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Carrabelle weighs takeover of SummerCamp water and sewer

David Adlerstein
dadlerstein@starfl.com
The Apalach Times

Carrabelle took cautious baby steps earlier this month towards taking over water and sewer service for The St. Joe Company’s SummerCamp development, and expanding its reach as a regional utility provider.

But much still remains to be examined and decided upon as city officials review a recently completed feasibility study of the SummerCamp project.

“The interconnection with SummerCamp would place the city of Carrabelle providing water and sewer services along 16.8 miles of U.S. 98, working towards the Northwest Florida Water Management District’s objective of Carrabelle being a regional utility provider,” said Mayor Brenda La Paz, following City Engineer Russell Large’s unveiling of the study at a July 2 meeting.

“Regionalization is also a long-term goal of Carrabelle, but we all understand we are taking the first steps towards regionalization,” she said. “Although this is an exciting opportunity for Carrabelle’s utility enterprise, I am cautiously optimistic as the commission moves forward towards a decision.

“We absolutely must not put the Carrabelle water and sewer enterprise in a financial situation that would somehow negatively affect our city and our utility ratepayers,” she said,

In his presentation, Large, from the Tallahassee-based Inovia Consulting Group, outlined how study of the possible takeover has its roots in a Jan. 2019 request from John Curtis, residential development manager of SouthWood and SummerCamp.

Curtis had said the SummerCamp water and sewer facilities were costly to operate as a non-municipal utility regulated by the Public Service Commission (PSC), and complex to manage permit requirements, particularly due to the low percentage of utility customers in SummerCamp.

Data taken from PSC filings indicate that with gross revenues little changed from the roughly $50,000 level between 2013 and 2017, and with operating expenses for SummerCamp’s water and sewer slowly dropping from a high of nearly $570,000 in 2015 to about $400,000 in 2017, the utility lost about $340,000 in 2017.

“It is apparent from these reports that the cost to supply finished water, and to pump out and haul away raw wastewater is far greater than the revenue from the 24 residential units and one commercial user currently constructed in the SummerCamp development,” wrote Large. “From these reports, it is apparent that in its current state of operation, the SummerCamp utilities are not capable of being financially self-supporting.”

The development’s water treatment plant draws on two wells that feed nanofilter membrane treatment units, considered an effective treatment to remove organic matter. Booster pumps force chlorine-treated water to the 150,000-gallon ground storage tank, and then into the distribution system.

In terms of wastewater, the approved treatment plant features sequencing batch reactors, a similar technology used by Carrabelle, with components such as the batch reactors and rotating disk filters manufactured by the same company, Aqua Aerobics.

Unfortunately, while construction of the SummerCamp treatment plant was completed, it was never placed into service since the build-out of residential units, far below the hoped-for 499 units, has yet to reach the minimum quantity of sewage flow for the plant to operate. Because of this falling short, Large said, St. Joe received approval for a procedure to pump out and haul away raw sewer effluent from the wet wells of two lift stations.

Originally designed for a total capacity of 180,000 gallons per day, Summercamp’s wastewater plant remains permitted, although for half the initial capacity, Large said.

Those SummerCamp residents who use the system now pay monthly utility rates, based on 4,000 gallons, of $54 for water and $49 for sewer, and based on 8,000 gallons, of $82 for water and $63 for sewer.

These rates are higher than that charged to current users of the Carrabelle who live outside the city, which include users in Lanark Village, St. James Bay, the Bungalows on the Gulf condos east of St. James Bay, and the Franklin Correctional Institution.

Those “outside” Carrabelle users pay $84 for water and sewer based on 4,000 gallons per month rates. And $119 based on 8,000 gallons per month usage.

Both the SummerCamp rates and the outside Carrabelle rates are lower than the statewide average, in 2018, of $61 for water and sewer for 4,000 gallon users, and $95 per month for 8,000 gallon users.

