Fort Pierce Utilities Authority adopts FY2026 budget, approves bond plan and bridge financing

The Fort Pierce Utilities Authority board on Aug. 5 adopted Resolution UA 2025-12 to amend the fiscal year 2025 budget and approve the FY2026 budget, authorizing staff to pursue debt financing and interim liquidity to fund a $103 million capital program and a $246 million combined FY2026 operating and capital budget.

The budget marks a shift the board described as pairing ongoing rate revenue for routine needs with municipal bonds for long-lived infrastructure. Michelle Harris, the authority’s chief financial officer, said, “50% of our capital budget for ’26 is grant funded and 20% of the entire budget is grant funded,” and warned that grant reimbursements require cash flow planning.

Board members approved the resolution by roll call (all voting members present voted yes). After the vote, the board directed staff to present the approved FY2026 budget to the City Commission and to move forward with preparations for financing and a short-term line of credit.

Why it matters: The budget funds near-term operations and a five‑year capital improvement plan that prioritizes wastewater conveyance work, a new substation and storm-hardening upgrades to the Energy Services Center (ESE). The adopted plan relies on a mix of rate-funded capital (about 56% of the FY2026 budget), grant reimbursements (the board was told grants will reimburse roughly $47 million in FY2026 and roughly $34 million are expected in wastewater projects), and proposed bond proceeds to spread the cost of large projects across current and future ratepayers.

Key details from the board presentation

- Totals and allocation: The FY2026 combined budget adopted by the board is $246,000,000 (O&M ~$143,000,000; capital ~$103,000,000). The electric system is budgeted to generate about $81 million in gross revenue; wastewater about $60 million; water about $33 million; gas about $7.5 million; and communications and other sources the remainder.

- Grants and revenues: The presentation said grant revenue recognized in FY2024 included about $25 million tied to wastewater plant work; FY2025 grant recognition was a little over $10 million; and budgeted grant reimbursements for FY2026 are expected to rise again (the presenter cited $34 million tied largely to wastewater). CFO Harris characterized grants as a major driver of the revenue picture and a stabilizing factor for the authority’s finances.

- Rate adjustments and assumptions: The budget incorporates the Florida Public Service Commission inflationary index of 2.23% in rate assumptions, with those increases effective March 1, 2026. The authority projects modest growth in unit sales and customer counts and built conservative revenue assumptions tied to those trends.

- O&M drivers and staffing: Purchases for resale (electric/gas supply) were identified as the largest O&M driver (about 38% of O&M). The budget includes a 3.5% annual performance adjustment for employees (budgeted at $709,000). Headcount remains essentially level at 291 budgeted full-time positions with 29 vacancies being reviewed before refills.

- Capital priorities: The five‑year CIP ($278 million shown for planning purposes) is focused on wastewater (about 46% of the five‑year plan), electric (about 31%), and systemwide priorities including storm hardening of the ESE, a new substation and conveyance work tied to the wastewater plant redirection. For FY2026 the board approved approximately $69 million of capital for wastewater, $14 million for electric, $12 million for administrative projects (including ESE work), and other smaller allocations.

Financing plan and timing

Board members discussed a proposed financing strategy to fund prioritized capital work without increasing rates above the PSC index. Staff described an earlier planning number of roughly $128 million in borrowing, then said leadership and the board asked staff to narrow the immediate issuance to an amount the authority can realistically spend within the near term. Staff proposed a municipal utility revenue bond issuance of $70,000,000 (the presentation noted an earlier $74,000,000 figure and that communications financing must be structured separately, with about $3.8 million for FPUA Communications subject to a shorter statutory term). A bond‑counsel and financial‑advisor review indicated the authority could take on approximately $90,000,000 of additional debt without exceeding the 2.23% indexed rate path; staff proposed $70,000,000 to avoid overborrowing.

To bridge timing and grant reimbursement delays, staff recommended issuing an RFP for a $10–$15 million line of credit to provide interim cash flow while projects begin and until a bond sale can close. Staff told the board it expects audited FY2025 financial statements will be required before finalizing a bond closing, which is likely to push a full bond issuance into 2026. The line of credit, if used, will be repaid from bond proceeds when the authority closes its long‑term financing.

Debt service and covenants

Staff presented a projected annual debt service profile that rises from current annual service of about $12 million to roughly $14 million in the first year after issuance and to about $16 million at the later peak shown in the plan. The staff-calculated debt service coverage ratio with the proposed issuance was reported as about 2.14, above the authority’s bond covenant minimum of 1.25.

Board discussion and concerns

Board members broadly supported the plan but questioned the timing, contingency planning and the mix of rate‑funded versus bond‑funded capital. Several members pressed staff on alternatives such as increasing rate‑funded capital temporarily to delay borrowing, and on how the authority would respond to catastrophic events or economic shocks after adding debt. Staff said the projects prioritized for immediate financing (wastewater conveyance redirection, ESE storm hardening, and a new substation) are mission-critical and would raise O&M costs if delayed. Staff also emphasized grant timing risk and the need for the line of credit to maintain days‑of‑cash and bond covenant compliance while awaiting reimbursements.

Direct quotes from the meeting

- “This year’s budget represents a significant evolution in how we approach long term capital planning and investments,” said a staff presenter during the budget overview.

- “50% of our capital budget for ’26 is grant funded and 20% of the entire budget is grant funded,” Michelle Harris, chief financial officer, said while reviewing revenue sources and grant impact.

- At the close of the session a senior staff member said, “I firmly believe we are charting a strong and promising course, for the future of this utility, one that ensures low cost and reliable services to our customers today and the generations that will follow.”

Next steps and follow-up

With the board’s approval, staff will present the FY2026 budget to the Fort Pierce City Commission on the next available agenda and will publish an RFP for a bridge line of credit. Staff indicated drafts of bond and reimbursement resolutions would return to the board for review and tentative approval before a final bond closing. The board’s next meeting on Aug. 19 was noted for strategic planning and further budget-related discussion.

Votes at a glance

- Approval of minutes (motion; mover/second not specified in record): approved by roll call (all voting members present voted yes).

- Approval of consent agenda (motion; mover/second not specified in record): approved by roll call (all voting members present voted yes).

- Resolution UA 2025-12, adopting FY2026 budget and amending FY2025 budget (motion; mover/second not specified in record): approved by roll call. Votes recorded as Yes — Mrs. Bennett; Mrs. Davis; Mrs. Gibbons; Mayor Mary Hudson; Mr. Fee (recorded as “reluctantly yes”). Outcome: approved.

(Authors’ note: motions and seconds were called but not attributed to individual names in the audible record.)

Ending: The board adjourned after director comments and noted the authority’s next public strategy meeting is scheduled for Aug. 19 at the Energy Services Center.