Gear up for tough decision ahead
Critics of the city-run utility system were served up enough fodder this week to feast upon for years.
The rest of us got some bitter food for thought.
Utility rates could nearly double in the next five years bringing the average Cape Coral water and sewer bill from $81.97 per month to $157.79.
The proposed rate increases come on top of annual increases implemented in 2006 and exceed previous projections by a substantial amount.
If this news wasn’t bad enough in a community with one of the highest foreclosures rates in the country and unemployment topping 12 percent, it got worse: Cape Coral is out of compliance with its bond covenants on money borrowed to expand utility infrastructure.
As a result, in January, the city was required to come up with a new rate plan to assure a revenue stream great enough to correct a technical default.
What’s surprising is that everyone is so surprised -previous rate estimates were based on the addition of new ratepayers to share costs. With two portions of the utility expansion project on hold, and new home construction non-existent, the only source for money is those of us already on the system.
No one is happy and throw-the-bums-out rhetoric is running rampant -with the definition of “bums” varying to include council, contractor, city administrators and even the UEP critics who got the last two planned expansions stopped.
It’s time for everyone to take a deep breath. We all agree the news is bad. That can’t be changed.
What we need to do is make sure that the solution does not make things worse – something we’ve hopefully learned from the “solutions” that got us into this fix.
Yes, some reasons for the crisis were beyond the city’s control. The current credit crunch was unforeseen as was the collapse of the housing market as the city expanded facilities to accommodate the record influx of new residents and the thousands more projected to come.
Others, though, were absolutely within staff and council control as the critical balance between expansion costs and expansion plans was debated, and expansion projects were approved, halted, approved, and halted yet again while costs accrued.
We suggest that council quickly schedule a special workshop to discuss the analysis and rate study update; a place on Monday’s workshop session is not enough.
Get questions answered and examine the three rate options offered in the context of the overall utility expansion project. Those rate plan options, as outlined by city staff this week, are:
– Set rates without any additional utility expansion over the next five years. This option would result in the highest increases.
– Set rates that include 16,000 new customers by expanding water-only services to all of the properties north of Pine Island Road. The rate study estimates this option would result in a 55.3 percent increase, raising an average monthly bill to $127.33 in five years.
– Set rates that would include the estimated 16,000 water-only customers in the north Cape and an estimated 6,250 additional customers by extending water and sewer to properties in Southwest 6/7. The rate study estimates this option would result in a 47.6 percent increase, raising an average monthly bill to $120.99 in five years.
The latter two options also would result in less borrowing as the assessment of capital expansion fees to unimproved properties in the north Cape would help pay for the new water treatment plant that’s nearly finished.
We would ask council to add one thing to the list:
Look at the other side of the balance ledger – at expenses and additional cost reductions within operations.
The bond covenants require that rates provide for operations and maintenance in addition to the debt service. There is not a private business – or government entity, either – in southwest Florida that is not examining costs. Can the city save money by self-scrutiny of in-house operations, by outsourcing, or through other means?
Council needs to ask these hard questions, then listen well, offer other options that are viable – and then do the job its members have been elected to do: Make an informed decision.
And live with it.
Dithering and blinders helped get us into this mess. Sound leadership and focus are the only way out.
– Breeze editorial