Enquiring minds want to know
To the editor:
1. No council member has sponsored the completion of a SW6/7 re-bid prior to any reconsideration of the project, even though many credible references have been presented that clearly indicate significant cost reductions of 30 percent, or more, are all but certain.
2. No council member has sponsored a contract provision that gives preference to local contractors and general managers, so long as their bids are competitive.
3. No council member has sponsored the termination of the manager-at-risk methodology, even though a cost reduction of 10 percent, or more, is likely.
4. Concerned citizens have pointed out that the “bottom-line” interest rates for the amortized and deferred payment plans for SW6/7 are actually 14 percent, or more. Literally, in the “fine print” of those programs there is a 5 percent administrative fee, as well as references to other poorly-understood costs and fees that are at the root of those onerous rates. Yet staff has not provided any justification for those unreasonable charges nor has Council challenged them to support those fees.
5. City administration has chosen not to recalculate the contentious 92.5 percent utility rate increase using financing rates available with Build America Bonds (BAB). Staff continues to use a 7 percent interest rate assumption over the next five years, even though they state that the credit market collapse has created the single greatest negative impact to the adopted utility rates. Embedded in those rates is yet another $220 million in bond debt coming in 2012. Meanwhile, Ottawa County, MI, just issued a BAB at a 3.02 percent effective interest rate for a water-supply expansion facility. We all need to know by how much those new financing solutions could lower the utility rates.
6. Council has not resolved how to equitably pay for the $140 million Kismet water plant mistake. It is currently embedded in the rate forecast, creating a false sense of urgency to bring more rate payers on line in the name of fairness, at any expense to the SW6/7 owners and N1-8 right behind them.
7. The Burton rate forecast states that SW6/7 will raise both our total indebtedness and our operating costs. Burton then utilizes a totally unrealistic assumption that 71 percent of all SW6/7 parcels will be online in 2010, generating revenue to compensate for those incremental costs. Now consider 1,300-plus properties already on city water, foreclosures at 36 percent or more, and up to 48 percent of the 7,300-plus parcels in SW6/7 being empty lots (pick your own numbers). None of these properties will provide revenue any time soon. This stark reality conflicts dramatically with the four-month-old Burton study assumptions. The consequences of moving forward with these unrealistic assumptions could lead to additional revenue shortfalls that may require even larger rate increases to cover the new debt. Council needs to question this strategy.
8. The adopted utility rates contain many future capital expenditures in addition to the $140 million water plant, including more than $78 million for projects such as a bio-solids fertilizer plant, a “water reuse” river crossing to Ft. Myers, new buildings to house the ERD and WRD departments, another deep injection well, design costs for N1-8 in 2010, more offsite storage tanks, even $3.5 million for wireless communications… can you hear me now? There is much more. Council needs to question these significant “rate inflators” that continue to feed a misplaced urgency to bring on new rate payers.
It is time to stop the flip-flopping and develop a realistic plan before you spend any more of our money. The City needs to live within the citizens’ means.
Gary King
SW Cape Coral