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Cape to consider utility assessment methodology

By Staff | May 2, 2013

Cape Coral City Council will discuss how to most equitably assess property owners for new water and sewer services Wednesday.

The elected board will discuss methodology for the expansion project set for the Southwest 6 & 7 areas as well as consider various payment options.

Staff then will draft an administrative resolution that will define Council’s preferences regarding the assessment methodology, financing options and other matters.

Council also is expected to authorize City Manager John Szerlag and the city’s bond council to draft the official resolution on what the expansion will entail.

Under consideration

The methodology used to assess the cost of utility construction is expected to be a hybrid model in which the actual assessment for the cost of construction would be by equivalent parcel, and the cost for the capital facility expansion charge would be done through the equivalent residential unit.

The equivalent parcel method of assessment would be a scalable amount based on the size of the property, while the capital facility assessment charge (treatment and transmission) would be fixed.

That means based on a two-lot 10,000-square-foot site, applying the same numbers used in 2008, it would cost $11,825 for construction and $6,750 for the capital expansion facility charge, for a total of $18,575.

The city considered a plan that would take into account square-footage and front-footage, but that won’t happen because, according to Councilmember Kevin McGrail, square footage is “easier and more verifiable.”

“To use frontage, we would have to go to everyone’s home with a tape measure and spend hundreds of thousands of dollars in work instead of just looking in the book,” McGrail said. “It has not been done locally and not supported by the surveyors.”

The first bids will go out in the next few weeks, s o the city will be able to zero in on actual costs then, but the hope is those numbers could go down slightly, since they use numbers from a somewhat inflated time.

By way of comparison, Southwest 4 cost nearly $25,000 due to the cost of pipe, the competition for labor among companies and the fact there was a lot of rock that had to be blasted out.

What property owners will get for their money, though, is a centralized system.

“It’s expensive to put in new sewer, water and irrigation lines, not to mention new roads and swales along with it,” city spokesperson Connie Barron said. “Sewers are an expensive way to handle sewage, but also one of the most reliable.”

Payment options

Some residents question square-foot methodology, saying it’s the most expensive.

Resident Gail Fischer is very concerned she will have to pay up to $35,000 on her half-acre property, while most residents will pay between $15,000 and $20,000 for a hook-up.

“Most of us got legal surveys when our property was purchased and it seemed they can do linear frontage easily,” Fischer said.

Fischer’s biggest fear is that the city could have a repeat of 2008-09, when foreclosures brought the city to its financial knees.

“I’m afraid the city could lose a lot of homeowners again. We were No. 2 in foreclosures, but a lot of it had to do with the assessments,” Fischer said.

Among the payment plans the city has laid out include six-,10- and 20-year plans.

Unless paid in full at time of completion, the option with 20-year variable and six-year fixed would cost the homeowner $25,160; the 20-10 financing would cost $26,100 and the 20-20 option would cost homeowners $29,000 based on the 2008 projections.

“It will be at least like a car payment and then you’ll have your water bill on top of that,” Fischer said. “When you think about spending $300 of $400 for water, it makes you scratch your head.”

Mayor John Sullivan believes the city is jumping the gun on the UEP, saying the value of the land, still low despite its recent runup, doesn’t justify the installation.

“If you have an $80,000 piece of property and they hand you a $18,000 bill, you’ll probably pay it. If you have a $4,000 piece of property and they hand you an$18,000 bill, they’re going to want to get rid of it.

“We’re going to pay for a lot of properties, then we’re gonna ask who puts the pipes in the ground or who pays the ad valorem taxes,” Sullivan said.

Tough choices

McGrail understands resident concerns over the lack of a concrete figure and state of the economy, but until the bids come back any guess he makes, he said, is just that – a guess.

But with the state revolving loan fund, with the second one worth $96 million and funded at 2 percent interest, that’s huge for the residents, he said.

“When all is said and done, when the utilities are put in the ground, the cost will be less than when I had sewers put in 1995,” McGrail said.

“I financed at 6 percent. They should be happy about that.”

McGrail said nobody likes to spend money on sewers and there is no good time for them, remembering that he had kids in school at the time. But centralized service came in handy when Hurricane Charley hit nine years later.

“I had showers and water and a sewer system that worked. A lot of the residents didn’t have anything,” McGrail said. “My friends were showering at my house because I had the services they needed.”

And for those who say it’s not the time or the economy is bad, McGrail said he gets it, since it was the same argument he made in 1995. But now the assessment is paid off and those same residents will appreciate what comes with it.

“They’ll appreciate new roads, they’ll appreciate the fire hydrants and the uninterrupted water and sewer,” McGrail said. “Those things that I never have to worry about again, I’m glad I have them.”