Fernandina stormwater improvements – “A more modest proposal”

Submitted by Mike Spino
November 16, 2015 6:00 a.m.

You have to give City Commission candidate Pat Gass credit for being audacious. Her recent proposal to increase the city stormwater fee from $48 a year to $600 is bold. It’s also onerous, inequitable, short sighted and disruptive.

In a recent interview published in the November 2, 2015 edition of the online NCFL Independent, Gass said “If people pay $50 a month we can begin building the process,” said Ms. Gass. “In less than five years we can generate the $20 million we need to do this.” (Click here for full story.)

The problem with Gass’ proposal is that it places the whole burden for the city’s stormwater issue on today’s residents and tax payers. The proposed capital improvements included in the city’s Stormwater Master Plan would require $17.8 million. According to city officials we have about 6,000 residences and 400 businesses in the city. Many pay the usual $4 a month fee but some pay $2 or $1 per month if they have their own stormwater management systems. The current stormwater fee raises about $270,000 a year. These funds are annually allocated for storm water management and improvements.

I know some of my neighbors struggle to make ends meet each month. Gass’ proposed $600 fee increase would cause tremendous hardship on some of our community’s oldest and neediest residents. Residents who use a minimal amount of city water could see their water bills double. Some city residents would pay more in water bills than real estate taxes.

A more modest approach would implement the stormwater capital plan over 25 years and allow taxpayers now and in the future to share the cost of these improvements. For example, if we doubled the current fee and used the additional $270,000 each year as debt service we could borrow $3.8 million for the first components of the Stormwater Master Plan with a 20 year repayment schedule. Over the next five years the city could make real progress toward fixing our stormwater management problem.

Because of the scale of the fee increase required and the issuance of bonds to fund the stormwater capital plan, a citizen’s committee of local finance and engineering experts could be appointed to monitor the work and the spending. The goal of the committee would be to assure that funds were used according to the plan and that work was done in a timely and prudent manner. Assuming the city utilities staff managed the first portion responsibly we would increase the fee again in five years and use it to back another capital issuance. This process would be repeated a total of 5 times so that the full plan could be accomplished in 25 years and the accumulated debt would be paid off in 40 years. Considering that the capital improvements will last at least that long it is a reasonable path to take. As each bond issuance is paid off the storm water fee would be reduced.

By managing the finances for the stormwater capital plan over time we can spread the burden and lessen the impact on residents. This is not to diminish the impact on some households of the extra $4 a month fee. We know from experience that for some folks the cost will be keenly felt. But phasing in fee increases over time is much more manageable on households than blowing a $600 hole in a family’s budget.

As I have said in these pages before for over 200 years American cities and states have used bonds to finance public works such as schools, water and sewer projects, libraries, bridges and highways. Financing public works projects allows the citizens that use them to pay for them over their useful life. Rather than burden current city residents with the full cost of stormwater management improvements we can spread the burden over 25 or more years so that future residents pay their fair share.

The city of Fernandina Beach has no operating debt and our capital borrowing is well within public finance recommendations. Public borrowing for major capital improvements is a time-tested and responsible tool for local governments. If we are serious about dealing with our storm water issues then we need to think about using the stormwater fee to leverage capital borrowing to get the work done.

Editor’s Note: Mike Spino is a retired budget official from the State of Ohio. Mike worked as a budget analyst and senior budget analyst for the Ohio Office of Budget and Management from 1985 – 1999. While at OBM Mike helped to create and implement the school district fiscal emergency provisions and the Ohio School Facilities Commission. Mike also served as Chief of Staff for the Ohio Department of Education from 1999 through 2002. Mike holds a Masters degree in Public Administration from the Ohio State University. Mike and his wife have lived in the historic district of Fernandina Beach since 2006.