Commissioners approve utility rate increases to pay for upcoming projects

Longboat Key’s two major infrastructure projects of fiscal year 2025 will require a $27 million loan.

Town commissioners say to make annual payments using utility rate revenues, increases are necessary. 

At the town commission’s Sept. 9 regular meeting, the Town of Longboat Key’s utility rate consultant GovRates, Inc. presented a new five-year utility rate increase schedule which would go into effect on Oct. 1. 

The town’s utility rates for water and wastewater are used to collect revenues necessary to pay for Manatee County’s treatment charges and utility projects. 

Per the new rate increase schedule, there will be an 8% increase every year over the next three years, followed by a 7% increase in 2027 and a 3% increase in 2028. The schedule also includes pass-through increases that might come from Manatee County. 

In this case, the town has two high-dollar infrastructure projects — the Country Club Shores asbestos cement pipe replacement project and the subaqueous force main project. 

The Country Club Shores asbestos cement pipe replacement project is already underway, but more recent cost estimates place the total cost around $9 million. 

But the primary project driving the need for a loan is the subaqueous force main replacement project. In 2020, the town’s force main experienced a fracture on the mainland portion of the pipe. 

The mainland portion of the pipe already was replaced, but the portion of the pipe that runs under Sarasota Bay is estimated to cost the town $31.4 million. 

These two projects led the town commission to direct staff to target a $27 million loan through the Clean Water State Revolving Fund (SRF) Loan Program. This loan option comes with an interest rate of 2.89%. Following a 20-year term and annual payments of $1.9 million, the total cost to the town would be $37.6 million with accrued interest.

This loan option requires a referendum in which residents will vote on whether or not the town can pursue this debt option. 

If the referendum does pass, the town would need to show that it can make the loan payments using rate plans, which is the reason behind the rate increases, according to town staff’s memo. 

Commissioners gave the rate schedule first approval with a unanimous vote on Sept. 9. The approval also stipulates that rates will be reassessed every three years unless an earlier review is required by the rate consultant.