Report to Council Water System Fire Protection Charges September 27, 2011 A

1. Report to Council Water System Fire Protection Charges September 27, 2011 A Report to Council Water System Fire Protection Charges

2. Pumps What is “Water System Fire Protection” ? Hydrants Large Pipes Tanks Maintenance

3. FIRE PROTECTION • Water distribution system capacity includes fire flow • Benefits the community as a whole • Costs associated with capacity not included in water user fees • High Service Pumps • Water Storage Tanks • Hydrants • Larger Pipes

4. Methods for Utility to Recoup Costs • Include in customer user rates • Rate increase for customers • Non-utility customers do not pay • Add a line-item charge on utility bill • Additional monthly fee for customers only • Non-utility customers do not pay • Ad-valorem taxes • Transfer from the General Fund (inside city limits) • Invoice to County (outside city limits)

5. Current Practice • In-city - Annual charge to the General Fund • Charge on a per-hydrant basis • $145.00 per hydrant • 2011 – $ 496,045 • Outside city – Invoice Flagler County • Charge on a per-hydrant basis • $145.00 per hydrant • 2011 - $ 44,950

6. At-Issue Flagler County has chosen not to pay invoices since 2008! Total of Unpaid Invoices = $ 175,595

7. Why Now? • Auditors have indicated we need to get this resolved and clear up the receivables • City Council has requested we get it resolved, first by trying to work with the County • County Administrator does not want it to be funded with County-wide tax dollars • One option is a separate fire tax district • Paid only by those who receive the benefit • This option has been rejected

8. History • ITT-Palm Coast Utility Corporation / Flagler County Hydrant Agreement – Mod 1994 • Florida Water Services Corporation Rate Case Settlement – 1999 • City of Palm Coast Purchase of Utility 2003 • 2006 Reinstated the Fire Protection System Fee and Based it on a per-Hydrant Charge • Flagler County Paid the Invoices in 2006 and 2007 totaling $81,490

9. Beginning with the 2008 invoice, Flagler County quit paying • Unpaid balance = $175,595 • County Attorney: “… could you please advise your hierarchy and have the pending invoices for 2008, 2009 and 2010 withdrawn and send us something to that effect so our books are cleared… Then I suppose we have to deal with the 2006 and 2007 past payments that were not authorized, again if you concur with my research. The total is just under $82K. You can return the money to us with some cover document or we can proceed otherwise if you would prefer.” • Meanwhile the City general fund has paid $2,835,040

10. Recommendation • Continue to charge the General Fund for hydrants inside the City of Palm Coast on a per hydrant basis in accordance with existing rate resolution • Adopt new Resolution to add a monthly fire protection charge on each account outside the City limits • $2.33 per month • Include in Resolution, a monthly charge for past due amounts • $2.28 per month • Charge will remain in effect for 4 years

11. Conclusion • The City utility system must recover the costs associated with providing fire protection to the community • While the tax-payers of the City have paid for those services, over the last 4 years the taxpayers of the County have not • Staff recommends implementing a monthly fire protection fee to all accounts outside the city limits • Council desires not to have customers pay for past due amounts