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New Years revelations

January 2, 2014
Cape Coral Daily Breeze

If 2012 offered the first signs of an economy poking through the ashes of the sub-prime apocalypse, 2013 offered some proofs of tangible improvement:

Property valuations were up.

Unemployment went down.

And Cape residents again began to look toward the future.

New beginnings

In 2013, Cape Coral voters finished what they started an election ago, sweeping out incumbents on both sides of a political divide that mired the city in a muck-fest during the worst of the recession years.

Newly elected mayor Marni Sawicki and council members Jim Burch, Rick Williams and Richard Leon offered voters little similarity in the way of background, experience or even political philosophy, but they did have one thing in common with the council members elected, or re-elected, two years ago: They promised a more positive approach - less faction-based in-fighting and more problem solving, something sorely needed if the Cape is to return to economic normalcy.

To get us there, they, along with the rest of the elected board -council members John Carioscia, Lenny Nesta, Rana Erbrick and Derrick Donnell - have their work cut out for them as the city moves into the new year.

At the top of the list remains on-going pension reform, the sole area where the Cape's Fitch rating took a smack in 2013 despite a touted $50 million in savings over the next 25 years on top of a previous $75 million savings from police negotiations alone.

Negotiated reforms in 2013 included no cost-of-living increases for three years; a $95,000 cap on annual payouts; a two-year increase in service time from 25 to 27 years; and a two-year increase in retirement age from 60 to 62.

In exchange, affected employees received a collective $1.8 million in "bonuses" to be paid out over two years.

We thank the city's union employees for their willingness to bargain and make concessions and we urge the new council to continue to prioritize this effort through 2014 as third-party analysis still says the city's contribution, as a part of overall spending, is "high."

Also in the top tier for 2014 is the now on-again utility expansion program.

Expansion to the neighborhoods dubbed Southwest 6&7 - a four-mile-square area south of Pine Island Road involving about 6,100 properties - was tentatively approved in 2012, with final approval and construction of this $103. 7 million phase beginning last year.

The good news is ratepayers, who got hammered with a 30-percent rate hike when the UEP was halted, saw a tick the other way as the new fiscal year got under way. The $38 annual decrease for an average user might not seem like much but it stemmed projected increases until, at least 2017.

The downside for many?

Property owners in SW 6&7 got their expansion fee bills and while they were less than they would have been had the project proceeded as scheduled during the boom, lot owners also had the impact fee portion added to the amount owed. Previously, this renamed "expansion fee" was not due unless and until the property was developed.

The first pre-payment/discount period has past with the second under way. The cost to property owners who now pay before July 31, is $15,824.

Otherwise, SW 6&7 property owners will be billed over 20 years at a total cost of $24,414. The bulk, $13,074, about $181.58 a month, will come due in the first six years. The remaining $11,340 to be paid over the final 14 years will cost property owners $67.50 per month.

Next in the queue is North 1 & 2 with various additional areas north of Pine Island Road to follow.

We hail the progress but continue to urge council to examine how the city will fund what is essentially the second half of a billion dollar project.

Despite numerous promises by candidates previously elected to council who actually, for two years, did have a solid majority on the board, little has been done to address the issues at the heart of the expansion debate: Assessment methodology and whether, at least for the neighborhoods north of Pine Island Road, there is a better way of extending public utilities than the assessment-impact fee method under which the bulk of the project has painfully moved forward.

In fact, if anything, the next phases may actually prove more painful than those of the past as the city eyes a major deviation in a plan previously dictated primarily by density: Water first.

That means property owners in future phases could face two, separate assessments, the first to bring in water alone, the second to bring in sewer services.

Critics say this could add substantially to overall costs.

As council looks down the road to the next phases, its eye must be on equitable methodology; whether to continue with construction processes that include extremely expensive road re-building; and possible new methods of financing in lieu of blank-check assessments.

Options used elsewhere include the establishment of special taxing districts to pay for infrastructure improvements and/or a compensatory rate structure similar to that used by the private sector, which has no authority to assess.

This past election confirms that most property owners agree a citywide system is the best way to go.

But they just don't want to pay more than they have to.

Make sure that they won't. Twice.

The third top tier priority for 2014 is, of course, taxes.

Cape residents and property owners saw two new, significant taxes approved in 2013; a 7 percent "public services tax" on electric bills and a new fire "assessment." The now court-validated assessment allows the city to transfer some operational costs into this new fund, shifting property tax dollars previously budgeted for fire operations in the general fund to capital improvements.

