To the editor:

First of all let me say that what I am about to say is my opinion and I want to make it clear that I am not talking as a member of the UEP Committee or for the UEP Committee; I am speaking for myself as a resident.

About one year ago a document came out of the Cape Coral Finance Department and the document stated that impact fees and reserves were insufficient to fund the Utilities Capital Improvement Projects (Plants Wells and other capital Items). Yet we have a certain faction that wants to lower the impact fees. The document recommended rate increases that were required to satisfy annual payments and the net income requirements of bondholders. The total cost of these capital Improvements were to be between $450 and $550 million over a four-year period, 2007 to 2010. This did not include assessments which were $350 million. The total estimated spending over the four year period was almost $1 billion.

The rate increases in excess of 28 percent for water within a four-year period and the increase for sewer was in excess of 38 percent. This round of rate increases is only into the second year and the city is telling us we need to raise it more and we need prepaid impact fees as well. I have to ask the question, how can this be and where are these funds supposed to be coming from? This tells me that the capital improvement costs are completely out of control and we don’t know from one year to the next what that cost is going to be. It seems to me that we are constructing a bigger straw to break the backs of the residents financially. Ladies and gentlemen, we need to get a handle on this before we move forward.

It appears our bond ratings have been revised to negative from stable by Fitch Ratings. The article I read indicates that there was a clear concern related to a decrease in revenues. And it states that Cape Coral is an economically stressed city.

It stated that new construction has declined 77 percent for fiscal 2008. The article also stated “The Outlook revision to Negative reflects concerns that a planned draw down of general fund reserves in fiscal 2008 will reduce the unrestricted balance to a level inconsistent with the current bond rating.” It also expressed concern about the massive number of tax certificate sales. Apparently the street feels that there is more risk. When this happens ratings drop and a higher rate of interest is demanded by bond investors.

How do I interpret this? From a financial perspective it seems we have bitten off more than we can chew and the economic climate has changed. Our main industry construction is flat on its ear and many people are out of work. We need to put a hold on these projects until we are able to determine the total cost and how they will be funded. When I look at utility rate increases of this magnitude in such a short period of time it indicates we have gone too far. Remember that utility rate increases at these levels are unsustainable.

The question becomes how far are we willing to put the city into hock? We need to bring some common sense into the equation and stop spending like we have unlimited funds. Put these projects on hold after we finish SW-5 so we can determine an equitable way to pay for the projects or find a better way to deliver them. Let’s not just keep raising utility rates and placing a heavier financial burden on the residents in hard economic times.

John Sullivan

Cape Coral