Golden Gate water most expensive in Southwest Florida

Golden Gate water customers pay the highest rates in Southwest Florida, following a 14 percent rate hike by Florida Governmental Utility Authority. As of July 1, the average bill for a 6,000 gallon user on water and sewer in Golden Gate city jumps from $118 to $133 per month, compared to $55 in the City of Naples and $81 for Collier County users.
“Our residents are already suffering from a bad economy. Many have lost their jobs and are facing the loss of their homes,” said water customer Bill Combs, who also serves on the FGUA citizen advisory committee. “We just gave you (an increase) for operations and maintenance, now we're hit again with a 14 percent increase?”
This is FGUA's second major increase in less than two years. In September 2008, customers were hit with a 7.5 percent rate increase.
The utility, which serves the four-mile square of Golden Gate city, is one of four owned by FGUA, which was formed in 1999 through an Interlocal agreement between Brevard, Lee, Polk, and Sarasota counties. A member from each participating agency sits on the FGUA board. Because Collier County did not own the Golden Gate system, it chose not to participate, leaving Golden Gate customers with no representation on the FGUA board.
“Your rates are high, we can't say they're not,” said Robert Ori, of Public Resources Management Group, a utility management consultant hired by FGUA. “Golden Gate is not alone. Systems all across the state are suffering from falling trends in growth and sales.”
But Golden Gate stands alone in its rate costs, which far exceed those of all other cities and counties in Southwest Florida. As of September 2009, the utility served 3,337 water accounts and 2,139 sewer accounts. Because the system was never built out, many homes in Golden Gate city are served by well and septic. That means the brunt of the utility's losses and debt fall on a small customer base.
In his findings and recommendations outlined during a public hearing, June 16, in Golden Gate, Ori stated the utility is suffering from $36 million debt, loss of customers and an 11 percent decrease in consumption. The final rate increase was approved, June 17, during the FGUA board meeting in Fort Myers.
Under current Florida law, FGUA's board has the ability to approve its own rates without oversight by the Florida Public Service Commission or the Collier County Water and Wastewater Utility Authority.
The only recourse for Golden Gate customers is a clause in an interlocal agreement with FGUA, allowing Collier County staff non-binding review of FGUA rate increases. According to Jamie French, director of Operations and Regulatory Management for Collier County, his office received some information, but did not receive enough data to adequately review the rate hike.
“We did not receive all the information FGUA presented for this meeting,” said French, who attended the final rate hearing. “Some of the numbers presented to the board, Collier staff had never seen before.”
French said it typically takes takes a minimum of 90 days or at most 30 months to review a rate case under National Association of Regulatory Utility Commissioners (NARUC) regulations, but FGUA is considered a government utility and not subject to NARUC guidelines.
In his presentation, Ori stated the rate adjustment was necessary to meet the debt service on the utility's $36.3 million debt and offset losses in customer base (down 350 customers) and an 11 percent drop in consumption.
Over 49 percent of the utility's $6.2 million budget for 2010 is tied to debt. Another 43 percent to administation and operations and only .96 percent to capital projects and 1.6 percent to professional services. Administrative services for the public-private entity are contracted to Government Services Group and operations are contracted to Severn Trent.
Ori said with three months remaining in the 2009-10 fiscal year, the utility needs a 7 percent increase to meet its bond covenants and break even. He said by setting the rate at 14 percent now, the utility will be able to build some working capital and avoid a request for an additional 7 percent, three to five months from now.
When asked what has been done to lower administrative and operating costs, Government Services Group municipal services director Stephen Spratt said his company voluntarily froze its fees in 2009.
He said Severn Trent, the contractor for operations and billing services, declined requests to renegotiate any reductions in its contract, stating costs had been fixed for five years. In 2006, Severn Trent negotiated a $74 million five-year contract with an additional five year option to operate and maintain FGUA's four water and wastewater systems. That contract comes up for renewal in 2011.
Spratt said several proposed projects have been canceled or deferred for the Golden Gate utility. He said the only project not deferred was the expansion of the wastewater treatment plant, which had been flagged by the Florida Department of Environmental Protection for operating over capacity for several years.
According to Spratt the utility plans to continue talks with Collier County to discuss a buy-out or ways the two entities can work together. It would cost the county more than $36 million to purchase the Golden Gate system from FGUA.
“With that kind of debt, it doesn't seem like they'll every get out from under it,” said water customer Ed Rogan, who also serves on the FGUA Customer Advisory Board. “Sounds like I should just drill a well in my yard and disconnect from their system.”


Water/Sewer rate comparison (high to low) monthly charge on 6,000 gallon usage:
FGUA Golden Gate system, $130

Marco Island, $112

City of Ft. Myers, $108

FGUA Lehigh system, $105

City of Cape Coral, $100

Bonita Springs, $83

Collier County, $81

Lee County, $72

City of Naples, $55