To the editor:

An open letter to Cape Coral City Council:

Just yesterday, Feb. 1, 2009, these opening headlines appeared on Meet The Press –

U.S. economy shrinks at its fastest pace in 27 years

the number of unemployed Americans reaches a record high

… President Obama declares in a video clip, “This is not merely an economic concept, it is a continuing disaster for America’s working families.”

The often-contentious debate over the extent of financial hardship that the Utilities Expansion Program will exact on property owners is dwarfed by these harsh realities. It is widely acknowledged by economists and laypersons alike that Cape Coral is at the virtual epicenter of this “disaster” and that any recovery will be prolonged and filled with uncertainty.

The debate regarding the city’s well-intended “safety nets” (programs that offer deferred UEP payment options) is a dangerous distraction from the reality. As Councilmember Deile so aptly illustrated at last Monday’s City Council meeting, the proposed choices are in reality another form of “pick your poison,” as it is the costs and timing of the UEP themselves that are the true root of the problem. These programs are the functional equivalent of the now “notorious” Option ARM the Adjustable Rate Mortgage product that is at the heart of the housing meltdown. It, too, offered the promise of affordability and flexibility, but actually proved to be a slow-acting form of “poison” when the adjustments came due. They have caused countless foreclosures, with many more to come. There is a critical lesson that we must learn from that experience.

Let’s be honest, “pay me $17,000 now or pay me $34,000 later” will ultimately cause severe financial hardship for many of your constituents who are struggling to keep a job and make ends meet. A similar fate awaits others who are on fixed incomes. John Sullivan recently presented some excellent analysis in the press that showed a gross income of $3,675 per year would be required to make the payments on the 20-year plan. The simple truth is that this alternative will not be affordable for many, if not most, of your constituents.

You have a leadership responsibility to insure that the City does not contribute further to those hardships at this time.

Now consider the following headlines.

January 26, 2009, Houston Chronicle reports

Halliburton agrees to pay $560 million in KBR bribery case

January 22, 2009, thehotjoints.com reports

KBR guilty of “Negligent Homicide” in soldier’s death says Army

September 3, 2008, The New York Times reports

Former KBR Executive Pleads Guilty to Bribery

Yet KBR (Kellogg, Brown and Root) is currently a city-approved subcontractor that has routinely received millions of dollars in fees from our Utilities Expansion Program.

Your moral and ethical responsibility should demand that we take immediate action to exclude KBR and its subsidiaries from any future participation in city-sponsored projects. This needs to be completed before any further contract awards or MWH sub-contractor assignments are made and before you make any further decisions regarding N1-8 and SW 6/7.

Now consider the following

Both Mayor Burch and Councilmember Deile have laid some strong groundwork to position Cape Coral as a candidate for the federal stimulus grants that are being earmarked for public infrastructure projects. Mayor Burch took advantage of his recent attendance at the national mayor’s conference in Washington to lobby with influential politicians, including Barney Frank, chairman of the Financial Services Committee.

It is a virtual certainty that you will inadvertently disqualify the city from any grant awards, if you vote to move forward and approve funding for N1-8 or SW 6/7. Any federal funding will undoubtedly be offered only for those projects that are viable, but lack the funding to move forward. This unintended consequence would be a colossal act of “shooting ourselves in the foot.”

We need to be patient and allow that process to play out over the next several months. With our current project costs expected to be in the hundreds of millions, the stakes are simply too high to risk ineligibility without compelling reasons to push forward at this time.

You have a fiduciary responsibility to insure that our eligibility for these massive programs is not jeopardized.

Now please consider the incredible opportunity that is hidden within this “continuing disaster.” Instead of moving ahead without delay, we can use this time to establish a “best practices” methodology that will become the keystone in the UEP strategic plan.

You have many powerful indications that there are lower cost solutions available to usnot now, but when the time is right.

As leaders, you can direct our efforts to replace “speculation and opinion” with “validation and facts”. To the point, let’s stop debating whether $18,000 is a good price or whether Bonita Springs’ cost of $8,720 is actually achievable. Instead, let’s scrub the facts via a vetting process and confirm what is possible vs. that which is unrealistic. You have many signs that that support this approach, if you choose to recognize them:

n Councilmember Brandt’s valuable groundwork, that documented a management multiplier of 12.75 percent in Port St. Lucie vs. our 37 percent cost (that 24 percent cost advantage alone could translate into more than $120 million in savings before financing costs on one-half billion dollars in future UEP contracts).

n Reports that Bonita Springs has delivered utilities for roughly half the cost that we are projecting and that other communities have successfully implemented less costly solutions, as well.

n Reports that the State of Florida has replaced the manager-at-risk methodology in favor of a Design/Bid/Build approach to achieve substantial cost savings in future projects.

n The fact that our current budget projections are based on aged labor, material and management pricing, without the benefit of a fresh competitive bidding process.

n The fact that we have not yet completed the UEP forensic audit that will provide invaluable insight into the relative efficiency and cost-effectiveness of our current process.

There are others.

These unmistakable signs are yelling out to us stop, think, and adapt to the current realities.

This plan has huge upside potential for the many reasons that have been summarized above, with little or no downside risk. You must ask yourselves what compelling reasons would argue that we cannot take the time to complete this process?

So, the $1 billion question is a simple one can we count on each of you to do the right thing? I am hopeful that we can.

Gary King

SW Cape Coral