COMMISSION WORKSHOP - May 06, 2025

Good morning, and welcome to the May 6, 2025 Commission Workshop. Calling this meeting to order, and we're going to start with the Pledge of Allegiance from Jen, our city attorney. Pledge of Allegiance to the flag of the United States of America, and to the republic for which it stands, one nation, under God, indivisible, with liberty and justice for all. Okay, well, welcome everybody. And we're going to go to presentations, which we're going to start with 56th Annual Professional Municipal Service, oh, I'm sorry, Municipal Clerks Week Proclamation, and we'll return to Vice Mayor. Thank you very much, Mayor. You know, sometimes as parents, you end up saying, I was born to raise this child or whatever. I came here this morning, and I'm blessed to read this. And when you talk about the city clerk's office, so many times that word clerk has this old-fashioned connotation to it, like secretary and things of that nature. But that is far from the truth with the city clerk's office. They are such an integral part of the community that you, for the four women that are standing before you, what they do and their connection between us and the community, the community and us, between the city commission and staff. And it's just a very well-balanced, efficient, professional department. So I'm extremely proud to read this this morning. And it is the 56th Annual Professional Municipal Clerks Week, May 4th through May 10th. Whereas the Office of Professional Municipal Clerk, a time-honored and vital part of local government, exists throughout the world. And whereas the Office of the Professional Municipal Clerk is the oldest among public servants. And whereas the Office of Professional Municipal Clerk provides the professional link between the citizens, the local governing bodies, and agencies of government at other levels. And whereas professional municipal clerks have pledged to be ever mindful of their neutrality and impartiality, rendering equal service to all. And whereas the professional municipal clerk serves as the information center on functions of local government and community. And whereas professional municipal clerks continually strive to improve the administration of the affairs of the Office of Professional Municipal Clerk through participation in education programs, seminars, workshops, and the annual meetings of their state, county, and the international professional organizations. And whereas it is most appropriate that we recognize the accomplishments of the Office of the Professional Municipal Clerk. Now, therefore, I, Jeff Gow, by the virtue of the authority vested in me by the Mayor of the City of Dunedin, and on behalf of this entire City Commission, do hereby proclaim the week of May 4th through May 10th, 2025, as Professional Municipal Clerk's Week, and further extend appreciation to our Professional Municipal Clerk, Rebecca Schlichter, and to all the Professional Municipal Clerks, for the vital services they perform and their exemplary dedication to the communities they represent. Thank you very much. Thank you, Vice Mayor, Mayor, Commissioners. So appreciate this. But really, this standing behind me, I could not do what I do on a daily, weekly, monthly, yearly basis without each of them. And so I get it's Municipal Clerk's Week, but it's really our entire office that just, I am so thankful, and I'm thankful for each of you for the opportunity. So I appreciate that. Thank you so much. I'm going to get a picture here. We promise we're going to get our agenda items in on time this week. We're going to get our agenda items in on time this week. That's great. And I know the Mayor's Council, I think this week, we're going to be recognizing the clerks and honoring them for all they do, because they are an integral part of everything, you know, protection of records and sunshine laws. So thank you. Okay, we're going to go to recognition of 2025 National Public Works Week. And I will turn to Commissioner DeGuard. Thank you, Mayor. First of all, I want to note an objection. I hate following Jeff on proclamations. He's a pro at this. And I'd like to ask, oh, here they come. I was going to invite all of you up. And I'm a little intimidated if you want to know the truth. Once again, they're three steps ahead of us. Yeah. Once again, that's right. That's awesome. Oh, it's good to see all of you. And I'm glad you could make it today. National Public Works Week is between May 18th and 24th. Before I get started on the proclamation, I don't know if any of you ever get by our offices upstairs, but on my wall is a public works project. It's in three panels. It was the largest project built in Europe up until the Eiffel Tower was built. It's called the Pont du Gard. I'm a little proud of that pont as they go. But it gives you an idea of what public works do. That project was built 50 A.D. It worked as a water project for a thousand years. A thousand years. And it still operates as a bridge to this day. We don't realize that public works is subterranean, surface, and aerial. It's three dimensions. And it makes our society worse. There is no great society without great public works. So I'm really honored to do this proclamation today. Whereas public works professionals focus on infrastructure, facilities, emergency management, and services that are of vital importance to sustainable and resilient communities and to the public health, high quality of life, the natural environment, and well-being of the people of the city of Dunedin. And whereas these infrastructure, facilities, and services could not be provided without the dedicated efforts of public work professionals who are federally mandated first responders, engineers, managers, and employees at all levels of government and the private sector who are responsible for rebuilding, improving, and protecting our nation's transportation, stormwater, water supply, water treatment, sanitation system, fleet vehicles, and equipment, public buildings, and other structures, and facilities essential to our citizens. And whereas it is in the public interest for the citizens, civic leaders, and children in the city of Dunedin to gain knowledge of and to maintain an ongoing interest and understanding of the importance of public works and public works programs in their respective communities. And whereas the year 2025 marks the 65th annual National Public Works Week sponsored by the American Public Works Association slash Canada Public Works Association. Now, I therefore, Tom Dugard, by virtue of the authority vested in me from the mayor of the city of Dunedin and on behalf of the entire city commission, do hereby proclaim May 18th through 24th, 2025, as National Public Works Week. I urge all our citizens to join the representatives of the American Public Works Association and government agencies in activities, events, and ceremonies designed to pay tribute to our public works professionals, engineers, managers, and employees, and to recognize the substantial contributions they make to protecting our national health and safety and advancing quality of life for all. Thank you. Thank you all very much. We'd also like to take this opportunity first to thank everyone and to remind everyone that we do have a public works department, but public works extends far beyond that in this city. Utilities and park ops are an integral part of maintaining our infrastructure and those items that you've so nicely read. We wouldn't be able to serve our citizens without all of the staff. They put their heart into it, and we do appreciate that. Good job, guys. Gals. Gals and guys. We'd also like to extend our invitation for the 2025 Public Works Equipment Rodeo that will be at Highlander Park. People, Purpose, and Presence, you can see by our poster. That's what inspires public works professionals to dedicate their lives in service. Thank you. And he's got his team colors on, too, for Public Services Week. So we're inviting you all to come and celebrate with us. There are very maybe behind-the-scenes skills that are often displayed by our staff, and they operate different pieces of equipment. And it's your opportunity to come talk with them, see them, try out a piece of equipment. We had a couple of our staff compete locally and then regionally and place. Now we're going to have one of them go on to international competition in October. So they are very skilled, and we appreciate that, too. But they're everyday heroes, and so we'd like you to come help us celebrate with that. It'll be May 21st on a Wednesday, and it'll be from 8 a.m. to 3 p.m. You're welcome to come and have some lunch at Highlander Park. It's on our calendars, too, I'm pretty sure. I think I saw it. We get an ice cream ticket. Yeah. That's the best part. So, but please come and join us and take a look at some of the different services we provide and the equipment that we use and some of the skills of our staff. And we thank you very much. Yeah, we're going to get a picture, too. One, two, three. Thanks for all you do, you guys. You are our backbone. Sorry, guys, no muffins are left from yesterday. I thought it was Monday Muffin Day or something, so that's awesome. Yeah, I know they did. We looked for them. Okay. We are going to go now to something obviously very important, Water Safety Month 2025 proclamation, and we'll all turn to Commissioner Zandbergen. Good morning and welcome. You know, it's hard to take just one month and make it into water safety. Very rarely do you find a hotel or an apartment complex or a condo, and in our case, a backyard. There's not exposure to water. And, of course, a wonderful family fun day can turn to tragedy within seconds. You know, whether it be our community pool or our intercoastal waterway, our local beaches. You and I talked about this. We did. Our lifeguards teaching kids to swim. And not only kids, but, you know, there's adults that can't swim and whatever we can do to make a Dunedin resident or even a local resident safe around water and comfortable around water. So, if you don't mind, I would like to read this proclamation. Absolutely. Water Safety Month 2025. Whereas the City of Dunedin is committed to ensuring the safety of all residents and visitors to our great city, and whereas residents and tourists alike enjoy our city's natural water resources and man-made recreational water facilities, and swimming and aquatic-related activities play a vital role in physical and mental health and enhance the quality of life of all residents and visitors. And whereas the Centers for Disease Control and Prevention reports that annually there are an estimated 4,000 fatal unintentional drowning, including boating-related incidents, and 8,000 non-fatal drownings, resulting in an average of 11 fatal drownings per day and an average of 22 non-fatal drownings per day. And whereas drowning is a single leading cause of death for children ages 1 through 4, except for birth defects, the second leading cause of injury-related death for children up to age 14 after motor vehicle crashes, and among the top four causes of death for people ages 54 and up. And whereas comprehensive water safety education is essential for everyone, including children, parents, and caregivers, in order to be aware of water safety rules and programs to help prevent drownings and recreational water-related injuries. And whereas basic water safety tips include always having an adult supervision of children, providing children swimming lessons at a young age, and installing barriers when a child or vulnerable adult has uninterrupted access to a body of water, and everyone, especially caregivers, should learn CPR and have safety equipment, such as emergency flotation devices. And whereas Water Safety Month in Dunedin is an opportunity to promote water safety, as well as provide education in our coastal community regarding prevention of recreational water-related injuries, illnesses, and deaths. Therefore, I, Stephen Sandbergen, by the virtue of the authority vested in me in the Mayor of the City of Dunedin, and on behalf of the entire City Commission, do hereby proclaim May 25th, May 2025, as Water Safety Month in Dunedin, and encourage all residents to take the pledge to be safe swimmers and make water safety a priority, especially as a coastal community. Thank you. Thank you. Good morning, Mayor, Vice Mayor, Commission, City Manager. My name is Alicia Castricone. I'm the Program Coordinator at the Highlander Pool. Water safety is a month of awareness. Nationally, as you said, there are about 11 deaths per day. That's a lot. Our most affected population is our ages 1 through 4. How do we lower that number? Education, outreach. We in Dunedin are doing our part in education and outreach, and I want to share a little bit of that with you. Aquatic staff hosted several water safety pop-ups around town. That's where we pop up in parks, the museum, and other locations to give out water safety and fit children for life jackets. Baycare helped sponsor by allowing us to purchase some of those life jackets with their funds. The Kiwanis Club of Dunedin has partnered with Dunedin to offer 16 years of swim lessons, teaching over 1,700 children how to be safe in and around the water. Currently, we have 50 students enrolled in this year's program. The Dunedin Youth Guild and Kiwanis Club of Dunedin have partnered with the city to provide swim lessons to the VPK classes at San Jose Elementary. This is the third year for this program. There are currently 22 students enrolled. Between the two programs, about 77 children will receive free swim lessons this year. That's huge. Lastly, education about layers of protection. Most drownings occur, like you said, in the backyard pool. So having door and window alarms, pool fences are key to keeping our children safe. We have also found that drownings tend to occur during family functions. This is where this water watcher badge is very useful. The adult watching the children must be free of distractions and focused on the children who are swimming in that pool. Adults can pass the badge around to create shifts. That way, the duty is shared amongst all. So thank you for allowing me to speak today about water safety, and hopefully our community's diligent efforts can save a life. Thank you so much. Picture two. Here we go. We'll get in this picture. I just have to say that's why our new pool is not just a luxury. It's something very important in our very water-oriented community. Okay. Our next one is going to be Historic Preservation Month Proclamation, and I will turn that to Commissioner Walker. Thank you, Mayor. You know, we are defined as a community by our history, who we are, what we have done, and where we live. And there really is no more important duty, civic duty, than to acknowledge and celebrate and honor that legacy in history. Preservation's not just about preserving our structures, our streets, but it is. But it's more importantly to preserve our character and our spirit. And our historic preservation work that we do here in Dunedin makes me very proud. And I will say that Claudia and I were proud to the point where we designated our home. And it just continues to provide us surprises and just happiness. And so it is absolutely my honor to read this Historic Preservation Month proclamation. And I see members of the Historical Preservation Advisory Committee. So if you've come on up. Historic Preservation Month, May 2025. Whereas, Historic Preservation helps to maintain the character and unique identity of communities. And Historic Preservation is essential to the economic, social, and cultural well-being of cities. And whereas, Historic Preservation is an effective tool for promoting sustainable development, revitalizing neighborhoods, fostering local pride, promoting resident and visitor engagement, and maintaining community character. And whereas, the City of Dunedin recognizes the importance of preserving its rich history and cultural heritage. And whereas, on October 2018, the City Commission adopted Chapter 111 of the Land Development Code that encompasses the preservation, protection, perpetuation, and use of historic landmarks in the City. And whereas, the City Commission established the Historic Preservation Advisory Committee, H-PAC, to safeguard the heritage of Dunedin by preserving the resources of the community which reflect elements of historical significance. And whereas, the H-PAC is tasked to identify, designate, and make recommendations on regulating historic landmarks to preserve their historical significance. Whereas, the H-PAC maintains the City's inventory of historic structures, and the City's local historic landmark designation program. And whereas, the National Trust for Historic Preservation established the month of May as Historic Preservation Month in 1973. Now, that's historic. As a way to promote historic places, to instill national and community pride, advocate heritage, tourism, and show the social and economic benefits of historic preservation. And whereas, the City of Dunedin is committed to promoting the importance of preserving our City's historic resources for future generations. Now, therefore, I, Robert James Walker, by virtue of the authority vested in me by the Mayor of the City of Dunedin, Florida, and on behalf of the entire City Commission, do hereby proclaim May Historic Preservation Month in Dunedin, Florida, and call upon the people of Dunedin to join our community, neighbors, and citizens across the United States in recognizing and participating in this special observance, and encourage all residents to celebrate and promote the importance of preserving our City's rich history and cultural heritage. Thank you, Commissioner Walker. That was very beautifully said. Thank you very much. Mayor, Commissioners, to Jennifers. We thank you all for your continued interest and support of historic preservation. It's a component, a very important component, of preserving our very storied history here in Dunedin. I also want to recognize Deanna Mitchell, who's a member of our HPAC. I want to recognize Frances, who puts up with us, and she works very hard to be our liaison. And Vinny Luisi, and I also want to say Vinny just won a very big award from the Dunedin History Museum for his many years of being really a very important historian of our history. So I want to recognize you, Vinny. So today we do celebrate historic preservation, and we thank you all, and we appreciate it. Thank you very much. Do you have anything? Thanks for all you do, and let's get a picture up here. Thank you all. Thank you, former Vice Mayor. Okay, and next we are going to go to public art recognition, City Hall Gallery. And I'm going to ask Elizabeth and Nicole to come forward to introduce the artist so we can recognize him. Okay. Good morning, Mayor, Commissioners, City Manager. This is Nicole Delfino, Strategy and Sustainability Manager. We're here today to celebrate the Chamber Art Gallery and the rotation, really curated by Elizabeth Brinklow and Mary Childs. And Elizabeth is here to talk a little bit about this installation and introduce our artists. Great. Thank you, Nicole. Mayor, Vice Mayor, Commissioners, the Jennifers, and staff. It's my absolute honor to be here this morning to introduce to you Kirk K. Wong, who is the Professor of Visual Arts of Eckerd College and a Board Director of the Ringling Museum of Art. He is a painter, a sculptor, a photographer, a mixed media artist, as well as an educational software developer. He was born in Shanghai, China, and received MFA degrees from the Donjing Normal University in China and the University of South Florida. In 1986, Mr. Wong moved to the U.S. as an exchange scholar, continuing his graduate studies. After receiving his second MFA, Mr. Wong was appointed as the art director of a design firm and designed many projects for the entertainment