Report on utilities purchase says county could operate more efficiently(Citrus County)
By Terry Witt
A consultant’s report released Friday says water and sewer utilities owned by the Florida Governmental Utility Authority in Citrus County would be less expensive to operate if the county owned them.
The report by Rose, Sundstrom & Bentley, LLP said customer rates would benefit from the cost savings.
Rate increases covering a 10-year planning period would be 15 percent less if the county owned the systems, cash reserves would be higher and the county’s borrowing requirements would be lower, the report said.
The report also said the county would have more accountability than FGUA.Rose, Sundstrom & Bentley LLP was hired by the Citrus County Commission on Oct. 11 to analyze whether the FGUA systems should be purchased by the county or left in FGUA’s hands. Burton & Associates Inc. prepared the financial analysis.“A preliminary financial assessment prepared by Burton & Associates Inc. provides that the cost to operate the Citrus Systems would be less under county ownership than under FGUA ownership,” the report said. “As a result, customer rates would benefit directly from county ownership.”When FGUA purchased the water and sewer systems in November 2003 from Florida Water Services Corp., the county retained the option of buying the utilities at a future date. Few in county government expected the purchase to occur this soon.
However, recent criticism of FGUA’s use of property assessments to pay for line maintenance and construction costs in Citrus Springs and Pine Ridge prompted commissioners to take an early look at a potential buyout.
The report, which is preliminary, appears to make a case for the county buying the systems.However, the report cautions that the county will have to do its own financial analysis to determine whether it would assume FGUA’s existing debt or issue bonds if it decides to buy the systems.
The report said FGUA’s existing bond debt is $21.8 million. Transition costs would be $280,000, and the county also would have to repay the $2.5 million FGUA borrowed as a “line of credit” after it took over the Citrus Systems.County Commission Chairman Gary Bartell said the key is whether the county could buy the systems without raising rates. He said FGUA agreed to keep rates stable for five years, except for annual adjustments for inflation.
However, some county officials say FGUA’s use of property assessments has breached its pledge not to increase rates. County Utilities Regulatory Director Robert Knight said the property assessments are a rate increase.
The report does not specifically answer the question of whether current rates could be maintained if the county took over the systems, but Bartell said Burton & Associates is expected to make a presentation at today’s meeting.“If they are going to recommend a rate increase, that won’t sit well with me,” Bartell said. “We’ll have to wait for the presentation. We just need good numbers so we can make an intelligent decision.”Cathy Taylor, director of the county’s Office of Management and Budget, said she had not been provided a copy of the report, but had requested it. Taylor said the numbers would have to show that rates would be equal to or less than current rates for the county to have an interest in purchasing FGUA’s systems.
A consultant’s report released Friday says water and sewer utilities owned by the Florida Governmental Utility Authority in Citrus County would be less expensive to operate if the county owned them.
The report by Rose, Sundstrom & Bentley, LLP said customer rates would benefit from the cost savings.
Rate increases covering a 10-year planning period would be 15 percent less if the county owned the systems, cash reserves would be higher and the county’s borrowing requirements would be lower, the report said.
The report also said the county would have more accountability than FGUA.Rose, Sundstrom & Bentley LLP was hired by the Citrus County Commission on Oct. 11 to analyze whether the FGUA systems should be purchased by the county or left in FGUA’s hands. Burton & Associates Inc. prepared the financial analysis.“A preliminary financial assessment prepared by Burton & Associates Inc. provides that the cost to operate the Citrus Systems would be less under county ownership than under FGUA ownership,” the report said. “As a result, customer rates would benefit directly from county ownership.”When FGUA purchased the water and sewer systems in November 2003 from Florida Water Services Corp., the county retained the option of buying the utilities at a future date. Few in county government expected the purchase to occur this soon.
However, recent criticism of FGUA’s use of property assessments to pay for line maintenance and construction costs in Citrus Springs and Pine Ridge prompted commissioners to take an early look at a potential buyout.
The report, which is preliminary, appears to make a case for the county buying the systems.However, the report cautions that the county will have to do its own financial analysis to determine whether it would assume FGUA’s existing debt or issue bonds if it decides to buy the systems.
The report said FGUA’s existing bond debt is $21.8 million. Transition costs would be $280,000, and the county also would have to repay the $2.5 million FGUA borrowed as a “line of credit” after it took over the Citrus Systems.County Commission Chairman Gary Bartell said the key is whether the county could buy the systems without raising rates. He said FGUA agreed to keep rates stable for five years, except for annual adjustments for inflation.
However, some county officials say FGUA’s use of property assessments has breached its pledge not to increase rates. County Utilities Regulatory Director Robert Knight said the property assessments are a rate increase.
The report does not specifically answer the question of whether current rates could be maintained if the county took over the systems, but Bartell said Burton & Associates is expected to make a presentation at today’s meeting.“If they are going to recommend a rate increase, that won’t sit well with me,” Bartell said. “We’ll have to wait for the presentation. We just need good numbers so we can make an intelligent decision.”Cathy Taylor, director of the county’s Office of Management and Budget, said she had not been provided a copy of the report, but had requested it. Taylor said the numbers would have to show that rates would be equal to or less than current rates for the county to have an interest in purchasing FGUA’s systems.
posted by Editor Facts & Myths @ 10:28 AM
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