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Mayor proposes fee to help cover utility costs

By Staff | Jan 6, 2010

Mayor John Sullivan is proposing a plan that would charge property owners who have not paid impact fees for being hooked up to city water roughly $300 – $400 a year, per property.
The annual charge would help to offset the monthly utility rates being paid by current rate payers, and help to pay down the debt of the North RO Water Plant, according to Sullivan.
In a memo to city council dated Jan 4, Sullivan wrote that “Each property that pays into this fund would be credited for a like amount and each property would be given credit for the payments and used to offset a portion of their utility impact fees when the impact fees come due in the future.”
He added during an interview Wednesday that the plan could help to pay off the RO plant in four to five years, which, he said, has been estimated to cost anywhere from $140 – $215 million.
And with utilities inevitably headed for the north sometime in the near future, he said eventual rate payers in the north are getting the savings now in impact fees if his plan comes to fruition.
“It’s like loaning the city money,” he said. “What the city will do is credit them against future impact fees for utilities … each person will be credited for what they pay in.”
While the plan is Sullivan’s, at least five total council members must buy into the ideology before it becomes a reality.
Sullivan said, too, that residents will have to buy into the idea, but realizes the plan could be viewed as a new tax, when its nothing of the sort.
“They can call it what they want to, but the point is, this is one of the few payments that helps them,” he said. “I don’t call it an increase, I call it savings.”
District 6 Councilmember Kevin McGrail, the majority of who’s district will fall under the North 1 – 8 section of the UEP, said he doesn’t view the mayor’s proposal as a new tax.
While admitting that he hadn’t studied the mayor’s proposal in full, he said the problem he sees with it thus far is the lack of citizen input.
He pointed out the previous council lacked a strong citizen voice in its decision-making process, and for the new council to move forward together, it will need that crucial citizen voice.
“The mayor was probably prompted to come up with these proposals prematurely,” he said. “That’s the frustration citizens had with prior councils … they weren’t part of the decision-making process.”
There’s the question, too, if the proposal is legal.
Sullivan admitted his idea was an offshoot of an idea from former Mayor Arnold Kempe, who suggested creating a taxing authority to collect special assessments on unimproved properties.
The city attorney’s office deemed that proposal illegal.
Sullivan said the city attorney’s office needs to find a way to approach his idea legally, and if not, council should direct Nabors, Giblin and Nickerson, the city’s bond counsel, to find a way to make it happen.
Under the Dual Rational Nexus Test, which dictates requirements for impact fees, those fees are valid when a reasonable connection, or rational nexus, exists between the expenditure of the impact fee proceeds and the benefits accruing from the growth of those proceeds, according to the Florida Association of Counties Web site.
In a memorandum from the city attorney’s office concerning funding options for the UEP dated April 29, 2009, Assistant City Attorney Marilyn Miller wrote, “For special assessments and impact fees, the property subjected to the assessment or impact fee must be capable of deriving a special benefit within the reasonable future and the special benefit must be certain.”
If a legal pursuance can’t be found, Sullivan said he’s be willing to go all the way to the Florida Legislature in order to see his plan become reality.
He said it is crucial that the city begin to rebuild itself financially, and that if his idea doesn’t work, he’s open to suggestions.
“If we stop and don’t do anything, we’re only digging a deeper hole. Someone has to take action,” he said. “If there’s another way, and it’s better, let them step forward.”
District 2 Councilmember Pete Brandt said it’s obviously clear, after the fact, that the North RO Water Plant is not needed now.
He said he agrees with the mayor that something has to be done to reduce debt and help ease the burden on ratepayers, but going all the way to Tallahassee to try and solve it, while not impossible, may be too difficult.
He’s confidant something can be done — maybe a half cent sales tax increase through the county level — and he’s willing to listen to anything can work.
“I think there’s a way … the exact structure he’s laying out might not be the best way to go, but there certainly is a way,” Brandt said.
Cape Coral Construction Industry Executive Director Patti Schnell said her board had not heard of the mayor’s proposal and had not taken an official position.
She said the CCCIA has always supported the UEP, but thinks that asking anyone for money in the still reeling economic climate might not go over too well with residents.
She added that, should the mayor’s plan become a reality, it will speak volumes to those who are paying into future impact fees.
“If they do this they almost have to move forward with the UEP,” she said. “You are now saying you are going to bring them utilities … you’re telling them utilities are coming.”