Ocala consultant recommends 5% annual water and sewer rate increases, higher impact fees; hearings set in June

Murray Hamilton, a vice president with consultant Reftellus, told the Ocala City Council at its April 29 work session that the city’s water and wastewater utility needs new revenue to cover projected capital projects and operating costs and recommended a package of rate and fee changes, phased over the next five years, with public hearings planned in June.

Hamilton said the study, which updates the city’s last rate study and looks out to fiscal 2030, recommends annual increases of 5% to monthly base and volumetric water and sewer charges through fiscal 2029 and an annual index in 2030 tied to a water and sewer maintenance-services index (not less than 4%). He also recommended a commercial “true up” (about $0.11 per 1,000 gallons for a typical commercial account, phased in over five years) and an update to development impact fees, with increases limited by recent changes in Florida law and phased in where required.

The recommendation matters because the city’s five-year capital improvement program (CIP) that the study incorporates includes roughly $116 million in investments, with Water Treatment Plant No. 2 alone estimated at about $50 million and roughly $25 million in master-plan improvements. Hamilton said those long-lived assets and planned staffing additions will raise operating costs and that the city should consider long-term borrowing, including the Florida Department of Environmental Protection State Revolving Fund (SRF) loan program, to spread repayment. Hamilton noted SRF loans allow drawing construction funds over project life and said the first SRF repayment for the proposed WTP No. 2 would not be due until about 2030, which gives the utility time to phase in rate adjustments.

Key recommendations and figures

- Annual rate path: 5% increase to minimum monthly base charges and volumetric charges each year through fiscal 2029; consider an annual index (min. 4%) beginning FY2030. Hamilton said, “We’re recommending a 5% increase in those charges each year over the 4 year study period.”

- Commercial true up: Hamilton recommended adjusting commercial rates toward cost of service, producing roughly $1 million in additional revenue by FY2030; he described the adjustment as approximately $0.11 per 1,000 gallons for a typical commercial account and estimated most commercial accounts would see average bill increases of about 6%–6.5% during the implementation period.

- Development (impact) fees: Current water impact fee shown in the study is $823 per equivalent residential unit (ERU) with a calculated cost near $1,800; current wastewater fee $3,148 with a calculated cost near $5,300. Because of recent Florida statutory changes Hamilton said the city is limited to no greater than a 50% increase in those charges; the consultant’s recommended amounts (reflecting that cap and a phased implementation where required) were $1,235 for water and $4,722 for wastewater. State rules require any increase above 25% to be phased in over four equal annual installments.

- Miscellaneous charges: The study identifies numerous service charges the utility is not currently collecting or is collecting below cost. Examples: customer-requested disconnect/reconnect trips (staff reported more than 3,000 work orders in a year) and manual rereads (more than 2,000 work orders yearly). Recommended fees include a $65 trip charge during business hours for disconnect/reconnect and a higher after-hours charge; meter test charges would be set at actual cost rather than a flat $60; increased deposits and minimum monthly fees for hydrant meters were also recommended.

- Wastewater and other capital: The consultant suggested considering the wastewater SRF program for roughly $7 million of borrowings (with repayment possibly deferred to about FY2031) and noted northwest Ocala modeling and improvements around FY2027–28 totaling about $6 million; Hamilton recommended using discretionary reserves to smooth short-term rate impacts for those projects.

Council questions and staff clarifications

Council members pressed staff and the consultant on implementation details and customer impacts. A presiding official asked why manual rereads still occur; staff said the system transition to remote, cellular reads will reduce the need for physical rereads but that disputed reads still require field visits for some older, manually-read meters. Council members also discussed practical billing changes to avoid frequent disconnects for low-income customers (for example, changing billing dates to better match pay cycles) and whether licensed plumbers should be permitted to operate curb stops in some circumstances to avoid double charges for customers when a plumber is already on site; staff said the ordinance will be clarified to define tampering and allow coordinated work when appropriate.

Several council members questioned the idea of a separate recurring private fire-protection fee for customers who already have commercial service; Hamilton explained the fee is intended to reserve system capacity for high-volume fire flow and to cover related system maintenance and capacity costs. Staff and council discussed limiting a separate fire-line fee to connections that are fire-flow only (not those already taking normal service through the system). The study estimated about 62 existing fire connections and roughly $100,000 in potential revenue from the proposed fire-related fees; staff noted that many of those accounts already pay other system charges.

Process and next steps

Hamilton said the consultant has met with the Utility Advisory Board and individual council members, and that the city will include required disclosures with utility bills in May and hold public hearings: a first reading and public hearing on impact fees and miscellaneous-charge ordinances on June 3, and a second public hearing and final reading on June 17 (the ordinance structure requires two readings where applicable). Hamilton said the rate resolution reflecting the 5% annual adjustments and new miscellaneous charges would be considered in the same process and, if adopted, the proposed rates would go into effect in October. He recommended at least 90 days’ notice before implementing increased impact fees.

What the council did not do

No formal motions or votes were recorded during the work session. Council members asked for additional information (including a consolidated list of impact-fee amounts across recent and proposed fee changes) and staff agreed to provide those details ahead of the public hearings.

Sources and attributions

The account above is based solely on the April 29, 2025 Ocala City Council work session presentation and the subsequent council discussion. Direct quotations in this story are from Murray Hamilton of Reftellus.