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Oldsmar to borrow millions to build water plant

OLDSMAR — Nearly 14 years after talk of an independent water system first surfaced, the City Council has decided to take out a multimillion loan to finance the remaining cost of the largest public works project in the city's 97-year-old history.

"Looks like we'll be creating our own water, ladies and gentlemen," Mayor Jim Ronecker said Tuesday night, moments before the council unanimously agreed to borrow more than $5.5 million for a new water treatment plant that will free Oldsmar from relying on Pinellas County's water supply.

The idea has been on the table since August 1996 when regional water wars cost Pinellas County utility customers tens of thousands of dollars in legal bills.

At the time, the city purchased 90 percent of its water from St. Petersburg and 10 percent from Pinellas County. City officials thought an alternative water source would remove them from the conflict, save their city and its residents money and reduce the burden on the region's stretched water system.

Feasibility studies were commissioned. Grants were requested, then denied. Twice, former Gov. Jeb Bush vetoed funds designated for the project.

Despite the setbacks, city officials pressed forward with plans for the $20 million facility, which will be on Commerce Boulevard.

"There's more than one very significant reason that the city is undertaking the project," City Manager Bruce Haddock said. "One is the ability to control our own destiny. And an equally important objective is the financial aspect to the ratepayer and the customer."

A major coup came in 2008 when the Southwest Florida Water Management District's Pinellas-Anclote River Basin Board awarded Oldsmar a $9 million grant.

Then in September, the Florida Department of Environmental Protection came through with a $3 million loan. The loan was part of the $217 million awarded to Florida under the federal American Recovery and Reinvestment Act of 2009.

The remaining $8 million will be covered by Penny for Pinellas sales tax money and the loan the council approved on Tuesday.

The DEP will repay the loan no later than Jan. 22, 2013. Taxpayers will then be indebted to the DEP. They won't feel the impact of the loan on their water bills until 2012, Assistant City Manager Marnie Burns said.

Even with the loan, customers will be better off than they would have been if Oldsmar had remained on Pinellas' water system, city officials say.

Residents who use 5,000 gallons of water a month spend $30.31, according to a March 2008 cost analysis conducted by Public Resources Management Group Inc., a Maitland consulting firm.

If Oldsmar had continued to buy all of its water from the county, customers would have seen their monthly bills rise to $36.71 in 2012.

With its own water treatment plant, customers can expect their monthly bills to come to $34.35 in 2012.

"There will be future rate increases, but they'll be smaller than if we left the status quo and continued to buy all of our water from Pinellas County," Haddock said. "There will be some long-term benefits to the customer in terms of rates."

Since October 2006, Oldsmar has purchased 100 percent of its fresh water from Tampa Bay Water through Pinellas County Utilities. The city currently buys 1.54 million gallons of potable water per day from the county. This fiscal year, which ends in September, the city expects to spend nearly $1.8 million on water.

When the city completes its plant in late 2011, it will use reverse osmosis technology to turn brackish water into drinkable water and have the ability to produce about 2 million gallons of water a day.

Though the city would incur costs to operate and maintain the plant, the cost to purchase water would go to zero.

"This is a better alternative than staying with Pinellas County as our water supplier," Burns said.

Oldsmar isn't the first city to create an alternative water supply system. Dunedin opened its reverse osmosis plant in 1991 and Clearwater opened one in 2004. Tarpon Springs moved ahead with plans of its own in 2008.

Even though Oldsmar will be self-sufficient, it will maintain its relationship with Pinellas.

"We'll have an agreement," Haddock said, "for emergencies only."

Rodney Thrash can be reached at rthrash@sptimes.com or (727) 445-4167.

. Fast facts

On the Web

To keep up with the status

of the city's reverse

osmosis water treatment plant, go to the city Web site at ci.oldsmar.fl.us. Under "Public Works," click on "Water Division."

Oldsmar to borrow millions to build water plant 01/20/10 [Last modified: Wednesday, January 20, 2010 8:49pm]
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