Collectively, it's a relatively small amount - an estimated $150 per "average" homeowner - but each holds the potential for continued increases in the future.

Council needs to watch this, especially in light of - finally, thank goodness! - rising property values. Otherwise, the city could again get itself in the same kind of fiscal pickle wrought by the boom years. That was "holding the line" by decreasing the property tax rate all the while spending money by the fistfuls from artificially - and unsustainable -increases in property values.

With new taxes on the books and increased revenue from property taxes, it would be easy to try to "catch up" all at once and begin to spend not only on neglected capital improvements, but also things like hirings, position reclassifications that mean higher salaries, and raises.

As the city has learned to its detriment, these are the expenses that creep.

To council we say, go slow. Scrutinize every expenditure and make sure it is justified as a quantifiable need.

The taxpayers will thank you.

So what is in the queue for those of us who pay the bills?

Housing market stabilizes

After seeing overall taxable property valuations plummet for five years running - including a near 33 percent drop in 2009 alone - the Cape saw the small increase of 2012 double to more than 7 percent in 2013.

It was the biggest bump countywide.

Pushed primarily by mid-market sales, median housing prices also saw a big boost - 21.4 percent year-over-year in November with the overall median price of a single-family home in Lee County jumping to $170,000. In November 2012, the median price was just $140,000.

Meanwhile, "inventory," - the number of homes listed for sale -is stable, the number of days "on market" is down, and the number of "traditional sales" - sales that are neither foreclosures or short sales - are up.

That's good news, indeed.

Lee County lost more than 60 percent of its property valuation in the five years following the real estate bust as the median home price dropped from its inflated bubble peak of $278,000 in 2005 to about $92,000 by the end of 2009 - well below replacement cost.

With foreclosures glutting the market - No. 1 in the country - construction came to a standstill.

The economy tanked and unemployment skyrocketed.

As we move into 2014, there is light at the end of the tunnel both in terms of new construction and employment, key interlinked economic factors.

Housing rebirth?

New home construction is making a quiet comeback in Cape Coral.

Last fiscal year saw 541 permits pulled with 72 so far in the first quarter of the new fiscal year, which began Oct. 1.

While a far cry from the 7,004 pulled at the height of the boom, FY 2005, it's also a solid improvement over the 150 issued in '09 at the base of the construction freefall.

In addition, according to Builder Magazine, pricing is up, with a 25.3 percent increase in August reported year over year.

For Southwest Florida and Cape Coral in particular, residential construction means much more than rooftops. It means jobs, good-paying jobs that disappeared with the bulldozers and cement trucks.

Our new city council needs to take a very pro-active stance here, putting proof behind all the pro-business, economic development promises made while campaigning.

One, as we have said since the real estate market collapsed, a moratorium or severe reduction in impact fees on residential construction - which would put the Cape on a level playing field with unincorporated Lee County - must be considered.

About $18,000 per home at last count, including school fees, residential impact fees are a hefty add-on, especially in a market still rift with too many short sales and foreclosures.

Two, council also must re-instate the "change of use" impact fee waiver enacted in 2011 and then allowed to quietly sunset last year.

Getting vacant office buildings and shopping centers filled by eliminating the tax - yes, call it what you will, it's a tax - assessed to convert use from, say, a florist shop to a dental walk-in, will do more to put people back to work than many an economic development plan, proposal, and target list.

Yes, we do acknowledge that growth has a cost.

However, as we have all painfully learned, its flip side - no growth - has a cost as well.

That cost is record unemployment, a tragedy tallied family by family.

But here, too, there is light, finally, perhaps, at the end of the tunnel.

Job market improves

Hiring in the Cape Coral-Fort Myers metro is predicted to be strong in the new year with a Manpower Group survey saying the employment outlook for the first quarter of 2014 is the third best in the nation.

The forecast is based on employer surveys and it's the best first-quarter prognosis the area has received since 2008.

Year-end numbers put the city's unemployment rate at about 6.5 percent in October, slightly less than the state's 6.7 percent.

For many families, this is the best news of all as at the recession's bottom, the Cape Coral-Fort Myers metro saw double-digit unemployment that only now is clawing its way slowly to normalcy.

To a better, brighter year in 2014!

Things ARE looking up.

- Breeze editorial

 
 

 

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