Lynn Haven commissioners seek revised tiering and billing models after consultant warns fees unsustainable

Lynn Haven — City consultants told the Commission that the stormwater utility’s current revenues will not cover planned capital projects and operations unless the city raises fees or identifies other revenue.

Stantec, the consultant firm that prepared the update, presented two revenue scenarios and several fee‑structure options. “The status quo is unsustainable,” a Stantec representative said, summarizing a five‑year revenue sufficiency model that showed declining reserves under current rates. Stantec said one option would be a 70% single‑year increase; an alternative that uses surtax revenue would reduce the single‑year jump to about 50% while still keeping reserves stable and funding the capital plan.

The finance review committee and commissioners focused on how that revenue is collected and on how tiers are configured. “I did a bunch of math,” Commissioner Peebles said, describing analysis that led him to favor spreading residential customers across more tiers so middle‑range homeowners do not shoulder disproportionate increases. Davia Ashbrook, the Finance Review Committee representative, told the Commission the committee preferred the 50% scenario (paired with roughly $300,000 a year from surtax) and recommended either a reworked three‑tier system or a four‑tier system rather than the five‑tier structure Stantec initially showed. “We just felt the 50% would be better using the 300,000 from the surtax money,” Ashbrook said, and the committee urged small annual adjustments thereafter to build reserves.

Why it matters: the city needs steady funds to complete stormwater capital projects, maintain equipment and pay personnel. Stantec said the study targets a minimum reserve equal to three months of operations and maintenance to handle unexpected repairs. The proposed changes would rebase the billing unit (EBU) to an equivalent residential unit (ERU) defined in Stantec’s analysis at about 2,800 square feet of impervious surface (the city currently uses 3,700 square feet as its billing unit). That rebasing changes how many parcels fall into each tier and shifts bills for many customers.

Discussion highlights

- Fee levels and timeline: Stantec described two revenue paths that would sustain the utility over the next five years: a one‑time 70% increase in FY 2026 or a 50% increase combined with approximately $300,000 annually from surtax revenue. Commissioners and the finance committee favored the latter as less immediately burdensome to ratepayers.

- Tiering and equity concerns: Commissioners and the finance committee said the five‑tier configuration Stantec showed would increase bills for many mid‑range homeowners while reducing bills for some higher‑impervious parcels. The committee recommended spreading the burden differently so that parcels with substantially more impervious surface pay proportionally more and the midrange does not take a disproportionate jump.

- Vacant land: Commissioners, committee members and residents raised vacant parcels as a recurrent concern. Some residents and the finance committee said vacant lots should continue to be charged in some fashion; others proposed reduced vacant‑lot charges or incentives for on‑site retention. Commissioner Ward asked Stantec and staff to model alternative vacant‑land pricing (for example, lowering the current vacant parcel charge shown in some scenarios).

- Monthly billing vs. property tax roll: Several commissioners and residents raised whether the stormwater charge should remain on the property tax roll (the current method) or be placed on the monthly utility bill. Some speakers argued monthly billing would make the cost easier for fixed‑income residents to manage; others — including the Finance Review Committee — warned the operational and administrative burden would be large and could shift costs to renters. City billing staff said the city does not currently record impervious area on utility billing records and does not store property owner data in the utility billing system; converting to monthly billing would require a substantial systems and process change and advance preparation. The city’s tax collector fee for processing is subject to a statutory cap (discussed in the meeting as a limit to actual cost or 2%).

Commission action and next steps

Commissioners did not vote on rate levels at the meeting. Instead they gave staff and Stantec direction to return with additional analysis: Stantec was asked to model a four‑tier configuration that reduces the disparity identified by the finance committee and to re‑run scenarios with different vacant‑land pricing. City staff were asked to prepare a comparison showing the same revenue scenarios under (a) continued charging via the property‑tax roll and (b) monthly utility billing for residential accounts (with commercial billing calculated by ERU/impervious area), including estimates of administrative effort and transitional tasks. The Commission set a timeline for those comparisons to inform the next meeting’s budget discussions.

Quotes tied to meeting speakers

- Stantec representative: “The status quo is unsustainable.” - Stantec representative: the study seeks to “target that 3 months of O and M, which allows the city some breathing room.” - Commissioner Peebles: “I did a bunch of math.” - Davia Ashbrook, Finance Review Committee: “We just felt the 50% would be better using the 300,000 from the surtax money.”

What was not decided

No rate ordinance, fee schedule or formal vote was adopted at the meeting. Commissioners asked for more modeling and for staff to return with numbers before a final decision; a date for the vote was not set but staff said the timing affects the FY budget process and that staff would bring comparisons to the next meeting for direction.

Context and background

The city’s stormwater utility covers capital projects, operations and maintenance. Stantec presented a revenue sufficiency analysis and recommended aligning tiers with the mean impervious area so most parcels fall near the middle tier (an ERU defined in Stantec’s analysis at ~2,800 sq ft). The alternatives discussed ranged from keeping a recentered three‑tier system to adding four or five tiers for finer sensitivity on large‑impervious parcels. Commissioners and the finance committee emphasized equity among residential customers, special treatment or relief for vacant parcels, and the administrative implications of moving billing to the utility system.

Next steps

Staff and Stantec will return with: (1) a four‑tier revenue model that reduces the middle‑tier burden; (2) alternative vacant‑lot charge scenarios; and (3) a cost and process estimate for shifting residential stormwater charges to monthly utility billing and a comparable ERU‑based commercial billing model. The Commission said it will review those numbers before taking a formal vote.

Ending

Commissioners emphasized they intend to balance the twin goals of funding capital projects and protecting residents on fixed incomes; no formal rate change was adopted at the meeting.