Consultant warns St. Pete Beach utility rates won’t cover costs; committee backs front‑loaded reclaimed increase and class‑based wastewater design

A consultant told the St. Pete Beach Finance & Budget Review Committee on July 7 that the city’s reclaimed water, stormwater and wastewater enterprise funds will not generate enough revenue at current rates to cover operating costs, debt service and planned capital projects over the next five years.

“Reclaimed water revenues are predicted to be insufficient to cover the overall revenue requirements of the reclaimed system throughout the entirety of the forecast period,” said Sean Ocasio, senior manager with Graftalus Financial Consultants, describing a model that assumes minimal customer growth and rising operating and wholesale costs. Ocasio said the reclaimed fund serves about 2,900 billed accounts and currently depends in part on general‑fund transfers to balance its 2026 budget.

The consultant recommended a suite of rate actions to restore financial health: a front‑loaded 50% increase to the reclaimed base fee in 2027 followed by annual adjustments (roughly 8% per year thereafter under the primary scenario), a stormwater path that phases larger increases early and uses reserves to smooth impact, and a wastewater plan that would raise system revenues about 16% annually for the first three years and 5% in the final year of the forecast.

Ocasio also proposed a wastewater rate redesign that scales commercial base charges by meter size and bills all commercial flow rather than providing a 6,000‑gallon free allowance. His analysis found that, under the system’s current structure, residential customers pay about 105% of the system average cost per gallon, multifamily about 138%, and commercial about 77% — a cross‑class subsidy the redesign seeks to remedy. “Commercial has been subsidized by multifamily and residential,” Ocasio said. The proposed design would shift more of the revenue burden to larger commercial meters, allowing lower increases for residential and multifamily classes.

Committee members pressed staff and the consultant on implementation details: how ERUs (equivalent residential units) are calculated for reclaimed billing (defined in code as 3,150 square feet of permeable parcel area), whether metering or zone assessments could improve equity, and how stormwater “resiliency” projects differ from baseline maintenance. Camden Mills, the city’s public services director, said later that lateral‑service pipe replacement and coordination with street paving are major drivers of capital timing and cost.

After discussion, the committee coalesced around the consultant’s recommendations for stormwater and the wastewater design alternative and signaled support for a front‑loaded reclaimed increase (the body summarized the group’s preference to present a 50% first‑year reclaimed increase to the commission). Staff will return to the commission with the recommended scenarios and additional materials, including a 120‑day reserve sensitivity analysis and simplified bill comparisons by customer class.

Next steps: the consultant recommended periodic updates to the analysis every three to five years, and staff said they will prepare citizen‑facing comparisons (residential, commercial, multifamily averages) and additional charts on how much of a proposed monthly fee would go to operations versus capital and debt.