Commission Decides Against Increasing New Development Fees

By Mike Lednovich

The City Commission did an about-face Tuesday on funding improvements to the city’s aged water and sewage system and took no action to place the potential burden on developers for those improvements.

Last month, a consensus of commissioners supported a Florida Rural Water Association (FRWA) consultant’s Option B recommendation to raise water and sewer capacity fees on new homes from $3,280 to $10,040. The higher capacity fees would contribute to the city Utility Department paying off $2.1 million in debt that was used to maintain and expand the capacity of the water and sewer system.

Commissioners were told in July they were not collecting enough capacity fees to pay for replacement of key utility system components like master lift stations which cost $300,000 each.

The Option B fee increase was required to be instituted by a new ordinance, which came before the City Commission Tuesday for approval. But instead of voting to increase the fees, the city did nothing and moved to have a new resolution that would actually lower the fee.

“You are screwing the future generations by adopting this, you’re screwing the taxpayers by going to this,” Ross said. He maintained that taxpayers would be subsidizing new development.

Ross questioned Utilities Director Andre Desilet about the condition of the 45-year-old water and sewer system.

Fernandina Beach water plant.

“It’s getting to the end of its useful life. A lot of the (10) lift stations are 45 years old and the infrastructure is going to need to be replaced,” Ross said. “The new people coming in aren’t going to pay for it, but the people already here are going to pay for replacing that infrastructure over the next coming years. So essentially the current users (taxpayers) are paying for this.”

Desilet agreed, “Essentially, the funds have to come from somewhere.”Commissioner Chip Ross’ motion to raise capacity fees failed to garner a required second.

Mayor Bradley Bean argued that the city was still keeping the $3,280 capacity fee in place for developers.

“We are still…these new homeowners will come and before they start paying (utility) rates they will still pay this initial $3,000 fee,” Bean said. “By saying no to this (tripling fees) we’re still charging new owners to hook up to our system. That’s a good number.”

But in the July workshop, Bean said the commission had consensus on moving forward on FRWA’s Option B “so that’s what we’ll look to recommend.”

The consensus was reached after FRWA Consultant Katherine Van Zant told commissioners, “What you’ve done with existing capacity fees since 2015, you’re not getting sufficient money for the (system) capacity that people are getting.”

The capacity fee is a one-time charge to new residential and commercial buildings for connections to the water and sewer system. The fees are used to reimburse the Utility Department for the capital costs necessary to provide increased capacity to serve these new customers. In July, Van Zant said that capacity fees are designed to make it possible for new customers to pay their proportion of the system and the available capacity they use that has already been funded and provided in the system by city taxpayers.

Van Zant said. “What you’re doing is putting what you’ve already done and what you have on the back of current users instead of equitably providing for it to be paid for.”

Matt Meskimen of the Northeast Florida Builders Association told commissioners “we do not believe the fees recommended in Option B are proportional or reasonable and we would like commissioners to consider opposing or not voting on this.”

Now going forward, commissioners said they would consider a new capacity fee ordinance, FRWA Option A. Commissioner Darron Ayscue said he favored reducing the fee to $3,000. Ayscue did not object to the consensus on Option B.

“Option B (the $10,040 rates) says let’s stick it (this increase) on somebody else,” Ayscue said. “I have a philosophical problem with that. That’s why I favor Option A (lowering the fee to $3,000).”

Vice Mayor David Sturges, a home builder, also opposed the Option B rate increase and favored incremental hikes in the capacity fee. “I wish with inflation they had come with a little bit of an increase (every year) because it’s been seven to 10 years since we’ve had an increase,” Sturges said.

The commission instructed City Attorney Tammi Bach to come back with a resolution with Option A to be voted on for approval.

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Noble Member
10 months ago

The logic and reason of the COFB Commissioners here is elusive – they ignore advice and their own initial leanings to increase fees for new connections to reflect the cost of adding users to the system.

Not increasing the fees does not reduce the cost of operating the system – it only reduces the incoming cash to support it.

