Presentation on Water, Wastewater, Irrigation and Reclaimed Utility Rates by Staff

Summary

GovRates, Inc. has completed a Water and Wastewater Rate Study for the City of Deltona, providing a financial forecast through Fiscal Year 2035 and recommending significant utility rate and impact fee adjustments. The primary reasons for these adjustments are the need to fund a multi-year capital improvement program (CIP) totaling approximately $172.8 million through Fiscal Year 2030, cover increasing operational costs (due to inflation, salaries, and regulatory requirements), and maintain financial sustainability and creditworthiness.

Key Recommendations:

• Monthly User Rates: Proposed annual increases of 6.0% for Fiscal Years 2026-2029, followed by 3.0% for Fiscal Year 2030 onwards. These rates are designed to avoid future "rate shock" and remain affordable, with the average single-family residential customer's combined bill staying well below 4.5% of median household income.
• Capital Charges / Impact Fees: Recommended increases for water impact fees from $1,846 to $3,220 per Equivalent Residential Connection (ERC) and for wastewater impact fees from $4,531 to $5,240 per ERC. These fees are intended to ensure "growth pays for growth" and reduce the burden on monthly user rates.
• Capital Financing Recovery Fee (CFRF): A new fee of $114 for water and $486 for wastewater per ERC is proposed to recover the cost of financing capacity developed in advance of growth.

The CIP includes critical projects such as upgrading the Fisher Water Reclamation Facility to meet regulatory requirements and expanding the Eastern Water Reclamation Facility to support city growth. Funding for these projects will come from a combination of grants, State Revolving Fund (SRF) loans, and the proposed rate adjustments. The financial plan projects that the utility will maintain a good financial position and meet all debt service coverage requirements.

Citizen Impact

Residents will see annual increases in their water, wastewater, and reclaimed water bills, with a 6.0% increase starting in 2026 for the next four years, followed by 3.0% increases. New development will face higher impact fees and a new Capital Financing Recovery Fee, which aims to shift growth-related infrastructure costs to new customers rather than existing ratepayers. These changes are necessary to fund critical upgrades to the aging utility system and ensure continued compliance with environmental regulations, ultimately aiming for reliable and safe water and wastewater services.

Confidence

high