Islamorada residents could face higher wastewater bills in the coming years as the village grapples with increasing operational expenses and the need for significant system upgrades. A recent rate study presented to the village council by the firm Raftelis suggests annual rate increases of 6% could be implemented from 2027 through 2031.

Rising Costs and Shortfalls

Operating costs for the village’s wastewater system are projected to reach $7.2 million in fiscal year 2026, while anticipated revenue from ratepayers is estimated at $6.9 million. This projected shortfall highlights the need for rate adjustments to balance the budget.

Trevor McCarthy, representing Raftelis, informed the council that the costs associated with operating and maintaining the wastewater system are expected to climb by approximately 3% each year. He also emphasized the importance of maintaining adequate cash reserves, recommending a minimum of 120 days of operating and maintenance expenses plus an additional 2% of gross depreciable assets.

For the average household, the proposed annual increase would amount to roughly $55.32. Following the presentation, the village council indicated support for proceeding with a rate increase to address the projected deficit in wastewater operating expenses. A formal resolution for the rate increase is expected to be considered by the council in September.

Past Increases and State Trends

McCarthy noted that the last adjustment to wastewater rates in Islamorada was implemented in 2021. A subsequent rate study conducted in 2022 had recommended a 1% annual increase to account for rising costs and necessary system upgrades, but these changes were not enacted by the village. Since that time, utilities across the state have experienced escalating costs for both operation and maintenance, as well as for capital projects essential to maintaining system efficiency.

“This is something we’re seeing all across the state,” McCarthy stated. “This is driven by inflation that persisted for a longer period of time than anyone would have thought back in 2022.”

Neighboring communities are also experiencing similar trends. The city of Marathon, for instance, has approved a series of increases for its sewer system charges. Marathon’s sewer rates are set to increase by 7% annually for fiscal years 2025 through 2027, followed by a 1% increase in fiscal year 2028. This information was reported by Keys Weekly.

Future Capital Improvements

Beyond day-to-day operational costs, Islamorada faces substantial expenses for future upgrades to its wastewater system. The system currently transports effluent from homes in Islamorada to the Key Largo Wastewater Treatment Plant. Village staff have identified approximately $38.4 million in necessary future upgrades.

While half of this total projected cost is expected to be covered by grants, the village will need to secure funding for the remaining half. Raftelis suggested that the village could utilize a loan or line of credit to finance these capital improvements. In either scenario, revenues generated from ratepayer payments would be allocated to repay the debt incurred for these essential upgrades. For more details on the wastewater rate study, residents can refer to the full report.