With Gulfport City Council fine tuning next year’s budget and discussing utility bill increases, deposits for new accounts have been a hot ticket item.
In a memorandum dated August 19, City of Gulfport’s Finance Director, Cheryl Hannafin, wrote: “Staff also recommends any person of the living unit to be serviced by water shall deposit with the city the sum of two hundred dollars ($200.00). Interest shall no longer accrue on all utility deposits held by the City effective October 1, 2020.”
There are two points of note, here.
On Tuesday, August 19 council passed Ordinance 2020-04, an increase for new account deposits from $135 to $200.
The deposit will now be mandatory for any new account opened after October 1, whether the account holder owns or rents the property.
So why the increase? Hannafin explained the $65 increase.
“There is a methodology used to determine an appropriate amount for the required deposit,” said Hannafin. “We’ve been doing rate increases for water usage over the last few years, but the deposit hasn’t been increased.”
Utility security deposits help insure against losses that result from unpaid or underpaid bills and generally reflect two months of usage for the average consumer.
That’s exactly what the city calculated. Hannafin looked at the average bill of both 2,000 gallon users and 4,000 gallon users and came up with a figure close to $200.
Once the account is closed and paid off, the account holder’s deposit will be returned with interest.
But, about that interest….
Council also voted to stop interest accrual on utility deposits. But why?
“The federal reserve reduced the interest rate to near zero and therefore management determined that the administrative overhead to allocate de minimus interest accruals outweigh the earnings themselves,” Hannafin explained.
In plain English, that means, with the current interest rate, it would actually cost the city money to allocate interest to account holders than the actual amount of interest that would be accrued.
Interest on current accounts will continue to accrue until October 1, 2020 according to Hannafin.
The city will pay previously accrued interest upon closure of the account.
For more information on water bill deposits and interest, contact the City’s Utility Customer Service Department at 727-893-1016 Monday to Friday 8 a.m. to 4:30 p.m., or visit mygulfport.us/finance-department/utilitybillpayment.