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Port Richey back to drawing board on water and sewer rates

PORT RICHEY — City officials thought they'd solved the problem.

After years of hemorrhaging money from the utility fund, the City Council raised the rates in July 2010 for its water and sewer customers. The rates would finally put the utility system in the black, with the added perk of encouraging conservation by charging higher fees to heavy water users.

But the solution created its own problems.

The new rates packed a wallop for mobile home parks — some of Port Richey's largest utility customers — because dozens of residents shared one meter. Their combined water use put them in the most expensive rate category, and their bills more than doubled. As angry residents complained, officials backpedaled and put five mobile home parks back on the old rates until they could re-examine the fees.

Then the issue went on the back burner as the council fired its city manager and lost its resident utility expert, Mayor Richard Rober, to resignation over tax fraud.

The new city manager, Tom O'Neill, inherited the mess when he took office earlier this year. The new rates had the utility department breaking even, but the city wasn't collecting enough additional revenue to plan for much-needed upgrades to a system where some components are 80 years old.

Moreover, the "temporary" break to mobile home parks had continued for a couple years, with no end in sight — depriving the city of nearly $500,000.

"The issue right now is, we have a problem," O'Neill told the Tampa Bay Times. "We need to move forward and fix it."

So, over the summer, he declared the problem an emergency, bypassing the usual competitive bidding process, to bring another consultant on board. Now, just two years after the city updated its utility rates, an entirely new schedule is in the works.

• • •

Like most government agencies, Port Richey has rules requiring officials to shop around and get council approval before major purchases. The previous city manager, Ellen Posivach, lost her job last year after council members said she ran afoul of those rules. An audit found she purchased a $35,000 emergency replacement device for the water system without council approval, and staff paid a contractor more than $25,000 for a communications tower without getting bids from competitors who might have had a lower price.

"Large purchases are being made without being let out for public bid," wrote the city's auditor, Judson Baggett. "The City Council and taxpayer have no way of knowing if the contract prices are fair and reasonable."

But O'Neill said he had good reason to skip the bid process when he hired Burton & Associates to re-examine the city's utility rates.

He said the city faced a twofold emergency: Officials didn't know how much to charge the mobile home parks, and they needed money to fix aging pipes in danger of collapse. The city manager also said Burton & Associates had the right credentials and experience. O'Neill, who worked in New Port Richey's public works department for more than three decades before his brief stint as city manager there, said the firm had done excellent work for that city as well.

In March, he hired Burton on a $10,000 emergency contract to review Port Richey's current rates. Then he requested an additional $27,000 from City Council earlier this month for the firm to draw up new rates.

"I liken it to having a heart problem," O'Neill said. "You don't try to find the cheapest cardiologist when that happens. You find the best possible person you can to do the job. I have the full confidence that Burton & Associates will do the professional job we need."

Council members approved the expense.

"For me the point is to move forward with the study to see what customers should equitably be paying," said Vice Mayor Bill Colombo. "I wish it could have been started five months ago, but that didn't happen."

Council member Terry Rowe cast the only vote against the study, saying the city should have gone to bid or reached out to the free service that provided the 2010 rate study.

"Whenever we are spending that kind of money, I like to see it go out for bid," Rowe said. "And if there's a chance that we can get services for free, I think that should be looked into as well. But that's not the direction the council went."

• • •

Yes, the 2010 study was free.

The Southeast Rural Community Assistance Project is a federally funded, nonprofit organization that provides free services to small communities for their water programs. By 2010, Port Richey's utility fund had lost $2.2 million from insufficient water and sewer rates that had been in place since 2002 — the largest factor in state officials declaring the city in a financial emergency.

The city asked Southeast RCAP for new rates to stop the bleeding.

And it worked, said Southeast RCAP specialist Rick Crews, who did the study. He said he told council members at the time that his plan did not provide additional revenue for system upgrades.

"Their priority was to get the systems back into the black, and that's what I did," Crews said. "When it came to capital improvements and maintenance, I told them that would be something to look at down the road."

Crews said he also told the city that it needed to install individual meters on each mobile home to ensure they're charged the appropriate amount, instead of having entire parks on one meter. But that never happened.

For most homeowners, the city's rates are on par with neighboring systems: A customer using 4,000 gallons a month pays $49.66 for water and sewer service in Port Richey, compared with $42.63 in New Port Richey and $51.13 on Pasco County utilities.

The problem is the disparity for mobile home parks. The fees approved in 2010 charge progressively higher rates as water use goes up. Senate Manor, for instance, has 395 lots on a single meter. Under the old rates, which remain in effect for mobile home parks, its bill last month was $4,541. Under the rates approved in 2010, it would've been $7,764.

O'Neill said the city needs new rates so it can properly charge mobile home parks and raise money for system repairs.

He said he consulted with Southeast RCAP first, but the nonprofit could not complete a study with the same detail as Burton.

"They do excellent work all around the country. But their mission is to provide aid for rural communities," he said. "We're a small city, but we really aren't what you would call a rural community. Our water and sewer system needs to operate like a professional business with standards in line with water systems throughout the Tampa Bay area."

So what will this new study mean for residents' water bills? It's too early to say. Burton & Associates has 120 days to perform the rate study, then City Council will review the findings. The council would hold public hearings before voting on any changes to the rates.

"I don't want people to necessarily see this as a coming rate increase," O'Neill said. "Some rates may go up, some may go down. That's what we need to find out so that it's equitable for everyone."

Port Richey utility rates

The city's rates include a base monthly fee plus a charge based on the amount of water and sewer use, with seven tiers that charge a higher price to heavy users. The goal is to encourage conservation, but the high rates pack a wallop for mobile home parks, where dozens of homes are on a single meter.

Port Richey water rates

Base charge$9$21
Usage rates

(per 1,000 gallons)
0-3,000$2.10 $5.60
> 57,000$5.65$10.90

Port Richey sewer rates

Base charge$15.50$19
Usage rates

(per 1,000 gallons)
> 57,000$14.50$14

Source: Burton & Associates' water and sewer rate review

Port Richey back to drawing board on water and sewer rates 10/27/12 [Last modified: Saturday, October 27, 2012 12:06pm]
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