City’s poor projections reason for escalating utility rates
To the editor:
The Cape Coral city staff did a very poor job of forecasting Sewer and Water capacity requirements in 2004 when they asked the City Council to approve plans to expand the system. This irresponsible “error in judgment” is the primary reason why City Manager Stewart is now telling city residents that sewer and water rates must be increased by 92 percent.
The production capacity of the system in 2003 was 15 million gallons per day, with average usage of about 9 million gallons per day or about 60 percent utilization. Peak demand was well below our capacity and could be cared for by drawing water from storage tanks. Five years later in 2008, in spite of growing by 11,037 new water accounts, average water pumped into the system was reported to be 9.8 million gallons per day. That very modest increase of water pumped into the system differs widely from what was forecast. This data can be found in the City’s 2003 and 2008 Annual Financial Reports.
As I write this, work is being completed to double the city’s plant capacity to about 30 million gallons per day. This means we will have the ability to produce three times as much water as currently used on a daily basis. That is 30 percent utilization. I might add that we sell some of the surplus water we produce to North Ft. Myers and have been doing so for a number of years.
Let me strongly emphasize, we will be raising our rates not because we temporarily stopped expanding the utilities project to existing homes, but because we expanded our capacity to produce water far more than what was actually needed based on current water usage and credible growth projections. The cost of the “construction” planned for new water production and sewer facilities went from $236 million in 2006 as reported by staff to $668 million as reported by MWH, in April of 2008. In a February report, MWH has now reduced that number to $504 million. That increase in cost from the original estimate drew no reaction from the majority of the City Council members other than to say staff was doing a great job of presenting them with information upon which to base their decisions.
Contrary to predictions of 5,250 new accounts being added to the system each year, the growth of new water accounts added to the system declined markedly from a peak of 3,839 in 2005 to 1,896 in 2006 to 207 new accounts in 2007. One must ask why the Council was not told we were no where near what had been forecast. Did staff conveniently forget to tell them or what? I believe the expansion plans should have been reduced in 2006; however, that never happened.
In a memo written by the City’s Financial Services Director last month, it was stated that the staff had forecast growth of 5,250 accounts per year from 2007 through 2015. That turns out to have been a grossly inaccurate and baseless forecast. The critical questions: Who made the forecast? Why was it not changed based on actual results? Who benefits? Again, there was no responsible reaction from the Council. The only Council members who complained about this disaster were Bill Deile and Pete Brandt.
This very costly decision made to expand our system far more than necessary has resulted in we captive rate payers, being asked to pay for that mistake with major rate hikes. We also have five people on the Council who condone that mistake and those five continue to think our unaccountable staff is doing a great job. What ever happened to protecting the public interest? I leave it to the public to render judgment on that score.
Sal Grosso
Cape Coral