The increases are needed to pay debt service costs on recent borrowings totaling over $130 million, and to meet required debt coverage ratio covenants in the borrowing agreements. Debt proceeds were used to construct major improvement projects, one of which remains under construction, including:
- Wet Weather project – Improves the wastewater collection system’s efficiency by replacing aging sewer pipes, and increases capacity to protect the environment from sanitary sewer overflows
- Treatment Plant Headworks project and Disinfection System project – Improves the treatment system’s efficiency and the disinfection system’s efficiency and safety
- Middle-plant project – Replaces the wastewater process treatment systems
- Construction of these projects was mandatory, and most of the projects were constructed under a Florida Department of Environmental Protection (FDEP) supervised Consent Order, which required the City to improve the wastewater collection and treatment systems to better protect the environment from sanitary sewer overflows.
Planning for these projects began over 13 years ago. The City worked closely with FDEP during this time to ensure all state and federal regulations were met or exceeded. Numerous public meetings were conducted over the past 13 years regarding the projects and the required borrowing to pay for the projects.
The large cost of these projects could not have been paid for with wastewater revenues; therefore, borrowing was obtained to spread-out the costs. After an evaluation of all alternatives, several low-interest loans were obtained from the FDEP loan program for fresh water and wastewater projects.
- The FDEP loans bear interest rates of 1% or less and are being repaid over 20 years
- FDEP loan interest rates were much lower than rates on traditional municipal bonds
- A longer repayment period could have been obtained by using traditional bonds; however, the higher interest rates would have eliminated any advantage and resulted in significantly higher costs
Current wastewater rates for single-family residential customers inside city limits are currently:
- $18.80 per month (minimum charge) plus $2.30 for each 1000 gallons of potable water consumed
- $30.30 per month for customers consuming an average of 5,000 gallons of water
- $41.80 per month for customers consuming 10,000 gallons of water (maximum monthly bill)
- Three proposed rate increases in FY2021, 2022 and 2023 will result in monthly increases of:
- For 5,000 gallons consumed: $3.03 in year one, $3.33 in year two and $3.66 in year three
- For 10,000 gallons consumed: $4.18 in year one, $4.60 in year two and $5.06 in year three
LOOKING TO THE FUTURE
Wastewater rate increases after FY2023 will also be required to address anticipated regulatory changes and replacement of aging infrastructure. Specifically, heightened regulations on surface water discharges will require the City (and the region) to move to a direct and/or indirect reuse of effluent to potable water. The EPA is also developing regulations for PFAS compounds to reduce human exposure (used in non-stick cookware, fabric protection and microchips), both in manufacturing and at the disposal point. Also, most of the reclaimed water system is 25 years old and is nearing the end of its useful life. Major reclaimed water system replacements will be included in future Capital Improvement Programs.
SHARE YOUR FEEDBACK
The City Commission will hold a Public Hearing at 6pm on September 1 to discuss the proposed increases. In light of the coronavirus pandemic, it is unknown at this time whether the City Commission meeting of September 1 will be held in-person at City Hall, located at 201 Highland Avenue, Largo, or will be held by means of communication media technology. Either way, public comments may be provided by sending an email to email@example.com at any time or by calling 727-586-7334 on September 1 at 6pm. If the meeting is held in-person, you will be able to provide public comment at City Hall. Please visit largo.com for information as to the location of the meeting.
To view the proposed FY2021 budget, visit Largo.com/FinancialCenter.