The faults of the past may have allowed a developer within the Marco Shores area (Mainsail Drive) to skirt some of the costs which were previously levied upon Marco Island customers of the city’s utility department through impact fees, as well as an 8% surcharge that went to all ratepayers.
Those costs, which covered the building of a new wastewater treatment facility along with increased capacity at the Marco Island plant, were paid for by impact fees assessed to homeowners within the districts required to replace septic systems during the controversial Septic Tank Replacement Program (STRP). Later on, an 8% surcharge was tacked onto water bills for all utility users to help defray the capital expenditures dealing with transmission lines in the streets, but only those in the STRP Districts were required to pay an additional $4,610 impact fee for the rebuild of the plant when that district was brought online.
That point was brought up by former Councilman Ken Honecker when he addressed council during their March 15 meeting. He came forward to oppose any special calculation of impact fees for the developer of Mainsail Apartments, since it would require ratepayers on the island to subsidize those costs.
The developer is planning to build 100 single and two-bedroom apartments on Mainsail Drive. Those units would be served by the Marco Island Water and Wastewater System. That project came before council during its March 15 meeting.
In 2003, when the city acquired the old Florida Water Service Company, which is now the city’s water-wastewater utility, the requirement for providing water for that area, as well as maintaining a failing wastewater treatment facility on Mainsail Drive, became the responsibility of the young city.
That facility served all of the condos along Mainsail, including those at Hammock Bay and the condominiums and restaurants in Isles of Capri. The stipulation to service the Marco Shores area was a requirement of that purchase.
When the STRP was instituted on Marco Island, the city chose to upgrade the wastewater plant on the island and increased its capacity from 2.2 million gallons of effluent to a 5-million-gallon plant. They were looking to future needs, which would include the necessary capacity to handle growth on both the island side of the bridge, and the requirements off island which had become legally binding as part of the purchase of Florida Water.
Over the last three years, as council moved ahead to replace the aging and failing wastewater plant on Mainsail Drive (by providing the necessary infrastructure to accommodate a new state-of-the art plant), the necessary cost-of-services study to determine proper impact costs, as well as a new rate study to determine the fair and equitable costs for providing water and wastewater services, were not done.
The rate structure for water is the same as it was in 1998 prior to the sale of the utility to the city around 2003. At that time, the island was getting 60 to 70% of its water from the RO (Reverse Osmosis) Plant at the south end of the island. Today, the majority of drinking water comes from Source Water Facilities (lakes), Aquifer Storage Recovery Wells (ASR sources) or surface water.
The rate structure which was approved in 1998 for Florida Water Service was based upon RO water and not the ASR system utilized today, and the new membrane system that went online when the first STRP District was placed in service, around 2006. Numerous attempts to create a new rate structure have failed over the years and the only adjustments to rates have come from minimal increases not based upon a valid study, but instead to satisfy bond requirements.
In addition, the city no longer purchases water from the county to service the Marco Shores District as it did since 2003 when the utility was purchased. The city now provides adequate quantities of water from its own existing sources, and pumps that water to the Marco Shores area.
In 2015-16, discussions were held with regard to a special assessment for the Marco Shores customer base, but they failed to gain traction and those discussions were shelved, so a method of acquiring funding for those capital improvement costs from that specific customer base has never been established.
This newest development on Mainsail Drive in Marco Shores will realize an almost $300,000 windfall for the developer by utilizing a methodology whose original intent was to provide aid to restaurants if it was shown they were actually using less water and the demand on wastewater services was less.
Instead of paying the standard impact fee of $621,492, the developer utilized an Alternative Method of Calculation which sets his impact fees at $367,429.89, providing him with a $294,062.11 savings that would not be recoverable by the utility and city ratepayers.
The vote of council was 6-1 in favor of passage of the resolution approving the proposed usage of the Alternative Water and Wastewater Calculation. Unless someone who voted on the prevailing side of the vote to approve will move to reconsider, the issue will be final.
Those who are familiar with the matter are also concerned that a similar loss of impact fees from this loophole may be available to others looking to take advantage of the criteria which made this possible. The only councilor to protest and vote against the issue was Erik Brechnitz.