Item M3
BOARD OF COUNTY COMMISSIONERS
AGENDA ITEM SUMMARY
Meeting Date: Mav 18, 2005
Division:Board of CountvCommissioners
Bulk Item: Yes
No X
Department: George R. Neugent
Staff Contact Person: Terri Marble
AGENDA ITEM WORDING:
A detailed explanation from the County Administrator on his Municipal Assessment proposal, to pay
for wastewater and how it would apply to hook-up costs in the future as opposed to the present way of
doing so.
ITEM BACKGROUND:
PREVIOUS RELEVANT BOCC ACTION:
CONTRACT/AGREEMENT CHANGES:
STAFF RECOMMENDATIONS:
TOTAL COST:
BUDGETED: Yes
No
COST TO COUNTY:
SOURCE OF FUNDS:
REVENUE PRODUCING: Yes
No
AMOUNTPERMONTH_ Year
APPROVED BY: County Atty _ OMB/Purchasing _ Risk Management _
DIVISION DIRECTOR APPROVAL:
(TYPE NAME HERE)
DOCUMENTATION:
Included
Not Required_
DISPOSITION:
AGENDA ITEM #
Revised 2/05
SUMMARY CONCEPT
Backqround
Florida law and rules of the Department of Community Affairs ("DCA")
(amendments pending) require Monroe County (the "County") to achieve certain
wastewater treatment levels in unincorporated areas of the County by the year 2010.
The County has determined that compliance is achievable in large part through the
installation of central wastewater systems throughout portions of the County although it
is ambitious to believe that such installations can be completed by 2010.
The County has completed a Sanitary Wastewater Master Plan (the "Master
Plan") which identifies and prioritizes wastewater facility construction projects and
estimates of costs based on 1999 dollars. The projects are identified on a regional
basis: Upper, Middle and Lower Keys.
Consistent with the Master Plan, to date, the County has cooperated with the
Florida Keys Aqueduct Authority ("FKAA"), municipalities and an investor-owned utility
to facilitate the construction of the wastewater projects.
Under Florida law (Chapter 98-519, Laws of Florida) and as confirmed in several
agreements between the County and the FKAA, the FKAA generally possesses
jurisdiction to provide wastewater services throughout the County except for areas
within municipal boundaries, areas within legislatively created wastewater districts, and
areas served by investor-owned utilities pursuant to authorization issued by the Florida
Public Service Commission.
DCA Rules Comoliance
There are three County wastewater activities to be completed by July 12, 2005
designated in the pending amendments to the DCA rules:
a. the issuance of $40 million in financing for wastewater facilities secured by
infrastructure sales surtax dollars.
The County previously has issued infrastructure sales surtax bonds of
which as much as $20 million may be available to fund the construction of
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wastewater projects. Currently, County staff is working with the Key Largo
Wastewater Treatment District (the "District") to draft an interlocal
agreement whereby the County could provide the District up to $20 million
of infrastructure sales surtax bond proceeds to construct a regional
wastewater facility to serve the northern portion of Key Largo, including
the Key Largo Trailer Village/Key Largo Park.
b. the beginning of construction of wastewater plants or laying of collection
lines for Bay Point, Conch Key and Key Largo Trailer Village/Key Largo
Park.
With the County's assistance, the FKAA previously has initiated
construction of wastewater facilities to serve the Conch Key and Bay
Point areas. Connection of customers in these areas prior to July 12,
2005, is expected. As indicated above, the County is considering funding
a central wastewater system to be constructed by the District which will
serve the northern portion of Key Largo, including the Key Largo Trailer
Village/Key Largo Park.
c. the connection of 1,350 wastewater equivalent dwelling units ("EDUs",1.
which basicallv represent a unit of measurement for wastewater service
utilized bv one household) to the Key West Resort Utilities facilities at
Stock Island.
Many customers have been connected to the facilities constructed on
Stock Island by Key West Resort Utilities. The County can request
information from the utility to determine whether 1,350 EDUs will be
connected by July 12, 2005.