industry, such as Disney World, MGM Studio, SeaWorld, and Busch Gardens, etc. In early 1990s, Mr. Wong taught at the Ringling College of Art and Design in Sarasota. He joined Eckerd College as a tenured, full-time faculty in the fall of 1993. Mr. Wong has exhibited his artworks in art galleries, not-for-profit institutions, and museums locally, nationally, internationally, such as the Museum of Modern Art, PS1 in New York City, and the National Museum of Art of China in Beijing. His works have been collected by museums, galleries, and private collectors in the U.S. and Asia, including the National Gallery in Beijing. Mr. Wong was awarded the Bronze Medal by the Cultural Ministry of China, and he is also the recipient of numerous grants and awards from many distinguished institutions, such as the National Endowment for the Arts, the Freeman Foundation, the Ford Foundation, the National Asian Network, and the Florida Arts Council, etc. In early 2000s, Mr. Wong led a team of educators, artists, and community software engineers to develop a computer learning system for early education, which was used by over 1,000 schools nationwide. In 2020, Mr. Wong was appointed by the Mayor of Tampa to serve on the Public Art Committee of the City of Tampa. He was also appointed as the board member of the Ringling Museum of Art in Sarasota, Florida. He maintains a studio in Tampa and New York City, and he often travels back to his hometown, Shanghai. The exhibition September in Snow is one of the most important exhibitions we've had here. We love them all, and each one has taken their unique space within our City Hall, both here in the new City Hall and in the old City Hall. I am proud and honored, both for myself and my co-curator, Mary Childs, to introduce to you Kirk K. Wong. Thank you, Elizabeth. Thank you, Madam Mayor. Thank you, City Council. It's my great honor to be here as a resident for the Tempe Bay area for almost 40 years. I love this place. I did a lot of projects for this place, and really it's my great honor to have this opportunity to have my work displayed in the City Hall here. The work, it's very important for me. It's actually the memory of the tragedy, September 11th. And when I ask my students, most of my students are born at the September 11th, the day or maybe even after, so the memory for them may not be as we remembered when that happened. Why snow in September? Because I remember, I'm also a resident of New York City, and when the building tower goes down, it's just like snow in September. So basically, even this work looks abstract. So they're actually based on photos. For example, that's the first one of the September 11th. So, and of course, I try not just describe the tragedy, but also what is the hope. So I have these writings, the roots, growing, even if they look abstract, but also it shows the hope. So the four paintings is four seasons, from winter, spring, summer, and fall. So this way, hopefully, and through artistic creation, we keep that memory and also keep that hope. So that's the idea behind this work, even if it looks abstract. Thank you very much. Thank you, dude. Did we have one or two questions? Yes. Any questions to ask? Anyone? Well, so we'll make a few comments, but thank you very much. Thank you. Thank you very much. Okay. Well, I'll turn to four comments. Vice Mayor, you want to follow? Thank you, Mayor. You know, people are, everybody's an artist until somebody tells them they're not an artist. And I'm one of those self-proclaimed people that, you know, or the definition of art is something that I can't do. And that's where I place my skills and ability. And what I really like about your work, Mr. Wong, is the complexity about it, that you can look at your work, this series of work, and really not understand it until you understand the meaning of it. And then you can't walk away from it, right? There's so much depth to it and meaning to it. And our City Hall complex has a reputation of we don't have public art in our City Hall. The City Hall is actually in a museum. And it is pieces of your work that help label, and I'm very proud of that label. I think we all are, the community. And so to have your work displayed here, so it is our honor to have it here. And so thank you for the work that you do. We greatly appreciate it. Thank you. Thank you, Vice Mayor. Commissioner Sandberg? Sir, after reading your resume yesterday and having Elizabeth recap it and even add some things that I didn't read, all I can say is congratulations. You are a very talented man. And thank you for what you're bringing to City Hall. And I would have never thought that was September 11th because of the abstract. But thank you. Thank you, Commissioner. That's my honor. Commissioner Walker? Thank you, Mayor. You know, it's, Mr. Wong, your depictions there are almost overwhelming. They're beautiful. And, you know, as I look through that, and I did read the background before to understand the inspiration behind these, but, you know, having known many of the first responders and active duty members that had participated on that fateful day, I, you know, for me, this is just completely intertwined. And I just, I'm, I don't even have words to describe out, you know, the understanding of this work is, you know, is what it is. And anyway, thank you for sharing this with us. It's truly, truly an honor. Thank you. Thank you, Commissioner. Thanks. Commissioner Dugard? Thank you, Mayor. I can get lost in either, any one of these. It absorbs you, and I could lose a day just on one of the panels and not have wasted any moment of that day. It's an exciting piece. It's also a tragic piece. And when something grabs what you have emoted and says that's it, it means something to you. They do that. Thank you. Thank you, Commissioner. And I totally agree, all your comments, because when we see a tragedy, like Greek tragedy in a way, but also we see beauty from the tragedy, see the culture, and also inspiration in a way that life is going on, and hopefully we can inspire the younger generation to remember what the memory is but move forward. And that's my idea. Yeah, I really appreciate your reading to these works. Yeah, I really appreciate. Thank you. And I'm just going to wrap this up by saying, as I listen to your resume, I'm like, oh, my gosh, how did we get this guy's art here in Dunning City Hall? Very amazing, very impressive, and we're honored to show this art. And now that I really understand the meaning, I'm really honored to show this art. So thank you. Thank you for letting us be part of your art world. It means a lot to us, our community. Thank you. Thank you, Madam Mayor. Okay, so I guess we get a picture. Yeah. Okay, so I don't know if I was told what the meaning of that art was before. I forgot. I didn't know. So I guess early on we should probably try to understand it, because it takes on a whole new meaning when you understand it. So, okay, we're going to go to citizen input. Does anyone in the audience wish to speak on a topic that is not on the agenda? Okay, seeing no one, I'm going to move on to our next item, which is our only workshop item as we're kind of starting into our new process here. The water and wastewater utility revenue sufficiency study results and discussion. I'm going to first ask the city manager to kind of set the stage as to the process and what your expectation is of the commission this morning. Yeah, thank you very much. And good morning, everyone. Good morning, Mayor, Vice Mayor, and Commissioners. So before you is the first presentation that we're doing to the city commission of the water-wastewater rate study. Some time ago, the city commission hired Ruff Talis to review all of our needs in our utility, and that includes capital needs. It includes debt payments that we have on the books already. It includes, obviously, labor personnel, retention of our staff moving forward, and all those types of things that are involved in a utility and running a utility. Just for those who may be watching, our water-wastewater is what we call an enterprise fund, which means it's operated like a business. So we essentially use the user fees that we collect in order to run the utility, in order to run the business. And the rate study is looking at, very fundamentally, the needs of that business moving forward vis-à-vis the rate that we're charging our customers. And two things. We want to be, number one, fair to our customers. But number two is most certainly to support that utility company, if you will, moving into the future. Ruff Talis has done a rate study before, several rate studies for us, actually. In the past, we've always been very impressed with their work. They, first of all, look at, as I said, all of our needs. And then they sit down with staff several times to go over those needs. They forecast in the future what our needs will be. And then again, sit down with staff. And so we have Nan Bennett and Alice Gonzalez. And we have Gonzalez. Right? Did I get that right? Yeah. Okay. Sorry about that. And Clay Watkins sitting there. And they have spent hours and hours with Ruff Talis going over this rate study. So it has been at the Board of Finance. And we will share with you some of the discussion at the Board of Finance level. It is before you, as I said, for the very first time. And so this is the first time that the five of you have had an opportunity to review the rate study, to discuss it amongst yourselves, and give what we call consensus direction to staff. You won't be voting. You'll be discussing and then telling us which direction you'd like to go in. Keep in mind that we have first readings scheduled for May 22nd. We need the rate in place by October 1st, which is our new fiscal year. And we also are responsible for providing services to unincorporated areas. And the reason why we have set first reading relatively quickly is because we need to provide proper notice to those in unincorporated areas. So that said, I will turn it over to Nan. To the Mayor. I'm just going to add. To the Mayor. I'm sorry, Mayor. No, I'm just going to add one other thing from a perspective of we've not seen this before. This is a work session. And even though the first reading is scheduled for May 22nd, I just want to make sure, you know, this is our time that if we've got questions, dig deep. Obviously, some of the percentage increases are not insignificant. So I think it's also the time that if we need more information prior to that first reading, we make sure that that's clear, and so that we're feeling comfortable with kind of the backbone of what kind of leads us to this recommendation. So I just kind of lay that as a foundation so the rest of the commission feels comfortable, again, you know, kind of mixing it up to make sure we understand what this is all about. So thank you. Thank you, ma'am. Good morning. Nan Bennett. Let me read what this is. Utility Operations Division Director. Trying to figure out what I'm doing here. Good morning and welcome. And I wanted to also introduce, maybe for the first time, our water plant manager, Megan Ceresi. She's here also participating. You were somewhat overwhelmed by proclamations this morning, but it is National Drinking Water Week this week. That's good. Okay. We're going to break for water. Okay. Yeah. So we're talking about the right things. We have also brought this same presentation earlier on April 16th to the Board of Finance and done the same presentation. The most recent, before this particular effort, water and sewer rate study was completed in 2020. It established the rates that we had for water and sewer from fiscal year 21 through 25. And at that time, the funding was adequate to cover all of our financial, capital, and operational needs. However, the utility fund has experienced higher than anticipated operational maintenance costs due to inflation over the last several years. I don't think that's a surprise to anybody who pays bills that everything has gone up. So the fiscal year 2025 adopted budget last year, when we were talking about that, also showed an ending available net position in the negative in this fund as early as fiscal year 26. So that accelerated our need to go ahead and move forward with this revenue sufficiency study. So, and that was despite all of staff's efforts to look for efficiencies and savings and find outside funding sources for anything we could. Due to these increased costs in construction and operational costs, it's imperative that we reevaluate our revenue sufficiency and our utility rates charged to our customers for the services going forward so that we can continue to fund these important services. As the city manager said, we operate as a business. We have to bring in everything we need to run the utility from the water and sewer rates that we charge to our customers. So back in June of 2024, when we started seeing that, you know, that the inflation pressures were very difficult on the utility, we engaged the assistance of Raftelis to help us do a comprehensive evaluation of the utility and where we stood. And Terry Boulveri and Tristan Townsend will go over their results of that study for you and do a presentation of what they've found and what we have and need moving forward. And then afterwards, what we'd like to do is engage in a discussion with the commission as to what's our best path forward to meet the needs of the utility so that we can do that within the resolution and keep moving forward in providing these vital services. So at that, I will turn it over to Terry. Good morning, everyone. We have a short or more abridged presentation than the one presented at the Board of Finance, about 18 slides for you today. And we'll be echoing some of the things that you just heard from both Jennifer and Nan. For members of the public, my name is Terry Boulveri again with Raftelis. And, you know, we're thankful to be of service here for the city today. And as we go through this presentation, we would just offer that, you know, if you have a specific question or something comes to mind, please feel free to, you know, ask your questions as we're going through. We've constructed the presentation for you today with some relevant background that we think is necessary for you to understand, which is going to focus a little bit on, you know, why it is that we needed to do the financial planning study and a little bit of overview of utility operations. Then we're going to talk a little bit about what was the scope and the objective or the methodology for the study that we performed for the city. And then our key findings, which are summarized, which we run through a few slides there on that. And then finally, our finding summary for you at the end, conclusions for your consideration. All right. So I won't spend too much time on this slide. I think Jennifer hit it. You know, the utilities is established as an enterprise fund, which means that we have to set fees to recover the cost of service. It's not funded from the general fund or taxes. And therefore, we have to do these types of evaluations to assure financial sustainability for the business operations. When it comes to water and sewer utilities in particular, they're very capital intensive businesses with nonlinear investments. So a lot of those investments can occur as the city is growing with population booms, as well as R&R needs that need to happen once the infrastructure reaches a certain age. We've noticed over the last several years that we made some pretty significant reinvestments into the utility, based on our analysis and discussion with Nan and the team. Mainly, the water treatment plant was redone, and now we're looking towards the improvements on the wastewater plant. Nan, did you want anything there? So, excuse me one minute. Before we start, should we take a break? Because I'm noticing my commission's taking breaks. So we're going to take five minutes before we like to get started, okay? Sounds good. Thank you. Yes, no problem. I guess I was next. Yeah. Okay. I can take a hint. He's ready now. Cool. Okay. Thank you. I was just mentioning to Commissioner Walker, I'm so thankful that you all felt that this was important, that you wanted a break so you could get every minute of the presentation. That's right. That's right. So right before we broke, I think, Nan, I was talking a little bit about how utility infrastructure, it's a very capital intensive business, and that the investments that you make are not always linear, meaning that we're investing the same amount every year, over year, over year, we have phases that we go through, and the assets have their own service lives. And utility infrastructure, piping infrastructure can have a 50-year or more service life. In fact, some of the studies I've done up in Virginia have had over 100-year-old wooden pipes still in service. They had taken it out maybe like five or 10 years ago. So utility infrastructure can last a very long time, but when it breaks, it breaks. And making sure that you're keeping on top of your infrastructure is a very critical aspect to the operations that staff does. And I think Nan was just going to mention a few things about some of the bids. So coincidentally, today is also the opening of the wastewater treatment plant electrical rehab rebid. And that's the single largest project that we have in our capital improvement program. It's somewhere in the vicinity of $20 million. So we should have some idea of how we're landing with that one project later today. Thank you, Nan. So we'll have a slide that'll talk about the capital improvement needs, and then I'll run through what the top 10 projects are. It's not specifically laid out on the slide, but I'll spend a little bit of time talking about that. But the point here is that this is an enterprise operation, as Jennifer mentioned, and we want to make sure that we've accounted for all of these non-linear expenditures in addition to our annual costs that we experience on a year-over-year basis, our operating costs to fund our labor and things of that nature. So some of the background is that we serve about 12,000 connections in the utility, as well as 4,000 reclaimed customer. We have about 88 employees. Average daily flow on the water system, about 3.4 million gallons per day are being produced on average, and 2.8 million gallons per day of reclaimed water is being produced, along with treating about 3.7 million gallons per day on the wastewater plant. You have over 173 miles of water mains, 152 miles of sewer mains, and not listed as about 78 miles of reclaimed mains in infrastructure. For all of that infrastructure, the city has invested approximately $161 million at original cost on the books. If we were to adjust that for just inflation based on the year that those assets were placed in service at original cost, that would approach closer to $382 million. And we've got a slide that shows a little bit of that based on the timing of when you've made those investments in the next coming slides. Yes. When you read that first line, 3.4 million gallons, you used the word produced, and it says provided. Is that the same word, or did you misspeak? No. I mean, you produce 3.4 million gallons per day. And I think, you know, I'm using them interchangeably. So, yeah. So, I think Nan touched on it, too. Inflation has been a pretty significant cost increase driver, not just for, you know, here in the city of Dunedin and utility operations as an industry as a whole, but I think nationwide we've seen pretty significant cost increases, many of which are sort of driven by energy prices and other factors at play, as we all know. The unique thing about this particular study is that it's happened in really short order. And some of the drivers for that are somewhat evidenced by the chart that you can see. And it's broken down between direct personnel costs and all of our other operating