Sewer board may study rate reduction
March 14, 2018
KEY LARGO — Talk of Key Largo Wastewater Treatment District funding through grants led to a debate among commissioners last week as to whether debt repayment or monthly rate reductions should be given priority.
After learning that the district will receive $3,333,333 in 2017-18 Stewardship Grant funds from the Florida Department of Environmental Protection, and that those funds could now be used to pay down debt, some commissioners weighed further reducing debt incurred from building Key Largo’s wastewater treatment infrastructure while others proposed reducing rates for property owners.
The state grant money previously couldn’t be used for debt payment, but this year $3,241,602 of those funds have been earmarked to reduce the district’s total debt to $35 million. The balance, $91,730, will go toward the solar panel project at the main treatment plant.
“When I came on board in 2012, we had $81 million in debt. Over five years, we paid $48 million in debt. Soon we will be under $35 [million] in debt. My question is, when can we start reducing rates? That’s why I’m on this board,” Commissioner Steve Gibbs said.
“That’s a good question,” responded Interim General Manager Peter Rosasco. “The board can do that when you are comfortable doing it. There’s going to be a point in the not-too-distant future that you can take that step.”
But Rosasco strongly recommended a rate study be conducted before rates are lowered and noted that there are more factors to consider than lost revenue. The board declined to pay $27,000 for a rate study last July, though it had been budgeted.
“If you want to do this right, you have to have a professional service do a rate study,” Rosasco said.
Commissioner Sue Heim preferred paying the debt off first.
“Once we know how much it costs to operate, then we need to know how much to collect,” she said. “That’s when we decide what the rates are going to be. I think it’s premature to go and throw around figures before that.”
Chairman David Asdourian agreed.
“Pay the debt down first and the rates automatically go down,” he said.
Commissioner Andy Tobin said he’d like to see rates reduced during his time on the board.
“If we could reduce it by a dollar, let’s just start it,” he said. “I agree with (Commissioner) Robby (Majeska), if we reduce our base rate of $33.60 to $31.60, we could calculate that in-house without having to spend the $25,000.”
The district currently bills 15,038 EDUs at $33.60 per month. An EDU is equivalent to a single family unit and is based on 167 gallons per day of potable water usage. Commercial accounts may have more than one EDU depending on water usage.
“Even if we could reduce our rates by $1 or $2, I’d like to see that happen during my time here,” Tobin said. “That’s why I’m rerunning for the board.”
Heim dismissed such a small reduction.
“As a customer, I’d be insulted if you lowered my rate by a dollar after waiting all this time,” she said.
Gibbs requested that a proposal for rate study be added to the March 20 agenda.
During that meeting, the board will also discuss its process for hiring a new general manager. The board shelved a previous effort in December, nine months into the process, and after interviewing five candidates.
Also other funding-related matters, Rosasco anticipated that the district may receive a quarter of the $5 million earmarked for Monroe County through the Florida Keys Water Quality Improvement Program.
The district received 28 customer complaints or callouts in February. Staff asks that homeowners first call the district to report sewer-related problems before calling a plumber. There are stickers on the breathers outside of homes with the phone number.
“We should be thanking our customers for calling us, especially as the system gets older,” Tobin said. “We should be asking them if they’d like to give us feedback.”
He requested that staff present a list of customer complaints month to month.
“This is topical, I can relate to this,” he said.
The district reported that its treating nearly 2 million gallons of sewage per day. Ninety-eight percent of Key Largo is tied into the central sewer as is 94 percent of Islamorada, which contracts with the district for sewage treatment service.
Interest fees raised
Rosasco reported that BB&T Bank is increasing its interest rate from 2.7 percent to 3.28 percent on two loans issued to the district in 2013-14.
“As a result of this, I think we ought to figure out a way to pay this one off first. I plan on contacting the bank and telling them how unhappy we are,” Rosasco said.
The interest increased to offset the marginal corporate tax rate, which was reduced from 35 to 21 percent under the U.S. Tax Cuts and Jobs Act that passed on Dec. 20, 2017.
The rate increase will cost the district $40,000 in additional interest, which is passed along to ratepayers who had chosen to pay their $4,970 assessment fee in installments over a 20-year span. That is most of the district’s customers, according to Majeska.
Homeowners interested in checking their assessment fee balance and interest can visit klwtd.com/check-my-assesment.
District staff will review clerk applicants and move ahead with filling that vacant position by May. There are 21 applicants, 13 of which are Monroe County residents.
The terms of Asdourian, Majeska and Tobin are up in November and all three have filed for office again. The deadline to file is June 20.
The next Key Largo Wastewater District meeting is scheduled for 4 p.m. March 20 at 103355 Overseas Highway. It is open to the public and a copy of the agenda will be available at klwtd.com.