From these facts, it is apparent that the County has substantially complied with
the near term time commitments set forth in the DCA rules.
The pending rules further require that the County coordinate with the FKAA and
the District for the issuance of $80 million of bonds to be secured by system
development charges by July 12, 2006. The proceeds of such bonds are to be used to
construct additional wastewater projects. As will be discussed later, the County may
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consider an alternative method of financing the installation of central wastewater
systems which could generate at least $80 million of bond proceeds for such purpose.
Alternative for Complyinq With Florida Law and DCA Rules
To date, the County has been cooperating with the FKAA, municipalities and an
investor-owned utility to provide central wastewater service in the high priority areas
identified in the Master Plan. Financing for such projects has been secured on a case-
by-case basis. No projects constructed to date, whether such projects were financed by
County funds or with other County support, are owned or operated by the County.
An alternative to the current approach is for the County to become the provider of
wastewater services in all unincorporated areas of the County. Areas within municipal
boundaries also may be served by the County if the effected municipalities consent. By
assuming this responsibility, the County may best be able to meet the obligations
imposed by Florida law and DCA rules, as the County will exercise a greater degree of
control over the construction of wastewater projects. Perhaps more important, if the
County becomes the wastewater service provider, the County can best insure that all
County residents, residential and commercial, pay a fair portion of the capital cost of
such projects wherever they may be located.
The following are the actions which would be required to initiate County
wastewater services:
1. Enter into an interlocal agreement with the FKAA. Currently, the FKAA
possesses jurisdiction to provide wastewater service in the areas described above.
However, the FKAA has the power to contract away such jurisdiction by interlocal
agreement with the County. The FKAA has informed the County's representatives that
it is willing to investigate whether it is in the best interest of all concerned for jurisdiction
over wastewater services to be transferred to the County.
2. Create a wastewater department within existing County structure or create
a dependent special district by ordinance to provide wastewater service.
3. Establish necessary ordinances, policies and procedures relating to the
provision of wastewater service and hire staff, at a time and in sufficient number as
required as the County expands wastewater operations. In the alternative, the County
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may consider providing wastewater services by utilizing a contract operator. Customer
service, billing, financing, operations and maintenance services, or any portion thereof,
may be contracted out to third parties.
4. Existing mandatory connection ordinance may need to be amended and
agreements should be reached with water service providers, wherever possible, to
provide for termination of water service if wastewater service fees are not paid to the
County.
Alternative Financinq Methods
Should the County and the FKAA determine that it is in the best interests of
County residents that the County assume responsibility for providing wastewater
services in the unincorporated area, several financing options are available to finance
construction of the necessary wastewater collection, treatment and disposal facilities.
The primary sources of finances would be:
a. infrastructure sales surtax revenue bonds;
b. wastewater revenue bonds payable from month Iv. rates for'
wastewater service;
c. system development charges; and/or
d. special assessments.
A concept currently under consideration which would equitably spread the cost of
providing wastewater service throughout the County is for the County to levy a special
assessment, payable over a twenty (20) year period, in an equal amount for every EDU
to be served by the County. Once the special assessment mechanism is in place, the
County could issue bonds, on a project by project basis, secured by the special
assessments to finance the capital costs of constructing regional wastewater facilities.
To create a more uniform approach to the provision of wastewater services and to best
assure that residents countywide are treated equitably, the County could enter into
interlocal agreements with municipalities and districts pursuant to which the special
assessment methodology for financing wastewater projects is agreed upon.
Special assessments could be levied in an amount sufficient to eliminate the
need for County residents to pay any up front system development charges (also known
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as connection charges or impact fees). The intent would be to recover the identical
amount of capital cost from every County resident to be provided service by the County,
where possible, through a uniform special assessment (the "Uniform Special
Assessment"). If a Uniform Special Assessment is levied countywide and the County
issues bonds secured by special assessment revenue, the County would be able to
maintain its existing bonding capacity of approximately $40 million from infrastructure
sales surtax revenue. This additional bond capacity then could be tapped in the future
in the event that the Uniform Special Assessment alone does not cover 100% of the
capital cost of a particular project or projects. The levy of special assessments or
issuance of infrastructure sales surtax revenue bonds to finance the capital cost of the
wastewater projects will assist the County in maintaining the lowest monthly rates
possible for wastewater service. Also, once the County begins to provide wastewater
service to County residents, additional bonds could be supported by wastewater
revenue.
