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Make the hard decision

January 9, 2010
Cape Coral Daily Breeze

Mayor John Sullivan has opened the new year with his first major proposal since the November election.

In an effort to tackle the challenge of escalating utility rates due to the previous board's inability to reach consensus on the remaining portions of the utility expansion project, Mayor Sullivan proposes a new $2,000-per-property levy on the 60,000 or so property owners not served by the city's water and sewer system.

He proposes to assess these property owners $300-$400 per year for the next five years "to help pay down the debt and reduce the monthly utility rates to the residents who have already paid for their capacity."

These property owners then would get credit toward the impact fee portion of any assessment levied when utilities become available at an as-yet undetermined point in the future.

"It's like loaning the city money," Mayor Sullivan told The Breeze this week.

We will give him credit for two things.

One, Mayor Sullivan is to be commended for coming up with a plan to deal with the financial ramifications associated with the stoppage of the UEP. The old water plant was expanded and a new $96 million water plant built on the premise the expansion project would continue and many new customers would come on line to help pay for those improvements. The effect of no new customers is very real, and all of us who have paid our fees and assessments are feeling it every time we pay our utility bill. It's going to get worse over the next few years because more rate increases are projected each year expansion is postponed.

Mayor Sullivan also is to be credited for moving out of the politicking mode into a leadership role. Proposing a new fee just two months after riding into office on a promise of no "unwarranted, unfair, and harmful increases in taxes, assessments and fees" took guts and we'll not smack him - not too hard, anyway - for coming to the realization that balancing the books is not the stuff of palm card promises or "contracts."

The problem lies with the proposal - it's simply not the best option out there.

Nor is it likely legal.

The bulk of the properties the mayor proposes to charge are outside the existing utility service areas, Southwest 6/7 and North 1-8, the areas that were to get water and sewer services or water-only services, respectively. The vast majority are undeveloped parcels - they have no homes awaiting service even if water and sewer was available.

Simply put, what Mayor Sullivan proposes is a precedent-setting new concept, a new tax not for services provided, but for services pending at some point in the future - maybe - as there is no companion plan or timetable to put pipes in the ground.

City staff previously tendered a similar concept of up-front impact fees with SW 6/7 and the North 1-8 water-only component of the utility expansion plan. Council deadlocked on the project, which would have levied a $6,000-per-parcel fee on all properties north of Pine Island Road to pay for both the installation of water pipes and a proportional share of the new water plant. It was the first time the city proposed to charge an impact fee - re-dubbed a "capacity reservation fee" - on unimproved properties. The rest of the city paid the impact fee portion of their utility assessment bill when they hooked up or built on the lot.

That was a dicey concept even with the pipes-in-the-ground component.

State law, to date, has been interpreted as to allow "impact fees" - fees for new infrastructure necessitated by growth -only if those paying the fees directly benefit within a certain time frame. A failure to demonstrate this "rational nexus," or link between payment and benefit, can result in a legal challenge while failure to meet that time window once the fee has been collected can result in repayment to those charged.

At least under staff's scenario, services were actually going to be available and within a known time frame.

This latest proposal calls for no installation of pipes and related infrastructure, which the city attorney's office already deemed would not meet legal muster when previously suggested by former mayor Arnold Kempe.

Going to outside legal council to get another opinion, or to the state legislature for new legislation to allow for taxation without return, as Mayor Sullivan suggests, would be a waste of more time and more money.

This council faces the same choice as the last board: Restart the UEP and bring more customers on board to pay for the infrastructure, built with citywide completion by 2017 in mind, or divvy the costs over a much smaller rate base.

We again urge a restart of the utility expansion project.

It's the hard choice, but it's the fair choice for everyone.

The water plant needs to be paid for. The costs need to be shared. But if people are going to pay a tax or a fee or an assessment - call it what you will - they should benefit. That's policy making bedrock. Or should be.

Let's start there and bring a viable plan back to the table.

- Breeze editorial



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