ST. PETE BEACH — Residential wastewater bills would climb nearly 64% over five years, and many commercial bills would more than double, under a rate plan a consultant recommended to city commissioners.
The city’s Wastewater Enterprise Fund is bringing in enough to cover operating costs and part of its annual debt payments, but not enough to pay for the repairs and upgrades the system needs, Shawn Ocasio, a financial consultant and senior manager with Raftelis, told the commission July 28.
“Enterprise funds are designed to be self-sustaining, that their rates are designed to cover the cost of operating,” Ocasio said. “The enterprise fund is currently not in a position that it’s able to do that.”
Commissioners took no vote. They also learned the city is in talks with Pinellas County to take over the island’s wastewater system from St. Petersburg, a switch that would put St. Pete Beach on countywide rates.
Ocasio presented three- and five-year options for phasing in the increases. He said the fund faces three main pressures:
• Inflation in operating expenses, including the wholesale rates the city pays St. Petersburg for treatment.
• A need for major capital improvements paired with slow customer growth, which has held down revenue.
• Rising debt service from additional borrowing for those projects, along with the need to rebuild cash reserves to maintain debt coverage.
The financial plan is also designed to end the fund’s reliance on transfers from the general fund, Ocasio said.
Under the three-year option, residential rates would rise about 16% a year, to $110.59 in 2027, $128.28 in 2028 and $148.80 in 2029, followed by a 5% increase in 2030 that would bring the bill to $156.24 — a cumulative increase of 63.89%. The five-year option would raise residential rates 14% a year through 2029, followed by two 5% increases.
Commercial customers would see the larger jump, because the city’s current method of calculating their rates does not account for meter size.
“Commercial accounts on average are paying approximately 77% of the system cost,” Ocasio said, while residential customers pay about 105% and multifamily customers about 138%. Residential and multifamily users are subsidizing commercial accounts to some degree, he said.
Ocasio recommended scaling commercial base charges by meter size and phasing the new charges in over three years. A commercial customer now paying a base rate of $95.34 would pay between $110 and $3,022 in 2027, depending on meter size.
For the 51% of commercial customers with a three-quarter-inch meter, the bimonthly bill would go from $141 to $273 in 2027, $316 in 2028, $367 in 2029 and $385 in 2030.
Charging commercial users their full share would ease the burden elsewhere, Ocasio said, cutting residential and multifamily increases by 12% to 26% cumulatively over the forecast period.
Commissioner Karen Marriott said she worried about the effect on small businesses.
“I think there’s going to be some small businesses who find out they’re occupying a building that has a bigger water meter than they need,” she said. “And there may be some commercial properties that become unoccupiable based on these rates that we set, three years down the road.”
Marriott said she nonetheless favors the three-year phase-in “because I think if we are going to rip the Band-Aid off, we need to rip the Band-Aid off.” Once bills start climbing, she said, “we’re going to hear from a lot of people that it’s a problem.”
Commissioner Al Causey also backed the three-year approach, noting that parts of the system are near “severe end of service life,” including Force Main 1, “which is how all of our wastewater leaves the island.”
Mayor Scott Tate said the increases could reshape the city’s restaurant and bar scene. “I’m worried about the character of our city long-term,” he said, adding that charts presented by the consultant show the city’s commercial rates would no longer be competitive with neighboring communities.
Turning the system over to Pinellas County could change that math. City Manager Robustelli said the city is waiting for the county to provide the cost of conducting random pressure-test studies throughout the city.
“Once we get that cost, we’ll come back to the commission for further direction,” he said.
If the county takes over, the island would move to county rates, Robustelli said, because the county does not set rates by district or by city.
Tate said a transfer would make the city more competitive and give it room to grow.
Robustelli said staff will bring back a finalized rate schedule and the commission will hold public hearings before voting on any increase.