Council approves borrowing up to $100 million for utility expansion
Cape Coral City Council approved the issuance of up to $100 million in water and sewer bonds Wednesday.
Financial Services Director Crystal Feast said Ordinance 25-26 is the legal authority for the city to borrow money.
“The ordinance will authorize the issuance of up to $100 million in water and sewer bonds — capital improvements in city water and sewer system,” she said.
The bonds will be used primarily to finance and refinance the acquisition, construction, and equipping of various capital improvements to the city’s water and sewer system, secured water, and sewer revenues.
“The ordinance 105-26 detailed financing terms including interest rates,” Feast said.
City Manager Michael Ilczyszyn said by the city’s charter, administration is required to get approval from council to issue debt. He said the ordinance is getting approval to finance certain improvements in the city by utilizing a debt instrument.
“The subsequent items are resolutions granting the authority to go and negotiate with our financial consultant and terms around funding in which we are going to use to finance,” Ilczyszyn said.
The planned projects being funded through the borrowing authority include various utility capital improvements required to be constructed in the North 1 East area as part of the utility expansion project, two 5-million-gallon irrigation booster tanks, Judd Creek water and sewer extension lines and reservoir waterline and pump station.
Ilczyszyn said the $100 million is going to fund these exact projects, which are treatment and transmission that is going to come through North 1 East, or help get major volumes of water, sewer, and irrigation to North 1 East. He said the two boosters are for the entire utility system, the extension line is to connect to the entire system, and the reservoir pipeline is from Charlotte County to Cape Coral.
The projects are for all the utility rate payers that are already on the system and all future rate payers that are not on the system yet, Ilczyszyn said,
Feast said the current estimates for water and sewer bonds are approximately $94.9 million debt proceeds and $90.6 million estimated per amount. There is an estimated 4.68% true interest, which is subject to change.
“These numbers are preliminary and subject to change,” she said.
Councilmember Bill Steinke explained how the process worked.
“The funding source is municipal bonds. Investors across the world can choose to invest in municipal bond,” he said. “The rate allows them to give the money or not. That is why it needs to be shopped. We have to make an assumption of what that rate is going to be determined and how quickly it will get paid back. That is why there is not an exact interest rate attached to it.”
Steinke said everyone who has city water and city sewer has paid the assessment in one way or another – either through owning the home at the time, or in the price of the home once purchased.
“Every single UEP project prior to this one, they all paid their fair share too,” Steinke said. “This is being done no differently. The difference in 2015 when I was living in the southwest and it came through my neighborhood; I had to pay $24,000 that was because it was 11 years ago. That is why the assessment is what is it today to run the same kind of equipment,” Steinke said.
Councilmember Rachel Kaduk said simply put, the residents — homeowners — are the developers. She said Cape Coral is very unique, as it is a pre-platted community.
“The initiative is to get everyone on city water and city sewer,” Kaduk said.
She said the bonds are specific to a special assessment area.
“It’s not passed on to everyone. It’s North 1 East homeowners. That’s it,” Kaduk said.
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