TO: Honorable Mayor & Members of the North Port Commission
FROM: A. Jerome Fletcher II, ICMA-CM, MPA, City Manager
TITLE: A Resolution of the City Commission of the City of North Port, Florida, Adopting the Annual Utility Rate Schedule for Private Fire Protection Services, the Annual Utility Rate Schedule for Water and Wastewater Guaranteed Revenue Charges, the Utility Rate Schedule for Reclaimed Water, the Water and Wastewater System Base Facility Charges, the Water System Rate Schedule for Water Usage Volume, the Water System Rate Schedule for Bulk Water, the Wastewater System Rate Schedule for Usage, the Wastewater System Flat Rate Schedule, the Water and Wastewater System Deposit Fee Schedule; Adopting Automatic Rate Increases; Providing for Incorporation of Recitals; Providing for Conflicts; Providing for Severability; and Providing an Effective Date.
Recommended Action
Option 1: Adopt Resolution 2025-R-66 as presented.
Additional Commission Options
Option 1: Adopt Resolution 2025-R-66 as presented.
* Pros: Provides Utilities the ability to fund critical infrastructure improvements and/or replacements, while operating efficiently with optimal staffing levels to maintain the current level of service provided.
* Cons: Adopting a 10% increase will put North Port on the higher end of water and/or wastewater rates when compared to our surrounding areas.
Option 2: Adopt Resolution 2025-R-66 with a smaller percentage increase.
* Pros: The increase will be lesser of an impact on water and/or wastewater customers.
* Cons: Utilities will again need to reprioritize critical infrastructure projects. This may result in component failure and unplanned emergency repairs, often with higher costs compared to planned projects.
Option 3: Deny Resolution 2025-R-66 and keep the current Engineer News Record rate increase of 1.6%
* Pros: The percentage increase will be very small for water and/or wastewater customers.
* Cons: Utilities has already been required to shift funds from planned capital improvement projects to support the cost of the Department of Environmental Protection (DEP) consent order required Effluent Pump and Pipeline Project (U21EPS). Cash balances need to be built back up in order to fund other needed capital improvements. Reducing rate increases to 1.6% would slow the ability to fund projects. This may result in component failure and unplanned emergency repairs, often with higher costs compared to planned projects.
Background Information
The Utilities Department budgeted for a comprehensive rate analysis to be conducted during Fiscal Year 2025. As a best management practice, this study was performed by an independent third-party consultant with expertise in utility rate structures. Engaging an outside specialist helps ensure the long-term financial health of our water and wastewater systems, supports fair and equitable billing across all customer classes, and aligns our rate structure with future capital improvement needs and infrastructure planning.
Below is a timeline of events related to the procurement of this project:
> December 16, 2024, the Utilities Department issued RLI 2025-01 under Contract No. 2023-32 for Professional Services related to City Fees, Rates, Methodologies, and Assessments.
> January 20, 2025, two (2) proposals were received by the solicited due date.
> January 31, 2025, the proposal evaluation and ranking meeting was held where GovRates, Inc. was selected to proceed with the formal rate analysis based on overall ranking.
The analysis reviewed a 10-year outlook encompassing staffing, operational costs, and capital planning. The evaluation considered recent significant cost increases across insurance, chemicals, fuel, electricity, construction, and supplies. The latest Capital Improvement Plan (CIP), developed during the Fiscal Year 2025 budget cycle, incorporated findings from the completed Water Master Plan, which assessed all water facilities and distribution lines for lifecycle and replacement needs using a risk-based approach. Projects identified in the nearly completed Wastewater Master Plan have also been added to the CIP.
The rate analysis recommended a 10% increase over the next three (3) years for both water and wastewater rates and fees. This phased increase is necessary to build sufficient cash reserves to fund critical CIP projects on a pay-as-you-go basis. While the City of North Port rates will be on the higher side when compared to surrounding areas, rates will still be considered affordable by the Environmental Protection Agency (EPA) standards, which outlines rates below 4.5% of median household income as affordable.
In addition, a phased three-year increase to reclaimed water rates has been recommended in order to achieve full cost recovery for the production and delivery of reclaimed water. This adjustment ensures that rates reflect the actual cost of providing the service while supporting the long-term sustainability of the reclaimed water.
Utilities plans to conduct a new full rate analysis in three to four years as part of industry best practices utilizing CIP projections and operational costs current at that time. Following this analysis, recommendations to fees will again be provided for Commission consideration.
Resolution 2025-R-66 has been reviewed by the City Attorney's Office for form and correctness.
Strategic Plan Pillar
Good Governance
Financial Impact
There will be a negative financial impact if recommended changes are not instituted, such as the inability to complete critical CIP projects, maintain adequate debt coverage and/or maintain current level of service.
Procurement
Not applicable.
Attachments:
1. Resolution No. 2025-R-66
Prepared by: Michelle Tipp, Utilities Business Manager
Department Director: Tricia Wisner, Interim Utilities Director