costs. So, we've seen personnel costs since 2023 increase, you know, pretty significantly. That was needed to maintain staff. We were, the understanding is that we were losing staff to other municipalities potentially, and we needed to remain competitive. And so, there was a pay study that was done, and there was a stepladder scaling and things of that nature. It's important, just from my perspective, it's important for utilities, as I've learned over the years doing these engagements, to maintain quality staff, because the thing that happens if you don't have a good operator, let's say, at your plant, is the cost of operations can be much higher than what they actually are. Case in point, with the wastewater treatment plant, that is almost like a zoo, a bacteriological zoo. And to maintain the appropriate balances in there, you've got to maintain a good balance of oxygenation, as well as chemical feeds. If you have a new operator that hasn't been educated on that particular zoo, each zoo is different out there, the cost can be pretty significant in terms of the amount that you might be spending on chemicals, as well as your field operators that understand and know to do the appropriate repairs and replacements, and can better identify the condition of the infrastructure when they go out to survey or do repairs. They can get a good feel for that. So having institutional knowledge within your staff and good operators and utility plant staff, as well as administration, provides for a sound financial operation and a better, more cost-effective operation. So it's an important investment that needs to be made at different points. And one of the things of the cost increases that we've seen over the last several years. The other thing that you'll also notice... Excuse me, let me just ask the commission. We didn't really say this in the beginning, but does everybody want to wait for our main questions until at the end? I mean, if somebody kind of changes their mind midstream, let me know. But usually we wait until the end for any major questions. But everybody good with that? Okay. Okay. Okay. Go ahead, sir. Okay. Thank you. So the other element here on that lighter blue bar is a pretty significant increase. And that's going to cover some of our other costs. But on the next slide, I'll provide a little bit more detail. In aggregate, if we were to also compare these cost increases to what we've seen in the national average for utility cost increases, about 26% since 2019. So pretty significant rise since about 2019 in the cost of operations for utilities. So you can think chemicals, materials, supplies, labor as well. And these types of cost increases don't always hit utilities in the same way. Some utilities might experience these cost increases before other utilities realize them. And we'll talk a little bit about that when we talk about the comparison benchmarking. So right here is a table that breaks down those cost increases just for the last three years since that's where we've seen the real big increases in cost. And you can see by dollar amount the relationship of the cost increases with personnel, indirect ISF, general fund transfers. A lot of the indirect ISF and general fund transfers can also be ascribed to labor costs too in a sense, as well as the cost to cover things like the new administration building that the utility helps cover some costs for. But in addition to that, an even bigger cost increase, more on line with our labor costs is our repairs and maintenance. So many utilities have made investments 20, 30 plus years ago. And that infrastructure is coming time for replacement. And we have to do ongoing repairs and maintenance in the field, obviously, for that infrastructure. And it's important to do that because if we don't do certain types of investments like, you know, and we'll talk more on the capital side, like slip lining, for example, pipes. If you slip line a pipe, that can extend the life of the pipe. But if we don't get to it fast enough, then that pipe fails, we have to replace it. And replacing it is more costly than, for example, slip lining it on the sewer side. So there's an important element to being proactive with our capital investments, which is why when we perform these types of studies, we pay close attention to the investments that haven't been made, when they've been made, and what staff is identifying along with their consulting engineers and internal engineers on what those needs are. So the chart right here demonstrates the capital investment. And you can see the light blue represents the original cost. But then we apply inflation adjustments so you can see. So apparently, there's some infrastructures that dates back to the 1950s. But much of the infrastructure that we have today really occurred between the early 90s. And so if you think about it, there's a lot of that infrastructure, like the treatment plants that have been needing reinvestments, which have been done more recently. When we assess fiscal sustainability, we talked about how we're accounting for those annually recurring costs, like operating costs, which we discussed how those costs were going up. But how do we, in a financial plan, account for those non-recurring capital needs? And how do we have a check, if you were, for how much money we need to be setting aside? So we sought to do that through this evaluation that we present for you. So I'm just going to step you through the calculations briefly. If you think back to the slide that we just presented on the original cost of that infrastructure, and I'll just jump back for a second, it was about $161 million, and then the replacement cost at $382 million. So every one of each line of the fixed assets that we have records for, that finance keeps records for, also has an assumed service life. So if we take that service life and we amortize the original cost and the replacement cost of all of the infrastructure, we get some of the outputs that you see in these tables. So if we look, for example, at the first table at the top right, assets at original cost. For all assets, it's $5.4 million. And for assets with remaining life, it's about $2.7 million, if we assume a replacement cycle of 30 years. Now, let me explain what the difference are between all assets versus assets with remaining life. Well, what that means is that when we fully depreciate an asset for accounting purposes, that's assumed to mean that it has no more remaining life. That's just an accounting methodology. It could still have life, because if it's still in service, it's still useful to the city. But the point is that if we were to look at depreciation in our reporting, in our financial statements, that depreciation amount would be a little bit understated. And I think if you look at your net income for the utility, you might think, oh, well, I'm doing pretty good because I'm a net income positive operation. But if that's associated with the fact that you're not reflecting a good portion of the assets because they're already fully depreciated, it doesn't tell you the whole story. So we try to look at the big picture before, because we know these assets are still in service and we want to get a better picture, which is why we also amortize it not just on the service life that's being reported for accounting purposes, but we also look at it at a higher level, 30 and 40 years on average. Those are pretty reasonable ranges to target an average replacement cycle from the rate revenues of the system. Why is this relevant? Well, if we were to think about all that infrastructure, that $161 million and that $360 million and $380 million, the question is, how much would we need to set aside every year to ensure that we have enough funding to do that replacement eventually when we do need to replace all those assets? So that's why we look at it on a 30-year and 40 basis. So at original cost, if we could go back and realize the same original cost, then original cost is a great way to go, because then you'll be able to replace all your assets in 30, 40 years when you need to. But we all know, we just talked about inflation. So we really need to look at that second box, which is the inflation-adjusted box. And we would look at 30-year and 40-year. 30-year is a pretty high target. It's probably one that wouldn't be too dissimilar from, it's actually a little bit less than the average amount that we've identified in the capital plan right now. Average capital plan is about $15 million per year as compared to the 30-year on the all-assets inflation-adjusted. So what does that tell you? That tells you that we're in a consolidated phase of asset replacement in our capital improvement plan. So we want to make sure that we don't just set rates too high to recover that, because then once we do some of those near-term replacements, we're not going to have a need for those cash flows. So we're trying to balance what do we think those needs are going to be just outside of our five-year window, so that way when you're done with this study, assuming that some of these assumptions hold up, which I can't guarantee that they will, because inflation could be different from what we've assumed. So you need to look at these things periodically. But the point is, we don't want to leave you in a bad position just one year outside of the forecast period. So for that reason, we look at our operating costs, and then we layer on top of that the 9.5 million is what we're recommending for financial planning purposes. So you can understand how we arrived at that, basically our thinking and our logic around that. It's a policy choice, what you want to set it at. You don't technically have to set it that high. You could just try to only fund what's in your near-term view, but the problem with that is that you may not be fiscally sustainable outside that five-year window. And I know that that was a core objective of the engagement. So if we stack up our revenues for FY25 relative to the amounts that we've assumed in our financial plan for FY25, absent debt service, because the 9.5 million sort of replaces the debt service to some degree, okay, you'll notice that we have about a 25% delta or gap between our revenues to our costs. I mean, just on that basis alone, you might recommend doing a rate increase in that nature to get them to balance. But we think that that would produce some rate shock to the customers, and we have an alternative plan developed for you today. But it's just to kind of demonstrate to you the gap that we're starting out with in the very first year of this analysis. I know this is probably too small for most people to read. However, it comes out of a publicly available document, which is produced by the city annually. And it's the budget document. I think the business plan is what it's referred to. And your finance director, Les Tyler, helps put this together. And it's a wonderful document, in my opinion, because it helps show you some of these things in advance. And I think that this document gets produced every year. And last year, we identified this deficiency that was occurring, as Nan mentioned earlier, as soon as 2026. Now, in these financial projections, it didn't assume, I believe, rate increases on a go-forward basis. So that was one of the main reasons why we needed to do this study, is because, you know, while we knew about this and had incorporated this to the business plan, and I encourage you all to kind of, you know, pay close attention to those, because I think they're wonderful documents that not every municipality does. You know, it happened very sudden, you know, the increase in the cost in the financial planning. And when you do know rate increases, without even me presenting the analysis to you, we already know we're not going to be able to fully fund our capital needs as they've been identified in the future years. And so, we had to do something. So, for that reason, we were engaged to perform a financial revenue sufficiency evaluation, or rate study to some degree, to develop a forward-looking model, as Jennifer previously mentioned, that's based on a lot of data. And we looked at a 10-year projection that we developed with staff and based on our, you know, experience in the industry. And, you know, ultimately to propose and promote fiscal sustainability. And, of course, as Jennifer mentioned, we want our rates to be fair and equitable to residents as well. So, when we do that, what's a basic premise of how we look at this? Well, we look at, we use a term called revenue requirements on the right-hand side of this scale. And on the left-hand side, we are revenues. And we want to try to balance those things. So, you know, I mentioned that $9.5 million earlier. What does that fit on the scale? Well, that would be that middle box on the right called capital and reserves. So, let me just run you through them very briefly, again, so you can get an idea of all the things that we're accounting for. On the expenditure side, our operating expenses, then our capital and reserves, the amount of money we want to set aside every year for capital reinvestment, and then our debt service requirements and obligations. And we juxtapose that against our user fees primarily. Over 95% of the revenue comes from our user fees, along with our miscellaneous and other income, like investment income. So, we're seeking to try to balance these two things against one another over time to ensure fiscal sustainability. So, when we gave this presentation to the Board of Finance, we had a number of other slides that presented some of the detailed assumptions. We'll be preparing a report that'll be provided to you before the first reading. We're also going to be working, I mentioned to Jennifer, to provide you the Excel-based report tables that support a lot of this analysis that we can provide to you well in advance of that with maybe a page disclaimer. So, this will provide some additional detail and context, should you have questions that I can't directly answer in the moment at this presentation. But one of the first things that we found as we produced this evaluation, in addition to the fact that we believe and want to recommend to adjust the user fees for the water and sewer system, is the reclaim system rates. So, this is a comparison on the right that shows the city of Dunedin relative to some other peer communities, both in the region and outside of the region. And what you're noticing is that basically lowest, some of the lowest rates in the region. I wanted to give you a little bit of background on this. So, in Pinellas County, we tend to have higher reclaimed rates than other parts of the country because, in Pinellas County, we look at reclaim rates as an alternative water supply benefit, in my opinion. So, that means that we're pricing it closer to what we might charge for potable water services. Older rate structures used to be based on more of a pure variable cost recovery mechanism. So, if you were charging $0.50 or $0.30 per thousand gallons, and many utilities across the state of Florida do do that, that was only to recover your variable costs within the system. So, it did nothing for the infrastructure costs. Now, why would you only want to recover a small percentage of your costs? Well, that's because, you know, if you think about some of the first adopters to reclaim systems, which was in, yeah, St. Petersburg was one of the first. I think Altamont Springs might have been the second in the 80s to adopt reclaimed water systems to customers. They were trying to encourage people to take it. It wasn't a very desirable thing at the moment, necessarily. Today, it is highly desirable for a few different reasons. We had to beg people to take it when we started. Exactly. Yeah, because it takes time for people to get acclimated to what that is. And now, today, I can go to these utility industry conferences and have a beer made from direct potable reuse water, which is hyper-treated and perfectly safe to drink. So, we are thinking on the value of water and the water cycle, and even our utility infrastructure systems is evolving over time. So, reclaimed water, I would say, as a rate and cost of recovery in Pinellas County is more advanced and more based on alternative water supply, which is why we see higher rates for others. And what we're proposing here is that the rates have been very low for some time, but it's desirable today. There are a few other things that you may want to think about, and that is that, you know, you only produce so much wastewater. So, for every, you know, three to four homes, you can only serve one home with reclaimed water. So, it takes a lot of wastewater, treated wastewater, to serve one home. So, that means that we don't have enough supply to necessarily serve everyone. And so, therefore, we want to send that supply to the most cost, you know, cost-effective way, infrastructure-wise, out to benefit. But not everybody is going to have access to that. And so, there's an equitability thought here in terms of we really want to raise these to be more comparable with our other irrigation customers in the system to be kind of more fair. So, that's one of the reasons why you have a pretty dramatic increase in that rate, to get it not only comparable to others, but also to make it a little bit more comparable in terms of cost recovery for the system. So, we're moving away from just variable cost only. We did do an analysis, and the rate recommendations that we have in this financial plan over the years that you see there, we believe those to be below, you know, the total cost of service that you could charge. So, we think that, you know, potentially you could even raise these more. But these are some pretty significant increases here. And these customers are also your water and sewer customers, so they're going to see water and sewer bill increases as well. So, we came to this recommendation. And we think that this is going to, this is a really important element of this plan because absent these increases, we would have to have higher increases on the water and sewer rates of the system. So, this is helping to keep those other rate increases that we've identified lower because we're adjusting this and correcting it to at least market. So, we spent some time in the background portion of this presentation talking about, you know, operating expenses in detail, what's been going on over the last several years and what's been driving it and why we want to ensure that we're recovering enough costs to do the things that we need to do. Pay staff, do repairs and maintenance, those types of things. But another really critical aspect is our forward-looking capital reinvestment needs. So, the chart that you have below you shows what those appropriations are. We went through multiple iterations with staff. This is not where we first started. We worked with staff to take these capital dollars and spread them based on when we think we're actually going to need the money to execute the construction of the projects. We still think it's a pretty conservative estimate, but by balancing out, by going through this activity of balancing out, it helped us to determine the ability to phase in the rate increases a little bit. And we're going to recommend maybe a two-year phase on this increase, but I need to provide you a little bit more context before we get to that point. The total capital needs, $90 million. As Nan mentioned, one of the most important projects or largest projects was a wastewater treatment plan electrical upgrade at about $19.4 million, roughly $20 million. We also have pipelining, and about $7.8 million over the next five years or so. Wastewater treatment plan reclaimed storage tanks on-site, about $7.6 million. Deep injection well, $7.4 million. Wastewater lift station rehabilitation, $6.2 million. Water production well facilities, $3.4 