https://www.americancityandcounty.com/wp-content/themes/acc_child/assets/images/logo/footer-logo.png
  • Home
  • Co-op Solutions
  • Hybrid Work
  • Commentaries
  • News
  • In-Depth
  • Multimedia
    • Back
    • Podcast
  • Resources & Events
    • Back
    • Resources
    • Webinars
    • White Papers
    • IWCE 2022
    • How to Contribute
    • Municipal Cost Index – Archive
    • Equipment Watch Page
    • American City & County Awards
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Privacy Statement
    • Terms of Service
American City and County
  • NEWSLETTER
  • Home
  • Co-op Solutions
  • Hybrid Work
  • Commentaries
  • News
  • In-Depth
  • Multimedia
    • Back
    • Podcasts
    • Latest videos
  • Resources/Events
    • Back
    • Webinars
    • White Papers/eBooks
    • IWCE 2022
    • How to Contribute
    • American City & County Awards
    • Municipal Cost Index
    • Equipment Watch Page
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Cookie Policy
    • Privacy Stament
    • Terms of Service
  • newsletter
  • Administration
  • Economy & Finance
  • Procurement
  • Public Safety
  • Public Works & Utilities
  • Smart Cities & Technology
  • Magazine
acc.com


Florida village generates revenue from utility

Florida village generates revenue from utility

Most city and county water and sewer utilities meet their primary public service function: providing effective, environmentally sound water treatment
  • Written by Gildan, Phillip
  • 1st February 1995

Most city and county water and sewer utilities meet their primary public service function: providing effective, environmentally sound water treatment and disposal service. But few utilities are fulfilling their secondary public service function: generating proprietary revenues for a general governmental services fund.

A water and sewer utility, like police and fire/rescue, is as much a business enterprise as it is a service. Courts throughout the United States have approved profits as high as 30 percent of gross revenues and 16 percent on equity for government-owned utilities, but few municipalities have taken advantage of this opportunity

Historically, governments have not needed to develop supplemental sources of revenues, traditional means of funding general government services — ad valorem property tax, state income tax, sales tax, etc. — have been sufficient. Most government-owned utilities served only their own citizens ad were funded by general revenues.

Neither of these historical rationales applies today. Ever since passage of California’s Proposition 13, the traditional funding sources for general government services have been under attack. No longer can governments count on readily available tax revenue to fund services.

Additionally, new cities and communities have sprung up in the West and South in recent decades, and rapid population increases required governments to build utilities in advance of growth, rather than simply serving existing communities. As a result, many systems serviced areas outside the government’s boundaries.

In addition, many of the new utility systems were created by private businesses, which did not limit themselves to political boundaries but serviced whatever customers could be found. When municipalities later acquired these systems, they inherited service territories spread over multiple incorporated and unincorporated jurisdictions.

One small southeast Florida village provides a good example of a utility system providing more than just water. Created by developers in the early 1970s as a model golf community for retirees, the village was constructed with significant excess capacity. By the 1990s, its utility system serviced not only its own citizens, but several unincorporated communities. Almost 90 percent of all customers now live outside the village.

Concerned about whether its outside customers were paying the true value of the utility service, the village identified the traditional costs of utility operation: personnel, chemicals, electricity, renewal and replacement, capital upgrades, etc. It also identified many general fund services — such as administrative support, management services, and police and fire services, as well as intangible benefits like tax-free municipal borrowing and operation — that were provided directly and indirectly to the utility system and could not be readily calculated.

The village resolved to incorporate all these additional factors into a comprehensive new rate structure that would equitably apportion the cost of utility service to all customers. To develop the new rate, the village calculated the actual time that its general administrative personnel provided to the utility and allocated personnel costs proportionately between the general fund and the utility system.

Next, the village used a property value paradigm to allocate police and fire/rescue costs. The value of the property within the utility service area was compared with the value of the village property to apportion costs between the general fund and the utility system. A profit factor was applied to the identifiable costs of the utility.

To finish the task, the village then applied a 25-percent surcharge on all out-of-city customers. Florida law permits municipalities to charge a 25-percent surcharge automatically and allows up to 50 percent if the surcharge is based on a documented cost-of-service study.

As a result of the comprehensive utility rate analysis, the village’s general fund now receives an additional $499,000 per year. (The general services budget totals approximately $925,000 per year.) This includes a $165,000 utility payment, $206,000 for the outside customer cost differential and $128,000 profit.

