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Utility expansion plan moves forward

By Staff | May 10, 2013

Plans that would expand utilities into the next service area while also stabilizing rates for existing customers nudged forward Wednesday with some modifications.

Cape Coral City Council directed staff to proceed with a resolution that will outline cost methodology for expanding water, sewer and re-use water services in the neighborhoods dubbed Southwest 6&7 in midyear 2014.

The vote was 6-2.

Mayor John Sullivan and Councilmember Chris Chulakes-Leetz dissented, citing economic conditions within the city and depressed property values.

Each also had opposed the expansion four years ago while running for office.

“I understand there may never be a right time, but from a business perspective I understand there absolutely can be a wrong time,” Chulakes-Leetz said.

“Only the government would charge you $20,000 and give you an asset value of $8,500.”

The council majority, however, pointed to record-low interest rates, a competitive construction market and the need to restart a near billion-dollar expansion that stuttered to a stop due to resident protests after the city committed to building a new water plant to handle the expansion. That cost is now being borne solely by existing customers.

“Two percent,” said Councilmember Kevin McGrail. “That is the lowest rate this city has ever seen.”

Affected property owners likely will see costs lower than he paid in 1995, McGrail added.

“This installation will be done for less and financed for less,” he said.

Last go-around, in 2007-2008, the costs were estimated at $18,575 for the average homeowner in SW 6&7 – $11,825 for the assessment and $6,750 for the impact fee. These numbers are being used now by the city for illustrative purposes only. Cost estimates are still pending and how those costs will be divided among affected property owners will not be determined until bids are opened and a construction firm is selected.

The assessment portion is levied to pay for the actual cost of construction – pipes in the ground, lift stations, related road costs and the like. The impact fee, which the city is now calling a capital facilities expansion charge, is levied to pay for “impact” on the system, including the cost of the water plant built to handle the increased capacity necessitated by new users connecting to the city-owned system.

How these costs are to be assessed to property owners is where council directed its decision to modify the resolution passed.

Council directed staff to look at discounts of up to 20 percent for property owners who opt to pay either their assessment or impact fee in full rather than through a finance program to be offered by the city. Council also directed staff to look at a large parcel discount so as not to unfairly charge owners of low-use acreage, such as churches or single-family homeowners on rural sites.

A number of speakers in the audience asked council to consider a linear-foot, or frontage, assessment method rather than the square footage method currently used but Councilmember Marty McClain, who drove the move to direct staff to bring back numbers and impact information on the proposed modifications, said the best method remains square footage also taking into account actual cost and benefit to the property owner asked to pay.

As an example, he pointed to a two-acre lot with one home. Based solely on square footage, that property owner would be looking at an assessment in six figures. Looking at frontage – which determines actual cost – and also computing square footage realistically based on how that property will impact the system rather than property depth, is the best way to go, he said.

“That’s the part I have an issue with. That’s why I want to go hybrid,” he said.

“Residential acreage must be looked at. Penalizing them because they go deep is just wrong; the city needs to look at it because it’s just wrong.”

He also pushed for pre-payment discounts. He would prefer discounts on both the assessment and the impact fee components but will settle for a discount on the impact fee only if early payment in full on the assessment would impede the city’s ability to fully cover expansion costs.

McClain said he’d also like to see the impact fee discount – he proposed 20 percent – extended to property owners in existing utility areas where some 16,000 parcels remain uncollected.

The city previously charged the impact fee portion of the expansion bill when the property was developed. Now, it is looking to charge both assessment and impact fee at the time of expansion.

McClain said he is no fan of impact fees in general and keeping them low via discounts for both the infill and the new area will help spur growth.

“A 20 percent discount on impact fees? I’m onboard with that,” he said. “I feel that’s something people (who pre-pay) are entitled to.”

Cost was a primary concern among property owners who spoke. It was cited as a reason some preferred the frontage methodology for determining per-property cost, it was the reason various church officials expressed concerns about the city’s plan to eliminate “subsidies” for houses of worship, and it was an overall concern by those who fear the city will come in too high compared to other communities.

Resident Ann Arnott, who told council she worked with subdivision development elsewhere, urged council to consider three things as it finalizes methodology and cost.

“One, be as cost efficient as humanly possible,” she said, adding she previously worked with numbers in the $10,000 per property range in subdivisions. The city should be able to do as least as well or better due to the economies of scale that come into play for larger projects, she said.

“No. 2, we would like a date certain to begin and complete,” Arnott said. Penalties should be levied for failure to meet contract deadlines, she added.

Three, she asked council to look carefully at the financing that will be available.

“We would ask that you look at bond issues, state financing, 2 percent or less,” she said.

Councilmember Derrick Donnell assured residents that council has done its due diligence.

The board has been meeting in workshop sessions for two years and has looked at numerous options, including the frontage or linear foot methodology. While there is still work to be done, nothing is being done on the fly, he said.

“This is not something that just came up,” Donnell said. “This is not something new.

“Even though you may not agree with all the issues, this is not something that has not been vetted.”

Council will meet again in special session at 4:30 p.m. on May 22 to discuss and possibly vote on a resolution incorporating the modifications requested.

The elected board meets in the council chambers at City Hall on Cultural Park Boulevard. Meetings are open to the public, televised live on CapeTV and “streamed” live at capecoral.net .