Exh CATTACHMENT C
FEBRUARY 28, 2005 COMMISSION MEETING
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: ~ Policy Options to Encourage Septic Tank Owners to Convert to the
Public Sewer System
SUBMITTED BY: Jim Hanson, '
DATE: February 17, 2005
BACKGROUND: A staff report was recently submitted to the City Commission outlining
various options to amend the current policy to further encourage septic
tanl; owners to convert to the public sewer system in a timely fashion. At
that time, the Commission expressed an interest in several of the proposed
policy options including guidance to amend those options before fmal
approval. The Commission's direction was discussed with the city staff
and this report is to present revised options that hopefully will meet the
Commission's desires.
Raise the cap of the loan amount; The Commission agreed that the present
$3,000 cap for loans should be increased to $5,000. Staffrecommends
that the cap be increased to $7,000 to allow for the increase in costs from
contractors making the sewer conversions.
Lower the interest rate; The City Commission agreed that the old 7%
interest rate is too high for the current market and should be lowered. A
discussion followed about an interest rate that would float based upon the
market conditions. However, after review with staff it became apparent
that we do not have the sophisticated capability to calculate floating
interest rates on our accounts receivable. system and would recommend
instead that a basic rate be set at 4%. The current prime rate is 5.25% and
the current federal funds rate is 2.25%. The 4% rate should cover the
city's administrative cost in handling these loans and recover lost interest.
Utility Cut Offs for Non-Payment; The Commission expressed an interest
in separating the loans from the utility billing system so that customers
would not be cut off for non-payment. To do this would require that
separate bills be sent out to each customer increasing our administrative
cost. Staffrecommends giving the customer a choice of two loan options.
The first would be a loan based on their utility bill with a 4% interest rate.
These would be cut off for non-payment of either the loan amount or the
regular utility charges. A lien would be placed on the house, but there
would be no foreclosure for non-payment. The second option the