To take advantage of the benefits available to government utilities, owners must re-evaluate their utility systems. In today’s climate, this revenue source may make the difference in maintaining needed services.

Tags:

Most Recent


  • How capital improvement project prioritization helps secure infrastructure funding
    Trillions of dollars in federal infrastructure funding have been made available to state and local governments across the U.S. since early 2020. This money has been allocated to address the nation’s aging infrastructure, much of which is at or near the end of its useful life, and to bolster the U.S. economy in the wake […]
  • Climate bill lauded; predicted to reduce nation's carbon footprint by 40% within decade
    Amid yet another punishing heat wave, the sweeping Inflation Reduction Act, which was approved along party lines Sunday by the Senate, represents a historic step in the nation’s fight against climate change by drastically reducing its climate footprint—while injecting billions of dollars into cities and counties. Along with provisions that cap prescription drug costs for […]
  • Partnership launches no-cost wastewater monitoring service for local governments
    Of all the important lessons cities and counties have learned since the pandemic began, high up on the list is the value of working together. No one community can solve cross-jurisdictional challenges alone—that’s a concept that’s at the heart of a new initiative launched by the National League of Cities (NLC) and WastewaterSCAN that brings […]
  • water
    Investing in America’s onsite wastewater treatment systems for equity and sustainability
    Ensuring that all U.S. households have access to clean water and sanitation will require a re-alignment of resources and investment, not only for centralized wastewater treatment systems but for decentralized ones too. Nearly 20 percent of America’s households today depend on onsite wastewater treatment systems (OWTS or onsite systems), but only about 2 percent of […]

Leave a comment Cancel reply

-or-

Log in with your American City and County account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

Related Content

  • Filling staff vacancies as workers retire is a priority for procurement administrators
  • What “smart city” means for 2021: How digital twins, AI and other innovations drive smart transformation
  • 10 reasons why local governments should outsource all IT: Post pandemic view
  • A call to action: Moving procurement past its pre-pandemic mindset

White papers


Modern American Perspectives on Law Enforcement

14th July 2022

Reimagine the Employee Experience

12th July 2022

How to Assemble a Rockstar Website Redesign Steering Committee

7th June 2022
view all

Events


PODCAST


Young Leaders Episode 4 – Cyril Jefferson – City Councilman, High Point, North Carolina

13th October 2020

Young Leaders Episode 3 – Shannon Hardin – City Council President, Columbus, Ohio

27th July 2020

Young Leaders Episode 2 – Christian Williams – Development Services Planner, Goodyear, Ariz.

1st July 2020
view all

Twitter


AmerCityCounty

How capital improvement project prioritization helps secure infrastructure funding dlvr.it/SWLQB7

9th August 2022
AmerCityCounty

Climate bill lauded; predicted to reduce nation’s carbon foot print by 40% within decade dlvr.it/SWHGQL

8th August 2022
AmerCityCounty

Partnership launches no-cost wastewater monitoring service for local governments dlvr.it/SW7N74

5th August 2022
AmerCityCounty

Investing in America’s onsite wastewater treatment systems for equity and sustainability dlvr.it/SW4Mb9

4th August 2022
AmerCityCounty

With passage of PACT Act, veterans service officers are preparing for an influx in applicants dlvr.it/SW4KTg

4th August 2022
AmerCityCounty

The 5 Procurement Superpowers Shaping the Future of Public Procurement dlvr.it/SW4DqT

4th August 2022
AmerCityCounty

This exclusive whitepaper presents the most recent nationwide data that give an unbiased view of how residents real… twitter.com/i/web/status/1…

3rd August 2022
AmerCityCounty

Capitalizing on hybrid work, these 10 cities are ready to take advantage dlvr.it/SW0cjT

3rd August 2022

Newsletters

Sign up for American City & County’s newsletters to receive regular news and information updates about local governments.

Resale Insights Dashboard

The Resale Insights Dashboard provides model-level data for the entire used equipment market to help you save time and money.

Municipal Cost Index

Updated monthly since 1978, our exclusive Municipal Cost Index shows the effects of inflation on the cost of providing municipal services

Media Kit and Advertising

Want to reach our digital audience? Learn more here.

DISCOVER MORE FROM INFORMA TECH

  • IWCE’s Urgent Communications
  • IWCE Expo

WORKING WITH US

  • About Us
  • Contact Us

FOLLOW American City and County ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookies Policy
  • Terms
Copyright © 2022 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X