Dunedin officials weigh phased water, sewer and reclaimed-rate increases to cover rising costs

DUNEDIN, Fla. — City staff and consultants told the Dunedin City Commission on May 6 that rising operating costs, large planned capital projects and existing debt have created a revenue gap in the city’s water and wastewater enterprise fund and that customers will likely face phased rate increases to restore long‑term financial sustainability.

At a workshop presentation, Raftelis consultant Terry Bovary summarized a 10‑year revenue sufficiency review and recommended a two‑year phase‑in of higher rates, an increase to reclaimed‑water charges and a policy target of roughly $9.5 million per year for capital reinvestment to keep the system funded over the coming decades.

The study matters because Dunedin operates water and sewer as an enterprise fund, meaning user fees must cover all operating costs, debt service and capital needs. Consultants told commissioners the city faces above‑forecast operating cost increases since 2019, a concentrated slate of capital projects in the near term, and a technical shortfall that requires action to meet minimum debt‑coverage tests in fiscal 2025.

Terry Bovary, the Raftelis presenter, said the firm used the city’s operating budgets, asset records and the capital improvement program to estimate replacement needs. Bovary said the city’s recorded original cost for utility assets is about $161 million, which inflates to roughly $382 million when adjusted for current replacement‑cost assumptions. Amortizing that replacement cost over long planning cycles produced an annual planning allowance the firm set at about $9.5 million.

“Utilities are very capital intensive businesses with nonlinear investments,” Bovary said during the…