Submitted By: Rusella Bowes-Johnson
presenter
Presentation By: Sean Lanier
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Department: Water & Sewer
STAFF RECOMMENDATION (Motion Ready):
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Adopt Resolution 2025-31 concerning a new sewage rate schedule pursuant to section 70-301, City Code, a new water rate schedule pursuant to section 70-416, City Code, and new reclaimed water service fees and connection fees pursuant to section 70-358, City Code, effective October 1, 2025
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OCALA’S RELEVANT STRATEGIC GOALS:
Fiscally Sustainable, Operational Excellence
PROOF OF PUBLICATION:
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BACKGROUND:
The City’s last rate study concluded in Fiscal Year 2021, which established utility rates for the next five years. The current water, wastewater, and reclaimed water rates and charges have been in effect since October 1, 2024. The Water Resources department worked with Raftelis Financial Consultants, Inc. (“Raftelis”) to develop a financial forecast to determine sufficient revenue needs to support system operations and maintenance and identify funding to pay for capital expenditures for system repairs, upgrades, and expansions.
FINDINGS AND CONCLUSIONS:
As presented to the Utility Advisory Board on April 16, 2025, and the City Council on April 29, 2025, the Water Resources Fund needs to fund operating reserves and capital improvements. This fund has supported operations by minimizing expenses and delaying capital projects. The water and wastewater infrastructure has continuing needs for system repairs, upgrades, and expansions to maintain public health and safety, and to meet regulatory requirements.
Capital improvement projects are currently being funded from reserves. The rate study analysis determined that it is not sustainable to continue to fund capital improvement needs with reserves alone.
As presented to the City Council, Raftelis recommends annual 5% rate adjustments for residential and residential/commercial customers. As outlined in the rate study, Raftelis also recommends a “true-up” or reconciliation to the commercial water usage charge to align with the costs of service. The true-up is allocated over the five-year implementation period. The estimated result is an additional annual average increase of approximately 1-1.5% of the combined commercial bill.
The recommendations result in annual adjustments between 6-6.5% for commercial customers. The first-rate adjustment would be effective October 1, 2025, with additional increases to follow each year for the next four years on October 1st. Beginning on and after October 1, 2029 (Fiscal Year 2030), rates will be increased based on the annual US-CPI Water and Sewerage Maintenance Service Index, but not less than 4%, until a new rate study may be conducted. Below is an example of a typical bill based on 6,000 monthly gallons under the proposed rates:
FISCAL IMPACT:
The existing water and wastewater service rates are only adequate to fund the current operating expenses, existing debt service payments, and the transfer to the General Fund. Based on the identified capital needs, the proposed rate adjustments will provide funding for up to $116 million in critical capital needs, will provide funding for necessary staffing positions to help implement the capital plan, and will maintain adequate reserve fund balances that are consistent with the City’s adopted reserve fund policy.
PROCUREMENT REVIEW:
N/A
LEGAL REVIEW:
This Resolution has been reviewed and approved for form and legality by City Attorney, William E. Sexton.
ALTERNATIVE:
• Approve with amendments
• Deny
• Table
RESOLUTION 2025-XX
A RESOLUTION OF THE CITY OF OCALA, FLORIDA (“CITY”) CONCERNING CHAPTER 70, “UTILITIES”; SETTING SEWAGE, WATER, AND RECLAIMED WATER RATES AND CHARGES PURSUANT TO SECTION 70-301, “SCHEDULE,” SECTION 70-416, “WATER RATE SCHEDULE,” AND SECTION 70-358, “RECLAIMED WATER SERVICE FEES”; PROVIDING FOR AN EFFECTIVE DATE
Whereas,
A. The City’s last rate study concluded in Fiscal Year 2021, which established utility rates for the next five years. The City’s current sewer usage rates and charges, potable water rates and charges, and reclaimed water service fees have been in effect since October 1, 2024.
B. The City Council has reviewed the rate study, findings and recommendations presented by Raftelis Financial Consultants, Inc. (“Raftelis”), which was retained to develop a financial forecast to determine sufficient revenue needs to support system operations and maintenance and identify funding needed to pay for capital expenditures for essential system repairs, upgrades, and expansions.
C. The City Council agrees with Raftelis’ recommendation to implement a series of annual 5% rate adjustments beginning on October 1, 2025, followed by subsequent 5% increases occurring on October 1st of each year thereafter for the next four years for residential and residential/commercial customers.
D. The City Council agrees with Raftelis’ recommendation to “true-up” or adjust the commercial water usage charge to align with the costs of service. The true-up is allocated over the five-year implementation period, which is estimated to result in an additional annual average increase of approximately 1-1.5% of the combined commercial bill when also considering the system-wide adjustments. The overall recommendations result in a series of annual adjustments between 6-6.5% for commercial customers. The annual adjustments begin on October 1, 2025, and occur each October 1st of each year thereafter for the next four years for commercial customers.
E. The City Council agrees with Raftelis’ recommendation to implement an annual index based on the annual US-CPI Water and Sewerage Maintenance Service Index, but not less than 4% beginning after the end of the Fiscal Year 2028-29 rate increase or until a new rate study is conducted in subsequent years.
F. Pursuant to Section 70-301, “Schedule,” changes to sewage usage rates and charges may be set by the city council by separate authorizing resolution.
G. Pursuant to Section 70-416, “Water Rate Schedule,” changes to potable water usage rates and charges may be set by the City Council by separate authorizing resolution.
H. Pursuant to Section 70-358, “Reclaimed Water Service Fees,” changes to reclaimed water base rates, consumption rates, connection fees, and service charges may be set by the City Council by separate authorizing resolution.
I. The City Council finds that the proposed rate structure is justified by the rate study, fair, uniform, non-discriminatory, and reasonable.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OCALA, FLORIDA, in regular session duly assembled as follows:
Section 1. The schedules included within Sections 70-301, 70-416, and 70-358 of the City’s Code of Ordinances are hereby revised to replace the usage rates, charges and fees set forth therein with the usage rates, charges and fees included in the attached Table 1, which is hereby incorporated as if fully set forth herein.
Section 2. This Resolution shall take effect on October 1, 2025.
This resolution adopted this ______ day of ______________________, 2025.
ATTEST: CITY OF OCALA
By: By:
Angel B. Jacobs Kristen M. Dreyer
City Clerk President, Ocala City Council
Approved as to form and legality:
By: _________________________________
William E. Sexton
City Attorney