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First round of water/sewer rate hikes put off until January

STORY BY LISA ZAHNER (Week of September 15, 2022)

The Vero Beach Utilities Commission got its first real look at proposed water and sewer rate hikes designed to finance the city’s new wastewater treatment and fund growing operational costs, and the price tag will be a steep one.

Indian River Shores and unincorporated south barrier Island residents can expect 76.7 percent higher rates by October 2025. Utility customers inside the city limits will be hit with a 63.2 percent increase. After that, only an annual CPI increase is scheduled, but that could change if the cost of building the new plant rises above the current $82 million estimate.

The one bright spot in the Raftelis consultant’s presentation, which was scheduled to be repeated this past Tuesday for the Vero Beach City Council, is that instead of implementing the first phase of theĀ  new rate scheme on Oct. 1 as originally planned, the initial set of increases will go into effect in January.

Finance Director Cindy Lawson said she wants the city to look at revenue requirements every year going forward to make sure the rates cover the city’s costs. The last full-blown rate study was commissioned in 2010.

“The idea that you can set rates and forget it for 13 years is not how you run a utility,” Lawson said.

She pointed out that the current rate structure has been depleting the utility’s cash reserves in recent years by a million dollars or more annually, and those reserves need to be built back up to the $10 million mark to put the city in a strong position to seek $80-plus million dollars to finance the new plant.

That $10 million is the bare minimum needed in reserves for a $30 million-per-year utility operation, she said.

Though Lawson and Raftelis consultant Tony Harrison emphasized that all of the numbers related to financing the new plant are preliminary and may change, one factor they can estimate with some certainty is that the operating and maintenance of the utility once the new plant is completed will increase by about $2.1 million per year.

Indian River Shores Councilman Bob Auwaerter, who serves as the town’s representative on the Vero Utilities Committee, noted that the cost estimate for the new plant has risen from $50 million to $60 million, and now to $82 million, and observed that similar-capacity plants elsewhere in Florida have cost upwards of $100 million.

“That’s the cost of operating a utility. Your new facility is going to last decades and decades and decades,” Harrison said.

Whatever costs need to be borne, Harrison said, “under the proposed rate structure, the rates will be the same across all the service areas.”

With only two members of the public rising to the podium to ask questions, the Utilities Commission voted 4-1 to advise the City Council to adopt the results of the rate study and, as Chairwoman Jane Burton put it, “move forward with the rate increases.”

Only Auwaerter voted nay.

Barrier island resident Judy Orcutt expressed concern that the significant sewer rate increases would discourage people with septic tanks from hooking on to the Vero sewer system via the Septic Tank Effluent Pump or STEP apparatus.

Aging and failing tanks are believed to be a major culprit in declining lagoon health and Vero has promoted the STEP systems as an environmentally friendly alternative.

Utilities Director Rob Bolton said the city connects 90 to 100 septic users per year to the sanitary sewer system with STEP installation, and that it would take a decade to get all the remaining septic tanks in the city on sewer.