Palm Coast staff recommends staged rate increases, bond financing to fund major water and wastewater upgrades

Palm Coast City Council heard a detailed utility rate gap analysis that recommended staged rate increases and borrowing to pay for upgrades to aging water and wastewater infrastructure and to meet regulatory requirements.

The presentation, led by Karl Cody and rate consultant Murray Hamilton, said the utility is near capacity in several areas and faces a Florida Department of Environmental Protection (FDEP) consent decree. Hamilton and staff proposed a four‑year rate plan beginning with an 8% adjustment, effective as early as April 1, 2025, followed by additional 8% increases starting each Oct. 1 thereafter through Oct. 1, 2027, then an annual CPI-based index thereafter; the council was asked to consider a “wrap‑around” bonding scenario that would smooth customer bills while funding projects.

Why it matters: City staff said the utility operates as an enterprise fund that must recover its own operating, capital and debt costs from user fees rather than from general tax revenue. Staff and consultants said existing rates and fees will not support major work the utility needs — including rehabilitation, conversion to advanced treatment and expansion of Wastewater Treatment Plant 1 — or the near‑term capital and staffing needs to maintain the system and comply with the DEP order.

Most important details: Consultants described three financing approaches and presented a recommended scenario (called scenario 3) that spreads debt service across system users to reduce near‑term bill shocks.…