million. Utility relocations, about $2.9 million or $3 million. And, you know, for everyone and members of the public, utility relocations are really not something you have a whole lot of control over. That has to do with roadway work, and if you have to move the pipes, the pipes could be perfectly good working order. You've got to replace and move them. And so these are not things you have control. This is DOT that does this. I don't know if you want to mention this. So he's referring to the relocation for the Curlew and Alternate 19 project that we have to send a check October 1st. So that's the project he's referencing. So not always are we investing money in just our direct needs, but sometimes things that we don't have control over. And that could be regulatory-driven as well, making sure that we're in compliance with all of those requirements. Utilities are highly regulated industries. We also have the green sand filter rehab at $2.7 million, and Bayshore water main at $2 million. And these projects, if you were to add them all up, account for about 70% of the capital needs we've identified in the CIP, or probably a little under $70 million, around $65 million or so. So these are pretty significant capital needs. And the other thing is that even though this chart shows these dollars spread, most of them on an appropriated basis for budgeting purpose, occur in the first year. So we had a very large amount of funding appropriations in that first year that we've spread. That means that we do have to have funding in order to balance the budget here, because we don't have enough money to fully fund all of these capital needs from cash and ongoing revenues, is we had to assume about $30 million in debt. And that's in addition to the debt that's already been taken out. The city has been working to try to secure the best and lowest cost financing available. And so it's done that through SRF loans at the state, which are typically at 80% of whatever the market rate is. Plus, they can be even a little bit lower, depending on other factors. The nice thing, too, about those loans is they tend to be 20 years. The reason why that's a good thing is because it leaves you about 10 years or more, because those assets are going to be longer lived, once that debt is repaid, it almost gives you, once the debt comes off, a cash flow funding for R&R on those assets for that next 10 years to build up cash. So I really like this financing mechanism that the city employs. However, there's some challenges with SRF funding. Those challenges are you can only spend that money on the project that is granted by the state. And you get reimbursed based on the invoices from those contractors associated with those projects. So if you have a multitude of projects like what we have here, that may not be the most appropriate method for you to accomplish all of the capital needs in the near term. So it is something, a point of ongoing evaluation, that will be determined at a subsequent point in time. For purposes of this evaluation, though, we assumed a more normal 5% interest rate market rate. We think you can do better if you could get SRF funding, but we're not entirely sure that that might be available for all of the needs. So we kept the assumption at 20-year like SRF, and then we assumed more market-based 5% for financial planning purposes to maintain a more conservative outlook. But, you know, make no mistake about it, many of these capital needs have been already appropriated in the near term that we're going to have to fund. And then this is also, again, why we're trying to target the capital reinvestment so we have more money for the future when the next tranche of R&R needs come up in your asset life cycle for you to be able to cash fund more of that, ideally, with this plan. So when we bring all this together relative to the rates to determine what the rate recommendations are, we don't just take all those capital needs by year and plug them in and compare them to revenues. Because those capital needs, you know, are funded from a variety of sources. Prior years, revenues that we've set aside, cash reserves, as well as debt proceeds. And then we translate those capital needs on top of our operating expenses, which is the chart on the right, shows the bars as our funding requirements, our revenue requirements, as I mentioned earlier. So the operating expenses are our yearly costs. Those go up about 3.5% per year off of the budget. So we've stabilized. We've assumed we've stabilized in terms of inflation for our forecast period and that we should be in a good position. It's something you'll want to continue to review if we have another, you know, black swan event like what happened in COVID or subsequent to COVID, let's say, with geopolitical issues on inflation. But the bars above that, we reflect that capital plan in terms of those debt service payments that come out of the amount of debt that we assumed in the plan, as well as the orange, which is the amount of money that we're setting aside on top of our debt. And we're targeting basically about that $9.5 million when you factor in both the debt and the orange, the PAYGO, for capital reinvestment needs. So that's where we were trying to get you. And you'll also notice that we raised these rates more steeply in the first two years. That's what I'll be referring to as a two-year phase, which is what we're recommending. We would prefer to phase that in over a longer period of time, three or five years. But we determined that because of the need to cover debt service requirements and the fact that our operating costs are so high relative to our revenues today, we need to do these. We're showing a technical default in fiscal year 25, which I'll present to you in just a moment, that's compelling us to need to raise the rates faster, along with the fact that these capital needs are happening or need to happen very soon. So if we were to implement this financial plan that we had identified in the proposal, you could see here one key financial metric that we look at referred to as debt service coverage. And we have a little formula bar at the top that explains what that is. And effectively, it's your net revenues, which are your operating revenues minus your operating expenses. And so typically after we pay our operating expenses in priority first, we then pay our debt service. Then after that, we can set aside money for capital reinvestment. So what happens is when inflation runs up and you've got to pay more on O&M, that leaves less for capital reinvestment. And so a big message or story here is that if we want to keep fiscally sustainable, we need to start raising our rates so we have enough money to do the capital investment. So that way we can address that infrastructure need as it arises. If we take those net revenues and divide by the annual debt service requirements, that gives us the coverage or the amount of revenues covering the debt service requirement. So if we were to have a 1-0 debt service coverage, that would mean that our net revenues were equal to $1 and our debt service payments were $1. I covered it 1-0 times. If I had $2 of net revenues and I only $1 of debt service, then my coverage ratio would be a 2-0 coverage ratio. So that gives you a good feel. Rating agencies for highly rated utilities generally range between 150 to 2-0 coverage, a 1.5 to a 2-0 coverage ratio. You can see in 2025, we're having difficulty meeting our subordinate coverage ratio. We do have two liens. One is a series 2012 bonds that has a first lien priority over our subordinate debt. So that just means that all of the debt service that we have outstanding, both of our bonds and our SRF loans, that the bonds have a first priority and have to be paid first in front of our subordinate lien, our SRF loans. And so we do two separate coverage tests. First for the senior liens, and then we look at the net revenues after the senior lien debt payment and divide that by the subordinate debt. And so you can see in 2025, we have a technical issue. And we have to raise rates to ensure that we get those numbers back above the minimum coverage requirements, which are shown right there at the 1.15 and 1.25. But we would recommend targeting at least a 1.5 to 2-0 to maintain the strong credit rating for the utility. And then this is one of, I guess, two more financial metrics we want to talk you through. I talked earlier about that $9 million target. That's basically what that green line represents. If you start in 2025 at the 9.5 and we adjust it for 3.5% for inflation, which has been the 20-year average in construction cost increases pursuant to the engineering and news record ENR index, which is an industry-accepted index for construction cost inflation, you'll see that that $9.5 million doesn't need to go up over time and that the blue amounts representing our revenues after operating expenses, once we implement the two-year phase, does get us pretty close to that level. And we're going to need that money to help fund all the rest of the capital needs that aren't being debt funded. So I mentioned we had $90 million in capital. We had existing SRF loans, plus we had an additional $30 million in new debt that we're assuming to cover those debt service payments and ensure that we've got enough money to fund some of the capital reinvestment from rates. We need to target at least kind of this level, basically. And you can see we kind of approached that. So arguably, you could argue potentially raise rates more in the out years, but we're not necessarily recommending that because we're also trying to balance minimizing increases to rate payers. It's always a balancing act between competing objectives when you do these types of exercises. Last but not least is our cash reserves. We need to maintain a minimum cash reserve, and we're following the operating and capital target policy for the city, which is basically to target 25% of our operating expenses, as well as $1 million allowance for capital. One could argue that you could even target a higher cash reserve to this, but again, that would have pushed more pressure on the rates for this financial plan. So we had to try to balance these things. We try to work very hard with city staff to strike a good balance between the two, but at the end of the day, these are still policy choices that need to be made and determined. So that's one of the things we're seeking input on with this plan. If we were to follow the plan as identified, when we do the benchmark comparison for a typical water and sewer customer utilizing, excuse me, 4,000 gallons per month, you'll see that Dunedin currently sits right around the average for everyone surveyed. And if we were to do the increase, that's going to bump us to the right. But it's an important point to make here that many of these utilities are constantly re-evaluating their business operations just as you are. And not everyone is doing a rate study every year. So you might have some utilities that have adopted multiple years of rate increases based on inflation, and then they need to reassess those and adjust those more. What we know for sure is that all of these utilities have rising costs. It's going to put pressure on them to have to raise rates at some point. And if they aren't proactive in setting aside the right amount of money today, they're going to be forced to in the future once they have that nonlinear infrastructure investment need related to the treatment plant that comes due or the line breaks that happen. And so what we typically see is that these utility rates tend to go up. And we do a biannual survey at Raftalis, and we're seeing that the increases in the state are fairly comparable to the national averages, and in the range of 5% or more at times every year increasing for utility, which is higher than inflation. And it's representative of the types of costs that utilities face a disproportionately greater amount of, which is capital needs as well as chemical costs, which are more energy effective inflation there, as well as other costs that are all sort of corollary to that, including labor to deal with regular inflation cost increases. So even though we're moving and sliding to the right, we're expecting that many of these utilities are also going to be moving to the left. So it's a little bit of, you know, a flip-flop over time. I remember I had done a, many of the clients that we work with, I've been working with since I started my career about 20 years ago. And when we, I had a few clients who ended up being on the right end initially when they were trying to get back to being fiscally sustainable. But today they're in the middle or the lower end because of that proactiveness and getting the funding that they need to be more cash flow funded for their utility operations. So I kind of view these things as sort of nice to look at, but, you know, every utility is going to have different timing for their capital needs. Some of these utilities are Central Florida utilities. So if you look at Lakeland, for example, their source of water supply is going to be less costly than it is for your water supply because you're close to the ocean, you know, and you have to deal with different costs on that that are going to be higher than just, you know, getting spring water out the ground basically, depending on your source of supply. And so you can kind of see that too in that comparison. We broke it out between the water and sewer, and you can see the sewer bill's a lot higher for Lakeland, but the water bill's a lot lower. So I just, I don't mean to pick on Lakeland. It's just to kind of illustrate the fact that those folks on the lower end may not be the best comparison for you, even though regionally they might be close to you or in Central Florida, let's say. So I think that's an important point to mention as well. All right. So this is our last slide, and we'll open up for questions. In conclusion, based on our evaluation, we're recommending not raising the rates immediately, but to try to phase that in over two years. We haven't particularly prescribed a recommendation for a three-year or a five-year rate plan. I think that, you know, I would defer to, you know, you all to try to make that decision. However, in talking with, you know, utility staff, one potential idea might be to adopt your five-year plan today and then reevaluate it. You can always defer an increase if you don't need it in the future, and I have clients who have done that in the past. You know, however, in the near term, I would advise against that, given the fact that we do need to fix the technical default issue, and we need to fund a lot of capital, and we want to be in a good position if we want to be able to issue debt to get the money to do the projects that we need to do. We need to have a good story to tell to the markets, to the banks, that we're going to be able to pay that money back. Because we're not relying upon the general fund to, as a pledge of revenue for this debt. We're only relying upon the user fees and the financial condition of the enterprise fund. You know, we need to consider increasing the reclaim rates, as I mentioned before. That's going to help with this plan. If we don't do that, we'll need to recommend higher increases on the water and sewer side. So we really want to try to get those reclaim rates closer to the true cost of service and more equitable among all of your customers. Lastly, and this is a sort of minor point because this represents a small amount of revenue, we've been working with staff and it's not, the specific details aren't included in this presentation, but we know that if we go out to set a meter today, we're setting it at a below cost level. So the cost to set a meter today, the fees that we charge for that are below cost. And so we're going to bring back some more details in our report that are going to prescribe for you recommendations to rate those based on actual costs. And in fact, we're meeting with staff today after this presentation to go through the details of those assumptions to incorporate within the report that we'll be issuing in the coming weeks. And if you do follow this plan, it will result in compliance with all of your policy goals and the objectives of the study that I sort of described to you today through the presentation itself. So with that, if you have any questions, I first of all appreciate you holding all your questions. I'm sure you probably had some as going through, so appreciate that. Would like to answer those at this time. I doubt that anybody has any questions at all up here, right? No. Okay. Vice Mayor, I want to start with you. Yeah. With, you know, I broke them out into components, right? We have the reclaimed water and then we have water and then we have wastewater. And I consider reclaimed water totally optional. It's not a matter of life safety. It's not part of what makes a community a community. So I'm very frustrated that our rates on that have been low at all. You know, in actuality, before the mayor gives me a hook, I've got more comments than I do questions. Do you have any questions, though? No. Okay. No questions. Okay, great. Okay. Commissioner Sanborn. Right at the beginning, you used the term 11,800 connections. What exactly does that mean? One second. I just don't want to make a misstatement. So these are individually metered accounts. So, for example, the single-family residential class, we have approximately 10,326, as of fiscal year 24, we have 10,326 average monthly customer accounts. So during any given month in a year, you can have a certain number of active accounts. And an account, you know, you decide to move out of your home or sell your home. And then that account maybe goes inactive for a period of time. The average number of accounts that we're receiving a charge for service is what we're reporting because we use those statistics to determine the revenue forecast. Some of the detail that I didn't go in, that the report's going to go in, is that when we develop the financial model, we base it off of a detailed listing of all of the customer accounts and the metered water that you've sold every year for the last several years. So we have a multi-year historical accounting of the trends that have been going on. And then we study within that data all the different customer accounts. And so some of the things that we know, and I didn't put special emphasis, but we lost a large water demand customer. So we lost Coca-Cola, who represented, you know, at least, what, 3% to 5% of the system revenues? Wow. One of our top 10. I have no idea. But was Coca-Cola considered one connection? I believe so, yeah. Okay. Of those, you just gave that number, 10 comma 300. Yes. Does that also include non-city residents that we supply the water to, such as unincorporated? 