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Reject re-assessment plan

June 18, 2011
Cape Coral Daily Breeze

A plan to subsidize utility rates by accelerating impact fees on an estimated 16,000 properties in the so-called "infill" areas of Districts 1 and 2 is on the agenda for council consideration Monday.

Council is expected to decide whether to give staff authorization to pursue a plan to re-assess owners of vacant lots where utility services are available.

These owners of undeveloped properties previously paid assessments of varying amounts when city-provided utility services were expanded into their neighborhoods. These fees, some assessed as far back as the 1990s, were tabulated on the cost of the new infrastructure - pipes in the ground and related improvements.

A second fee was to be due when these properties were developed and so "impacted" the system by accessing the newly available water and sewer services.

What the city proposes to do is change the nature - and the name - of the impact fee portion of the levy. Development of the property would no longer be the trigger. Instead, these property owners would not pay an impact fee when a home or other structure is built, but would be assessed a "capacity reservation fee" following final approval and implementation of the new fee structure.

As currently approximated, the new assessment would equate to $5,136 per lot in District 1, and $6,750 per lot in District 2. Property owners would have the option of paying the levy over 20 years in annual increments added to the tax bills of affected properties.

Why are the owners of some 16,000-plus parcels facing a new assessment at a time when property values are at record lows and unemployment at record highs?

It's not to put more pipes in the ground, install more lift stations or expand capacity at the water and sewer plants.

It's not to pay for more wells or for a more modern sewage treatment method - not that these particular properties have any immediate need for these services.

The plan has been proposed to refinance debt so as to reduce, by a tad, utility rates for those who already are on the system and using its services. By assessing those who are not on the system - and whose properties might very well never be - the city can issue $91 million in assessment bonds to redeem a comparable amount in commercial paper, thereby lowering a projected utility rate hike of 8 percent down to a 3.5 percent increase.

The assess-'em-all-again plan is a bad one because it is no solution to the Cape's utility woes.

Like previous "solutions" of a similar ilk, it's an attempt to subsidize rates by forcing non-customers - and, all the better, mostly non-voting non-customers - to pay for, well, nothing.

Meanwhile, it won't lower rates or even stop the increases, it will just make for smaller hikes as rates continue their upward spiral.

And it will do nothing to address the primary reason the city had to raise water and sewer rates to meet its bond obligations in the first place - the city halted its multi-year, multi-million dollar utility expansion project in mid course AFTER it committed to build a water plant to serve customers projected to connect according to an approved area-by-area expansion schedule.

While one can argue that the collapse of the housing market deeply affected customer projections, the bust did not affect the substantial customer projections in Southwest 6 & 7 - customers on developed properties in what also can be construed as an "infill" area where the city incurred considerable expense for the engineering component of their portion of the expansion project.

Nor did the bust affect the next phases scheduled for the more developed areas north of Pine Island Road that already had met the density requirements for utility installation.

Bottom line: In the long run - and we will argue in the short run, too - it makes much more sense to restart the UEP so as to bring on line actual customers to help offset the very rate increases caused by deciding not to service those homes and businesses.

Staff effort would be better placed in developing a plan to make this happen by also formulating financing options to mitigate the financial impact on these property owners.

Hiding the cost ball under another cup is nothing but a shell game, a street hustle.

What is needed here is a whole lot more complex - a legitimate plan to restart the UEP in a way that is cost effective and palatable to those who will bear the costs and receive the benefits.

It's time for this council and this administration to show both ratepayers and taxpayers they are up to the task.

- Breeze editorial



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