If the Vero Beach City Council signs off on a newly completed rate study in June, city water, sewer and reuse irrigation water customers can expect to pay roughly 47 percent more in monthly utility bills by 2030.

Rate consultant firm Raftelis gave the Vero Beach Utilities Commission a first look at the study earlier this month. Though the all-volunteer advisory commission has not yet voted to recommend rate increases to the city council, the hikes appear to be a foregone conclusion.

Vero needs bond financing to build the city’s $164 million “One Water” plant at the airport. It must show bond issuers sufficient future revenues to support not only that project debt but also day-to-day utility operations, maintenance of assets, emergency reserves, and compliance with evolving environmental regulations.

Design and construction of the plant has been financed so far with a bridge loan. By March or April that loan will be refinanced and rolled into 30-year municipal revenue bonds. Certain high-dollar components of the plant will only be financed for 10, 15 or 20 years based on component lifespan. “You don’t want to take out a 30-year bond on something like a membrane that will need to be replaced in 15 years,” said Rob Bolton, Vero’s longtime water-sewer utility director.

If the suggested rates are approved by the city council, the typical customer using 4,000 gallons of water per month will see utility bills rise from $83.54 currently to $122.45 in 2030.

The rate consultant reassured commission members that the higher rates would still be competitive with neighboring municipal utilities but didn’t mention that Vero customers could wind up paying almost double what Indian River County Utilities customers down the block pay.

Though commissioners have discussed a potential inflation increase capped at 3 percent, no planned rate hikes that would up the average monthly bill of $67.70 are in the works. Worst case if county rates do go up 3 percent each year would be a total 12.5-percent hike by 2030. Best case, rates would remain at $67.70 – a far cry from Vero’s $122.45.

Three city council members were in the audience at the May 5 Utility Commission meeting where higher rates were discussed, and Mayor John Cotugno defended the higher rates at last week’s city council meeting.

One reason Vero rates are significantly higher than Indian River County Utility rates is that Vero transfers 6 percent of utility revenues to its general fund.

About 40 percent of Vero Utility customers live outside city limits, in Indian River Shores and in the unincorporated South Barrier Island. As with Vero residents, their rates are calculated to support the general fund subsidy.

As utility rates soar, so does the dollar amount of the 6 percent general fund transfer. Shores Vice Mayor Bob Auwaerter asked the Vero Utilities Commission if the city might consider reducing the 6 percent, perhaps down to 5 percent to stem rate increases a bit.

But Cotugno does not think a 6 percent transfer is lucrative enough, in light of what he calls attacks on home rule by the state government, including a crusade by Gov. Ron DeSantis and CFO Blaise Ingoglia to reduce local property taxes.

Cotugno said at last week’s city council meeting that Tallahassee “is now trying to assault the revenue streams that we have from our enterprise funds.”

He claimed Vero Beach residents take all the risk of building out and owning the utility, so the city deserves an even bigger return on its investment.

Cotugno threw out a figure of 8 percent, instead of the current 6 percent, saying that seemed fair. Councilman John Carroll concurred. But increasing general fund transfers by one third would mean even higher rates than the rate consultant projected.

Responding to the proposal, Auwaerter said, “Mayor Cotugno’s comment that the water and sewer profit transfer revenues have not kept up with inflation makes no sense. The city has already raised water and sewer rates by a substantial amount in anticipation of the new water plant coming online and the city gets 6 percent of that increase as profit.

“The new utility rate study proposes an average additional cumulative 46.6 percent rate increase by 2030, [and] the city will keep 6 percent of that huge jump,” Auwaerter continued. “The mayor’s proposal to raise the profit transfer to 8 percent and apply it to a monster rate increase is just piling on customers who are already facing a tough inflationary economy.”

The proposed rates are expected to come back to the Utilities Commission first, then go to the city council in late June so new revenue figures can be incorporated into the city’s 2026-27 budget. Increasing the percentage of utility revenue that goes to the general fund would likely be a separate process.