17 for the single family individually. So we have 17 outside city customers. However, we have a more significant number of sewer customers in the Greenbrier, unincorporated Pinellas County area that are served by Pinellas County Utilities for water, and we provide their sewer service. So those accounts total all of those, whether it's water and sewer, just water or just sewer. So that round number of 12,000 connections is everything. So have we ever taken a look to see if that's profitable for us to provide that outside, for those services outside of our city limits? You know, Nan, do you want, I have thoughts, but I'm going to let Nan go first. I have thoughts, but. So many, many years ago, at the beginning of my career, when there was a lot of federal money flowing to build our water and our wastewater treatment plants, Pinellas County was divided up in what's called the 201 Facilities Plan, and so the entire county was into a water and sewer service areas. We have a defined water, it's not a franchise, but you can think of it like a franchise. We're bounded on the south by Clearwater, bounded on the west primarily by Pinellas County for water and sewer, although there is a private utility, Sunshine Utilities, that provides water west of Belcher. So we have defined water and sewer service areas that we are pretty obligated in this kind of an urbanized area. Nobody else can really serve them cost efficiently. Nobody else has a wastewater treatment plant or the infrastructure in place that could meet those areas. And there's not a lot of growth left in Pinellas County. Quite truthfully, there's very few and far between places that aren't served by public water or sewer connections. And then I guess lastly, I think I caught this during your presentation, so you took a look at the efficiency at our locations, the standard of the equipment, modernization. Is there anything else that we're missing? Well, you know, my formation is as an economist, so I'm not really like an engineer. You know, I don't want you to play one on TV maybe with some of the things I say, but that's only because I've done a lot of this financial planning work alongside really good engineers when I've done the study. So I've picked up things about the operation and know these things from the experience that I've had. So I don't want to mislead you in terms of my background. For that reason, I did not perform an operational evaluation. We were strictly limited to a financial plan and cost of service evaluation. But when we do that study, there are things that kind of come to light as you do these evaluations. Like, you know, what is the age in the infrastructure? What kind of investments you've done? And other types of anecdotal information that you learn as going through this study. One of the things that I thought was interesting that we shared with the Board of Finance, and Nan was telling me about this, and maybe she could kind of explain a little bit more, but this utility, once a year, shuts down the wastewater treatment plant. Can you talk a little bit about that? So we are very proactive, particularly at our wastewater treatment plant, at keeping things operating efficiently and well. One of the things that we do once a year is de-energize our wastewater treatment plant in the middle of the night so that we can have an outside firm come in and inspect our switch gear equipment and maintain it. I can honestly say I don't know of another utility that ever turns off their wastewater treatment plant. But we plan ahead, and we divert the wastewater into a flow equalization tank, and we take a couple of hours, and we do that so that we don't have an electrical failure, because typically that's like a single point of failure, that if that fails, that there's nothing else you can do, that electrical generation coming into the plant. But we do maintain it. That is also the same equipment that we're proposing now, because of its 30-plus years of life and these inspections, to go ahead and upgrade that equipment so that we're sure that it's reliable and it operates every single day. So that's what he's referencing. My question was answered perfectly. I'm good. Thank you, sir. Thank you. I'm going to move to Commissioner Walker. Thank you, Mayor. One thing I want to understand, on slide six, there was only one of those bars that had non-recurring on it. Oh, yeah. Excellent question. I had anticipated this question. I wrote myself a note to mention or explain that earlier, but there are a lot of things to mention, so I apologize. The non-recurring, so there are operating costs that I would consider to be like capital. So if you do some sort of a maintenance on capital infrastructure, that would be recorded as an operating expense for accounting purposes. And the city calls these types of non-annually recurring, non-recurring operating costs. So it's like these costs that are capital-like that occur sporadically every several years or so that can be pretty significant. In fiscal year 25, I think we've estimated around $700,000 or $800,000. Tristan? $783,000. Tristan? Thank you, Tristan. So about $783,000 in costs. And the reason why you don't see the bar in the prior years is because they aren't specifically called out within the trial balance for us to exactly know that that was considered non-operating. So we show it for financial planning purposes, we call it out. But historically, it's sort of embedded in the lighter blue bar. So that's why we don't have them all. You don't see the bar in every year. Well, I greatly appreciate that. And actually, you kind of segued right into the next question. And this is just so I'm kind of clear on this. But the distinction, my world, non-recurring engineering and those types of cost, to me, I see where those costs are captured specifically in the capital improvement plan. Is that correct assumption? So we have reallocated those costs into the capital improvement plan, even though they're for accounting purposes considered to be operating costs. So when we come out with the report, we're going to have a section in the CIP plan that's going to call out every project for you or the combination thereof of the non-recurring cost. And honestly, I prefer the terminology called major maintenance. I think that that speaks a little bit better to what it actually is, even though I do think non-recurring is appropriate. Okay. You know, I really appreciate that distinction. I think going forward, this is just more of a recommendation, but I think it's important to understand the distinction between what is actually a capital improvement cost. And I do like the term major maintenance. But anyway, that's neither here nor there. I really do have some questions. So... You're doing good. Okay. Be careful with this. It's been one of those jokes when they're really... That was an excellent dry humor. SRF trends. I understand that basically these have to be state-approved projects. What's been our experience with getting approval on the major projects that we have? The... And I'll let Les chime in if he wants to. The improvements to the water treatment facility was funded by state revolving loan funds. It is a process. Yes. You have to do what is called a 201 facilities plan, where you go through and you do a very specific study and outline options in what you're going to do, enumerate what you're going to do. The state reviews it for applicability to its goals and things like that, and then they will approve it. We've done a similar study based on our wastewater master plan, put a number of the wastewater improvement projects together. So we have one of the state-revolving loan funds, the water, has closed out, and we are now into the repayment period on that one. We are in the middle of a state-revolving loan fund cycle with a number of projects. For instance, the force main replacements, I think, actually got pulled out. That's why I was not thinking of that one. The controls, all of the electrical and the controls, the big project that's opening today, the electrical rehabilitation. The chlorine contact chamber was part of the SRF on the wastewater side. There's two forms of state-revolving loan funds. There's clean water, which is wastewater, and there's drinking water. And we've closed out our drinking water. We're still in the process of implementing the rest of the projects for the clean water SRF that we've been approved for. But we haven't gotten to the debt payment portion yet. We're just in the part where they reimburse us as we do the projects. We have Lift Station 32 on Thursday, too, right? It's SRF? That, no, Lift Station 32 and Lift Station 20 are hazard mitigation grant program funding. Okay, sorry. Never mind. We go for whatever funding we can find to leverage the dollars that the city has. We are looking for other ways to leverage the dollars, but SRF is not a grant. It is a loan. I mean, it can be a grant if you're a very, very disadvantaged community, which, unfortunately or fortunately, we don't meet that criteria. But it is very low-interest loans. I'm going to let less tell you. It's very, very good loan rates. And in recent history, they've been as low as 0%. We have some. You know? And you can get grant forgiveness sometimes if it achieves an objective at the state level from an environmental perspective. So that's why these are good programs to try to pursue. They're really great if you have a project that aligns with sort of the objectives of the state. But they're challenging if you have multiple different types of projects that you need to all fund because it can be fairly administratively burdensome to try to ensure that each one of these things are going to qualify. And then if they don't all qualify, then you need some other form of funding. So that's why utilities that we work with tend to try to maximize the use of SRF for larger projects that align with these things. But then also potentially bank or bond funding to fill the gap. Yeah. I just wanted to mention that, as Nan had said, our water plant was an SRF loan. That was about almost a $30 million loan. We started making payments on that. Nan had just mentioned that interest rate was 1.03%, a very good interest rate. And the interest rates on the wastewater are anticipated to be just under 1% with what we're seeing now. So they are attractive rates, as they had mentioned. And with the wastewater, like Nan had mentioned, another good thing about SRF loans, the loan does not begin until the project's done. So the project may take three years. Once the project's done, and all the payments have been reimbursed back to the city, then that's when the clock starts ticking for the 20-year loan. So that's another positive thing about those types of loans. The debt service doesn't really begin until the project's done. And just as a point of clarification on the presentation, I believe that we did assume what's referred to as capitalized interest during the construction period to try to help phase in the rate increases. So we've already sort of assumed that into the financial plan already, you know, and we would have to make that assumption in financing if we wanted to follow these. But, you know, we were conservative in the fact that we assumed 5% rate based on discussion with Les to provide you a little bit of, you know, cushion depending on what the markets are going to do because they're unpredictable right now with interest rates. Yeah. And I appreciate that. And so, you know, I also appreciate the conservatism that's implemented into the actual assumption of what we get back on the SRF. But it sounds to me, and this is confirmation, this is a confirming question, that based on our strategic planning and our forward-looking, we are able, it sounds to me like we've got a pretty good track record of getting our projects approved by the state. Is that a safe assumption? MS. That is a safe assumption. Okay. Thank you. A quick one on debt service compliance. Is that a state-mandated number that we need to track to? It's a, well, I want to let Les jump in too, but I was just going to say that it's a requirement of the loan that you have entered into. So when you issued bonds back in 2012, you entered into an agreement, a covenant, if you will, with the lenders of that money. And those covenants prescribe a series of different things, like issuing a budget typically, maintaining minimum cash reserves sometimes. In this case, a debt service coverage ratio equal to 1.25 times the debt service payment. So these are requirements not of the state or anything like that, but of the lenders of the money to you that it helps ensure that you're going to be able to pay back the debt service on the monies that they've lent you. Okay. All right. So, and the distinction between accounting depreciation and service life depreciation, and I like the differentiation, but what, I mean, it wasn't clear to me kind of which way we're leaning on this, because is this decision going to entail a discussion on adopting a different depreciation model? No. No. It doesn't impact your accounting at all. It's just for determining how much money we need to be setting aside after we pay for our operating costs. It's a metric. Yeah. What's a reasonable allowance? And we didn't go with pure depreciation, because the service life there might be a little bit less. So we went with, I think, an average life that was longer than the depreciable service life. So we had 30 years in the financial planning. We also looked at it at 40. We settled on 30. We thought that was a good balance between everything. So you hedged your conservatism by implementing a metric that allows us to adequately evaluate the, yeah. The closer to the maybe potentially the real service life of the composite assets as opposed to the depreciable life, which might be more conservatively skewed lower. Yeah. Okay. Thank you. That 9.5 million capital requirements that, and you mentioned the time period. Over what time period was that 9.5 million forecasted? So basically, if you take, if you look at this chart again on slide number eight, and you look at that $382 million, okay, we divided that by 30 years, basically. And then that gets you back to the 9.5 million dollars. Okay. So in terms of the, and this is the last question, your recommendation. Hold on. Hold on. I need to clarify my statement. It was 40. We've assumed 40 years, not 30 years. I misspoke earlier when I was saying we were targeting the 30. We targeted 40. So I just wanted to catch myself. I misspoke earlier. Okay. Sorry about that. Yeah. Okay. Now, that obviously is the recommendation that's being made is essentially a phased rate increase starting in 2026 with that, whatever it was, $12 increase. Yes. Is there, I mean, just, you know, I won't hold you to this, but is there any more forward projections in terms of what those rate increases are going to look like, like, say, 2027? Yes. On the screen, we're anticipating more inflationary increases after the two-year phase. So about $3 per month. So much more, you know, basically inflation. And, you know, to the extent that you can secure better outcomes than what we've assumed, you may not need to do that level. Like, for example, if we can get more SRF funding and then that reduces our debt service requirements, we might not have to increase the rates as much because of that. Okay. All right. Well, thank you, Rob. Very, very good presentation. Thank you. Okay. Commissioner Degard. I'd like to say all my questions have been answered. I really would. But I'm not smart enough to know if all my questions have really been answered. Josh, I have a reoccurring dream that I'm going to go into a chemistry class and they're going to throw a pop quiz at me and I haven't studied. I think I just went through that in my head here. This is, first of all, thank you, Terry. You've tried to make something very complicated, easy for us to understand. And I appreciate your efforts at that. Now, when we're dealing with depreciation, are we dealing with straight line or straight line depreciation models? Okay. And they're different categories of assets. So, if you have buildings, and I don't remember exactly the depreciation amounts, but equipment would have a lower straight line depreciation rate as opposed to, you know, buildings, for example. All right. I just wanted to be sure I understood what I was looking at. Yes, sir. The expansion of expense and reclaimed water? Yes. Getting closer to the, are you recommending something higher than the regional average or going toward the regional average? Where are we going with that? Yeah. So, in the initial year of the forecast, we get a little bit below the survey average right here, if you can, if you all are able to see the screen. So, I think that, you know, within, you know, the first, you know, three years of the recommendations, we get to $20. Right now, the survey average is about 19. So, we're taking you up to the average, but not all the way to the average. One of the reasons, too, is you do have, like, Clearwater and St. Pete that are, you know, much higher than everyone else, which kind of skews the average up a little bit. But, you know, right now, you're the lowest on there. So, we try to pick a balance, you know, with, based on staff. So, but over the next several years, we're proposing that to get upwards of $20 per month, assuming you're consuming about 10,000 gallons a month for irrigation, for nonessential use. What are your assumptions about expansion of reclaim? Well, we've not really assumed any expansion because I think that, currently, we just don't have enough supply. So, the reclaim system utilizes every, you know, amount of water out of the reclaim system during the dry periods when it's really in demand. And, in fact, you can supplement it with raw water, and the city does do that at times. So, we don't always have enough, you know, wastewater to send out into the system. So, we'll supplement that with raw water, which is why we're able to serve about one in three customers, as opposed to one in four customers out the system through that supplement. And I don't know if, Nan, you want to add anything to that? We are in the height of dry season right now, and we do not have enough reclaim water. We are supplementing with groundwater, as we're allowed to do by our water use permit. But we're still not keeping up, and our potable system is really stressed right now, as well, because of the irrigation people are doing. Mm-hmm. As we deal with our customers, are we looking at a situation in the near future where we're going to have to ration water? I would not say in the near future. Okay. All right. And I would just add, too, that the, I don't have an image for you of your rate structure, but Nan did bring their rate sheet. If I could take a quick look at it, I just want to make a look at that. For the potable system, you do have a, what's called an inclining conservation block rate structure. So what happened- Can you repeat that, please? An inclining conservation tiered rate structure. So that's a technical term in our industry for the type of structure that you have. But what it means in plain language is that as you use more, it's almost like the federal income tax system. So as you use more, as you generate more income, you get a higher tax rate. So you get a higher, it's not a tax, though. So maybe that's a very poor analogy. But the point is that it is an increasing rate per 1,000 gallons of use. So let me just provide for you an image of that. So for 0 to 5,000 gallons, we charge $5.82 for every 1,000 gallons of potable water that a customer consumes. Once we get over 5,000 gallons, we charge $8.75 for every additional 1,000 gallons above 5,000 gallons, up to 20,000 gallons. If we have someone that utilizes more than 20,000 gallons in a month, which provides a reasonable allowance for both indoor use as well as outdoor irrigation, the rate jumps to $13.12 per 1,000 gallons. So you do have a pretty significant stepwise increase in the rate to try to help send pricing signals to conserve water to those customers. Not to mention that, you know, for your potable water and sewer customers average 4,000 gallons per month, you know, there's a sewer billing cap. But it doesn't hit until I believe 10,000 gallons a month or 12. I have the ratio right here. I should know. Single family is different than commercial. Yeah, single family only. But single family customer, the cap is 10,000 gallons per month. So every 1,000 gallons of water use would also see the sewer charge up to that 10,000 gallon cap at $8.35. So this type of a rate structure really sends a very strong pricing signal as you utilize more to try to incentivize conservation of your water supply resources. I appreciate that. The perspective I'm going to take on this is a little different. I'm looking at our consumers, our citizens, and what's going to happen to their budgets. Right