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Title:
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Utilities Rate Analysis Presentation
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TO: Honorable Mayor & Members of the North Port Commission
FROM: A. Jerome Fletcher II, ICMA-CM, MPA, City Manager
TITLE: Utilities Rate Analysis Presentation
Recommended Action
No action required.
Commission Options
The Utilities Department and Bryan Mantz, GovRates, Inc. will present a review the Department's current rate structure, budget and recommendations for Fiscal Year 2026. At a future City Commission Meeting, staff will be requesting Commission review and consideration of these recommendations which will be incorporated into Resolution No. 2025-R-66.
Background Information
The Utilities Department budgeted for a comprehensive rate analysis to be conducted during Fiscal Year 2025. As a best management practice, this comprehensive rate analysis 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.
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. Presentation
Prepared by: Michelle Tipp, Utilities Business Manager
Department Director: Tricia Wisner, Interim Utilities Director