Whether city utility customers can afford rate increases to pay for needed water and sewer system improvements will be discussed Tuesday.
Port Richey City Council members will hold a workshop starting at 7 p.m. Tuesday and will review recommendations for annual 3.5 percent rate increases for up to five years.
Affordability concerned the council on Jan. 15, when it got a first look at a utility rate study from Burton & Associates. The consulting firm has incorporated city officials' suggestions for review Tuesday.
On Feb. 5, the latest in a series of pipeline breaks left residents of the Candlelight subdivision without water.
Crews repaired a 6-inch PVC water main. "Our crews will repair the line with restrained pipe joints and a proper thrust block to prevent a reoccurrence of the leak," City Manager Tom O'Neill wrote in an advisory last week.
What to do about the deteriorating municipal utility system is a "critically important issue," O'Neill said in an interview Wednesday. The revenue from rate increases would help pay for construction projects to upgrade the utility system, O'Neill said.
The utility's reserve fund has dwindled, O'Neill said. It "simply is inadequate to cover any catastrophic failure" of pipelines, lift stations or treatment facilities, he said.
The industry standard is a reserve account with enough money to fund operations for six months, O'Neill said.
Subsidies from the city's Community Redevelopment Agency have propped up the utility budget. "Ultimately we want to wean ourselves off CRA funding" for water and sewer operating expenses, O'Neill said.
CRA funding should be restricted to redevelopment, he said.
The utility dates to the mid-1920s, and a patchwork of new and old pipelines has developed over the decades, O'Neill said.
Some 2,600 customers could wind up paying more. Any rate increases would go into effect Oct. 1, the start of fiscal year 2014.
Andrew Burnham, a Burton senior vice president, has suggested 3.5 percent annual rate increases. Utility infrastructure improvements would cost about $550,000 a year, he estimates.
If the council OKs the plan Tuesday, staff will write an ordinance subject to public hearings and a council vote.