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St. Pete upgrades water facilities, plans rate hikes to pay for the improvements

Margie Manning

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St. Petersburg public utility customers can expect to see their rates continue to rise for the next several years.

The city plans to increase rates as it upgrades water, sewer and stormwater facilities, according to Fitch Ratings, which issued a report June 1 on two series of bonds the city will sell this month.

The bonds — financial instruments that allow governments and corporations to borrow money from investors — will provide funding for the improvements planned in the current 2021 fiscal year and in fiscal year 2022, which starts in October. The bonds will be repaid with revenue that comes into the city from customers of its water, sewer, reclaimed water and stormwater services.

That revenue will increase as rates go up.

“For the last 13 years the [public utility] system has adopted annual rate increases and expects to continue to adjust rates through fiscal 2030, based on a recent rate study,” Fitch said. “Customers saw the largest combined rate increase of about 15% in fiscal 2018 followed by a 6.5% increase in fiscal 2019. Based on the system’s 2020 rate study, combined rates for water resources [water, sewer, and reclaimed water] are expected to see annual increases of 4.9% to 5.75% through at least fiscal 2025. Stormwater rates will see larger increases of 10%-18% over the same period. The higher stormwater rates are in support of the system’s upcoming stormwater master plan.”

The city provides water, sewer, reclaimed water and stormwater service for about 300,000 residents who live in St. Petersburg and in surrounding areas including Gulfport, South Pasadena, St. Pete Beach and Treasure Island.

St. Petersburg has accelerated its capital projects to address system updates mandated in a consent order between the city and the Florida Department of Environmental Protection, Fitch said. The mandates were brought on by system failures following heavy rain events, resulting in significant unauthorized sewer discharges into Tampa Bay. The capital improvement projects are designed to improve the system’s ability to handle significant weather events.

The city will issue about $74.3 million in Series A bonds to pay for eight projects, according to a preliminary bond document:

• Water reclamation facility upgrades — $15.9 million

• Wastewater lift stations upgrades — $8.95 million

• Wastewater collection system upgrades — $22.6 million

• Water treatment plant and pumping station upgrades $12.35 million

• Water distribution system upgrades — $5.5 million

• Reclaimed water distribution system upgrades — $1.486 million

• Computer resources and support facilities — $7.35 million

• Stormwater system upgrades — $7.272 million

The Series B bonds, totaling $58.2 million, primarily will be used to pay off debt from bonds issued in 2013. The early repayment will save the city about $5.4 million in net present value, Anne Fritz, the city’s chief financial officer, told the City Council Thursday.

“It would be like refinancing your mortgage at a lower rate,” Council Chair Ed Montanari said.

Both Fitch and Moody’s Investors Service gave investment grade ratings to the new bond issues. Fitch assigned an “AA” rating while Moody’s gave them an “Aa2″rating with a stable outlook.

“The stable outlook reflects the system’s healthy financial position along with management’s commitment to annual rate increases that can meet escalating debt service payments, sizeable population base served by the utility, and adequate system water supply and water and sewer treatment capacity enabling the maintenance of stable coverage levels in the near term,” Moody’s wrote in a June 1 report.

The City Council can take a lot of the credit for the high ratings, Fritz said.

“Without the appropriate rate increases to support the [capital improvements plan], we could not maintain that bond rate level. That is important to minimize interest costs for our citizens,” Fritz said.

The City Council approved the bond issues unanimously on Thursday, with Council member Lisa Wheeler-Bowman absent.

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2 Comments

2 Comments

  1. Avatar

    Grace

    July 20, 2021at10:23 am

    St. Peteersburg has the highest water bills I have ever seen. I just moved from Miami and my bill was between $20-$30 a month, while here I paid $145! It is outrageous that they can’t fund a much smaller city and it’s improvements with the price gouging that is already going on.

  2. Avatar

    Jason

    October 15, 2021at9:11 pm

    Agree with the previous commenter. I am happy to hear that they are making necessary improvements to reduce sewage discharge and improve infrastructure. However, blanket rate increases disproportionately affect anyone in a lower income bracket. Especially when applied year after year. I have not done research on this but I sincerely hope all this new multi unit construction going on has developers contributing more than their share.
    My family, thankfully, can afford the cost of the water bills here. I picture single parent households or people falling behind with medical bills and fixed incomes being entirely priced out of their home and ultimately their city. A slow but steady increase just chipping away at them.

    Is this an intentional move to drive the poor and lower middle class out of saint pete? Certainly revenues can be generated elsewhere. Water is essential to life. The poor and wealthy alike need similar amounts of water to get by.

    The extra units we keep adding create the strain on supply, infrastructure, and sewage production. The new builders should shoulder this burden more than the long time residents.

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