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City head justifies UEP and proposed public service fees

By Staff | Apr 29, 2009

Cape Coral City Manager Terry Stewart defended the city’s approach to the controversial utilities expansion project and his proposal for a new public service fee Tuesday during a meeting of the Cape Coral Civic Association.
The UEP, a project designed to bring water, sewer and irrigation utilities to areas of the Cape that do not have them, was started because the city’s water usage crossed the threshold the state uses to require municipalities to increase their capacity.
“We were using 75 percent of capacity on a routine basis. State requirements say the city has to plan for increases in capacity,” he said.
The project has come under fire in recent years as the cost in assessments and fees faced by homeowners rose dramatically.
Stewart said the decision to go forward with the UEP was the correct one, and the city council’s recent decision to stop it carries ramifications for current utility customers, including the prospect of higher rates.
“The city council very wisely took (state requirements) under advisement and we began planning,” he said.
The Cape needed money to fund the project, and now that the project is stopped Stewart is faced with generating revenue to fund the $275 million in debt related to the project.
In March, Financial Services Director Mark Mason unveiled a rate increase plan that would raise the average utility bill for current customers by 92 percent over the next five years.
Council members are loathe to approve such a hike, but Stewart said the alternative carries even greater ramifications.
“Don’t do anything? Guess what happens — the project goes into default, the bonds go into default. That’s not something this city can afford,” he said.
Stewart also pushed the need for a public service fee of up to 10 percent on electric and sewer bills to offset the city’s dependence on property taxes for the majority of its revenue, so the Cape is not left at the mercy of the fickle housing market.
He pointed out that 65 percent of the Cape’s revenue for the general fund comes from property taxes, whereas that figure is 30-40 percent in most “healthy communities.”
“We have such a high reliance on property taxes it creates a situation that is pretty untenable,” Stewart said.
However, some audience members Tuesday were not sold on the idea of a new tax or fee.
“The main reason I object to it is it leaves vacant properties off the hook,” Cape resident John Barth said.
Stewart admitted that the public service fee would essentially amount to a tax.
“It’s the same thing — it comes out of your pocket. We’re not trying to mislead you,” he said.