1. Report to Council Water System Fire Protection Charges September 27, 2011 A Report to Council Water System Fire Protection Charges

2. What is “ Water System Fire Protection” ? Hydrants Pumps Tanks Large Pipes Maintenance

3.  Water distribution system capacity includes fire flow  Benefits the community as a whole  Costs associated with capacity not included in water user fees o High Service Pumps o Water Storage Tanks o Hydrants o Larger Pipes

4.  Include in customer user rates o Rate increase for customers o Non-utility customers do not pay  Add a line-item charge on utility bill o Additional monthly fee for customers only o Non-utility customers do not pay  Ad-valorem taxes o Transfer from the General Fund (inside city limits) o Invoice to County (outside city limits)

5.  In-city - Annual charge to the General Fund o Charge on a per-hydrant basis o $145.00 per hydrant o 2011 – $ 496,045  Outside city – Invoice Flagler County o Charge on a per-hydrant basis o $145.00 per hydrant o 2011 - $ 44,950

6. Flagler County has chosen not to pay invoices since 2008! Total of Unpaid Invoices = $ 175,595

7.  Auditors have indicated we need to get this resolved and clear up the receivables  City Council has requested we get it resolved, first by trying to work with the County  County Administrator does not want it to be funded with County-wide tax dollars  One option is a separate fire tax district  Paid only by those who receive the benefit  This option has been rejected

8.  ITT-Palm Coast Utility Corporation / Flagler County Hydrant Agreement – Mod 1994  Florida Water Services Corporation Rate Case Settlement - 1999  City of Palm Coast Purchase of Utility 2003  2006 Reinstated the Fire Protection System Fee and Based it on a per-Hydrant Charge  Flagler County Paid the Invoices in 2006 and 2007 totaling $81,490

9.  Beginning with the 2008 invoice, Flagler County quit paying  Unpaid balance = $175,595  County Attorney: “… could you please advise your hierarchy and have the pending invoices for 2008, 2009 and 2010 withdrawn and send us something to that effect so our books are cleared… Then I suppose we have to deal with the 2006 and 2007 past payments that were not authorized, again if you concur with my research. The total is just under $82K. You can return the money to us with some cover document or we can proceed otherwise if you would prefer.”  Meanwhile the City general fund has paid $2,835,040

10.  Continue to charge the General Fund for hydrants inside the City of Palm Coast on a per hydrant basis in accordance with existing rate resolution  Adopt new Resolution to add a monthly fire protection charge on each account outside the City limits  $2.33 per month  Include in Resolution, a monthly charge for past due amounts  $2.28 per month  Charge will remain in effect for 4 years

11.  The City utility system must recover the costs associated with providing fire protection to the community  While the tax-payers of the City have paid for those services, over the last 4 years the taxpayers of the County have not  Staff recommends implementing a monthly fire protection fee to all accounts outside the city limits with additional charges for past-due amounts