- May 16, 2024
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Palm Coast is proposing three 6% increases over the next two years to meet the city’s water and wastewater demands.
Between the city’s growth and the continued increase in operating costs, raising the city’s utility rates has become necessary, Utility Director Steve Flanagan said in an interview with the Observer. A utility rate study conducted last year showed that without more funding, the city’s operating reserves will be exhausted by 2027.
The city needs to pay for necessary upgrades and expansions to a 50-year-old system, Flanagan said.
“The last thing we want to do is kind of kid ourselves, if you will, as a community and an organization that we can make it with less," he said.
The Palm Coast City Council will have two public meetings discussing the rate hike. The first will be held at 9 a.m. on Feb. 20 and second at 6 p.m. on March 5 to discuss adopting an increase to water and sewer rates, fees, and charges, according to a press release from Palm Coast.
The council first heard a presentation on the necessity of a utility rate increase in November. At the time, Flanagan and a representative from Stantec Management Consulting, which conducted the rate study, presented the analysis and two possible rate increase scenarios to the City Council.
This has become a necessity for two reasons, Flanagan said. First, the city’s general operating costs have increased, including salaries, parts and construction costs.
Secondly, Palm Coast residents have essentially only been paying for the infrastructure they're using, not the infrastructure the city will need to support its continued growth. Between 2024 and 2026, Palm Coast had planned for $225 million capital improvement projects for waste water, according to the November presentation.
Utility Systems Manager Peter Roussell said Palm Coast's Water Treatment Plant One is one example. It was built in 1977 and — beyond the 50-year-old parts and technology that have been replaced throughout the years — was not meant to serve the city's forecasted population size.
"We are currently going through a study right now to see how long that plant is going to last or if we should replace it," he said.
The city has tried to avoid large rate increases by having small, annual increases tied to the consumer price index, Flanagan said. But the operation costs and the upcoming expensive but necessary improvements require additional funding.
Flanagan said the scenario staff will propose to the council will implement the first of the three 6% increases in April, while the second would go into effect in October. The third increase would be implemented in October 2025.
In order to mitigate the impact to fixed income families, the proposed increase would include implementing a new tier to the water bill called the “Life Line” tier. The Life Line tier would apply to the first 2,000 gallons of usage on a water bill.
Flanagan said 48.7% of Palm Coast residents use less than 2,000 gallons and will see the least impact to their bills.
During the first increase in April, if approved, the 6% increases would only impact the volume charge, but not fixed charges or the Life Line tier.
The average single-family home in Palm Coast that uses 2,500 gallons of water a month has a monthly bill of $71.08, Flanagan said.
Because of the savings of the Life Line tier, the first 6% would only increase the bill to $71.17 in April, he said. That bill would then increase to $75.44 in October 2024 and $79.96 in October 2025.
Residents will not be the only ones footing the bill though — impact fees for water and sewer will increase by 50% over the next four years.
Flanagan said he tries to view the utility rates "as if it's my own household expenses."
"And we utilize every dollar we get in rates here sensibly," he said. "We're not wasteful."