“In any scenario or analysis which involves the Carrabelle owning and operating the SummerCamp utilities, an evaluation of rates based on the (outside Carrabelle rates) must be considered, as they are less than the current SummerCamp rates,” Large said. “Legally, the city must apply rates consistently for customers outside the city limits, unless a different parameter or class of service can be established. “

The study notes that the city is now pursuing an extension of water and sewer lines to the Lighthouse Estates area, which would mean the city has lines along 13.1 miles of US 98. The addition of the SummerCamp water and sewer systems would extend Carrabelle’s service by 3.7 miles eastward.

Large said the Northwest Florida Water Management District’s stated objective is to provide “interconnectivity and regionalization” of utility systems along the US Highway 98 corridor, because this would “provide a measure of reliability during catastrophic storm events along the coastline.”

The study contemplates a phased approach to assuming service to SummerCamp, mainly because the city would have to see “an initial adjustment of the water and sewer systems operation to achieve positive operating revenues to meet the city’s goals and objectives.”

This first phase would mean extending Carrabelle’s water and sewer systems to connect to the SummerCamp facilities, while taking that current water supply and treatment system offline, and discontinuing hauling off untreated wastewater.

“In doing so, it is expected that operating costs will be significantly reduced by eliminating the cost to operate separate and redundant systems,” reads the study.

The plans would call for tying into the water supply system that now serves Lanark and St. James Bay, and extending those lines to SummerCamp to supply the development with finished water.

The capital costs for the first phase of the water project would run about a half-million dollars, but with lackluster revenues at the current rates, due to just a 5 percent build-out at SummerCamp, “it is apparent that revenues are not enough to cover the cost of operation and maintenance,” reads the report.

The impact of revenues regarding the first phase of the sewer line extensions would be different. After about $1.5 million in capital costs that would include upgrading the lift station pumps in the St. James Bay master lift station, and extending eight-inch sewer force main from St. James Bay to SummerCamp, the utility would have revenues “that are sufficient to cover the cost of operation and maintenance.”

A second phase to follow would call for operating the SummerCamp water and sewer systems independently.

“This will become necessary at the time SummerCamp demand is greater than the capacity of the interconnected capacity to provide water and wastewater service; or at the point it becomes more cost effective to operate the SummerCamp water and wastewater systems independent of the interconnected systems,” reads the report.

The study forecasts that in 2029, or year 10 of the project, “both the withdrawal capacity and the treatment capacity are below the needed amount to support the interconnected water system. It is at this point that the SummerCamp water wells and water treatment plant must be brought into service.”

On the other hand, the wastewater treatment capacity of the Carrabelle system would not be a limiting factor “since capacity remains available for the assumed growth patterns,” reads the study. The limitation that would emerge in the year 2029 would be due to exceeding the capacity of the sewer collection system at St. James Bay, and would necessitate bringing to the now-moribund SummerCamp wastewater treatment plant into operation.

“The weak link here is the St. James Bay lift station,” said Large.

Charlie Painter, who heads the Carrabelle water and sewer department, estimated that it could take as much as $1 million to rejuvenate the SummerCamp wastewater treatment facility

“It’s currently in some disrepair,” he said. “It would take some effort to bring it online.”

Large was a bit more optimistic about the costs. “My initial reaction is that sounds a little high,” he told commissioners.

The study concludes that with about $2 million in funding needed for the first phase of the project, this “is not feasible since the net revenue will not cover the cost of operation and maintenance nor debt service. It has been contemplated the St. Joe Company will consider funding the initial capital improvements for Phase I.

“Additionally, the city will need to consider establishing a separate parameter of service or class of service for SummerCamp, for purposes of establishing higher water and sewer rates,” reads the study. ”The city will need to consider establishing higher rates for SummerCamp customers. Beyond the initial year of Phase I, the net revenue at the city of Carrabelle rates for customers outside the city is not sufficient to cover the cost of operation and maintenance of the interconnected systems.”

The report goes on to say that in addition to greater reliability due to storm damage or other unforeseen events, and the adhering to regionalization goals of the water management district, this expanded system, with capacity improvements, could be used for future expansion of regionalization to the east, such as St. Teresa.

“There’s a lot of conversation yet to had,” said Large.