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Cape Council looks to convert utility system debt

By Staff | May 19, 2010

Several Cape Coral City Council members seem to be leaning toward a general obligation bond to reduce interest on municipal utility system debt to mitigate rate increases for existing water and sewer customers.
That option does not have a consensus at this point, as no vote was taken Wednesday, but city staff, along with the city’s bond council, agree a general obligation bond would have the greatest affect in bringing down the rates.
“The best option for the ratepayers to pay less is the GO (general obligation) bond,” said Public Works Director Chuck Pavlos.
Looking for a way to either absolve ratepayers of the debt burden, or in the very least, share that burden with people not hooked up to the system, council could make a decision before another scheduled rate hike in October, although it is unlikely any decision will be made before their summer hiatus June 14.
Other options presented to address rates and existing debt included adopting the rate model as it stands; imposing a public service tax on certain utilities such as natural gas, electric and propane; imposing a capital facility assessment fee on various property owners; and restarting the utility expansion project into unserved areas.
There were two options presented for the assessment fee aimed at properties not yet connected to the city’s utility system.
One would be limited to prior expansion areas where properties are already abutting utility lines but not yet on the system.
The second would encompass all of North 1-8 and Southwest 6/7 where utilities currently are not available.
If the GO bond is selected as council’s option of choice, ratepayers should expect a cumulative increase of 2.4 percent in their rates through fiscal year 2015, officials said.
But the bond would have to approved first by voters through a referendum.
“If we go ahead with the GO bond there is relief in sight for our ratepayers,” said Councilmember Kevin McGrail. “If we let the rates keep jumping, we will be a community no one wants to move to, and we will lose residents.”
Mayor John Sullivan is in favor of a capital facility expansion charge, though he doesn’t believe they are assessments.
There’s still question as to the legality of that option, because a service must be provided if a resident is charged.
“I wish we would stop calling them assessments,” Sullivan said. “We need to call them capital assessment fees or impact fees.”
Ratepayers will see some savings should council do nothing but accept the rate study as is.
Originally, rates were due to spike another 15 percent. Based on more recent information, rates are expected to rise just over 10 percent in October, if council accepts the current rate study.
“It’s not gigantic, but it is progress,” said Councilmember Chris Chulakes-Leetz.