Edgewater consultant recommends 4.5% annual water and sewer increases to secure low-cost loans for $86.4M plant expansion

Brian Mance, a rate consultant with GovRates, told the City of Edgewater council at a June 25 workshop that the city’s utilities face growing financing pressure and recommended adopting a multi-year rate plan that would include a 4.5% annual increase for water and sewer.

Mance said the city’s installed utility assets total about $128,000,000 and include many systems more than 30 years old, and that declining cash reserves will limit the city’s ability to phase in increases gradually. “The city has about $128,000,000 installed cost of aging assets under city management,” Mance said, and later warned that “utility cash reserves are decreasing, which limits our ability to gradually phase in rate adjustments.”

Why it matters: Mance said the city must show adopted rate adjustments when it applies for construction loans under the state revolving fund (SRF) program. He described an $86,400,000 estimate to expand the wastewater plant from 2.75 million gallons per day (MGD) to 4.125 MGD and said prior assumptions of roughly 50% SRF loan forgiveness now look unlikely. “Looks like 50% loan forgiveness may not happen, and so the current outlook is 15% loan forgiveness,” he said. Without the larger forgiveness, the city would need to rely more on rate revenue and impact fees to reduce debt levels.

The consultant framed the 4.5% recommendation as a strategy to preserve access to the very low SRF interest rates and to avoid “rate shock” from larger, catch-up increases later. He illustrated options that delay increases, showing they produce higher effective adjustments in later years if the city defers action.

City staff finance recap: Bridget Bass, Edgewater’s finance director, summarized the financial effect of the proposed increases and the recommended mix of funding. Bass said the proposed 4.5% water and sewer increase would raise approximately $1.2 million in annual revenue to cover operations, CIP and potential wage adjustments. She also confirmed that the typical bill comparison uses 3,000 gallons per month as the baseline for regional benchmarking.

Council questions and context: Council members pressed on alternatives and comparisons. The consultant cited other Florida examples — noting that Groveland adopted a large, roughly 40% increase — to underscore the cost of delaying adjustments. Council members repeatedly raised affordability concerns for households that already face high bills in the region; one council member said residents “can’t afford our water.” Mance and staff acknowledged the trade-off between affordability and preserving access to grants and low-cost loans.

Stormwater and impact fees: Mance and staff also described the stormwater master plan’s prioritized capital needs (about $99.6 million) and said the stormwater impact fee was resized to reflect those projects. Staff recommended a $5.03 monthly stormwater rate increase (raising residential stormwater from $14.58 to $19.61) tied to phase 1 project design and to qualify projects for grant or loan funding.

Next steps: Staff will bring a rate resolution to the council in August and hold public hearings in September as part of the tentative and final budget process. Council members indicated verbal consensus to proceed with drafting the necessary rate and impact-fee ordinances, subject to the public hearings and any changes if grant funding materializes.