now, all our basic utilities seem to be skyrocketing. Budgetarily, that's having a tremendously difficult impact on our more financially challenged citizens. I'm seeing situations where we're going to, and I'm going to a question here, I promise. I'm seeing situations where our customers are doing things like ripping out yards, putting in astroturf, things like that, because they just can't afford the water. And we're going to see some behavioral changes on this. When we look at these rates, do we look at it from their perspective? Do we start measuring our impact to average citizens? Nan? We're all residents, too. Yeah. Yes, I definitely do think about that. And we try to, on the most essential services and the basic usage, keep that as cost effective as possible. Like Terry said, there is some rate pressure to try to conserve water and to use less water for things that aren't essential. Same thing with reclaimed water. There was a mention that, you know, that is not an essential use. And that was why we looked at the reclaimed water. We were trying to figure out how long the reclaimed water has been at 50 cents per thousand. And the best we could come up with was that our billing supervisor has been here 23 years and it's never changed. So we're looking at, you know, equity and trying to keep the essential things that people need cost effective, yet cover our total cost. I would say we're very sensitive to having to raise rates because, you know, it's not something you want to do. In fact, we're excited when we can find ways to minimize those increases. That's actually our objective. We don't get any benefit from raising the rates when we do these types of studies. What we get a benefit from is by providing value through the work effort that we do through staff. And so we're always trying to find ways to balance these competing objectives. But it is a business operation. And, you know, that is why utilities have been raising their rates, because the costs have been going up. And there's a need to do that. Obviously, you know, there are other considerations that need to be made. But that's the perspective that we come from, you know, on this matter. We try to, to the best of our ability, try to mitigate the impacts to customers. Thank you. Good answer. How do we measure the possibility of future efficiencies in systems? We're capital intensive. We're labor intensive. We've got both of those elements right there. What are we expecting in the near term relative to finding? For instance, I know that we've got some water pipe extensions by inserting liners rather than replacing the pipes, things like that. What are we seeing coming down the pike in this particular area in wastewater management that might make us more efficient and save funds? Are we seeing anything right now? And where do we go to get those pieces of information? We keep current with our professional organizations. We keep in research a lot of digital twins, if you will, where you model and you try to find those efficiencies. But I will tell you that they're not huge gains. They're, they're, they're on the margins, you know, that you're just, you just keep trimming on the margins. I have not seen a big game changer in wastewater or water in recent times. I mean, if anything, our regulations continue to increase and our two or three of the major projects that he listed in the capital project is a reflection of meeting what, what I've referred to as Senate Bill 64, the requirement that we no longer discharge water to a surface water body. I think, I think when you listed out those projects, it was about $10 million for additional reclaimed water storage so that we can have more water to serve our customers in the dry periods. Because the thing is, is that there are times of the year that we have more reclaimed water than our customers want. And how do we store those? And so because we don't have another alternative, because we can't discharge those to the surface water like we have been after 30, 20, 32, we will have to install a deep injection well. And we will have to dispose of that water below the, the drinking water level to try to get rid of it because we can't do that. So there, so these increasing regulations keep increasing the bar that make it, I mean, even though we're gaining efficiencies, the bar keeps moving on us to do something more. What do we do to educate our customers? Pardon? What do we do to educate our customers on water use? I know I learned a lot from Blair out at the country club on how to water my yard. And what do we do to tell our customers how to manage their water? We literally go out there, our distribution people will go out there and help people reset their irrigation, irrigation meters. The other thing we do is we door hang every year, every reclaimed water customer, because we do have a surcharge for reclaimed water. If there's somebody who's using too much reclaimed water, what we call egregiously using water. We, every year, if you're a reclaimed water customer, you get this little purple door hanger at your reclaimed water report card. It tells you what you used last year, what you should use if you were doing a healthy irrigation of your green space in your, and then what your surcharge will be if you exceed the amount that we allow. I think it's five months out of the year that you have to use within your allotted amount or we charge a $2, 1,000-gallon surcharge. And so that's like an individual one-on-one basis that we're doing that education. We also leverage our communications group to do a lot of this weekly in our Dunedin News and the different various ways we get that out. Every chance somebody will listen to us, we try to tell them how to do this efficiently. Citizens Academy, we do a lot of this type of thing. No more questions. Thank you, Mayor. Thank you. I'm going to ask my questions, and I think Commissioner Gallup did say he did have a couple questions after all. So let's see, a lot of my questions have been answered, but so looking at slide, page seven. So that reflects what, water sewer operating expense? And reclaim total utility operations, the historical operating expense table. So when you provide us the backup report, will it really kind of highlight some of those key factors in all of those? Yes. You know, in a little bit more detail? Yeah. In fact, we are provided this data by object code line item detail by cost center. You know, I don't know how many hundreds of lines do we have in the operating budget. So you have about 330 different data points that we identify for every year historical, and that will be included in the report as a table for reference. So let me ask you this. What's the biggies in the indirect category? In the indirect category? In the indirect category, well, there's the internal services fund, there's indirect costs, and then there's general fund transfers. So, you know, I think that there's about $440,000 per year associated with the repayment of the loan for the administration building. Tristan, do you want to comment to some of the details of the numbers at all? Oh, I was just going to say that that was, yeah, like $468,000 for the allocation. Is that a year or overall? Per year. A year. For how long? Les, do you know? Yeah, I can make one comment on this. Beyond the forecast period. It's 468. Sorry, I misspoke. That's okay. 468 every year. But the biggest variance in that line item is our internal service fund allocations. Our IT internal service fund increased $300,000 roughly over that timeframe between 23 and 25. Our facility allocation increased another $260,000. And then also our insurance, our property and liability insurance increased another $300,000. So those three internal service funds were about almost $780,000 of that variance of $1.3 million. So those are three of the largest ones that I saw in that category. It's just our internal allocations. Insurance has gone up dramatically. Our IT costs went up a lot over those two years, and so did our public services over those two-year timeframes. And how long is the facility, going back to the administrative building, how long is that payback period? That payback ends in October 2029. And what in this building is, what part of this building is being utilized for water and sewer and reclaim? That's the, that was an allocation that was done through the engineering folks and their portion of the building when the FTEs were calculated for the building. Well, it's water and wastewater, too. I mean, it's utility billing. Utility billing, basically? Utility billing. Utility billing, too. Thank you, yeah. Okay. And then looking at, like, professional contractual services, which sometimes we get hit on, what's a lot of that for? I believe that's mostly for the operation of the utility, but also for the capital needs of the system. Nan? I would, I don't have the real specifics right in front of me, but I would assume that that's when we have to hire a consultant to do a design or some kind of engineering services during construction. We, we have a pretty aggressive CIP going on, some of which we manage with our in-house engineers. Sometimes we have to leverage that by using outside professionals to do that. For instance, the Virginia Water Main project was designed by an outside professional. And there was obviously design fees and there'll be some engineering fees during construction. And Nan, is that more that we don't have the capacity or sometimes the expertise is outside of what we have? It's a combination of both. You don't want to staff up to really big times because then you have to lay people off if you staff up. So we leverage that either if we need additional help that we don't have in-house or if there's expertise that we don't have, then we'll utilize that. You know, there may be some very specific expertise in different things. We're, we're rebuilding our filters right now. We're designing the, the, the rehabilitation of our, our denitrification filters. And that's a very specific skill set. And so we have an engineer of record doing that design effort. Great. Okay. Thank you. Yeah. I mean, I, I just, I like to see the report too, because obviously the ingredients of the cake are what get us to the cake. Yes. And the cake is some pretty significant rate increases. Um, so reclaimed, what year did we start reclaimed? Was it late eighties? Over 23 years ago. It was definitely the nineties. When I worked here in, in, uh, 94, 95, we had reclaimed. I don't know if it started exactly with the new plant, but I, I tend to think like 92 when, when the plant went online and we had AWT effluent, that would have been one of the goals to do that is to have the ability, but you also have to build out the, if you will, the purple pipe distribution system. And I'm not absolutely sure, but it was the nineties. I know when it came through my neighborhood, it's, I, we were just outside of the circle, the figure eight and didn't make a lot of my neighbors happy. But, you know, it made it easier for me to say, sorry, I'm part of that too. I don't get it either. Um, but we did have to beg people back then and people made their own capital investments into the system. And so my question would be, as we look at raising the reclaimed rates, uh, which I obviously don't disagree because they're so low. Um, I would think most people are through that capital investment phase of their, of their homes that they're paying, that they had added to their mortgages basically, or separate payment. So, I mean, can you answer? My capital recovery fee paid off this year. Okay. So I would think everybody's spot hitting that. Yeah. It's a, it's a 20 year capital recovery fee. Okay. But what they're talking about is not the initial capital. They're talking about the reinvestment because once you have the initial capital, that's part of it. And we got a lot of grant funding through SWIFMUD to help offset those costs. But as we go forward, these systems are now 20, 30 years old. And they need more and more reinvestment. Yeah. So we have to invest in that, that as well to keep them up. Right. And, but my point is that, you know, by increasing the rates, most people have dropped off this payment that they're making for the original capital. Right. Creates capacity. So they're basically only have the rate now versus a payment and the rate. Yeah. Okay. So in essence, I mean, some people have, by dropping off, then again, it's, it's a savings. I don't want to call this. Less may be able to tell us how many people still have a capital cut recovery. I could get that for you, but I don't know the number now. Yeah. My guess is most people are dropping based on just when it was historically begun. I think, Mayor, also may I, I think when the home sells, a lot of times it's part of the, part of the negotiation that you pay off the capital. I know it was for our house. Okay. Okay. I mean, I know it carried over. Typically after, you know, average homeowner stays in a home seven to ten years, maybe less. I don't quite know the statistics today. Back then I thought it was like seven or eight years. So, you know, usually after that. And a lot of municipalities in the state have assessment programs for line extension programs. And in my experience, those typically last about 20 years, maybe sometimes 15 or 10 years. And so if it was in the, yeah, so they did 20. So if you had been, it depends when everyone actually, you built the whole system out the last year that it was built out. Most people are getting almost to that if not past that. Yeah. So I think that's pretty common to assume. I think it's a safe assumption to assume that you're probably done on those capital recovery charges. Well, I've already had somebody tell me you guys are doing 100% increase on a reclaim. But let me, so. 50 cents. So let me ask this question. Well, I guess what's your response to that? Yeah. Well, I think that that is correct. But also, if we go back and look at the comparison here, you know, you're the lowest on the comparison. And that's actually not always a good thing. Excuse me a minute. I'm not sure why our front things aren't changing with that. Because it's. Yeah. So, unfortunately, the computers are, every time we switch screens, it has to regenerate. So. I never noticed that happening before. It hasn't. It's. And we. It'll take about 10 minutes in order to reset the system. So. Okay. We just move forward. And he's actually been switching them manually every time in the control room. Okay. Yeah, it's just hard to follow that. But I'm sorry. Go ahead. So if we look at this reclaimed comparison we presented earlier in the presentation. I can't remember what slide number it is. I think I maybe obfuscated the slide number on the page. It's 16. Yeah, 16. Thank you, Commissioner. So you'll notice that the reclaim rates, assuming, you know, 10,000 gallons, that's, you know, about 50 cents per month or per thousand gallons. And so at 10,000 gallons is about a $5 bill, which is, you know, half of the next highest on this comparison. So I think, you know, the. So let me ask you this. Sorry to interrupt. But 10,000 gallons of reclaimed versus 10,000 gallons of potable. Oh. Very big difference. Can you. Well, at 568, 1,000 for the first five, I need to do the math for you. At 582. So potable water is $5.82 per thousand gallons. And then what's the next tier? And the next tier is $8.75 for everything over 6,000 gallons. So basically it'd be like a 50-50 average of the 875 and the 568 to get to what the typical customer pays just on the water, not to mention the sewer on there. I think that that figure is important for people to understand. Yeah. When they think about rates increasing with reclaim. Oh, yes. Like how minimal that is compared to what I pay for potable to water lawn. Yes. I just think that we need to keep reminding the benefits of being one of the lucky ones to have it, you know, if you're lucky enough to have it. Right. It is a huge benefit. I should say that I live in Seminole County in the Orlando area. And in my county, we have reclaimed infrastructure. And I happen to be near the plant. So, you know, we have reclaimed water coming to us. And I would tell you that the reclaimed rates are not cheap for me. They're more like, you know, St. Pete or Clearwater. So they're priced more like that. It didn't hurt that I think the person who did that redesign also did it for, I think, maybe St. Pete and Clearwater. That wasn't me though, but I wish. But the point is that it's more priced as an alternative water supply, kind of more comparable to your, you know, potable irrigation rates. And at 50 cents per thousand, it's a fraction of what, you know, your potable customers are having to pay for irrigation demands. Yeah. So I just think that's part of our communication because, I mean, clearly. I've had so many people that wish they had reclaimed now when Nan knows. Yeah. We begged people, you know, to do it. Yeah. I mean, because Nan told me somebody. And they paid to do it then. Yeah. Because they had to make the capital investment. Well, yeah. And Nan had told me it was really interesting because you had to get maybe 50% or more of your homeowners association to work. Yeah. You had a petition process. Petition process to go through. First time to get it in and that was. Mm-hmm. Yeah. And a lot of people, you know, like I was doing a study in Martin County on the East Coast, and they had a very extensive line extension program with an assessment program. And they, too, had to do that same sort of process to get people to agree to it. I mean, it was a pretty big capital expenditure, even though it went on the tax bill and the utility helped finance it like you all did. But it was an investment at the time. I think now everybody agrees it was a very worthy investment that's really paying dividends. Not to mention that reclaimed water, unlike potable water, is drought resistant. So you're able to continue to irrigate during periods of drought when everyone else, if they're on a potable water system, cannot. I know a lot of people that wish they could get it. So looking at page 22, which is where it shows the comparison of our water sewer rates. So I'm not used to seeing us move to the high end of anything. Right. Obviously, it makes me very concerned. So I guess I know you've attempted to tell us why we would be at that higher end. But can you tell me again maybe a little better? Yeah. So there are a variety of factors that influence the cost of operations from a utility, from the the type of water treatment process, the number of plants, how spread out your customer base is. If you have customers that you're serving and there's low density in your service area, like if you have more single family than multi-family in your service area, then you're going to have a larger distribution network, a higher capital investment per customer than other utilities. Which we do. Which you do. There could be other differentiating factors that exist. I've not studied every one or these comparisons to tell you precisely what are all the differences. Because there are other factors at play too. For example, when's the last time the utilities done a rate study? Are they adequately, are they applying the same methodology and setting their rates? Because if every. Keeping up with their capital. Yeah. Keeping up with their rate increases. It's a policy choice as you operate your business operation. You know, you can choose, you know, like a city of Tampa. You know, they are a client that we work with. But there was a lot of a lack of propensity to raise rates for a very long period of time. And they got to the point where they were averaging over one line break per day in that system. Because they didn't want to raise the rates to fund the infrastructure needs, you know, basically. So, you know, you have to make choices that, you