TO: Honorable Mayor & Members of the North Port Commission
FROM: A. Jerome Fletcher II, ICMA-CM, MPA, City Manager
TITLE: An Ordinance of the City of North Port, Florida, Amending Water and Wastewater Capacity Fees; Amending the Code of the City of North Port, Florida, Section 78-30; Providing for Findings; Providing for Conflicts; Providing for Severability; Providing for Codification; and Providing an Effective Date.
Recommended Action
Option 1: Adopt Ordinance as presented.
City Commission Options
Option 1: Adopt Ordinance as presented.
• Pros: Provides the Utilities Department the ability to fund capacity related infrastructure through capacity fees.
• Cons: Customers constructing new residential homes and businesses will have an increased cost if they construct where municipal water and/or wastewater services are available.
Option 2: Adopt capacity fees of a lesser amount than presented.
• Pros: Provides the Utilities Department the ability to fund some capacity related infrastructure through capacity fees.
• Cons: The capital needs of the utility will not change, therefore, adopting a lesser amount will cause the need for user rates or other revenues to subsidize the revenue requirement shortfall.
Option 3: Deny the Ordinance and do not increase the capacity fees.
• Pros: The capacity fees will not change; therefore, it will not have an additional financial impact on residential or commercial construction in relation to municipal water and/or wastewater connection fees.
• Cons: The infrastructure identified in the rate analysis will still need to be completed, As a result, additional funding sources must be identified, or the costs will need to be covered through utility user rates, placing the financial burden of growth-related infrastructure on current utility customers.
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:
Ø December 16, 2024: The Utilities Department issued Request for Letter of Interest (RLI) 2025-01 under Contract No. 2023-32 for Professional Services related to City Fees, Rates, Methodologies, and Assessments.
Ø January 20, 2025: Two (2) proposals were received by the solicited due date.
Ø January 31, 2025: The proposal evaluation and ranking meeting was held and 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.
Following a comprehensive review of services provided by the Utilities Department, the rate analysis has recommended updates to existing capacity fees. Capacity fees are a one-time connection fee to new residential or commercial properties connecting to the municipal water and/or wastewater system. They are intended to recover the cost of existing and future capacity-related infrastructure and are intended to ensure that new users pay their fair and equitable share of the system’s capacity. This avoids placing the financial burden related to growth on the existing utility customers.
Ordinance Number 2025-35 has been reviewed by the City Attorney and is legally correct as to form.
The Business Impact Estimate for Ordinance Number 2025-35 has been posted through City Clerk on October 27, 2025, in accordance with Florida Statute § 166.041(4)(a) (2024).
Strategic Plan Pillar
Good Governance
Financial Impact
Approving the changes to the capacity fees will allow growth to pay for growth and development to buy into their proportionate share of the system capacity.
Procurement
Not applicable.
Attachments:
1. Ordinance No. 2025-35
Prepared by: Michelle Tipp, Utilities Business Manager
Department Director: Tricia Wisner, Utilities Director