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Cape looks to adjust utility expansion loan program

By Staff | Dec 14, 2008

Property owners in the recently completed utility expansion area who have paid their assessments but are having difficulty coming up with the fees related to hook-up may get some help from the city of Cape Coral.
A last minute add-on to Monday’s council agenda will include a staff presentation outlining new loan parameters that would help property owners in “SW 5” finance their capital expansion charge without a down payment, get a hardship qualification without money out of pocket or spread their meter and deposit fees out through their monthly utility bills.
Financial Services Director Mark Mason outlined the recommendations in a Dec. 12 memo to council after noting that the 180-day time limit for connection to the city system had passed for some property owners who simply don’t have the money to hook up.
“Over the course of the last several months, as the economic climate continues to worsen, staff has noticed that there are many property owners who have come in to connect to the system but can not meet the current terms of financing (for) the capital expansion fees,” Mason wrote. “Staff has looked at these issues and was preparing to bring something forward to the City Council in January, however there are numerous property owners approaching the 180-day time limit to connect or have passed the time limit and not connected due to the economic circumstances that exist today.”
Mason asks that council approve the changes immediately, before the board’s holiday break.
“In light of the break coming up, we request council to authorize staff to implement these measures… immediately, in advance of the necessary changes to the resolutions and ordinances governing the policies following to date,” he said.
Mason proposes:
* That staff be allowed to approve hardship applications in advance of financing the fee, applying the hardship to the property based on strict guidelines in place. Staff would also be allowed to waive the connection deposit for property owners approved for the hardship program. These hardship cases would be reported to council quarterly.
Currently, the city’s hardship program requires the applicant to finance the capital expansion fee with 15 percent down and then apply for hardship relief, with final approval coming from council annually.
“The result of this proactive approach is getting the property connected and supporting the property owner in these uncertain times,” Mason said in his memo.
The city’s hardship policy applies only to a very narrow segment of low-income property owners.
* Eliminate the 15 percent down payment requirement for capital expansion fee financing and also allow such financing past the current 180-day connection deadline for those who have not connected to the system.
Property owners would be allowed to finance the fee with nothing down or “any amount of down payment that the property owner feels comfortable with.” The finance period would remain at six years.
* The city offer the option to pay the meter fee over a period of up to 12 months and the $100 utility deposit over two months. Currently, meter fees and deposits are due when property owners connect to the system.
“The result of this action will reduce the overall up-front cost to connect to the system, thus allowing for connections that might not have occurred in a timely manner,” Mason said.
If council approves these proposals, changes to the appropriate ordinances would be brought forward Jan. 12.
Mayor Jim Burch said the city began looking at ways to make assessment and fee payments easier about two months ago after he suggested the city look at short-term interest waivers or deferments for the now-postponed SW 6-7 expansion phase. Bonding makes no-interest loans problematic, he said, so the city addressed the payment issues another way, looking first at SW 5 and the down payment requirement.
“If you have a hardship problem, then really, people don’t have 15 percent,” Burch said in a phone interview Sunday.
He said he supports making the payment process easier.
“Absolutely,” he said. “Absolutely.”
Councilmember Dolores Bertolini said she supports such a proposal in concept. A look at the number of residents who say they can’t afford to connect to the new system for which they have paid dearly, is reason enough to take another look at the city’s financing plan, she said.
“I think that’s where the red light went off,” she said of the numbers. “They don’t have the money to hook up. I really want to see what Mark (Mason) has to offer with the new hardship program.”
While Bertolini agrees there is a need, whether the proposal gets her support will depend on its final draft and its potential impact on next year’s budget, which is already shaping up to be revenue lean.
“We need to do something but I want to see the proposal in full and hear the dialog among council members,” she said.
SW 5, begun in 2007, is the most recent phase of the city’s $1 billion utility expansion project. Within each area, property owners are assessed for the installation of potable water, sewer and re-use water lines. Assessments are levied when work begins. In addition, property owners pay a capital expansion fee for their “impact” on the system – the water plant, the sewage treatment plant, etc. That fee has been due when the property owner connects to the system, typically within six months of completion of expansion into their area. The assessment in SW 5 was approximately $13,690 for an average size homesite. The impact fee, the fee now in question, was $6,750.
These costs, and related costs such as the dismantling of septic systems, have put the expansion project on hold. Council recently again voted to against proceeding with the next phase, SW 6-7.