Okaloosa County BOCC — October 7, 2014 — Action Item Printout

BOARD OF COUNTY COMMISSIONERS AGENDA REQUEST DATE: October 7, 2014 TO: Honorable Chairman and Members of the Board FROM: Jeff Littrell SUBJECT: Using CIP Funds "Freed Up" By Grants In Lieu Of A Rate Adjustment DEPARTMENT: Water and Sewer BCC DISTRICT: ALL STATEMENT OF ISSUE: OCWS staff have been requested to discuss the use of CIP funds "freed up" by grants in lieu of the October 1, 2014 rate adjustment stipulated in Ordinance Number 11-12. That ordinance provided for a five year schedule of annual rate adjustments. The first scheduled adjustment took place on October 1, 2011 and the last scheduled adjustment will occur on October 1, 2015. BACKGROUND: As to the use of CIP funds freed up by grant money in lieu of the scheduled October 1 rate adjustment, we do not believe that is appropriate. Grant funds are always project specific. Diverting a large number of dollars into the rate model in lieu of the revenue from the scheduled FY2015 rate adjustment is problematic. In the past, when we have received a large grant for a project that was already in our Capital Improvement Program (CIP) budget, we found an unbudgeted urgently needed project on which to spend the previously budgeted funds "freed up" by the grant. Example; when the Northwest Florida Water Management District awarded OCWS a $1.25 million grant for the Bob Sikes elevated tank, we informed the BCC that we plan to allocate the freed up funds to buy land for the Shoal River offline reservoir. We believe that it is crucial that we always use grant opportunities to increase the funding for addressing our critical aging infrastructure issues. The intent of grants for capital projects is not to divert funds from infrastructure projects to O&M expenses. Our strong recommendation to the members of the BCC and the County Administrator is that windfall grant opportunities for Water & Sewer be used for critical aging infrastructure projects. OPTIONS: Take no action or direct staff otherwise. RECOMMENDATIONS: Staff strongly recommends that no action be taken - that the current five year rate plan should be kept in place as scheduled through October 1, 2015. RECOMMENDED BY: APPROVED BY: Ernie Padgett, County Administrator