know, yes, you can be on the low end like Tampa. But is that really where you want to be with one line break per day? So, you know, again, have not done an exhaustive comparison. So just kind of relying. But those are key differences. So you do have to take these comparisons with a grain of salt. And I would also point out that, you know, even though we're moving up, I mean, relative to Clearwater, you're maybe a few dollars different. You're closer to Clearwater than you were Hillsborough County. So you're right in the mix. And I can tell you, Hillsborough also has some pretty big rate increases that they're trying to put through right now because of the amount of growth that they're experiencing in South County. They're building a huge, you know, hundreds of million dollar project in South County to aid in, you know, wastewater treatment to deal with the growth among the R&R needs that they have going on. And they're going to be high single digits for at least the foreseeable future, if not maybe low single double digits potentially soon. So people rave about that we have reverse osmosis and we were looked at as a real pace setter when we did it. It's one of the more costly treatment processes. Is that still true? Have we put ourselves in a position of having the most expensive kind of operational system? Should we have done it differently? Should we think differently in the future? I guess I'm just asking. It's a good thing you did it, but I'll let Nan. I was looking at that and Gulfport, St. Pete, Safety Harbor, and Hillsborough County have no reverse osmosis. They just have traditional water treatment. Clearwater does have a mix of reverse osmosis, but that's one factor. Our operating is one factor. My recollection is it wasn't very long ago that St. Petersburg was on the low end of this, but when they ran into all of the troubles they had with their wastewater system because of delayed capital investment in their wastewater system, they've jumped way up onto that chart. There's a balancing act between what you're doing in your operations and how you're maintaining those assets so that you don't have to do huge rate increases that shock your residents and your customers. We're trying to hold that balance where we're high quality, things that people expect, but also maintaining things to maintain the operational cost, the long-term capital reinvestment and stuff, as well as doing things like going through our grants and leveraging those the best we can. Well, I am dating myself totally by saying I was here when it was way off balance, and this city had the biggest crisis ever in waterways water because they waited too long to keep stuff up, and it was huge. Let me just ask you this about Pinellas County. So I look at Pinellas County's rates, and I'm like, okay, well, Pinellas County, why can't we just jump on with Pinellas County and our citizens have way less to worry about, way less rates to worry about? Why not? What I have suggested is that we might also extra work for the consultant, but look at the date that the last rate study was put in place because every utility does this every three to five years. Some of them look at it as frequently as annually, but when was the last time they adopted rates? And if, you know, ours are right in the middle of the pack, and we may just be ahead of them. We tend to be progressive, and we're forward-looking. We're forward-looking, and we see problems moving forward, so here we are standing in front of you. Well, some of that's the history, too, Nan, some of the history that we didn't. We weren't progressive, so. It is typically more cost-effective to be progressive, to look ahead and plan for these changes. Here we are looking ahead and saying, okay, we see problems down the road. We want to get ahead of this. You know, depending on when those studies were previously done, some of these other utilities, I don't know when Pinellas County did the last rate study. I can't. We can find that out. I mean, I guess the question is, could you, you know, you just made a pretty significant investment back into your water treatment plant, and you're about to make a pretty big investment into your wastewater plant. You know, if you were at end of life on those facilities, it might be a better idea to maybe look at that. But now that you've made that investment, you know, you have to think about would the county, if you were to connect to them, require you to pay capacity fees, impact fees, to connect for all the capacity that you would want. And if you did, what would be the cost of that capacity? And it's probably not cheap. You know, right now, today, we're pricing capacity in the $20 to $25 range just for water. So if you have, I mentioned earlier, like, three and a half million gallons per day times, you know, $20 or so, you're talking about, you know, millions and millions of dollars just for the water capacity when you have an existing facility. So I think that you're sort of committed to the infrastructure system that you made. You know, it could be something that you could explore. But I suspect that it is not going to produce savings because of the, you know, capacity payment requirements that you'd most likely have to face if connecting to their utility system. We lose some of our autonomy. So, okay, I'm sorry. I know I asked a lot of questions. Vice Mayor. Thank you, Mayor, for letting me circle back. Nan, you talked about kind of a tiered rate on our portable water side, right? It was $5.82 per thousand up to 5,000 gallons. And then it goes to $8.72 for over that. And we're at 50 cents per thousand gallons on reclaimed. Is there any tiered to the reclaimed water? No, not currently. No. Other than the surcharge that we charge the five months a year. Right. Right. They get a finger wag that says you use too much. For the dry season. No, it's more than a finger wagging. It's $2 a thousand that we charge if you exceed your allotted capacity. Is there a reason why we chose that method over just a tiered? I would guess it had to do with initially needing to get rid of the. Subscription. Trying to get subscription. Yeah, subscription, trying to get signed up and trying to get, to build the reclaimed water system. And now we've had a mature reclaimed water system for probably 20 years that we, I don't know that we've put in a new major reclaimed water project and probably. But certainly it's something that could be looked at. I mean, we wanted to keep the structure kind of comparable. We were more focused on the level of cost recovery so much than the rate structure itself. And we figured it was a pretty big increase. So, you know, we're recommending maybe not changing the structure. Raise it. Once you get there, maybe it's something you look at. But that doesn't, you know, we're not married to that idea. Okay. And looking at, I think it's slide 18, where it shows the rate increases. Yes. If I can get there. And I know on slide 16, I think it is, it shows the reclaimed water going from 5 to 10. 15. 15. Or here it is, 16, it goes, it shows the reclaimed water. So I guess on 18, it shows. The water and sewer rates. The water and sewer bill increase. And the changes, right? So this is the anticipated. And these are just sewers or just reclaimed? Sure. On slide 18, with the bar chart called revenue requirements, that only shows the water and sewer bill for the average use in the system at 4,000 gallons per, for residential customer account. So the typical customer using around 4,000 gallons per month over the course of a year, would see those types of increases. If they had, you know, higher amounts of irrigation use, or if they have a reclaimed system and they're irrigating, that would be above, you know, this. Okay. So when we talk about the increase in rates on the sewer side and the tiered rates that come with that, did we change the incremental increase on the tiered rates? Did they change also? No. Or are we closing the gap on that tiered amount? What we did is we didn't make any changes to your structure. We increased the rates all the same proportionally for the water system and the sewer system. We did allocate costs between the water and the sewer systems. But what we found is that the cost recovery was pretty reasonable between the two, particularly depending on, you know, how we do the allocation of the debt service. Like, if we look at debt service as sort of like a capital investment and we allocate based on the total investment, you get a more balanced allocation of those costs as opposed to focusing only on projects that might have been sewer funded, let's say, which ordinarily you might directly allocate to the sewer system. So taking more of a average infrastructure investment basis, we felt like that the two system rates were pretty reasonable where they were at. And we decided to recommend applying the increases across the board. This also ensures that all customers, when you communicate to them, are going to get the same proportional increase absent the reclaimed customers, which are a subset of the broader customer base. Wow. That was a whole lot. I'm sorry. So I guess you probably answered my question. But right when you've got a difference between 872 and the 582, the difference in tiers, that difference is still there? Yes. Okay. Okay. Yes. We are maintaining the conservation tiered inclining block structure. Okay. And in the SRF loans, just to confirm, I guess, that the balance of those loans, all those projects are water, wastewater, reclaimed water projects. Right? We aren't repaying loans that are used from another department or anything. Yeah. State revolving loan funds, like I said, are issued either on the drinking water system or the clean water system. And the projects have to meet those criteria. Those are not combined. Okay. But that is all that can be financed with state revolving loan funds. Okay. And how are you planning on educating the residents on these rate changes if they're approved? What? Well, allow me to help you. Well, first of all, we'll certainly engage our communications department. And I would imagine that we'll be sending messages out in their water bills and those types of things. So we'll put together the communications plan. Okay. But especially as when we're talking about being able to explain in a way that's understandable what exactly what that rate increase means and the percentages and that type of a thing, we'll need some help from Sue Burness and her group. So go ahead, Nan. We've already initiated that process, as is required by state law. Every utility customer has been advised that we are considering rate increases. They've been given the dates that we're going to have the public hearings. And that's the beginning of that education process is to let them know that we're considering it and that they have input in the rate consideration starting May 22nd and then the next one, June 5th, June 5th. But as well as even our customers that we serve through Pinellas County Utilities, everybody's been notified or will be notified of those dates. And then we have other legal requirements for the public hearings that we're going to be putting out, that's before the rates are adopted. And then, you know, obviously through this process of talking through why we need the money, and then we'll continue with communications to explain to people once they get the bills beginning in October. Obviously some people don't pick up on the information that's provided to them until it comes in their bills, and then we'll continue that process through then as well. Is any of that communication, in addition to the need and justification for the rate increase, what they can do to conserve more, right? Sustainable living, native plants, you know. For instance, there's a lot of people that don't have large families that use one or two thousand gallons a month of potable water, and their increase would be less than the 1203. This 1203 is the average. So, yes, we do talk about, you know, yes, there's ways to conserve water. There's all kinds of efficiencies to be gained if you don't want to pay a higher utility bill. Okay. But there's, okay, I'll say this. Can I just ask, because I want, but are we really promoting it? Like as they're getting a rate increase, they're also getting, hey, here's the things you can do to help yourself and back it back down, because I think that's what I just, because it's a great question. We certainly will and can do that with communications. As we communicate the rate increase, we can also say, here are ways that you can check. One of the things that's caused our increase is we do have automated meter reading, which is almost 100% cellular at this point. We have something called Ion Water, where a customer can see their water usage day by day, minute by minute, literally. When my husband accidentally leaves the hose on with a, you know, a nozzle that turns off, it sends me an email and tells me, you've had a leak for more than 24 hours of greater than four gallons a minute. And I go looking around and I turn off the hose. Notice it's the man that did that. But that's a great tool. That's a great tool. I will say that in my past years, there would be times I'd put the hose in the pool and forget about it and overflow it. That can't happen if you have some of these tools. So we do have tools that we can provide to our customers to help them control their usage as well. That we can promote more strongly, especially we're really approaching 100% of our customers. I think last I knew we were over 80% of our customers have this cellular that give them the minute by minute updates of their water usage. I think that's cool and that's technology. I don't know that people need or want that. I'm not going to sit around on my phone and watch my meter. But, yeah, kind of to piggyback on the mayor's piggybacking on mine, I think it's an opportunity lost if we don't actually lead with the conservation. Instead of being reactionary, oh, you didn't like the rain increase? Well, you can do this. It's like, hey, what an opportunity to save yourself some money and save the planet at the same time, which is kind of a Dunedin thing to do. And those are my questions. So thank you, Mayor, very much. Great. Okay. Yeah, no, I was going to ask if anybody had any quick follow-ups. Go ahead, Commissioner Degard. Toward that point, as this is an enterprise fund, I'd like to know if you've experienced any communities where you've seen consumption elasticity break, where it suddenly started dropping, and is there a price point we've got to concern ourselves with on that? Well, yeah, a few thoughts come to mind. There was research done that was funded by the water management districts back in 2004, 2005, where they looked at price elasticity demands over a time series. I think that was performed by Dr. Wickholm. And we've got copies of that evaluation. And it's the only one, to my knowledge, that's been performed in the state of Florida that was pretty comprehensive. And they did identify long-run elasticity changes from increasing rates. So for every 1% increase, you might get a decline. What we found in that particular study was that price elasticity varied based on both income and use characteristics. So if you had lower income and less non-essential use, your demand was fairly inelastic. And as you had more irrigation demands, demand was more elastic. I think what your rate structure, as I mentioned before, with the way it increases, already prices irrigation pretty high. And, you know, probably with the rate increases, we might see some pullback. But it's something we would need to evaluate. In addition, I mentioned that study. I used the term long-run changes. They couldn't tell you from that study what the short-run changes would be because I forget who mentioned it on the commission. But you have two types of ways you can change your behaviors. One is immediate change in behavior, so you adjust the settings. And then there's capital investments or longer-term changes. So you rip out all of the yard and you put in zero scaping, stuff like that. So it's a question of, you know, how many of the customers out there have already done that versus not done that? And what types of behavioral changes that they can do? So it's not like a precise science because we don't have the data in the system to know all of those factors. So what we try to do is assume a conservative forecast of demand. We've not specifically incorporated a whole lot of price elasticity to it because the last point I want to make to you is when we looked at your demands, your average use is around 4,000 gallons. That's on par with, like, Sarasota County and some other coastal communities. Pinellas County, I suspect, might be a little bit higher on an average use basis maybe. But I need to look at their study to kind of see, you know, county-wide. But to me, that tells me that, you know, you might have more of your demand on indoor or more essential use. And therefore, the price elasticity might be less than other communities. Because in Florida, I've worked all over the state. And, you know, the average use per month can vary from 4,000 typically on the lower end. If I go into the keys, it can be a little bit lower than that, up to, you know, 5,000 to 7,000 gallons per month easy, you know, in other communities. So it really depends. Okay. Anybody else have a leftover question they need to get out? Okay. So our next item would be to open it up to the public input. Even the public wish to come forward and speak to this issue. I see no one. So I'll close the public input. And I guess we will go to final comments. And within those comments, if you could, you know, just differentiate, I guess, anything that, you know, you might need as we prepare for the first reading, additional information, or you tend to, you know, support versus have a little concern with, I think that would be the way to go. So, Jennifer, does that sound pretty good? Perfect. We can do that. So I'm going to go ahead and start on this side of the aisle this time. Commissioner Walker. Thank you, Mayor. So, first of all, well, I'll answer your question here in a minute. Now I'm out of order. Do whatever you want right now. It's all you. You go. Literally. Out of order. Okay. So, well, first of all, you know, when we sit up here and we hear about all of the different nuances that go into a recommendation and an ultimate decision, first of all, I want to say that this was one of the better presentations with regards to taking a look at this from so many different ways. So, you and your team, really, and supported by the staff, obviously. Infrastructure is one of our top priorities. And we have to stay ahead of that because we are a coastal community. We are in a storm path, if you will, during storm season. Second of all, one of the cost drivers is our people. And I will tell you that people are one of our top priorities as well. And the market and the competition specifically within these labor categories and these people are significant. I mean, you know, so we need to make sure we incentivize people to come work for the great city of Dunedin, but we also need to retain them. So, I think it's important to look at that because, you know, you could just take it as face value and go, oh, my God, that, you know, whatever it was, that million dollar increase in cost of personnel and people and all that. That, but you know what, in the grand scheme of things, it's not. And the other priority is that we're maintaining adequate cash flow to make sure that the enterprise fund and our capital planning remain solvent. With that said, we've got two offsetting responsibilities here. First of all, we need to address the market and economic conditions that are really driving some of these cost increases. And those are things that are completely out of our control. So, we