Deltona considers 3 water‑rate options to fund $22M projects and long‑term infrastructure needs

Deltona City Commission heard a detailed presentation from utility staff and rate consultants on proposals to raise customer rates to cover pressing regulatory mandates and capital projects.

Utilities presenter Jim told the commission the utility is enterprise funded — supported entirely by user rates — and serves about 36,500 water accounts, 7,500 wastewater accounts and 1,750 reclaimed accounts. He said regulatory agencies (EPA, Florida Department of Environmental Protection and the St. Johns Water Management District) set compliance requirements that drive capital and operating costs and noted the system has roughly $200,000,000 in installed asset value.

Brian of GovRates presented three rate‑design options for fiscal recovery and CIP funding. "Option 1 would be a 6% across the board recovery," he said; Option 2 would shift more to base charges (a 9.02% base increase with lower tier increases while yielding the same overall revenue), and Option 3 would tie increases to an index (shown as roughly 1.6% in the current model) but would not produce sufficient five‑year CIP funding and could jeopardize bond covenants and ratings.

Nut graf: The rate discussion is driven by a mix of unfunded regulatory mandates (for example Advanced Waste Treatment at wastewater plants), planned expansions (Eastern plant expansion to 3.0 million gallons per day and Advanced Waste Treatment at Fisher) and steady renewal‑and‑replacement work on aging buried infrastructure. Staff said some grants are in hand (a design grant for Fisher and about $22,000,000 identified toward construction) but rate revenue is required to meet the city’s bond and loan covenants.

Commissioners pressed staff on tradeoffs between conservation incentives, revenue stability and equity. Several members favored options that preserve access to grant and debt financing and maintain current bond ratings; others raised the possibility of increasing bulk sale rates to neighboring systems and asked staff to analyze whether acquiring or accepting service territory (e.g., Del North) would be financially feasible. Brian warned that a state bill could eliminate the 25% surcharge on outside customers and reduce that revenue stream.

Staff also noted a structural challenge: the city has many more water customers than sewer customers (roughly 36,500 water users vs. fewer than 8,000 sewer customers), meaning sewer costs are spread over a smaller base. That blended customer mix informed the recommendation for an across‑the‑board increase to meet fixed‑charge recovery requirements through 2030.

Public‑process and next steps: Commissioners directed staff to schedule a focused workshop on rates before final direction; staff also committed to return with more modeling, bulk‑sale scenarios and an examination of the option to explore a sale/transfer or interlocal arrangement (for example with the Florida Governmental Utilities Authority) if commissioners want that analysis. The commission moved to public comment afterward.