Exh 8BAGENDA ITEM SB
FEBRUARY 11, 2002
CITY OF ATLANTIC BEACH
CITY COMMISSION MEETING
STAFF REPORT
AGENDA ITEM: Franchise Fee Levied by the City of Jacksonville on Outside City
Water and Sewer Sales
SUBMITTED BY: Jim HansOA,-C.1
DATE: Januazy 30, 2002
BACKGROUND: Atlantic Beach was notified by the City of Jacksonville that it had adopted
a new franchise ordinance that affected Atlantic Beach's water and sewer
sales outside of ouz City limits. One of the provisions of the ordinance
would impose a 5% Franchise Fee which would go into effect on 10/1/01.
As a result of our concerns over late notification, Jacksonville has since
delayed the effective date unffi Apri12002.
The total amount of the outside water and sewer sales in the current year's
budget is estimated at $2,595.000. Five percent of that amount would
equal $129,750. The Franchise Fee will be in addition to the amounts
collected by Atlantic Beach on Jacksonville's behalf for the Water Utility
Tax of IO% which is already in effect.
At the request of Mayor Meserve, a meeting was held with Jacksonville
Council members Jerry Holland, Warren Alvazez and Elaine Brown.
Many other Jacksonville and JEA staff members attended that meeting.
Mayor Meserve argued that the additional fee would place an unusual
burden on our water and sewer customers outside of the City limits
because Atlantic Beach had already increased the rates in each of the past
two years. The Jacksonville Council members said that they fully
expected Atlantic Beach to pass along the cost to the customers and.
declined to eliminate the franchise fee requirement.
State Law requires that a public heazing be conducted before any
jurisdiction can impose a utility rate on outside City customers that is
more than 125% of the inside City rate. Because this Franchise Fee would
be in addition to that current 125% rate, we have received an opinion from
our City Attorney that a public heazing must be conducted if Uxe
Commission wishes to consider passing on any portion of that Franchise
Fee to the customers.
BUDGET: The estimated cost to the City of Atlantic Beach for the 5% Franchise Fee
would be approximately $125,000 per yeaz. Becanse there would be
seven months remaining in our current fiscal yeaz after the April 1 a date,
the cost to Atlantic Beach during this year is estimated at approximately
$72,900.00.
AGENDA ITEM 8B
FEBRUARY 11, 2002
RECOMMENDATIONc Decide if the Commission wants to call for a public heazing to consider
passing along some or all of the franchise fee.
If the Franchise Fee is absorbed by the City without a general rate
increase, the net effect will be a reduction in the amount of funds available
for capital investments in water and sewer infrastructure.
We expect that other rate changes may be needed by October 1, 2002.
The SJRWMD is reviewing City applications for renewal of water
withdrawal permits and may require some rate amendments to promote
conservation. Second, we discussed the need for some (revenue neutral)
restructuring to bring our rate structures more in line with those of
neighboring utilities, but postponed these changes until after the last two
yeaz's rate increases. A rate increase to keep up with inflation over the last
12 months may also be advisable.
It may be prudent to consider a12 these factors at one time in connection
with the yeazly budget process.