Commission Decides Against Increasing New Development Fees

By Mike Lednovich

The City Commission did an about-face Tuesday on funding improvements to the city's aged water and sewage system and took no action to place the potential burden on developers for those improvements.

Last month, a consensus of commissioners supported a Florida Rural Water Association (FRWA) consultant's Option B recommendation to raise water and sewer capacity fees on new homes from $3,280 to $10,040. The higher capacity fees would contribute to the city Utility Department paying off $2.1 million in debt that was used to maintain and expand the capacity of the water and sewer system.

Commissioners were told in July they were not collecting enough capacity fees to pay for replacement of key utility system components like master lift stations which cost $300,000 each.

The Option B fee increase was required to be instituted by a new ordinance, which came before the City Commission Tuesday for approval. But instead of voting to increase the fees, the city did nothing and moved to have a new resolution that would actually lower the fee.

"You are screwing the future generations by adopting this, you're screwing the taxpayers by going to this," Ross said. He maintained that taxpayers would be subsidizing new development.

Ross questioned Utilities Director Andre Desilet about the condition of the 45-year-old water and sewer system.

Fernandina Beach water plant.

"It's getting to the end of its useful life. A lot of the (10) lift stations are 45 years old and the infrastructure is going to need to be replaced," Ross said. "The new people coming in aren't going to pay for it, but the people already here are going to pay for replacing that infrastructure over the next coming years. So essentially the current users (taxpayers) are paying for this."

Desilet agreed, "Essentially, the funds have to come from somewhere."Commissioner Chip Ross' motion to raise capacity fees failed to garner a required second.

Mayor Bradley Bean argued that the city was still keeping the $3,280 capacity fee in place for developers.

"We are still...these new homeowners will come and before they start paying (utility) rates they will still pay this initial $3,000 fee," Bean said. "By saying no to this (tripling fees) we're still charging new owners to hook up to our system. That's a good number."

But in the July workshop, Bean said the commission had consensus on moving forward on FRWA's Option B "so that's what we'll look to recommend."

The consensus was reached after FRWA Consultant Katherine Van Zant told commissioners, "What you've done with existing capacity fees since 2015, you're not getting sufficient money for the (system) capacity that people are getting."

The capacity fee is a one-time charge to new residential and commercial buildings for connections to the water and sewer system. The fees are used to reimburse the Utility Department for the capital costs necessary to provide increased capacity to serve these new customers. In July, Van Zant said that capacity fees are designed to make it possible for new customers to pay their proportion of the system and the available capacity they use that has already been funded and provided in the system by city taxpayers.

Van Zant said. "What you're doing is putting what you've already done and what you have on the back of current users instead of equitably providing for it to be paid for."

Matt Meskimen of the Northeast Florida Builders Association told commissioners "we do not believe the fees recommended in Option B are proportional or reasonable and we would like commissioners to consider opposing or not voting on this."

Now going forward, commissioners said they would consider a new capacity fee ordinance, FRWA Option A. Commissioner Darron Ayscue said he favored reducing the fee to $3,000. Ayscue did not object to the consensus on Option B.

"Option B (the $10,040 rates) says let's stick it (this increase) on somebody else," Ayscue said. "I have a philosophical problem with that. That's why I favor Option A (lowering the fee to $3,000)."

Vice Mayor David Sturges, a home builder, also opposed the Option B rate increase and favored incremental hikes in the capacity fee. "I wish with inflation they had come with a little bit of an increase (every year) because it's been seven to 10 years since we've had an increase," Sturges said.

The commission instructed City Attorney Tammi Bach to come back with a resolution with Option A to be voted on for approval.