City can’t run its utility system
To the editor:
The way the administration released the planned utility’s increase of 92 percent without consulting the council is, in my opinion a disgrace. In the weeks since the council voted to delay the utility projects I have seen spin coming from MWH and city staff. The theme seems to be that the increases in the monthly billing for utilities are taking place because the projects were canceled. It is council’s fault that the rates are going higher. The administration denied this at the counsel meeting but the tactics stink to high heaven.
As far as the delay of the utilities is concerned, the 92 percent number does not bear out that the increase in rates is due to the pause. The total number of improved properties north of Pine Island Road is about 18,000. The number of improved properties in SW-6 & SW-7 is 3,935 some of which water is already serving. This is around the total number of accounts that would have been added to the system (assuming 100 percent participation) but only after a period of around five years when the North Construction would have been completed.
Let’s assume that these accounts were added today and were hooked up and paying monthly fees. This would add approximately $12.5 million (assuming a monthly water bill of $40 for those North of Pine Island Road (Water Only) and assuming a monthly utility bill of $82 per month for SW-6 & SW-7) to the revenue stream. The 92 percent increase (assuming it took place today) would add around $47 million per year in revenues at the five-year time frame and at the 10-year time frame that number would increase our revenues by $64 million each year. This is besides the current $50.2 million that we are collecting today assuming 51,000 accounts and an average monthly charge of $82. How do we account for the $34.5 to $51.5 million dollar increase above and beyond the revenues if the North and SW-6 & SW-7 were on the system? It surely cannot not be associated with putting the utilities on hold.
Keep in mind that if we went forward with SW-6 & SW-7 and North 1 through North 8 anyone in those assessment areas would have the capability to put all payments (assessments and impact fees) on hold for 10 years. What would that do to our debt service? It would push our debt through the ceiling which would only add to the monthly utility rates since someone would have to pay the debt service (principal and interest) on those borrowed funds at least until the property owners either came up with the money or defaulted.
The question that the city council should be asking the administration is how we got into this mess in the first place? The council is attempting to avoid this but someone must be held accountable. If one looks back to 2004 at a presentation that was given to the city council it is not hard to see what happened. There is much misrepresentation in this document
www.ccminutemen.org/upload/200408-Presentation.pdf
The document states that there would be sufficient funds to build the facilities with impact fees at $4,309. (Impact fees are now $6,750.) and to pay the debt service and other expenses with a modest monthly fee that would average around $55 a month. Did the city council vote to carry these projects forward on a false premise? I don’t know. If the city council was given bad information and voted accordingly, who is responsible?.
I have included a link to an extract from a document (2004 Facilities Planning Report).
www.ccminutemen.org/upload/2004-Facilities-Planning-Report.pdf
According to this document the FEP should have cost $236 million. Our staff surely must have gotten this information from our friends at MWH. Anything to keep the money flowing into their bank accounts.
That figure has since grown to more than $500 million dollars. If you look at another attachment you can see tremendous cost differences in individual project costs over a period of only three short years. Look at Everest Plant cost going from $37 million to $89.4 million in three years. Three other projects tell the same story.
www.ccminutemen.org/upload/2007-2004-Compare.pdf
This has to play a big roll in the tremendous increases projected in the monthly water and sewer rates. There was a rate increase put into effect in 2007 after 10 years that monthly utility bill would average $111 a month. Then in 2008 we get another rate document and that one states that the monthly bill in 10 years would average $128 to $140 a month. In 2009 we get another rate schedule and that one says that the monthly utility rate will go to between $141 to $185 in the next 10 years. What’s next? What are we going to hear in 2010 ($250, $300 or $400 a month)?
When you look at this information and put it all together two words pop into my mind, gross incompetence. This administration is not capable of running the sewer and water utilities. Look at what we paid in SW-4 & SW-5 for our utilities assessments and impact fees. At the time we were paying $24,000 or $25,000. Bonita Springs residents were paying $7,000 and Fort Myers was paying around $8,500. (Both Gravity Sewer). This was sheer insanity at that time and we are still living in the “Twilight Zone” today. The utilities need to be taken out of the hands of city staff and must be privatized now. The financial damage that the utilities are doing to the residents is not necessary. We talk about 92 percent increases and no one bats an eye. The word on the street it is council’s fault because they paused the U.E.P and besides the council voted for it right? The part that is lost is that the council was given bad information to begin with and on more than one occasion.
Some of our council members say they want solutions. This same solution was offered almost three years ago (long before we were in this kind of trouble) and it fell on deaf ears but I am going to say it again. The city of Cape Coral is incapable of administering the sewer and water projects and the assets must be sold to experts who know how to run a central utility program. We must cut our losses now. We continue to go deeper and deeper into debt. The only appropriate word to describe this situation is quagmire.
Each year we go deeper in debt and create a less tenable position and each year we call for huge increases in monthly utility rates. This is all being done in the worse recession I can remember. We now have a 12 percent unemployment rate in Lee County and it is going higher. “Hello is anyone there”! If we pass this increase we will be at or close to the highest rates in SW Florida or maybe even the entire state of Florida. The only question left is, how long will it take us to get to the highest rate structure in the country?
We never had the capability and will never have the capability to run the utilities. This is a study that shows the successful implementation of a private enterprise plan while delivering services at a much lesser cost to the rate payers.
www.ccminutemen.org/upload/privatize.pdf
Please council look at this document, study it, think about it and make the best decision for the residents.
John Sullivan
Cape Coral Minutmen