homepage logo

Annual financial report forecasting obstacles in future

By Staff | Mar 31, 2009

The comprehensive annual financial report for fiscal year 2008 was presented to the Cape Coral City Council on Monday, and while it indicates the city’s short-term financing is on stable ground, the future looks more shaky.
“We are in a sound shape right now,” said City Manager Terry Stewart. “There are indicators that if things continue the way they are right now, there is some cause for concern.”
Stewart pointed to declining market forces and the state government’s own budget woes as reasons to worry.
Financial Services Director Mark Mason said the Cape was caught in the housing bubble that eventually burst.
“Essentially, we’re a single-industry city that revolves around construction,” he said.
Combined with the tightening of the credit markets resulting from the Lehman Brothers bankruptcy, the result is an economic and fiscal nightmare for the city.
According to the report, other factors going against the city include:
— A stagnant or decreasing population;
— Rising unemployment;
— Vacancy rates of 20 percent to 25 percent compared to 8 percent two years ago;
— Declining property values; and
— Declining rates of new construction.
Cape Coral’s general fund undesignated reserves currently stand at $14.2 million, or 1.23 times monthly expenditures.
City policy calls for two times monthly expenditures.
Mason, however, claims that the city’s current financial standing is sound.
“The city’s near-term financing is in good condition,” he said.
Mayor Jim Burch was bemused Monday by the report.
“That’s the first I’ve heard that over the next several years we’ll have a financial decline. I certainly appreciate the candor, but I still say financial position is something you create,” he said.