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Assessment ruling may take weeks

By Staff | Oct 10, 2013

Whether the city of Cape Coral can legally use a controversial new revenue source for bond financing is now in the hands of a judge.

Closing arguments were made Wednesday during the third and final day of a bond validation hearing sought by the city of Cape Coral to test the legality of its pending fire service assessment.

The judge gave defense counsel 20 days to file a legal brief, with 15 days after that for the city to respond.

Judge Keith Kyle is expected to rule next month.

The hearing concluded with officials speaking on behalf of the city continuing to maintain everything was done by the book in regards to the assessment, saying it is necessary to provide fire services to its residents.

Meanwhile, property owners challenging the assessment contended that not only is the “two-tiered,” “ready-to-serve” methodology flawed, and the ratio of fire calls versus non-fire calls erroneous, but that the process had been poisoned by possible Sunshine law violations.

At stake is the city’s ability to impose on Cape Coral taxpayers a new assessment to partially pay for fire operations using a method that has not been seriously challenged in court until now.

The city, which sought the legal clarification, is the plaintiff.

The defendants, or challengers, are any and all affected Cape property owners.

Dozens showed up, most on the first day on Monday.

Chris Roe of Bryant Miller Olive, the city’s bond counsel, said Wednesday the city provided proper notice in regards to legal notice for readings and meetings and followed all the procedures necessary to make everything valid.

He also said the assessment methodology just made sense.

“We determined that a two-tiered method, the per-parcel charge and the structure value was best,” Roe said. “The city can no longer rely on ad-valorem and it doesn’t preclude us from seeking other sources.”

The methodology in question first sets a flat fee on unimproved properties, regardless of size, to all property owners, at $104.38.

It then also sets a fee on the improved structure; the greater the assessment on the structure, the higher the fee. The tier 2 assessment is $2.46 per each $5,000 of building value.

To the average property owner, that means $110 of a $150 total tax increase the city says it needs to fund capital improvements.

As for alleged Sunshine violations and questions concerning a document council members were asked to sign during an Aug. 26 meeting, Roe said that actions taken were not unusual in a bond validation process.

The state had no objection to the issuance of bonds, but those opposed were vocal.

Councilmember Chris Chulakes-Leetz, among those opposed, thanked the court for its indulgence in allowing its team, many of whom had no legal court experience, to make its case.

Chulakes-Leetz also criticized the state for what he said was a failure to provide legal representation and promised the case will be appealed if defense loses, and reiterated his belief Sunshine laws were broken.

As for the document in question, Chulakes-Leetz contended neither he nor Mayor John Sullivan signed it, even though Sullivan’s signature appears on it, and said signing such a document was not protocol.

“Those who took an oath on the Bible wouldn’t have to sign an affidavit. It screams of violation,” Chulakes-Leetz said. “It’s possible the signatures were either wrongfully obtained or forged.”

Former council member Bill Deile, also opposed, contended that the city council and City Manager John Szerlag had no idea what the ordinance meant or its specific details.

Both sides were confident in their cases afterward.

Szerlag said the main idea of the hearing was to test the methodology for a new assessment the city needs to provide necessary services.

“We were here to have a fire service assessment and to test the legality of it,” Szerlag said. “The city was artificially balancing its budget by foregoing capital and layoffs. We had to decide what kind of city we wanted to be.”

Deile said he was glad the hearing was over and said it could be considered a victory of the people against government, though that wasn’t the purpose.

“It was a lot of work and tension, but what the judge did was reserve judgment,” Deile said. “We came here because the methodology to exact this tax was incorrect, unnecessary and in violation of procedures.”

“I’m very pleased with the results of these three days. I’m going to follow the judges instructions and file a brief within 20 days,” Chulakes-Leetz said. “He tolerated the lack of education in the courtroom, and allowed us to present our case on behalf of the citizens.”

The city’s new tax plan, initially proposed to raise an additional $20 million in revenue called for two new taxes – the fire assessment to offset a portion of the department’s operation costs, and a tax on electric bills – coupled with a reduction in the property tax rate.

The public services tax was set at 7 percent tax; the property tax rate decrease at .75 mills.

The city tentatively plans to shift up to 64 percent of fire operation costs to the new revenue source in budget year 2015, thus freeing up money in the general fund for other uses.

The additional money is needed to help pay for capital improvements neglected when tax revenue plummeted with property values during the real estate bust, proponents have said.