To tackle urgent infrastructure projects, Longboat faces $27M debt

Due to rising project costs, two necessary utility projects come with a price tag of almost $40 million.


Photograph of the pipe lying on its side at the Town of Longboat Key's Public Works Department. The breach was in the bottom invert of the pipe.
Photograph of the pipe lying on its side at the Town of Longboat Key's Public Works Department. The breach was in the bottom invert of the pipe.
Courtesy image
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Longboat Key’s subaqueous force main replacement and Country Club Shores' asbestos cement pipe replacement projects can’t wait any longer. 

At a June 28 meeting, Longboat Key town commissioners reviewed the projects and directed staff toward a financing method for the projects that require upfront costs with a high price tag. As a result, the town will incur a $27 million debt. 

“You have to start from the perspective of we have to do this, this is not optional,” Town Manager Howard Tipton said to frame the discussion. 

The primary driver of the financial need comes from the subaqueous force main project, currently estimated to cost $31.4 million for the remainder of the project, which is the replacement of the pipeline under Sarasota Bay. This is due to a 2020 fracture and leak from the existing pipe. 

The purple line running from the Key to the orange dot represents the town-owned wastewater pipeline.
Courtesy image

Another factor in the debt is the Country Club Shores asbestos cement pipe replacement project, which has a total cost of close to $9 million.

Tipton added that figuring out the cheapest option comes down to how the loan is financed, not necessarily about finding the cost savings in parts and labor. For financing options, the town had three main options. 

The first — and commissioners' preferred — option is through the Clean Water State Revolving Fund (SRF) Loan Program. The interest rate for the SRF loan would be around 2.89% with a 20-year term and annual payments of $1.9 million. After interest, the total cost to the town would be $37.6 million. 

Though this loan option has the lowest interest and overall cost, the difficulty comes with the fact that a referendum would be required. Referendums are required for certain types of loans that would cause the town to incur debt. 

This means that registered voters in Longboat Key would decide if the town can take this route. 

The referendum would most likely take place in the March 2025 election cycle and would require public education efforts in the months leading up to the referendum, according to town officials. 

The other two options are either 30-year or 20-year revenue bonds. These are bonds that are repaid from the revenue generated by the project they fund.

For the 30-year option, the estimated interest would be 5.51% with an annual payment of $1.9 million. The total cost to the town would be $58.5 million, an additional $20.9 million compared to the SRF option. 

The 20-year option would come with an interest rate of 5% with an annual payment of $2.2 million and a total cost of around $45.9 million — an additional $8.3 million compared to the SRF loan.


Repayment with utility rates

For any of the options, the town would make payments with collections from utility rates. 

Commissioners were provided with an updated utility rate survey at the June 28 meeting by Bryan Mantz from GovRates, Inc. The last rate study was conducted in 2021, and commissioners approved annual increases of 5% through 2026. 

The need for rate adjustments is driven by the two major capital projects. The subaqueous force main project rose in cost by about 30%, about $6.5 million, since the last rate study. The Country Club Shores asbestos cement pipe replacement project’s cost increased by about 18%, or $1.2 million, since 2021. 

The total cost of capital needs for town utilities through fiscal year 2034 is estimated at $68.9 million. 

On top of that, fiscal year 2025 operating costs are projected to be 14.4% higher than they were in 2021 due to inflation and nationwide issues with filling positions and retaining employees. 

None of these increases includes Manatee County’s annual increases, which are also factored into resident utility bills. 

Mantz presented two different utility plan options depending on which loan option the town chose. For the SRF loan option, adjustments would be 8% through 2027, 7% in 2028 and 3% in 2029. 

If the town went with the revenue bond option, increases would be 9% through 2027, then 3.5% through 2029. 

A new rate study would also be conducted by GovRates in three years to reevaluate the town’s utility rates. 

