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Failed plan for water independence adds to Port Richey's flood of problems

PORT RICHEY — City officials in 2005 believed they had the perfect plan.

They would drill five wells within city limits that would give them all the water they needed to dry out their decades-long dependence on New Port Richey.

Sure, it would be an investment — the $3.3 million bond to pay for the wells filled more than a third of that year's total budget. But in time, former City Manager Jerry Calhoun said, the savings would "more than offset the additional cost of borrowing."

Fast forward to the present. Nearly everything about the city's goal of water independence remains a mirage — except for the recurring costs. Utilities director Pat Stewart said the four newest wells provide not nearly enough water to sate the city.

Wait a second — weren't there supposed to be five wells?

"We've researched this an awful lot," Stewart told the City Council Tuesday. "We can't find out why there was no fifth well."

The city's missing well is just one of many bits of bad news the City Council heard Tuesday when considering a change in its water and wastewater rates. Consultants said the city's billing lagged far behind other cities and would need a rate increase just to keep up.

But in a contentious 3-2 vote, the council voted to keep its rate the same, casting a cloak over what consultants say could be the only option the city has to keep its water fund, and the rest of the budget, afloat.

Enterprise funds like the city's water and sewer fund are built like businesses: They're supposed to raise their own revenues and pay for themselves.

But for years, Port Richey's fund has dug deeply into debt, according to a financial history compiled by Pete Schatzel, a consultant with the St. Petersburg accounting firm Wells, Houser & Schatzel, P.A.

Since 2002, the city's water fund has vastly overspent what it has earned, losing about $2.2 million — or about $690 per city resident. The fund has seen only two years of profits, including last year, which saw major operating cuts to the point where the city was, Schatzel said, "not spending money on anything."

Climbing water costs have been a problem for most cities, especially local governments that buy from regional supplier Tampa Bay Water. Many cities have changed their rates yearly to match the rising prices.

But Port Richey, which buys its water from Tampa Bay Water member government New Port Richey, hasn't changed its rate since 2002. The city buys a thousand gallons of water for $4.06, then sells it for $1.85. For every thousand gallons used by residents and business owners, the city loses about $2.

To residents, that may seem like a good deal. But when the water and sewer fund loses money, so does every other part of the city. When the fund lost $1.6 million between 2006 and 2008, the city — already in a state of financial emergency — advanced $1.03 million from the general fund to cover it.

"We're robbing Peter to pay Paul just to keep the water running," council member Terry Rowe said Tuesday. "That's not a good position."

Then there are the wells. Stewart said the well field saves the city about $30,000 a month, though the transmission lines are too small to handle the city's demand.

But for all its lukewarm production, the initial investment to fund the wells still haunts the city budget. The city pays debt service on the 2005 bond to the tune of about $400,000 a year.

That was enough to anger some council members who believed the city had been sold a multimillion dollar line — and now had nearly nothing to show for it.

"I sat here and listened to the BS from the well story," council member Nancy Britton said. "After the well story, and the money that was spent, I've got to say I don't know what to believe anymore."

• • •

To deal with the deep deficit in the city's water and sewer fund, Rick Crews, an adviser with the Southeast Rural Community Assistance Project, said the water rates should be increased by about 50 percent.

Officials crafted an ordinance that reflected that increase, though for most users the jump would not have been as big as it seems. Under the proposal, the average homeowner would pay a base rate about $1.30 higher per month and about 50 cents more per thousand gallons. Business owners would have seen their monthly rates double.

Mayor Richard Rober and Vice Mayor Steven O'Neill pointed to consultant reports that urged radical change to the city's antiquated system — a setup in which homes and businesses pay the same rate for water, and people who use lots of water face no extra charge.

But council members Rowe, Britton and Bill Colombo voted against the rate hike, arguing it would be another burden on citizens already strapped for cash.

"It's very disappointing. It's a very awful, awful time for this to happen," Britton said. "There's too many unanswered questions for what happened in the past and who can be held accountable."

During a late-night break called after the proposal failed, Stewart spoke off the cuff with Colombo on the utilities' problem spots.

The water infrastructure is old and includes 80-year-old rusty pipes, he said. The bare-bones budget means people hired to cut the grass are pulling double duty to read meters.

The system, he said, is like a "skeleton on two legs."

Failed plan for water independence adds to Port Richey's flood of problems 06/23/10 [Last modified: Wednesday, June 23, 2010 8:49pm]
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