The owners of residential and commercial properties countywide would each pay
an identical special assessment per EDU served. The special assessment can be
collected over a twenty (20) year period. The special assessment ordinance may
provide that the total amount of the special assessment outstanding becomes due and
payable upon a transfer of title to the property.
Property owners will be responsible for the cost of installing service laterals to be
located on the property (which also are owned and maintained by the property owner)
as well as the cost of decommissioning on-site sewage disposal systems at the time of
initiation of the County's wastewater service to the property.
Steps for Implementinq the Uniform Special Assessment Concept
The following steps would have to be taken to implement the special assessment
financing concept:
a. designate appropriate personnel to identify the total cost of constructing
wastewater projects countywide;
b. identify total projected EDUs to be served by all of such projects;
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c. divide the total wastewater project cost by the total projected EDUs to be
served to arrive at an average capital cost per EDU. This average capital
cost would be established as the Uniform Special Assessment;
d. a County ordinance must be adopted to authorize the imposition and
collection of special assessments for wastewater projects as projects are
finalized and ready for construction;
e. It is anticipated that the special assessments will be collected on the ad
valorem tax statement pursuant to section 197.3632, Florida Statutes (the
"Uniform Collection Method");
f. under the Uniform Collection Method, the County must pass a resolution
notifying residents that the County could finance projects using special
assessments;
g. on a project by project basis, the County would pass resolutions (initial
and final) necessary to levy the Uniform Special Assessment against
property benefiting from each wastewater project as such projects are
finalized and ready for construction. If grants or other no cost funding is
obtained or if the Uniform Special Assessment exceeds projected project
costs, the Uniform Special Assessment can be adjusted;
h. a Uniform Special Assessment, unless adjusted by the County, is levied
against benefited property on a project by project basis to finance the
capital cost of bringing wastewater service to the property; and
i. the County issues bonds secured by the special assessments with the
proceeds funding the project construction costs.
In the event that the Uniform Special Assessment does not cover 100% 0' the
capital cost of a particular wastewater project, the County will be responsible for
securing additional capital funds necessary to complete the project. Grants, low interest
loans, revenue bonds, and infrastructure sales surtax bonds are a few of the potential
sources of such revenue. If the Uniform Special Assessment exceeds the capital cost
of a particular project, special assessments shall be adjusted to reflect the actual costs.
The wastewater projects which would be constructed under this concept would
be constructed over a period of years. Florida law requires that the benefit for which a
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property owner is paying a special assessment must be capable of being realized within
a reasonable time after the special assessment is initiated. Since it is anticipated that
construction costs used to determine the Uniform Special Assessment will be stated in
2005 dollars, it is expected that the cost of projects which initially may be projected to
cost less than the Uniform Special Assessment amount will approach such uniform
amount over time and may perhaps exceed such amount by the time the project is
initiated and the special assessment is authorized by the County.
The overriding premise of the Uniform Special Assessments is the fact that the
County is obligated by Federal and State laws and regulations to achieve certain
wastewater treatment levels countywide. The County has determined that such levels
can best be achieved by closely coordinating the construction of central wastewater
facilities throughout the County. Federal, State and local authorities each have
acknowledged the significant public interest in protecting the public health, safety and
welfare of Key's residents and visitors as well as preserving the unique pristine
environment of the Florida Keys and its precious beaches, coral formations, waters and
aviary and marine life. These matters are of critical concern to all residents and
businesses of Monroe County and thus a countywide approach to resolving existing
wastewater issues will best protect these identified interests.
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