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Time to untie the Gordian knot

July 3, 2009
Cape Coral Daily Breeze

Cape Coral property owners in the proposed utility expansion areas are again decrying costs.

We understand their position.

Most of us owe more on our homes and lots than they are worth and valuations continue to decline. Many of us - more than 12 percent - are unemployed while the rest are afraid we may not have a job tomorrow. The construction industry has collapsed and, while other parts of the country talk about "ripple effect," here in the Cape that tsunami wave is still lapping at the doors of nearly every business in the city.

Let us state the obvious: Money is tight and must be spent wisely.

Extending water, sewer and "dual" water services to the 6,200 properties on the south side of Pine Island Road in the area dubbed Southwest 6/7 remains a wise expenditure. Extending water only to the 57,000 parcels on the other side of Pine Island Road to North 1-8 also has merit.

Consider: Millions of dollars of expenditures for both project components already have been made for engineering and design work, for the expansion of existing water and sewer treatment facilities, and for the construction of a new $96 million reverse osmosis water plant to serve customers in the expansion areas.

These bills have come due and must be paid.

The city can turn to existing customers, who already have paid expansion assessments, and double their monthly bills over the next five years as has also been proposed. Or the city can mitigate the rate increases set to begin this fall by finally approving its on-again, off-again plans to finish what it started, all services to SW 6/7 and water-only in the north.

Either way, we pay. It's just a question of who among us, how much, and when.

What is needed now is long-term vision sharpened by common sense and a strict application of fairness.

This means proceed with the expansion, but examine the assessment methodology, which has changed significantly for some property owners in the upcoming expansion areas.

As stated previously on these pages, the issue should not be whether the expansion should continue but how the city proposes to assess and collect the money.

We suggest:

Examine the discount program

Some property owners, but not all, will receive a discount on their assessment for prompt payment.

The 20 percent discount for pre-payment by Oct. 23 in the north is a good option; it reduces the cost to the owner of an "average" property of 10,000 square feet from $6,000 to $4,800. That's a significant savings, and it quickly puts much-needed funds into the city coffers.

Property owners in SW 6/7, who have only until Sept.18 to pay $17,058 for full services, however, are offered no discount. They can prepay but are offered no incentive to do so.

We suggest council revisit this disparity.

Revisit pay-over-time options

For those property owners who can't pay cash - and who can't borrow because of the decline in housing costs - take a look at the interest rates proposed for the remaining two options, deferred payment with no payments due for 10 years and the time payment plan, which spreads payments over 20 years.

When previously proposed, rates were estimated at 6.2 percent rate for the deferred payment plan, 5.75 for the amortized plan.

Now rates are estimated at 7.5 percent per year, a sharp increase.

The city needs to do better.

Call it what you want, an impact fee is an impact fee

Council proposes a major change in assessment methodology, brand new for SW 6/7 and N 1-8, that unfairly burdens the owners of undeveloped properties while also requiring more money up front from homeowners paying cash.

The city proposes to require lot owners to pay the impact fee portion of the expansion bill long before many will actually impact the system - which is why it's now being called an "expansion fee."

Previously, all property owners in the expansion areas were required to pay their assessment - the amount for pipes and all connection infrastructure - as the project got under way.

Property owners, though, did not need to pay the impact fee portion of the bill until they actually hooked up to the system. For lot owners, that meant when they built on the property. Now they, and all owners of undeveloped sites, will need to pay the total amount up front although they are not impacting the system a bit.

This is unfair. Call it a capacity expansion fee, call it a reservation fee and it's still an impact fee - and a hefty one at that.

The proposal fails the "rational nexus test" which says he who pays must benefit and so is open to legal challenge, made easier this legislative session.

Don't go there. Revisit this proposed change in how - and when - property owners pay and reject the new plan; the city cannot defend the alleged benefit.

Revisit large property 'discounts'

Council also has changed - substantially changed - how much the owners of undeveloped and rural properties pay.

Faced with harsh criticism concerning assessment amounts a few years ago, city council made a change that shifted costs from home and lot owners to the owners of larger parcels.

The city bases its assessments on square footage. If you have a larger yard, you pay more. If you have acreage, you pay more. In expansion areas before 2006, the city recognized that it would not be fair to assess the owners of large commercial sites for the entire parcel. Wetlands and retention areas, for example, would never require services. It also would be much more costly for these owners to supply the on-site improvements needed to hook up. So the city assessed these larger parcels at 30 percent of the actual square footage.

The change eliminating the "discount" flew beneath the radar because few were affected.

Now, particularly in the north, the impact of the change has become apparent, especially to those who own in the Cape's only rural area. The owners of small parcels of grazing land - as little as nine acres - are looking at a water-only assessment of $88,000-plus. An owner of one home on a similar small parcel is at looking at $98,000 for water only.

Some common sense, please. Water-only is not worth six figures to any property owner, much less one home in the lone low-density area of Cape Coral.

Revisit the assessment methodology and undo the change unthinkingly made three years ago to earn political brownie points with residential property owners.

Not only will that be much more fair to "rural" property owners asked to pay far more than any benefit received, it will better position the city for economic growth north of Pine Island Road.

Again, council needs to think long-term to foster much-needed commercial and industrial development in an area of the city where there is virtually none.

The Gordian knot wrought through years of cross-purpose planning, petty politics and lax oversight can be untied by this council this summer.

Slicing through the rhetoric and standing firm to make the right decisions in an election year will be the greatest challenges.

Council needs to gird its respective loins and will itself strong enough for the decisions ahead.

- Breeze editorial



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