Is the Palm Bay, FL City Council Surreptitiously Discussing Selling the City’s Water and Wastewater Utility?

palm-bay-utilities

IT WOULD APPEAR THAT THE PALM BAY CITY COUNCIL, WHICH INCLUDES MAYOR WILLIAM CAPOTE, HAS SURREPTITIOUSLY DISCUSSED THE SALE OF PALM BAY UTILITIES.

According to the minutes of a regular City Council meeting on 10.18.2016, “Fran Whale, resident, quoted minutes from the from the Florida  Government Utility Authority (FGUA) with regard to the potential acquisition of the Palm Bay Utilities.”  According to a reliable source who was at the City Council meeting, she asked if any of the council members had had any discussions with any party about the sale of the Palm Bay Utilities within the last six months.  Each council member denied that they had had any such discussions.

But those minutes of the FGUA Board of Directors meeting on May 19, 2016 tell a different story by referring to the potential acquisition of the Palm Bay Utilities.

Here is an excerpt of those FGUA minutes:

“Mr. Robert Sheets (FGUA Secretary and Treasurer) reported to the (FGUA) Board that the City of Palm Bay (Brevard County) had reached out to the FGUA about acquiring its utility system.  The City of Palm Pay has large funding needs for road improvements, has Charter restrictions on raising revenue and therefore has entertained the idea of possibly selling their water and wastewater utility outright to the public sector to generate funding.  The city manager and his staff have met with Mr. Sheets to learn about how the FGUA’s process works in acquiring a system and the City asked for the FGUA to provide more analysis and information as to how this may benefit the City and how this transaction would work. The City of Palm Bay had concurred to move forward with the the preliminary due diligence to develop this information which would take up to 90 days.”

fgualogo

The FGUA meeting was on 5.19.16. The Palm Bay City Council meeting was on 10.18.16.  That’s only five months.  So if the City Counselors did have any discussions with any party about the sale of Palm Bay Utilities within the last six months, they were off by a month.

How much is the Palm Bay Utilities worth?  And what would Palm Bay do with the money?

According to another reliable source, who wished to remain anonymous, City Manager Greg Lynk indicated it could result in a one-time payment of $ 60 – 65 million after paying off approximately $ 35 million of City bond debt.

Once again, according to the FGUA minutes, “The City of Palm Pay has large funding needs for road improvements…

On February 8, 2015 “watchdog reporter” Rick Neale wrote in Florida Today that Palm Bay “reigns as the undisputed rotten-road capital of the Space Coast, where an unfunded $162 million repair backlog persists along 524 miles of decaying streets.

Engineers believe Palm Bay contains 357 miles of failed roads, which must be reconstructed, and 167 miles of failing roads, which require less extensive repair.”

Elia Twigg, who was Palm Bay’s Public Works Director for over three-and-one-half years until she was replaced in August 2015 (along with seven other key Palm Bay officials) said those estimates are at least five years old.”

“We have a $162 million problem. There’s no way we can get $162 million unless we do something drastic, like a bond referendum or something,” Twigg said.

 

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Free image / Palm Bay / Florida Today

But the problem for Palm Bay in securing revenue bonds is that they “must be payable solely from revenues of undertakings for which bonds can be issued that are pledged for that purpose. Consequently, revenue bonds can only be used when the undertakings will be self-sustaining from the revenues pledged.” (Source: Smith, Gambrell & Russell, LLP)

Palm Bay is in a box, because there would be no dedicated source of revenue to pay off the bonds, unless there was a significant increase in ad valorem taxes dedicated to pay the principal and interest on the bonds.  Or take a portion of the current 8.45 milage and dedicate it to the bond payments.  But that would put a strain on the City budget.

So lets’s sell the Palm Bay Utilities, with “a staff of 135 highly skilled and trained professionals.” http://www.palmbayflorida.org/government/departments/utilities

It would be an attractive buy.  Although Palm Bay is only 100 square miles with a population of 104,000, it is only 30% built out.  And there are 32,000 drinking water customer accounts and the Utility provides sanitary sewer services to 15,000 accounts.

Further, according to the Palm Bay website: “The City of Palm Bay is the largest city in Brevard County and 2nd largest city in Central Florida, while only being 30% built-out, which offers high potential for growth, innovation and opportunities for businesses, both domestic and international.”

So Palm Bay resident Fran Whale and the entire Palm Bay community have the right to ask what’s going on and the City Council has a responsibility to tell them.

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One thought on “Is the Palm Bay, FL City Council Surreptitiously Discussing Selling the City’s Water and Wastewater Utility?

  1. Pingback: The City of Palm Bay Apparently Has an Archaic and Severely Restrictive Zoning Ordinance That Allows a “Super Majority”of City Counselors to Approve a Zoning Change. | Vero Communiqué

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