$5.5 million purchase of Plantation Bay utility approved

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  • | 5:00 a.m. February 6, 2013
  • Palm Coast Observer
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Before Flagler County officials approved an interlocal agreement with the city of Bunnell to purchase and manage the Plantation Bay utility, they said they knew they were paying too much for a system in disrepair.

"I've been opposed to (this purchase) basically because it's a bad deal," said County Commissioner Barbara Revels. "However, these people need to have better water, so with all kinds of reservations about this, and knowing it's a bad deal, I'm going to support the motion."

Other commissioners voiced similar concerns before voting Wednesday night to move forward with the $5.5 million purchase, which carries an anticipated $3.5 million additional expense to rehabilitate the utility.

The motion passed 4-1, with Commissioner George Hanns casting the dissenting vote — but not before saying he knew that morally, purchasing the utility was the right thing to do, but that he couldn’t support the motion as a commissioner after spending years dealing with the utility’s current owner.

The current owner of the Plantation Bay utility has not maintained it. It has been likened to a house of cards: unstable, and ready to fall at any time. Residents complain of yellow bathwater, and engineers say the entire system could fail at any time, rendering 1,600 people waterless.

Flagler County and Bunnell will buy the utility for about $5.5 million. It will need repairs amounting to about $3.5 million. The plan is to revive the utility, and the costs will be shouldered by Plantation Bay utility customers through rate increases.

The Plantation Bay utility has a service area that straddles the Flagler and Volusia County lines. Most of its 1,600 customers live in Volusia County.

Flagler County has been trying to acquire the Plantation Bay utility for more than a decade. The Plantation development of regional impact is currently permitted for 5,391 dwelling units, consisting of three discrete areas: Plantation Bay, Prestwick and Westlake.

Westlake is located in Flagler County, and is the area where the majority of vacant parcels are within the DRI, with a total of 4,326 units in the county.

County Administrator Craig Coffey said that outside the DRI, there are more than 2,000 to 3,000 more residential units, and potentially hundreds of thousands of non-residential square feet outside of the DRI that could be served by the utility.

The $5.5 million purchase price is a decrease from the utility owner’s original asking price of $9 million.

Hanns: “You’re going to need a sledgehammer to convince me”

At a joint workshop between Flagler County and Bunnell officials, attendees heard an engineer’s report of the shortcomings of the Plantation Bay utility system. While Coffey said he would later outline a plan to revitalize the utility, officials expressed concern at the extent of the problems with the utility.

“I wasn’t aware of a lot of these problems and the depth of these problems,” said County Commissioner George Hanns, saying that he had always assumed that the present owner of the utility had been maintaining it. “What you’re telling me today is very distressing — nothing was maintained.”

Hanns likened the reduced sale price of the utility to a person selling a pick-up truck that didn’t run at a reduced price.

“We’re going to have a defunct system,” Hanns said. “Now that this information is coming out from engineering studies … I’m not comfortable with this at all. Over the last ten years, the owner has been collecting revenues from the system and not putting anything into it.”

Supporters said the utility is like a house of cards that could fall at any time, and that needs to be prepared.

But Hanns questioned why nobody has been telling the utility’s owner to maintain it over the last decade.

"Right now, you're going to need a sledgehammer to convince me," he said. 

An immediate water problem

As engineers presented their proposed improvements to the utility, Flagler County and Bunnell officials expressed concerns over the cost, but Coffey said Plantation Bay has "an immediate water problem."

"At the end of the day, these people have to have drinkable water and sewer," County Commissioner Nate McLaughlin said. "But at the same time, the numbers are very bothersome to me when compared to the state of the system."

Engineers attributed the state of the utility to poor maintenance.

County Commissioner Frank Meeker totaled the engineer's predicted projects as well as the assumed purchase price of the plant for a total of $13.1 million for Plantation Bay acquisition and repairs.

But, Coffey said, if the plant went out tomorrow, it would be more difficult to repair than it currently is.

"The plant right now is old and it needs to be replaced," Meeker said. "Somebody needs to pay to fix it."

Coffey said that as the utility's service area expands, the county and city will earn more from the utility through water rates and impact fees.

 A five-year financial projection

Consultants evaluated the utility purchase to determine the relative service rate needed to generate a full return on money spent in the acquisition, taking into account operating and maintenance expenses, payment of debt services, a repair and replacement fund and other factors

The proposed rate changes would increase rates for Plantation Bay customers by 30%.

Water service currently has a base charge of $11.62 per month, with a usage charge of $3.34 per 1,000 gallons. The recommended increase would be a $15.11 base charge, with a usage charge of $4.34 per 1,000 gallons.

Current wastewater charges have a base rate of $18.95 per month, with a usage charge of $3.66 per 1,000 gallons. The recommended increase would be a $24.64 base charge, with a usage charge of $4.76 per 1,000 gallons.

An average customer using 4,000 gallons of water each month could expect a total increase of $17.58 for water and sewer.

Officials said the rates could decrease if the customer base were broadened as the vacant lots in the DRI are filled.

An interlocal agreement

Officials proposed an interlocal agreement between Bunnell and Flagler County to mandate how the Plantation Bay utility would be run.

The agreement would make both municipalities equal partners, Coffey said. The Board of County Commissioners and the Bunnell City Commission would both serve as representatives for the utility, and would need to reach agreement before any rate changes or other changes could be made in the future.

County Commissioner Barbara Revels questioned the sustainability of the agreement. In the future, the two respective commissions may not get along as well as the current ones do, she said.

But County Attorney Al Hadeed said the wording of the agreement would allow for the boards to decide how the relationship should look in the future if it ever needed to change.

The agreement would create a net of four of five new jobs, Coffey said, after accounting for Flagler County jobs lost with the elimination of the current Plantation Bay operations. Current employees could apply for the new jobs.

Revels also raised concerns that now, Plantation Bay residents who wish to start water service would need to drive to Bunnell to do so.



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