Default on a 22-year old loan debt of nearly $800,000 leaves the City of Apalachicola little choice but to increase utility rates and sewer fees this fall.
“We are one emergency away from financial disaster,” said newly-hired City Manager Ron Nalley as he presented the preliminary 2018-19 budget to the City Commission during the City’s first budget workshop August 22. “We are in default on a maturing loan that, if we don’t resolve quickly, could result in the state enforcing their rights through collection remedies including stepping in and taking over the finances of the City,” he told the commission. “Right now, we can’t borrow money, we can’t get grants and we can’t even secure a line of credit.
Nalley, who likens the utility budget to a business, stated that the water and sewer funds are running at a deficit and, in keeping with recommendations from a rate study performed by the Florida Rural Water Association, has proposed a 13.5% increase in both residential and commercial water and sewer rates and a per-month increase of the existing Sewer User Fees (SUF) of $18.25 for residential customers and $74 for commercial customers.
If approved, average residential customers who now pay $60 in water and sewer charges and a $10.75 existing sewer fee can now expect their bill to increase to $98.36 to cover both the 13.5% rate increase plus the additional sewer fee hike of $18.25.
Similarly, average commercial customers who now pay $90 in utility/SUF fees can expect their bill to increase to $176.15 to cover both the 13.5% rate increase plus the additional commercial sewer fee of $74.
The sobering news presented by Nalley and City Administrator Lee Mathes during the August 22 workshop has been a long time coming. According to Mathes, the City secured funding in 1995 from the Florida Department of Environmental Protection to make necessary wastewater infrastructure repairs. Trouble began during a period of economic stagnation and a reluctance to impose higher utility rates on residents. The result was that the City was no longer able to make good on the loan repayment schedule and subsequently fell into default on their loan payments.
While Nalley acknowledged that staff was continuing to review additional cost savings, he cautioned that the operating budget is already pretty lean. “You can’t continue to cut operations or staff and not expect those cuts to affect services to the community,” he said.
The good budget news, according to Nalley, is that the $7 million budget does not propose any millage increase and, if approved, will help put the City on a path to solvency and allow it move forward on much-needed infrastructure improvements. And, Nalley said, it is possible that the SUF may be a temporary fee that could be abolished once the debt is paid off in seven to eight years.
A second budget hearing is scheduled for 6 pm Thursday, August 30. A final budget vote is scheduled for Tuesday, September 25.
“We are one emergency away from financial disaster,” said newly-hired City Manager Ron Nalley as he presented the preliminary 2018-19 budget to the City Commission during the City’s first budget workshop August 22. “We are in default on a maturing loan that, if we don’t resolve quickly, could result in the state enforcing their rights through collection remedies including stepping in and taking over the finances of the City,” he told the commission. “Right now, we can’t borrow money, we can’t get grants and we can’t even secure a line of credit.
Nalley, who likens the utility budget to a business, stated that the water and sewer funds are running at a deficit and, in keeping with recommendations from a rate study performed by the Florida Rural Water Association, has proposed a 13.5% increase in both residential and commercial water and sewer rates and a per-month increase of the existing Sewer User Fees (SUF) of $18.25 for residential customers and $74 for commercial customers.
If approved, average residential customers who now pay $60 in water and sewer charges and a $10.75 existing sewer fee can now expect their bill to increase to $98.36 to cover both the 13.5% rate increase plus the additional sewer fee hike of $18.25.
Similarly, average commercial customers who now pay $90 in utility/SUF fees can expect their bill to increase to $176.15 to cover both the 13.5% rate increase plus the additional commercial sewer fee of $74.
The sobering news presented by Nalley and City Administrator Lee Mathes during the August 22 workshop has been a long time coming. According to Mathes, the City secured funding in 1995 from the Florida Department of Environmental Protection to make necessary wastewater infrastructure repairs. Trouble began during a period of economic stagnation and a reluctance to impose higher utility rates on residents. The result was that the City was no longer able to make good on the loan repayment schedule and subsequently fell into default on their loan payments.
While Nalley acknowledged that staff was continuing to review additional cost savings, he cautioned that the operating budget is already pretty lean. “You can’t continue to cut operations or staff and not expect those cuts to affect services to the community,” he said.
The good budget news, according to Nalley, is that the $7 million budget does not propose any millage increase and, if approved, will help put the City on a path to solvency and allow it move forward on much-needed infrastructure improvements. And, Nalley said, it is possible that the SUF may be a temporary fee that could be abolished once the debt is paid off in seven to eight years.
A second budget hearing is scheduled for 6 pm Thursday, August 30. A final budget vote is scheduled for Tuesday, September 25.
You may view a copy of the City's 2018-19 proposed budget by clicking here.
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