Historic City News reporters will be watching closely when the City Commission convenes on Monday night — one of the issues on the agenda will be the potential transfer of the city’s West Augustine utility system to the county.
City Manager John Regan was quoted in The St. Augustine Report today, saying the two governments will work out an acquisition agreement to determine the value of the city-owned system, including installed utility lines, revenue, and future growth of the area.
In the report, Regan calls the proposal, “a great example of our city and county working together to benefit the West Augustine community”.
But, is it?
Former City Attorney Geoffrey Dobson, who is currently attorney for the Town of Hastings, was asked about his experiences with municipal governments who sell their utility companies. “My general philosophy is that ultimately — the money from the sale gets squandered.”
County Administrator Michael Wanchick made the acquisition proposal, according to the report.
Historic City News editor Michael Gold, who is a candidate for the open seat on the St. Augustine City Commission in November, said “I would be more than careful — the fact that the County initiated the request is telling. If they did not already think they were going to benefit by it, why would they even ask?”
Municipal utility companies are one of the few, and often the largest, sources of revenue for local government — next to the collection of property taxes.
“Once it’s sold — it’s sold,” Dobson warned. “I recall a time when the City of Sarasota owned, and decided to sell, their electric utility company to Florida Power Corporation. Then, with the money in the bank, they went off to dredge a channel out to the municipal pier. A hurricane came and destroyed the channel, wasted all of the dredging, and left the city with no channel AND no money.”
Regan said, “The County has a greater capacity to handle the expense of the planned West Augustine infrastructure improvements and possibly lower utility rates for that community,” Regan said.
Dobson warns, “That’s certainly not a given. It’s just one of a plethora of questions that would have to be answered in public meetings before a decision could be reached. Another would pertain to the amount of excess capacity of the existing providers.”
The City of St. Augustine has long collected a 25% surcharge for utility customers outside of the city limits. Gold asked, “What effects will this have on those customers who would then be serviced by St. Johns County Utility Department — and how would that decision impact future annexation proposals?”
A policy question immediately came to Dobson’s mind; remembering a time when the county tried to take over the Hastings-owned water and sewer treatment services. “It has been a long standing policy at the City to defend against the sale of the utility company.”
Dobson offered a humorous adage; likening the county takeover of “just the West Augustine utilities” to a camel’s nose — “If the camel’s nose is in the tent, the camel is in the tent.”
“Between now and 2015, and so long as Joe Boles is mayor, I am scared to death of this city commission having jurisdiction over a large, lump sum windfall of taxpayer money like this — there would be some excuse why the money would have to be used on Boles’ 450th party; then we’d have no way to get it back,” Gold said.
A legal question also arose to Dobson. “What about the bond-holders of the City’s debt that have been secured with the income derived from the full operation of the St. Augustine Utility Department?”
“Even if the money from the sale of the utility service in West Augustine was used to pay off the bond debt, I am leery, very leery; because the value of the future income to the city is enormous,” Gold commented.