Fruitland Park blesses 25 percent water rate hike that falls below study’s recommendation

Fruitland Park commissioners showed their support during the first reading of an ordinance on Thursday night that will increase water and wastewater rates by 25 percent – considerably less than a utility study recently recommended.

The second reading of the ordinance is scheduled for the commission’s July 25 meeting, when final approval is expected based on their statements Thursday night and their unanimous support for the ordinance at a June 24 workshop.

Commissioners held the workshop after receiving a utility rate study completed by GovRates Inc. that recommended an increase of 71.5 percent to meet the minimum debt coverage service requirement, or 94 percent to meet revenue requirements.

The debt coverage service requirement is associated with State Revolving Fund loans that were secured to finance Fruitland Park’s wastewater utility system and if that isn’t met, the city could go into technical default and have issues getting future loans, the study says.

At the workshop, commissioners balked at the idea of implementing such drastic increases at once and agreed to go with a 25 percent increase each year over the next three years. But they also promised to look at the issue each year to see if growth and other factors have eliminated the need for the hike.

The increase is designed to eventually eliminate the city’s need to subsidize water and wastewater services through the general fund. That practice has been going on for several years and the city eventually will be required to pay that money back into the general fund.

At the workshop, Mayor Chris Cheshire made it clear early on that he wasn’t in favor of raising rates all at once by either one of those higher rates. He called that idea “ridiculous” and said he believes the problem could solve itself in the next few years.

“If we have to raise sewer rates and water rates, we want to raise them as little as possible to make everything balance,” Cheshire said. “I still believe in the next two to three years, growth is going to work this problem out. We’re going to have enough people hook up to sewer that this is no longer a problem.”

After some considerable debate at the workshop, commissioners unofficially decided to implement a 25 percent annual rate increase over the next three years, with the caveat that they’ll take a hard look at the situation each year to see if growth and other factors have eliminated the need for the hike. And they agreed that the same rate of increase would be passed along to Central Sumter Utility Company, which purchases water from Fruitland Park for 82 cents per 1,000 gallons and in turn provides it to The Villages portion of the city at a much higher rate.

The GovRates Inc. study showed that 75 percent of utility customers have water-only service provided by the city. It said the average resident in that scenario uses 6,000 gallons a month and suggested that rates should go from $20.49 to $35.10 – an increase of $14.61. But under the plan approved by the Commission, those same customers would see their base water rate stay the same and their increase would be just $4.53 cents – .4 cents per gallon – bringing their total monthly bill to $25.02.

The study also pointed out that 25 percent of the city’s residents are water/wastewater customers who use an average of about 4,000 gallons a month. It suggested their rates should go from $41.13 to $74.82 – an increase of $33.69. But the actual increase will be just $10.61 – 1.3 cents per gallon – bringing that monthly total to $51.74.