City Council considers new utility rate plan to increase revenue by $1M

The Ocala City Council convened on April 29, 2025, for a work session focused on a comprehensive water rate study. The meeting aimed to address the financial sustainability of the city's water utility system and explore potential adjustments to water rates and development fees.

The session began with a presentation outlining five recommended strategies to enhance revenue generation within the utility system. The first initiative discussed was a cost of service review, which highlighted that irrigation customers currently pay a premium for discretionary water use. This tiered pricing structure encourages conservation by charging higher rates for increased usage.

A significant recommendation from the study was the implementation of a "commercial true-up." This adjustment aims to align commercial water rates more closely with the actual cost of service. Currently, commercial customers pay approximately 83% of the average system cost, which is about 56 cents less per 1,000 gallons than residential users. The proposed adjustment would increase commercial rates by about 11 cents per 1,000 gallons over a five-year period, resulting in an estimated additional revenue of $1 million by fiscal year 2030.

The council also discussed updating development impact fees, which are charges imposed on new developments that increase demand on the water system. The current fee for a new residential connection is $823, while the calculated cost is nearly $1,800. For wastewater connections, the current fee is $3,148, with a calculated cost of approximately $5,300. Due to recent changes in Florida law, any increase in these fees is capped at 50%, with a recommended new charge of $1,235 for water and $4,722 for wastewater.

The meeting concluded with a consensus on the importance of these adjustments to ensure the financial health of the water utility and to prevent existing customers from bearing the costs of growth. The council plans to further evaluate these recommendations and their implications for the community in upcoming sessions.