Utility commission reviews 2026 rate study recommending phased rate hikes and $125M revenue bond for wastewater plant

Chairman Burton presided as the City of Vero Beach Utility Commission heard a presentation on a 2026 bond feasibility and rate study that recommends issuing roughly $125 million in revenue bonds to help pay for an expanded wastewater plant and elevated operating costs.

The consulting firm (Raftellus) told commissioners that post‑COVID operating costs and a later construction schedule have pushed capital needs higher: the utility’s five‑year capital improvement plan now totals about $200 million, with roughly $164 million tied to the new wastewater treatment plant. The firm said it was working with the city’s financial advisor, PFM, and proposed issuing about $125 million in revenue bonds, with projected average annual debt service of roughly $8.6–$8.7 million once bonds are in place.

"There's nearly $89,000,000 of additional expenses that we're trying to get rates to help fund," the presenter said, describing a multi‑year revenue path to make each system self‑sustaining.

Why it matters: The study would raise customer bills materially to cover both the plant and higher ongoing operating expenses. The consultant said the utility now has roughly $28 million in combined revenues and will need phased increases to reach long‑term coverage targets; it recommended maintaining a minimum unrestricted cash balance (about 180 days, or roughly $10 million) to improve bond market reception and borrowing costs.

Key recommendations and timing: The consultant proposed phased rate adjustments, showing wastewater increases of about 15% this coming October and another 15% the following October, followed by smaller increases (10% and 5%) in later years. Water rates were shown with larger near‑term operating adjustments (about 10% and then 7.5%), and reclaimed water rates were also increased in the model. The firm recommended a public hearing, ordinance readings and customer notifications over the summer to allow changes to take effect October 1 if approved.

On PFAS and regulatory risk: Staff and consultants flagged potential additional costs to address PFAS treatment. "You're probably looking at a $15,000,000 to $20,000,000 investment that we will have to make to solve the PFAS problem," Wastewater and Sewer Director Bridal Bolton said, adding that the precise approach (granulated activated carbon, ion exchange or reverse osmosis) and timing depend on forthcoming federal rules.

Commission questions and follow up: Commissioners asked whether the firm had broken costs down by neighborhood; the presenter said that neighborhood‑level cost breakdowns were not part of this study but recommended a follow‑up effort. The commission also discussed bond structure (30‑year revenue bonds) and the use of capitalized interest to smooth near‑term rate impacts.

Public comment: Bob Aveder, vice mayor of Indian River Shores, warned of household impacts: "Looking at the slide deck, the typical bill is going to go up 46% over 4 years," he said, and urged the council to consider capping the city's 6% profit transfer so it does not rise in lockstep with rates. Aveder also questioned a 72% reclaimed‑water increase shown in the presentation and asked about potential litigation or joint action against PFAS manufacturers to offset local costs.

Next steps: Commissioners agreed not to adopt rates at the meeting and instead to collect written questions through the clerk, receive staff responses, and reconvene for a call meeting on June 2 to consider recommendations to city council. The consultant and staff will provide the presentation PDF and additional clarifications ahead of that meeting.

What remains unresolved: The final rate ordinance, exact neighborhood impacts, the final bond sizing (contingency may change the issuance amount), and the PFAS treatment path and funding sources were left for further study and a June follow‑up.