Most telling are the polar opposite positions taken by Asyscue:

“Option B (the $10,040 rates) says let’s stick it (this increase) on somebody else,” Ayscue said. “I have a philosophical problem with that. That’s why I favor Option A (lowering the fee to $3,000).”

and by Sturges:
“I wish with inflation they had come with a little bit of an increase (every year) because it’s been seven to 10 years since we’ve had an increase,” Sturges said.

So on the one hand we have a Commisisoner advocating a REDUCTION in a fee that has been flat for many years in the face of increasing costs….and another recognizing that the fees should have been increased over the years (but they have not been)

Whom exactly would be getting ‘Stuck” with the increased fees to add people to the system? Those that are responsible for driving up the costs – new connects – so how is that “sticking” it to them?

The City is going to plainly need additional funding for the renewal of the system – and the “developer-friendly” approach is passing more of it to exisiting users while all users will benefit.

And the sentiment expressed by Meskiman of the buiders association is nothing more than a selfish point of view that flies in the face of the facts from Van Zant – “we do not believe the fees recommended in Option B are proportional or reasonable and we would like commissioners to consider opposing or not voting on this.” Well who wouldn’t prefer to have lower fees?

The builders and developers in the area will simply add the increased fees (plus a mark-up) to the cost of projects passing it along to buyers. Crocodile tears for sure.

And given the difficulty in getting a local builder/remodeler to even return a phone call these days for new business, they don’t seem to be hurting

The Commissioners should do the right (and perhaps unpopular with builders) thing and raise the connection fees. It’s necessary. It’s timely. It’s responsible government.

Trusted Member
10 months ago

Recall that the city bought this utility, which placed it outside of regulatory oversight. It appears to be mismanaged like other city assets. Why haven’t the lift stations been managed over time? Is this the same fund that has been loaning money to the marina and golf course without any thought of repayment? Good questions for former mayor?

Active Member
9 months ago

Concerned, don’t forget the City issued Revenue Bonds for the purchase because they wished to by pass using General Obligation bonds as the mood of the city voters was not in favor of this purchase. Revenue bonds are a two edge sword, they come with an indenture to ensure they get paid back. Since the department included County residents in service area, the City by regs was required to get approval from the County to issue those which may have been “overlooked” in the rush to complete this deal. So, after 20 some years I guess the answer is where in the money now??

Robert Weintraub
Trusted Member
Robert Weintraub(@rukbat23gmail-com)
10 months ago

The developers got to Baby Bean and his cohorts

Noble Member
9 months ago

Name calling … not nice. I thought this was a site for adults.

Mark Tomes
Trusted Member
Mark Tomes(@mtomes)
10 months ago

These short-sided, one-sided, business-friendly policies eventually hurt all the citizens by postponing much-needed maintenance, shifting costs to taxpayers rather than the people who profit from new development, and reducing trust and faith in our government. This Republican Party obsession of ensuring maximum business profit at taxpayer expense is what is really killing our country. This particular vote will add another nail in the coffin to affordable housing, as well.

Richard Timm
Trusted Member
Richard Timm(@rtimm-ontheislandgmail-com)
10 months ago

This discussion ignores the gorilla in the room. The system will require a lot of money to maintain it, but it appears no one had the foresight to anticipate and provide the funds. I hope there is not enough new development to make a dent in the funding needed. While I feel the fee should be significantly increased (It is unacceptable that the city has not increased the fee for 10 years), the real question is where is the rest/most of the maintenance funding going to come from?

Noble Member
9 months ago
Reply to  Richard Timm

I think the problem is the City uses “profits” from the Water Dept. to subsidize operations elsewhere. I think the article and some of the comments are somewhat misleading. Water/sewer capacity fees on new construction should not be expected to by themselves fund replacing old lift stations and general obsolescence … as some writers point out this should have been anticipated and money reserved for this purpose. New construction did not cause these things to wear out. But the fees should certainly be set to cover any cost of expanding a system to accomodate their usage and the point that the fee has not been increased for 10 years indicates that someone is not doing their job. Not a surprise. Nor is it a surprise that one of your regular contributors manages to insert a negative reference to the Republican Party in his comment. THAT … THAT … is the obsession of which he writes.