DeLand commissioners back phased-in stormwater rate increases to rebuild reserves

City of DeLand commissioners on Wednesday signaled support for a phased-in increase to the city’s stormwater utility rates, directing staff and consultants to proceed with a multi-year approach intended to restore reserves, pay for vehicle replacements and fund priority capital projects.

The decision came after a presentation by Tara Hollis, a consultant with Willdan Financial Services, who outlined two rate scenarios: a “just-in-time” approach with larger, irregular increases when needed, and a phased-in plan that spreads increases over several years. Hollis said the city should target a minimum unrestricted reserve of $1,000,000 and that the city’s beginning reserve for Oct. 1 was estimated at about $722,000.

Hollis said the city’s five-year capital improvement plan (priority 1 and 2 projects) totals about $3.7 million, with infrastructure projects at roughly $2.6 million and vehicles and equipment slightly over $1 million. “We want to make sure that you’re generating enough revenues to cover all of those operating the day-to-day operating needs as well as long term capital needs,” Hollis said.

The consultants presented two models: the just-in-time scenario, which would produce a roughly 19% increase in the first year and a monthly EDU (equivalent drainage unit) rate rising from $10.88 to about $13.02 per EDU; and a phased-in plan that spreads increases (roughly 15% in year one and year two under the illustration) to reduce near-term bill shock. Hollis noted both scenarios assume no new debt and that the utility would use pay-as-you-go financing for capital purchases.

Commissioners raised concerns about the effect on downtown property owners and other commercial parcel holders, who pay under the city’s general-parcel (nonresidential) category and often have multiple EDUs. Commissioner Dan Reed said, "to go from 10 to 15 is a 50% increase for us in 3 years. That's a lot." Several commissioners said a phased-in approach would be easier for residents and businesses to absorb.

Brandi (staff) clarified billing procedures for commissioners’ questions: the city does not disconnect water for unpaid stormwater charges; instead, the city typically places a lien on the property for unpaid stormwater fees. "We don't disconnect for storm water," Brandi said. She also explained that stormwater is billed monthly to property owners who are water and sewer customers and annually to owners who are not customers; tenants generally do not receive a separate stormwater charge on their monthly utility bill.

Commissioners also discussed the uncertainty around grant-funded projects identified in pending county studies and the potential need for local match funds. Commissioner Kevin Reed noted grant matches and said the city should aim to have some match funds available. Hollis said the recommended $1,000,000 minimum reserve would help cover match requirements and unanticipated projects, and that some grants could require local matching funds.

After discussion, commissioners expressed a clear preference for the phased-in rate approach and asked staff and the consultant to refine the fund-balance assumptions and prepare the draft rate study report and ordinance language for the required two public hearings before rates would take effect Oct. 1. No formal vote was taken; staff will return with ordinance readings and the finalized documentation for commission action.

For reference, the consultant described the city’s EDU methodology: a typical EDU equals 3,100 square feet of impervious surface; single-family residential is tiered (small/medium/large/very large) based on building footprint plus driveways and other impervious areas; condominium units are allocated EDUs based on total impervious area divided by parcels; and the city applies mitigation credits that reduce EDU counts for properties that maintain stormwater features.

Commissioners asked for a more detailed breakdown of revenue impacts by parcel type under the chosen scenario and asked the consultant to analyze whether the proposed fund balance could be slightly reduced if grants and project timing provide additional flexibility. The consultant said she would include fund-balance detail in the draft report and provide the financial model for staff use.