ST. PETERSBURG — Residents can expect their water and sanitation bills to increase between $7 and $11 starting in October.
That represents an average of a 7-percent increase. Customers who use an average of 4,000 gallons a month, including reclaimed water, will see the higher increase of $10.96, said Eric Grau, a managing consultant with Stantec.
For those who don't have access to reclaimed water, rates will rise about $7.09.
The bad news was revealed at the Thursday meeting of the council's budget, finance and taxation committee. But to city officials the good news is that raising more cash now through higher utility fees will reduce what St. Petersburg needs to borrow to fix its outdated sewage system.
Last year City Council approved a consent order with the state Department of Environmental Protection pledging to spend $326 million to improve the sewage system blamed for the 2015-16 sewage crisis.
Compared with rates in other nearby cities, Grau said, the utility increase puts St. Petersburg on the higher end of the spectrum.
Tampa, which hasn't raised rates since 2011, remains the lowest. However, several council members, including Darden Rice, did not want to focus on comparisons with the biggest city in Tampa Bay.
"You're probably being very gracious by not pointing out that this morning Tampa City Council is sitting in a room just like we are discussing their ... budget deficit," Rice said.
Tampa's deficit, to be exact, is currently about $5 million.
"I like this room better," City Council member Charlie Gerdes replied.
Steve Kornell also agreed, calling it a bad comparison between the two cities.
The rate jump can be attributed to an increased contribution to the capital improvement program, which pays for various projects within the city, and the refinancing of a bond anticipation note.
Historically, water resources would cover 10 percent of capital needs with cash and debt fund the rest. But last year, Grau said staff was directed to ramp that cash number up to 50 percent and reduce the dependency on debt payments. That would save the city more than $300 million over 10 years.
"There is a real dollars and cents benefit longer term to increasing the cash funding of capital," Grau said.
Increases in water and sewage utility rates are typical nationwide, usually averaging 5 percent per jurisdiction, Grau. While St. Petersburg adopted rate increases below the national average from 2018 to 2017, "there's now a bit of catch up" as the city closes in on rates closer to the national average.
Residents can expect to see their utility bills increase about 50 percent between now and 2023. That means rates will rise about 10 percent each year for the next five years, a fact staff glanced over during the presentation but that Council member Ed Montanari later highlighted.
"I'm not sure if that's going to be financially sustainable for residents of St. Petersburg," Montanari said. "It's kind of a scary slide."
Council members also discussed the disproportionate impact utility increases have on those who make less, especially those living in poverty or on social security.
"There is a disproportionate impact among those who earn at the lowest income range," Grau said.
The median household income in St. Petersburg is $48,183. So the proposed utility rate increase will be about 1.9 percent of that household's budget. However, for a household making about $24,000, that number jumps to 4.1 percent of household income. At $14,000, it's 7.3 percent.
Grau pointed to options that could ease that financial pain, like the rebate program that offers incentives for those who install more efficient appliances. Customers can also choose to round up their monthly bill to the nearest dollar. The difference would go into a pot to provide temporary assistance to customers experiencing short-term hardships and face the threat of losing service.
In addition to raising rates for citizens, Grau said the city also plans to increase its wholesale rates. Gulfport is the city's only customer hit by increases to both water and wastewater prices, the first increasing 4.6 percent in October, the latter 21.6 percent. About a dozen other municipalities will see the 21.6 increase on wholesale wastewater, including South Pasadena, Treasure Island and Fort DeSoto.
"The key issues affecting these wholesale customers are increase in debt and capital," Grau said. "But also it's important to note each wholesale customer has the ability to mitigate those future increases if they take certain actions to tighten up their system."
A public hearing on the rate increases will take place on Aug. 23.