IRB SEWER FUND...WHAT'S THE BIG DEAL?
Indian Rocks Beach sold its sewer system to Pinellas County in October 2014 for $1.99 million. At the time of the sale, the City got to keep an additional $1.6 million in reserves in the Sewer Fund. The sale proceeds and the reserve monies were then transferred into the General Fund in tax year ending Sept. 30, 2015. (The General Fund is where the City keeps money to cover its operating expenses.)
The sewer fund reserve monies were solely from property owners’ utility bills at the time of sale. The last $100,000 of these monies are the subject of a referendum that you will vote on in the March 2018 ballot. You are being asked to approve deposit of these funds into the General Fund, as required by our City Charter. I am voting "NO" because I want these funds held in reserve. As your Mayor-Commissioner, I would propose to use these funds to establish a future disaster fund, kept separate from the General Fund, that could only be tapped after a bona fide emergency.
SAGA OF THE IRB SEWER SYSTEM SALE
I feel voters should have been allowed to decide the fate of the $1.6 million reserve portion of these funds since they were derived from utility payments by the residents (and not taxes). The $1.6 million could have been either: (1) refunded to utility customers; or (2) held separately for a future emergency as I recommended to the commission in 2014.
Hurricanes tend to hit near the end of the budget year when our city funds are at their lowest point. Federal disaster funds normally become available through FEMA for reimbursement some months later. In 2017, Hurricanes Harvey, Irma, Jose and Maria dealt a crushing blow to FEMA’s budget, even exceeding the losses in 2005. (FEMA is the primary source of funds to rebuild Puerto Rico). FEMA’s future ability to pay state/local governments is unclear and is tied up in the Federal budget process. It remains to be seen what the 2018 hurricane season will bring but I want our city to be prepared and not dependent on FEMA for reimbursements.
In late 2007, Indian Rocks Beach had a financial crisis. The Sewer and Solid Waste Funds were depleted and showed combined IOUs to the General Fund of $1.08 million. The City’s General Fund reserves had fallen well below the recommended minimums. The commission hired the Burton Consultant group to do a rate study on these two enterprise funds and make recommendations on recapitalizing them. The rate study was completed in 2008. It laid out an escalated payback structure whereby utility bills would be raised 80% between 2008 and 2013 to rebuild not only the two enterprise funds but also the General Fund. The IRB Commission approved this structure in August 2008 (Ordinance #2008-15) and incorporated it into the 2008 budget. In August 2012, a second rate study was reviewed by the Commission as the Sewer Fund’s payback schedule to the General Fund was nearing completion. At this point the sewer rates could have been normalized nearer to their 2008 levels. Instead, the City continued to collect the elevated rate and the excess funds accumulated in the sewer reserve fund until the time of sale in October 2014. Page 6 of the City's Certified Audited Financial Report (CAFR) for year ending Sept. 30, 2015 shows the transfers into the General Fund from the sale of the sewer system. Note: There is also a $1.2 million Deepwater Horizon (BP) lawsuit settlement that flowed into the General Fund during the same tax year.
Under the Burton rate plan, sewer bills were scheduled to be raised: 60% in 2009; 10% in 2010; 2.5% in 2011; 2.5% in 2012; and 2.5% in 2013, however this last one was canceled. Rates stayed high at the 2012 level until sale of the sewer system in October 2014. By 2012, sewer bills had increased over $350 per year for most folks compared to 2008 rates. Some homeowners were paying the City as much for their sewer bill as their property taxes!
"Indian Rocks Sells Sewer System," Belleair Bee article of 8/12/14 by Brian Goff about sale netting $3.66 million that went into the General Fund with $1.6 million derived from the jacked-up sewer rates we paid in the preceding years.
Political advertisement paid for and approved by Donald House, Jr. for Indian Rocks Beach Mayor-Commissioner