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Cash cow? North Cape’s rural property owners protest near six-figure assessments for water services

By Staff | Jun 27, 2009

In 2000, Cape Coral resident Tom Gamso bought a little piece of paradise — 11 acres in a city where most homes are squeezed onto 80- by 125-foot building lots.
He paid $35,000 for the acreage, built a little house for $160,000, and kicked back to enjoy the rural lifestyle.
But he may not have much longer to enjoy it.
After nearly a year of votes by the Cape Coral City Council starting and stopping the utilities expansion project, it is on track to be restarted later this year.
For the property owners of the 57,000 lots in North 1-8 (the area north of Pine Island Road) the next phase of the UEP will bring potable water. The 6,200 residents in SW 6/7 (which generally lies between Pine Island Road and Veterans Parkway, bounded on the east by Skyline Boulevard and on the west by Surfside Boulevard) will be able to receive water, sewer and irrigation utilities.
Assessments and fees will total $17,058 in SW 6/7 and $6,000 in North 1-8 for residents with a 10,000 square-foot lot.
The owners of some larger parcels in North 1-8, though, face much heftier payments, even if they opt for the city’s self-touted payment plan.
Gamso is one of them.
Gamso has been assessed more than $96,000 for water only for his 11-acre parcel with its one house in the north.
“The assessment that they’ve levied on us now . . . they’re going to steal our property by way of tax certificate if I don’t pay it, or we’re going to have to sell our property,” Gamso said Friday.
When buying the property nine years ago and building a home, Gamso said he expected to be assessed for five lots when the utilities came to the area, instead of the 36.5 lots he’s being assessed for now.
“When we purchased this property we did our due diligence. We bought it in good faith,” Gamso said.
An exception for larger parcels that allowed owners to be assessed at 30 percent of the regular rate was taken out by city council members in 2006.
John Kolb is another affected property owner.
Kolb owns nine acres off of Old Burnt Store Road which are classified as grazing land. His assessments and fees total $88,000, because UEP rates are based on square footage. The rates were based on 10,000 square-foot lots.
Kolb says the assessments are unfair because he will receive the same benefit as the owners of smaller lots.
“They’ve assessed me like I’d put a house everywhere I could. I have acreage I’ll never use there,” Kolb said.
The payment options available to property owners in the newly assessed areas include the prepayment, amortized, and deferral options.
Residents in North 1-8 who choose the prepayment option will receive a 20 percent discount, reducing the payment for a 10,000 square-foot lot to $4,800. The deadline for North 1-8 property owners to choose this option is Oct. 23.
The prepayment option is also available for residents in SW 6/7, but without an accompanying discount. The deadline to choose this option is Sept. 18.
The amortized option allows property owners to pay the assessment off over 20 years, with the bill appearing annually on their tax bill. At the city’s estimated maximum interest rate of 7.5 percent, the annual payments would be $1,053 for 10,000 square-foot lots in North 1-8, and $2,750 for similarly-sized lots in SW 6/7. The bills would not begin to show on homeowners’ tax bills until 2012.
Kolb said that even with the amortized option his annual payment for water would be nearly $20,000.
“My head is just totally spinning, I don’t know what to do,” Kolb said.
Opting for the deferral payment plan will let residents put off payments for 10 years. At the end of 10 years, the total bill will rise to $16,570 for 10,000 square-foot lots in North 1-8 and $36,251 for similarly-sized lots in SW 6/7, assuming the city’s estimated maximum interest rate of 7.5 percent and that no payments have been made in that period.
Residents in SW 6/7 can choose different payment options for different utilities. For example, a homeowner can choose the prepayment plan for water, the amortized option for sewer, and the deferral option for irrigation.
There are no exemptions or exceptions for the larger, agricultural lands in north Cape Coral.
“Zoning has no role in (the assessment methodology) at all. It’s the methodology that’s been in place since the early ’90s,” city spokesperson Connie Barron said.
Nonetheless, some residents in the north are overwhelmed with their new bills. Opponents of the UEP say the added costs will drive many people into foreclosure in a city that already had the highest foreclosure rate in the nation last year.
Councilmember Bill Deile said the project is fraught with problems, but the troublesome economy is the main reason to rework the UEP.
“There’s a number of problems with the UEP. No. 1 is the methodology, but that’s paled by the economic crisis right now,” Deile said.
Deile, who is suing the city over his assessment on his home in SW 4, said larger properties are being unfairly assessed, since they are receiving the same benefit as smaller properties.
But supporters of the project say the various payment plans will allow the economy time to recover, enabling many to get back on their feet.
Mayor Jim Burch said the payment options, especially the deferral option, which was not available in previous assessment areas, allowed him to support the newest phase of the UEP.
“If it weren’t for that I would not have voted for it,” said Burch.
Burch supported the projects in the past but abstained from the vote this time due to a perceived conflict of interest. The company for which he works performed some design work in the north.