ST. PETE BEACH — Reclaimed water rates are scheduled to increase almost 21 percent over the next two years and, for the first time, nonusers will be charged an "availability fee."
On Tuesday, the City Commission approved the rate increase in the first of two required votes. If the hike passes again at the commission's June 22 meeting, it will go into effect Oct. 1.
The rate increase was recommended by consultants several months ago as a way to stem the reclaimed water system's flowing red ink. By the end of September, the city would have loaned the utility about $400,000 to cover its operational and maintenance costs intermittently since 2001. "The reclaimed water system should support itself," Public Works director Steve Hallock told the commission. "The system has a zero cash balance. It is broke and bleeding cash."
Hallock gave the commission two choices:
• Raise rates 39 percent just for current and future users.
• Raise rates 21 percent for users while charging nonusers a $7.70 monthly availability fee.
Currently, reclaimed water users pay $11.50 a month, a rate that has not changed for 10 years.
Property owners are not required to connect to the system, a situation that will not change. Approximately 80 percent of city property owners are connected to the system — 2,205 single family homes, 920 multifamily units and 758 commercial properties.
However, if the selection rate schedule is adopted, the approximately 800 property owners who never connected to the system will be required to pay a fee for the ability to connect.
The new proposed rates for users will be $12.88 a month beginning in October plus another $1.03 per month beginning in October 2011, bringing the total new monthly cost for users to $13.91 (a 20.95 percent increase).
The new fees will enable the system to operate independently and begin to pay back the $400,000 loan from the general fund.
The selected rate increase will be phased in over two years with the bulk of the hike effective in October.
The reclaimed water system is the result of a 1992 referendum when voters approved borrowing $24 million from the state to construct distribution lines to every property in the city. The loan will be completely paid in 2016. The reclaimed water itself is produced by and purchased from Pinellas County.
Only Commissioner Bev Garnett voted against the rate increase, arguing that although she recognizes the need to increase rates, she is opposed to charging a fee to nonusers.
Vice Mayor Jim Parent said city officials think the new availability fee will encourage some of the present nonusers to connect to the system and discourage users from dropping out.
"We are just looking for a fair rate. We want to stop the bleeding and get the system back in the black," Hallock said.