Report to Council

Water System Fire Protection Charges

September 27, 2011

A

Report to Council

Water System Fire Protection Charges

What is “Water System Fire Protection”

?Hydrants

Pumps

TanksLarge Pipes

Maintenance

FIRE PROTECTION

Water distribution system capacity includes fire flow

Benefits the community as a whole Costs associated with capacity not

included in water user feeso High Service Pumpso Water Storage Tankso Hydrantso Larger Pipes

Methods for Utility to Recoup Costs

Include in customer user rateso Rate increase for customerso Non-utility customers do not pay

Add a line-item charge on utility billo Additional monthly fee for customers onlyo Non-utility customers do not pay

Ad-valorem taxeso Transfer from the General Fund (inside city

limits)o Invoice to County (outside city limits)

Current Practice

In-city - Annual charge to the General Fundo Charge on a per-hydrant basiso $145.00 per hydranto 2011 – $ 496,045

Outside city – Invoice Flagler Countyo Charge on a per-hydrant basiso $145.00 per hydranto 2011 - $ 44,950

At-Issue

Flagler County has chosen not to pay invoices since 2008!

Total of Unpaid Invoices = $ 175,595

Why Now?

Auditors have indicated we need to get this resolved and clear up the receivables

City Council has requested we get it resolved, first by trying to work with the County

County Administrator does not want it to be funded with County-wide tax dollars

One option is a separate fire tax district Paid only by those who receive the benefit

This option has been rejected

History

ITT-Palm Coast Utility Corporation / Flagler County Hydrant Agreement – Mod 1994

Florida Water Services Corporation Rate Case Settlement - 1999

City of Palm Coast Purchase of Utility 2003 2006 Reinstated the Fire Protection System

Fee and Based it on a per-Hydrant Charge Flagler County Paid the Invoices in 2006 and

2007 totaling $81,490

Beginning with the 2008 invoice, Flagler County quit paying

Unpaid balance = $175,595 County Attorney: “… could you please advise your

hierarchy and have the pending invoices for 2008, 2009 and 2010 withdrawn and send us something to that effect so our books are cleared… Then I suppose we have to deal with the 2006 and 2007 past payments that were not authorized, again if you concur with my research. The total is just under $82K. You can return the money to us with some cover document or we can proceed otherwise if you would prefer.”

Meanwhile the City general fund has paid $2,835,040

Recommendation Continue to charge the General Fund for

hydrants inside the City of Palm Coast on a per hydrant basis in accordance with existing rate resolution

Adopt new Resolution to add a monthly fire protection charge on each account outside the City limits $2.33 per month

Include in Resolution, a monthly charge for past due amounts $2.28 per month Charge will remain in effect for 4 years

Conclusion

The City utility system must recover the costs associated with providing fire protection to the community

While the tax-payers of the City have paid for those services, over the last 4 years the taxpayers of the County have not

Staff recommends implementing a monthly fire protection fee to all accounts outside the city limits with additional charges for past-due amounts