- April 23, 2024
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Palm Coast residents will not see a new fee added to their electric bills as part of a city government effort to raise money for a new, $21.5-million public works facility — at least, not yet.
The City Council at its Oct. 16 meeting decided to delay a vote on the proposed public service electric tax. Numerous residents spoke in the meeting's public comment period to say they opposed the fee.
Alan Peterson, formerly both a Palm Coast city councilman and a Flagler County commissioner, was among the locals who showed up at the council's Oct. 16 meeting to oppose the city's proposal to add a fee to electric bills to pay for the public works facility.
"Why are you putting backbreaking increases in taxes on the current residents and having the future residents have the benefits at no cost?"
— ALAN PETERSON, Palm Coast resident
"Since Palm Coast has been formed ... I have always believed that the city has been fiscally illiterate," he said, pointing out the city's history of using pay-as-you-go strategies, rather than taking on debt, to pay for large projects. "There’s no question that this is regressive," he said. "Why are you putting backbreaking increases in taxes on the current residents and having the future residents have the benefits at no cost?" Financing costs a bit more, he said, "but the user who gets the benefit ought to pay for it."
John Tipton, a candidate for the City Council District 4 seat, said during the meeting's public comment period that he thought the council should table the issue — and any other proposed taxes and fees — until after the November election. He questioned why the city had been undertaking expensive projects like the Holland Park renovation and construction of City Hall while the public works facility was in such disrepair, and why the proposed expense for the public works facility had jumped over recent years from an initial $6 million to the current almost-$22 million.
City Council District 2 candidate Jack Howell told the council that his first concern is the safety of the workers at the facility, which city officials have said is now unsafe. He noted that the city had spent money building City Hall and the Community Center while the public works facility had continued to degrade.
But, he said, echoing Tipton, "I believe that nothing should be done until the new council members, whoever they may be, are elected and in place."
One resident, Lewis McCarthy, said the city needs to handle the safety issues at the public works facility before the Occupational Safety and Health Administration gets involved.
"Whatever we do, we better hurry up and do it before OSHA comes down," he said.
THE PROBLEM
Palm Coast's Public Works department handles much of the basic work of the city government: repairing roads and trails and sidewalks, maintaining swales and ditches, and maintaining the city's public buildings and facilities.
The department's facility on the west side of U.S. 1 was built in 1985 and given to the city upon the city's incorporation.
"There's no question that something has to be done. It's just a matter of finding a funding source."
— MILISSA HOLLAND, Palm Coast mayor
Most of its buildings are simple, open "pole barns" that don't require permitting.
"None of these structures that are currently in our public works facility are up to code; none of them are ADA-compliant," Mayor Milissa Holland said at the meeting. There might be one exception, she added: the trailer the city rents for $10,000 a year to run its operations facility.
The facility is inadequate for the city's workers, she said.
"There's no question that something has to be done," she said. "It's just a matter of finding a funding source to do that," while having the least possible impact on residents, she said.
Councilman Vincent Lyon agreed. "I think nobody on this council thinks that this is something that doesn’t matter or needs to be put off," he said. "This facility is inadequate for a city of our size. ... We owe it to [workers] to provide them with a safer environment, a safer place to work. ... So, how are we going to pay for it?
FINDING THE MONEY
City staff had presented the council with a series of options for financing the project, plus several million dollars per year of street maintenance, at a previous council workshop on Oct. 9.
Council members had agreed at the workshop that an upgrade was needed, but they did not come to any decision on how to pay for it, asking the city's staff to prepare more options for the council's review.
Council members saw those proposals Oct 16.
The council, according to the presentation, could implement a 6% electric franchise fee. Or it could implement up to a 10% electric public service tax. Or it could blend the two, and/or use debt funding to supplement the fee or fees.
A public service electric tax levy of 10% would bring in $6.5 million annually and add an additional $8.27 to residents' bills per 1,000 kilowatt hours of use. A 7% public service electric tax levy would bring in $4.5 million annually for the city and cost residents $5.67 per 1,000 kilowatt hours. A 6% electric franchise fee would bring in $4.3 million annually and cost residents $5.94 per 1,000 kilowatt hours.
If, as Councilman Bob Cuff suggested as a possibility, the city decided to implement the 10% electric service tax but exempt the first 500 kilowatt hours from the fee, to relieve some of the burden on lower-income or fixed-income residents, that would generate $4.9 million for the city, while costing residents $4.54 per 1,000 kilowatt hours.
If the city also used debt funding, it could use any of those strategies and complete the new facility in 2021. Without debt funding, the 10% electric public service tax would let the city finish the facility in 2023; the 10% electric public service tax with the 500-kilowatt-hour exemption would let the city finish in 2028, as would the 7% electric public service tax without the 500-kilowatt-hour exemption; while the 6% electric franchise fee would let the city finish the project in 2029. Combining a 3.5% electric franchise fee and a 3.5% electric tax would let the city finish in 2028.
Council members were wary of the franchise fee, which would require a long-term contract of up to 30 years with Florida Power and Light.
Holland said she didn't want to leave future councils beholden to FPL for power. "Thirty years from now, we could be looking at a whole different set of options," she said. Councilman Nick Klufas agreed.
Councilman Bob Cuff wanted to see more information on how the project could be funded, including options for handling it in phases.
Shipley acknowledged that the facility needs work — she toured the facility two years ago, "and thought at that time it was an emergency situation," she said — but thought the council didn't have enough information to make a decision on proposed fees.
The council voted unanimously to support her motion to table the matter.
