During the last six years, Dunedin should have collected almost $700,000 more in stormwater utility fees from commercial properties than it did. City commissioners voiced their outrage about that Thursday night, no doubt dreading the decision they now must make about whether to collect what the city was owed. But there was no one they could hold accountable - the previous city administration is responsible for this expensive error.
Because the mistake was missed for so many years, commissioners said they now have no confidence in the revenue projections and billing and collections processes in their city utility funds. So they will take the appropriate step of hiring auditors to conduct a thorough examination of all the funds. And they wisely delayed a decision that was scheduled for last week on increasing the stormwater fee, uncertain now how much to increase the fee, if at all.
The problem began in 2003, when city commissioners increased the fee $1.50, to a total of $4.50. The $1.50 increase was levied on residential property owners, but for some reason - perhaps a misplaced decimal point - the rate for commercial property owners increased only 15 cents. And no one noticed.
In 2005, the city raised the rate again, to $6. But the increase mistakenly was applied only to residential properties. Commercial property owners got no increase, continuing to pay $3.15.
For six years, the mistakes were not caught - not by staffers in the utility department or their supervisors, not by the city budget director or finance director, not by the city manager, not by the firm that audited city accounts each year, and not by the consultants regularly hired to examine the city's rate structure.
A few city commissioners, present and past, did notice that the revenues being collected from stormwater customers weren't as much as the staff and consultants had projected. But when they asked why, the city staff always offered an explanation or theory that seemed believable.
Only days ago, the reason for the problem was discovered - by the city's interim finance director, Annette Stahura. She calculated that the mistakes meant the city had failed to collect $694,420 from the city's approximately 600 commercial properties. City Manager Rob DiSpirito, who, like Stahura, has worked for the city only since 2007, delivered the bad news to city commissioners early last week and announced it to the public during Thursday's commission meeting. By that point, commissioners were wound up.
"I am just disgusted," said Commissioner Dave Carson. "Can you imagine if we had overcharged and had to start issuing refund checks?"
"It shakes the foundation of confidence by our citizens in what we are doing," said Mayor Dave Eggers.
"I am very concerned there were no checks and balances," said Commissioner Julie Bujalski, adding that the city's many rate studies, done by consultants, "are not worth more than the paper they are written on."
Stormwater fees are used to pay for maintaining and improving the mostly underground systems that collect and channel rain runoff and prevent it from flooding homes and streets. Dunedin's stormwater utility is set up to be an enterprise fund, like water and sewer, meaning that the users are supposed to pay the full cost of the system. But the city kept its fee too low for years and had to supplement the fund with Penny for Pinellas sales tax dollars to build stormwater projects. Still, the list of needed projects grew and flooding by rainwater remained a problem. Had the proper amount of money been collected, the city could have done more projects and improved the situation.
When the problem was caught, DiSpirito told his staff to immediately implement the proper $6 rate for commercial properties, so the next bill those owners receive will be almost double what they have been paying.
Still undecided is whether the city can or should try to collect the money commercial owners did not pay over the past six years. There are arguments against doing so: The mistake was the city's fault, and this is a terrible time to burden businesses with higher bills. However, residential property owners have been "toting the rock" for the commercial owners, as Eggers put it, for six years, and there is a basic unfairness there. Commissioner Ron Barnette suggested that perhaps the city could prorate the underpayment on future commercial bills. "The truth needs to be spoken," he said. "People were underbilled."
Commissioners said they want to see the result of the upcoming audit before taking any other action. If there is a silver lining in this debacle, it is that Dunedin now has a staff with the competence to discover the problem and the openness to address it with their bosses and the public.