have to stay ahead of it. And we have to do in-depth analysis, just as we've just seen. We also have a responsibility to make sure that the actions that we take, the decisions that we make are as less impactful to our residents as they possibly can be. So, in that context, you know, a phased approach is definitely the way to go. And I, you know, one of the things I looked for in this plan was, is are we being reactionary? And my assessment after hearing this is, we're not being reactionary. We're doing what we are paid to do. And that is make a responsible decision based on market, current market economic conditions. And at the same time, staying ahead of where we need to be in one of our most critical, critical areas of our city. I was really, there was a couple things that the mayor had mentioned. First of all, the indirect rates. My experience has been in public endeavors is that you should always be looking at your indirect rates. How are you reducing the cost of the overhead and all the things associated with that? Because that is a major cost driver. And I do appreciate that question. I think that was very important to this context. The other was the reverse osmosis, you know, the expense of that. And I, this actually kind of threads into the vice mayor's comment with regards to public awareness, public education. So, you know, communicating the rate structure, communicating the ultimate decision that we make here, absolutely imperative. But, and I'm going to put my marketing communication hat on and I'm going to say, okay, well, all right, here's what we need to do. We need to tee this up as a feature and a benefit to our residents. And we have got a story to tell here. And so, anyway, I fully encourage, as much as we can get out there and talk about the great things that we're doing, the great benefits of living in Dunedin, you know, we can't go too far on that. And that's, those are my comments. Thank you. Okay. Commissioner DeGuard. Thank you, Mayor. And thank you, Rob, for your comments. They were well-founded. I'm looking at this now a little different. I believe that this study was very well done. I think that it's given us some good information as far as what we're looking at relative to a future necessity to raise rates and how we're going to do that. So I'm beginning to now shift my mind into more of the other side of the equation, the consumer side. I think we're going to see rates increase no matter how clever we are. I think we're going to see that necessity. And I think we're going to see some behavioral changes because of those rate increases. And we're going to have to manage that side of the equation with as much care as we've just spent in understanding the necessity of rate increases. And so I'm kind of shifting already to that side of the equation. I think our questions up here on how we're going to communicate to our consumers, what we're going to see. But I'm even going a little bit beyond that. I'm going into a place where we should incentivize conservation in some ways with programs that will not only share with our consumers how to conserve, but do some recognition for those that are actually conserving well. And we're way too early to get into some examples of how that might work. But I just think we're going to end up there at some point in the near future. I think we're also seeing an environment where all the basic necessities of life that used to be very reasonable within the framework of what percentage of a budget they were in are going to be expanding. Just look at our electric rates, our water rates, they're all going to be chewing up a greater percentage of our overall income. That's going to create some reaction within the community. How we help them manage that will probably parse the difference of how they view us. So I think that's where we're going to probably have to move next. But generally, I also applaud the work that's been done here. I think it's sound. There's an expression that, and I've got to use an aphorism again, I apologize. Those who live by crystal balls sometimes have to eat ground glass. It's a tough job. And you just took it on very well. That's all I have. OK. Vice Mayor. Thank you, Mayor. You know, I don't know where it started, and it probably did start with where we were with our water, wastewater, and how we came, and the reverse obmosis. But since I can remember, Deneen has always been extremely proud of where they are on the curve in relation to other communities and what we've done. And I certainly understand if we make this change where we fall in relation to our colleagues and the rest of the communities and surrounding communities. But we've always been ahead of the curve on our water, wastewater, other than when we weren't, right, historically speaking. And so I don't want Deneen to be in the headlines like St. Pete has. And it's always smarter to be ahead of the curve and a little progressive in the way we approach things. Kicking the can down the road with infrastructure is never, ever a good thing. And it only puts the pressure on future commission, future residents, and usually with a much greater cost. And so I am in support of this. I know, Mary, you were kind of looking for what's that direction. Although looking at it from the consumer side, it just incredibly pains me that the first two-year increase is just shocking to me. And that shows me where we haven't always been progressive. This is something we should have been looking at four years ago. And so the incremental increases. And I know that if you look at the last four years, I know it's been insane on the things that we've had to address as a community with hurricanes, et cetera, et cetera. COVID, I get all that. But it's the shock value. I have great concerns with the consumers, great concern on how livable Dunedin is in becoming or not becoming with housing increases, with property increases, insurance increases, and that here we are with utilities. And it's what is that breaking point for our residents. And I know that we've already passed it for a lot of our residents. And so I'm always mindful on where is our middle class, where are our first responders, where are our teachers living. We're very prideful of our downtown and the food service workers. Where are they living? And Dunedin is quickly becoming not a livable community for those people. And that truly, truly needs to be our focus on everything we do. What is the impact on the middle class, on the lower income people? Tom, you did kind of steal my thunder on conservation, but we don't speak about it enough up here. I think there should be a strong incentive. I know that we have solar rebates. We have facade grants. We can do so much more with how we handle our water and use of water. We just have a sea of green grass. And there are so many more. St. Augustine is, it just sucks up water. And so there are other alternatives. And it's hard if you're in that neighborhood of St. Augustine to be the one that breaks ground from your neighbors. That's incredibly hard. But somehow we've got to figure out how to crack that code and reach out to some of those residents. Who's going to be the first and what can we do? Because I think in the long run, that's what we need to do. And we seem to be reactionary on our reclaimed water. We need to make it more accessible. And it's like, well, do we? Is that changing behavior? Are we responsible for changing behavior as a city government? Or should we be reactionary and go, well, that's what they want? I tend to believe that in some areas, but I think there's other areas where the commission has responsibility. City staff has responsibility to lead and be visionaries. And that sometimes can mean change in behavior. And I think we're quickly becoming that community where that's what we need to start doing and that's where we need to be looking. Because continuing to increase rates is not the problem, not the solution. But I understand it's where we're living today, especially in the economic environment where we're living. I know the next two, three, four years are going to be incredibly unstable. So where that ends up, we all, we still don't know. But anyway, so it's just a precursor and just a tale that we need to be where we need to be. But what we do greatly, greatly impacts our residents. So thank you. Thank you, Vice Mayor. Commissioner Sandbergen. I realize as a city commission, we have a responsibility to the residents. And I would like to hear a handful of complaints about the price and the increase in a water bill or an invoice. I would rather hear a handful of those than one person talk about a disaster in the water plant where we have water shortages, where we have issues that we could have taken more initiative. I do support this. And I think this is one of the most comprehensive presentations that I've heard since I've been up here. Yeah, people's water, their bills are going to go up. But it kind of reminds me of when I was a kid. I guess my mother was, in the winter she said, keep the door shut because you're heating the outdoors. In the summer, keep the door closed so we don't air condition the outdoors. Now everybody's going to have to step up and realize when the toilet continues to run, it's not going to stop. When the faucet continues to drip, it's not going to stop. But when they get a little increase in the price of their water, it will stop because they're going to hire that plumber, they're going to go to the hardware store, and they're going to fix it. I mean, we just did it in my own house. I realize this is, you know, it could be painful for people, but people are going to have to learn to conserve on their own. Make sure that those are taken care of. The hose being left on, guilty at our house too. And it's just the little things like that. Everybody's going to have to take the initiative to maybe, you know, the length of the shower, the number of days with laundry. I realize bigger families are going to get, they'll be hit harder, but I'm all for this. I'm for taking care of it and continuation. Thank you. Great. Thank you, Commissioner. I was going to say that I looked at my back lawn because, you know, I'm not living in my house yet. And I looked at my back lawn, like last week, and it was as good as a blanket of grass as I've ever seen. And I'm not sure why, because we haven't done a thing with it. The front, of course, is still tore up and it's got to be landscaped. But I'm sitting here listening and I'm thinking, hey, you're the mayor of Dunedin. You've got a great opportunity to be smart about how you relandscape. So anyway, just kind of a side note. Another side note is your comments, Commissioner Walker, on our personnel. Thank you for that. You're dead on. And it's not just in this area. It's citywide in everything we do. They're the backbone of what we do. And in this area, we know there's a lot of competition. And we want to be smart about making sure we've got great people. I've recently toured both facilities. And, I mean, we've got good people doing good stuff. And we want to be smart retaining those good people. So a couple things that I just want to have kind of crystallized as we look towards the great job, by the way. Absolutely great job. Crystallize informationally. It's just, you know, kind of the backup information, you know, that became the cake, so to speak. And in terms of that, it would be helpful. You know, as crystal as you can be on anything to do with comparable communities and how it lays out, I think, you know, we want to have that. Because as we push this out to citizens, we want to have as much detail as we can for them to understand what we're getting, what we're paying, and what they have. Kind of going back to, you know, how we put our best foot forward about the good parts of this. You know, the comparable potable or reclaimed rates so people that have reclaimed can further understand how they're lucky versus those of us who don't have it. Anything to do in the efficiency study that might have an impact on any of this? And I heard you loud and clear, though, Nan. Nothing completely very impactful in the big dollars, but it might be helpful to know that. And I'd also like to kind of know our last 10-year history of water sewer rates, just to kind of have that as a baseline, and to go along with that. Any information that we could say about the role of regulation and what's driven those costs to where they are? Not just being proactive, but the role of regulation. So I've said a lot about the history. And I say it because when I came to Dunedin originally, I was just a young professional. And I will always remember that as a risk manager, I had people who worked in like the nursing industry and other industries that brought their white, you know, outfits and clothes and threw them on my desk. Because they were all rusted. I mean, people, you know, rust in their dishwashers and rust in their clothes and rust in everything. It was, I mean, and at the time, the water department would have like a jar sitting there of the rust water that was coming out of our system. Because we hadn't kept up things with our plants or under the ground where we can't see it. And again, and that's not taking a ding at prior administrations because I have no idea what they were dealing with at the time. They could have had a lot of other issues that just that became the back issue. But as a young professional in my career, I will never forget it. And as all of us up here have said, our number one job really is to keep our infrastructure good, to make sure we don't get to the crisis point. And of course, at that point, you know, right around the early 1990s, you know, both the water and wastewater plants were completely redone, completely rebuilt. And a lot of proactivity into making sure under the ground where you can't see stuff is what it needs to be. So that has always been a passion of mine. It will continue to be. It's our number one job. So and of course, I clearly also remember begging people to be on reclaimed. And so interesting where we are today. So obviously, as we look at the impact to our citizens, I do think we can't just look at this. Because when I was walking to running for mayor, we had we did the stormwater. We did the stormwater increases. And I just think we have to be also understanding the full impact of that one bill, because people will see it as that one bill. And so I just want to make sure as we're moving forward, I'd like to see, you know, the impact of the bill with water, sewer, stormwater, sanitation. And for those who do have reclaimed, just to understand what that's going to look like, because I mean, I'll be honest, I don't look at it as I don't look at it as little individual things. I look at what do I typically pay in a month for that bill? So I think we need to think about it that way and actually be able to market like what we're doing, why we're doing it, why we're keeping Dunedin protected. And so people can understand. And we've heard all this. We know with the storms, people are our infrastructure, our infrastructure, our infrastructure. They want us to make sure our infrastructure is good. And I think that gives us that opportunity. So I'll say that out. And then I think my last thing, too, is we are going to be approaching probably in 2027, looking at our priority list for the next level of Penny for Pinellas. And I don't know what other things we're going to have colliding with that. So I don't want to make any judgments about that, you know, whether it's streets and sidewalks, our facilities, how important it is to keep our new facilities up so we don't deal with those sooner than we have to. But, again, I think that when we really look at that priority list, and I've talked to you about it, city manager, you know, I just think we need to think about maybe there's a little bit more role with the Penny in some of these infrastructure things to take a little pressure off the rates for people and homeowners. So I just think that's got to be one of our thought processes. And, again, I say that without understanding fully what we've got to look at with some of the other issues in the city. So that's all I have. I'm supportive of this. I do want some more information before that first reading to really drill down. Again, I never want to be in the position of what I saw back in the early 90s. And none of us do. So I think that we try to look at where we can create efficiencies and look at how we can educate. And I love the idea of some type of incentivizing conservation cost-saving methods. And I know that, like, Pinellas County, they give awards for people that have, like, best, you know, landscaped yards that are, you know, reducing water consumption. I just think, you know, that's kind of recognizing maybe there's more something that we can do. But I love that idea. So I just ask the city manager, do you have what you need? We do. Thank you. Okay, great. And great job. I think a very professionally done report. Okay. So on that note, is there anything else that you have for us today? No informational items, no. Anything? Okay. So no other informational items. And obviously our main informational things will move to Thursday night where we'll have commission comments, et cetera. And I do want to say, because I think it's really important to say, and maybe we can include it in our prayer on Thursday, the death of Manny Kucurias, former commissioner, former mayor, gave a lot to this city, meant a lot to this city, and just passed away. And I know his funeral's on Friday, but I think Thursday night if we could add that to the prayer. Can I, is it okay if I bring up something on that regard? Sure. Yeah. I just thought we shouldn't go through a meeting without bringing up Manny. Oh, no. Yeah, no. I appreciate that. Good segue. So I talked to the city manager yesterday about what essentially our flag policy is. And I, you know, I would just be interested to know if there was any sort of policy or anything that we can implement here to recognize the passing of one of the most profound figures in Dunedin by lowering the flag to half-staff. And again, I might be catching you flat-footed on this. So whatever, you know, I'm just interested to hear if this is in the realm of the possible. So you're talking about lowering the city flag to half-staff? Yes. Yeah. I don't think there would be an issue with that because you control your city staff. If you were talking about the national or state flag, we would need to do a little more research on that. Okay. Well, I think. So point of clarification then, we do have a state flag in front of city hall here. So that would have to stay at full staff. I believe the governor dictates the state flag and when it is at half-mast. Right. And there may be a way under his flag policy to, you know, identify that there's been a person of certain recognition that you want. But I think given the timeframe you're looking at, it may be faster, easier to just do the city flag because obviously he was a very important figure in the city. I think, yeah, I mean, that's, and I completely understand the circumstances and maybe conflicting policies, but that's a good start. Yeah. Thank you. So we will lower the city flags in honor of Manny Kutzer-Reyes. I think that's a great idea. Right. Yeah. That's a great idea. And at some point, can you come back with this? Can we create a policy out of this, which also gives when we raise it? So Jennifer, I have, have we spoken about a policy before earlier this year when we had an issue? So we'll definitely draft something up. Yeah. Thank you. Cool. Good. Thank you, Rob. Yeah, that's a great idea. And, you know, our thoughts, obviously, and prayers are with Sue and the family. So anyway, nothing else good for the order. I'm going to adjourn the meeting. So adjourned. Thank you, guys.