R5X - Of the City of Miami Beach,

Ordinances - R5 X

COMMISSION MEMORANDUM

10:55 a.m. Second Reading Public Hearing

RECOMMENDATION

The Administration recommends approving on Second Reading Public Hearing, the proposed increase to the water and sewer impact fees as presented to the Mayor and City Commission (City Commission) at its March 19, 2025 meeting.

BACKGROUND/HISTORY

The Public Works Department engaged GovRates, Inc. to conduct a utility rate study, which is now completed.

A presentation of the formulation of the proposed rates, as well as public comments, were offered at the February 21, 2025, Finance and Economic Resiliency Committee (FERC) meeting. The Administration recommended that the Committee consider adopting the proposed adjusted water and sewer impact fees as discussed in Section 2 of the Utility Rate Study (Attachment A).

At the conclusion of the presentation and discussion, FERC members made a motion to proceed to the City Commission with a favorable recommendation to adjust the impact fees with implementation to start upon approval by the City Commission.

On May 21, 2025, City Commission members had the title of the Ordinance read into the record. Sponsoring Commissioner Tanya Bhatt stressed that the current water and sewer impact fees had not been adjusted in 30 years, and they needed to become current. Any approved fee increase would affect new developments, typically paid for by developers. There were no members of the public present in person or via zoom to speak on behalf of or against the item. Commission members voted unanimously to move the item to the June 25, 2025 City Commission meeting for approval on Second Reading Public Hearing.

ANALYSIS

The City of Miami Beach owns, operates, and maintains water and sewer utility systems that provide essential water and sanitary sewer services to residences and businesses 24 hours per day, 365 days per year.

The City is constructing water and sewer infrastructure to support and provide future capacity within the City's utility service area. Water and sewer impact fees can be used to help fund growth-related capital projects and growth-related debt service. The water and sewer impact fees were last adjusted in the 1990’s and have not been increased to reflect the City's current costs of providing water and sewer capacity.

The City retained the firm GovRates, Inc. (GovRates) to assist in the determination of revised water impact fees and sewer impact fees. GovRates has recommended right-sizing water and sewer impact fees to accurately recover the cost of transmission capacity. Separate impact fees are paid to Miami-Dade County for water and sewer treatment capacity. The City now has a higher cost per unit of capacity than what was calculated 30 years ago due to inflation, new treatment technology, increased government regulations, and changing capital needs. The purpose of assessing impact fees is to assign the proportionate share of growth-related capital costs to new customers benefiting from such additional costs.

The City’s existing water and sewer impact fees are based on water meter size and were adopted by the City Commission on May 17, 1995, pursuant to Ordinance No. 95-2990 for water and Ordinance No. 95-2991 for sewer. Level of service standards, which indicates the capacity per unit of demand for each public facility or service, were established in order to ensure that adequate facility capacity will be provided for future development and for the purposes of issuing development orders or permits pursuant to Section 163.3202(2)(g) of the Florida Statutes. The level of service that is commonly used in the industry is the capacity (service) allocable to an Equivalent Residential Connection (ERC) – known as an equivalent residential unit (ERU) or equivalent dwelling unit (EDU) – expressed as the amount of usage (gallons) allocated. Since Miami-Dade County provides the City's water supply and sewer treatment, the proposed impact fees for the City were developed assuming the County's level of service standard of 210 gallons per day for units under 3,001 square feet.

To evaluate the availability of the existing utility assets to meet future capacity needs, the existing utility assets were reviewed and assigned to functional categories. The functional cost categories are based on the purpose of the assets and the service that such assets provide. The City’s reported utility asset information served as the basis of the functionalization of the existing utility assets.

The City’s Capital Improvement Program (CIP) through the Fiscal Year 2034, as prepared and estimated by City staff and its Consulting Engineers, outlines a number of capital improvements for the water and sewer systems. These capital projects include i.) upgrades of existing assets to accommodate new and existing customers; and ii.) replacements of existing assets or projects which generally benefit current users of the system.

Based on the fair share apportionment rule identified by case law, only backbone transmission costs were recognized in the water and sewer impact fee calculations. General transmission and distribution/collection project costs were not recognized because they i.) generally are not system- wide costs (i.e., distribution/collection project costs tend to benefit specific customers); ii.) in many instances, are funded by a specific charge applied to a customer (e.g., line extension charges, etc.); and iii.) are usually contributed to the City as part of the development process (e.g., it would not be equitable for a developer who has contributed the distribution/collection assets to pay an impact fee which includes recovery of distribution/collection projects).

The current impact vs. increased impact fees that will primarily affect developers/new developments, and not City residents, is shown in the table below.

FISCAL IMPACT STATEMENT

The proposed increased water and sewer impact fees shown in the table above will be effective upon approval.

Does this Ordinance require a Business Impact Estimate? Yes

If applicable, the Business Impact Estimate (BIE) was published on: 6/11/2025 See BIE at: https://www.miamibeachfl.gov/city-hall/city-clerk/meeting-notices/

CONCLUSION

The Administration recommends approving on Second Reading Public Hearing, the proposed increase to the water and sewer impact fees as presented to the City Commission at its March 19, 2025 meeting.

Applicable Area

Citywide

Was this Agenda Item initially requested by a lobbyist which, as defined in Code Sec. 2-481, includes a principal engaged in lobbying?

If so, specify the name of lobbyist(s) and principal(s):

Department

Public Works

Sponsor(s)

Commissioner Tanya Bhatt

Co-sponsor(s)

Commissioner Joseph Magazine

Condensed Title

10:55 a.m. 2nd Rdg, Increase Water Impact/Sewer Impact Fees. (Bhatt/Magazine) PW

Previous Action (For City Clerk Use Only)

First Reading Public Hearing on 5/21/2025 - R5 V