Even with the increases, Mantz said the rates would be considered affordable when compared to surrounding areas. For example, the average utility bill after the SRF loan increase in 2024 would be $174.44. The average for other Florida utilities is around $192.58 according to data presented by Mantz. 

Rate increases would also allow for the town to have more cash reserves for any unanticipated expenses along the way, Mantz said.

Commissioners agreed that the SRF loan approach was the most favorable. If the referendum fails, the revenue bond options are still on the table. A unanimous vote among commissioners solidified the direction that staff will move with that approach and begin finalizing the utility rate increase scheduled to be brought back in the fall.


Big-ticket projects

The town’s subaqueous force main project will replace the existing pipeline under Sarasota Bay. A fracture in the mainland portion of the pipe caused a spill in 2020. 

In 2021, following the spill, the town entered into a consent order with the Florida Department of Environmental Protection that put into place certain restoration and mitigation requirements, including planting mangroves. 

The town completed a slip-line rehabilitation of the 2-mile mainland portion of the force main in May 2023, which cost about $2.72 million. 

Next is the more costly part of the project, which will install a new subaqueous pipe about 50 feet away from the existing one to decrease the chance of an accidental fracture during construction. 

Staff proposed $31.4 million in FY25 for final design, easement acquisition and construction, which is slated to begin in fall 2025, said Director of Public Works Isaac Brownman.

“As I mentioned at one of the prior budget workshops, it is significantly higher than our original estimates from about three to four years ago,” Brownman said. 

Some of that is due to changes from the COVID-19 pandemic, supply chain issues and inflation, he added. 

The town was already granted two state appropriations in the amounts of $1.25 million and $800,000, and Brownman said staff will continue pursuing grants and earmarks to drive the cost down. 

As for the Country Club Shores project, the neighborhood's asbestos cement pipes — installed in the late 1960s and early 70s — are being replaced with new polyvinyl chloride (PVC) pipes. Asbestos cement pipes are not common practice anymore, and by replacing the mains in Country Club Shores, Brownman said about 90% of the outdated lines in all of Longboat Key will be replaced. 

The asbestos cement water mains have aged beyond useful life and are very fragile, which is the main reason they need to be replaced, according to Brownman. 

Country Club Shores IV and V will be the first of the neighborhoods to get their water main replaced.
Courtesy image

The projects split the Country Club Shores subdivisions into four phases. Phases 1 and 2 cover Country Club Shores 4 and 5, while Phases 3 and 4 span Country Club Shores 1, 2 and 3. 

The first two project phases were the most critical areas, Brownman said, due to having the most breakages and the need for better interconnectivity. 

Phases 1 and 2 require about 15,000 linear feet of asbestos cement pipe to be replaced, as well as new meter boxes, fire hydrants and a full mill and asphalt overlay after the underground portion is completed. 

The contractor for the project, Spectrum Underground, Inc., quoted the project at $5.5 million and was given the notice to proceed in October 2023. There were about 200 days left on the contract as of June 28, which means another six or seven months, according to Brownman. 

Survey work for the next part of the project — Phases 3 and 4 — has already been completed. These phases will be less intrusive in that the contractor will use a method called pipe-bursting, according to Brownman.

The method bores new pipes into the old ones, which shatter as new pipes are fed through them. This is not only less disruptive but also more cost-efficient, Brownman said. 

Due to the layout and complexity of the first project phases, Brownman said this was not an option for those subdivisions. 

The project is on target to go out for bid after the FY25 budget adoption on Oct. 1, and the estimated construction cost is currently $3 million to $3.5 million. 

Construction could start in early 2025, unless the project team wanted to time the project to start after peak season in 2025, according to Brownman.

 

author

Carter Weinhofer

Carter Weinhofer is the Longboat Key news reporter for the Observer. Originally from a small town in Pennsylvania, he moved to St. Petersburg to attend Eckerd College until graduating in 2023. During his entire undergraduate career, he worked at the student newspaper, The Current, holding positions from science reporter to editor-in-chief.

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