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FY 2027 Non-Ad Valorem Assessment Rate Increase for Spring Hill Street Lighting Municipal Service Benefit Unit and Establishment of Future Maximum Rate and Associated Resolution
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BRIEF OVERVIEW
The Spring Hill Lighting District was created by Ordinance No. 83-10 as a Municipal Service Taxing Unit (MSTU), later amended by Ordinance 90-07 to a Municipal Service Benefit Unit (MSBU) and includes those properties in the original platted Spring Hill Subdivision. The lighting installation was developed in phases by the Spring Hill Civic Association in conjunction with the County and utility provider, Withlacoochee River Electric Cooperative (WREC). The first two phases were to install lighting on major and secondary roads at regular intervals, and the third phase added lighting to intersections. Thereafter the intent of additional lighting was to be placed in areas where there were curves, cul-de-sacs, long stretches between lights or areas where it was dangerous to drive.
Over the life of the MSBU, the district has requested on average 50 additional streetlights annually, thereby increasing the annual operating cost. Concurrently with the annual lighting additions, WREC is gradually phasing out older Sodium Vapor fixtures at a monthly cost of $7.68 per light and upgrading lights to a Light Emitting Diode (LED) style Cobra fixture at a monthly cost of $10.13 per light for both replacement and additions within the district. There are currently 4,467 streetlights paid for by the MSBU, of which 3,503 are sodium vapor and 964 are LED. In 2025, WREC increased their rates on average by 6% for lighting and 10% for poles. Additionally, Property Appraiser cost allocation fees increased from 2% to 3% beginning FY 2026. As a result of these increases, the annual operational expenses have risen beyond the annual assessment revenue received, thus diminishing reserves. To adjust for the increase, the County limited the 2025 allowable lighting additions to no more than 20 each fiscal year to reduce the impact to reserves.
The current annual assessment rate of $14.00 was set in 2019 and has not been adjusted to compensate for the economic increases that occurred in the past few years. As a result, the Spring Hill Stret Lighting MSBU district’s assessment revenue can no longer support the increasing annual operating expenses and maintain the required reserves. The five-year operational estimates indicate the reserves will fall below the recommended 18% required to meet first quarter cash flow needs by FY 2027. Assuming an estimated 2% annual inflation of utility services, the projected operating expense for FY 2026 is $16.60, increasing to $18.50 by year 2031.
In accordance with Section 197.3632 Florida Statutes, a non-ad valorem assessment roll shall be adopted at a public hearing if the non-ad valorem assessment is increased beyond the maximum rate authorized by law or judicial decree at the time of initial imposition. Property owners must be notified of the public hearing and notices of assessment increases by first-class mail and newspaper advertisement at least 20 days prior to the public hearing. The FY 2026 recognized cost for printing and mailing notices to all property owners in the Spring Hill Street Lighting MSBU is $18,030.00.
Therefore, Staff recommends increasing the FY 2027 non-ad valorem assessment rate to $16.00 and increasing the maximum assessment rate to $25.00 as noted below to meet future operational needs. Setting the maximum rate would alleviate future printing and postage cost for rate increases in the foreseeable future.
Current Proposed Proposed Rate
MSBU Name Fund Rate Rate Max Adjustment
Spring Hill Lighting 7041 $14.00 $16.00 $25.00 $2.00 - $11.00
FINANCIAL IMPACT
The recommended assessment rate of $16.00 for each of the 32,962 units is anticipated to generate $501,023.00 at 95% collection rate and will be included in the FY 2027 budget for the Spring Hill Lighting MSBU.
LEGAL NOTE
The Board has authority to establish MSBUs and set assessment rates pursuant to Sections 125.01 and 197.3632, Florida Statutes.
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RECOMMENDATION
It is recommended that the Board approve and authorize the Chairman’s signature on the attached resolution, thereby increasing the annual non-ad valorem assessment rate for the Spring Hill Lighting MSBU for FY 2027 and establish the maximum assessment rate for future years.