Fernandina Beach sets new utility capacity (impact) fees

Submitted by Suanne Z. Thamm
Reporter – News Analyst
February 18, 2015 4:00 p.m.

With neither a bang nor a whimper—and not even one question or voice of opposition from the public–the Fernandina Beach City Commission (FBCC) unanimously adopted on second and final reading new utility impact fees for the city of Fernandina Beach. It took the FBCC just shy of 6 minutes to pass Ordinances 2014-35 (sewer fees) and 2014-36 (water fees) during their February 17, 2015 Regular Meeting.

City Manager Joe Gerrity asked Eric Grau, Burton & Associates spokesman, the same question preceding the FBCC’s vote on each ordinance: Does the proposed rate meet both prongs of the dual rational nexus test? In both cases, Grau, who had conducted the study upon which the new rates were calculated, explained how the test would be met by the new rates. He said:

The first prong states that the fee must be proportionate to the benefit received by the new connection to the [utility] system. That was satisfied by the [Burton & Associates] capacity study conducted in accordance with state statutes and case law.

The second prong requires that the revenues generated by those fees must be used to fund the assets benefitting the new connection. That was satisfied by the second [Burton & Associates] study, a revenue sufficiency analysis, where we showed in ten-year financial planning and forecasting that the revenues generated by the fees go to separate accounts and are used solely for that portion of debt service related to the expansion of water and sewer systems. And for our forecast, in no year does the revenue generated by the capacity fees ever exceed the expansion related portion of the debt service.

Vice Mayor Johnny Miller asked city Utilities Director John Mandrick if he agreed that the proposed rates met the dual rational nexus test. Mandrick replied, “Absolutely, Commissioner. I believe that very strongly with the studies that have been done. I commend the professionalism of Burton & Associates. I couldn’t feel more strongly about [satisfying the test requirements], and have the utmost confidence in it.”

The commission passed both ordinances unanimously and with no further discussion. Due to a minimum of 90 days’ notice requirement, the new rates will not become effective until late spring.

Although the FBCC had latitude to set lower fees than the 95 percent recovery rate recommended by Burton & Associates, they did not choose to publicly debate the issue, settling on the recommended rates:

• Sewer formula: $2,321 x ERU (1 ERU is 300 gallons per day)
• Water formula: $959 x ERU (1 ERU is 350 gallons per day)

The 2015 combined Fernandina Beach system capacity, or impact, fees of $3,290 will be lower than combined rates of both Nassau-Amelia Utilities ($4,133) and JEA ($3,308.50).

Editor’s Note: Suanne Z. Thamm is a native of Chautauqua County, NY, who moved to Fernandina Beach from Alexandria,VA, in 1994. As a long time city resident and city watcher, she provides interesting insight into the many issues that impact our city. We are grateful for Suanne’s many contributions to the Fernandina Observer.