Council Approves Waterlines Loan Application

    264

     

    After the workshop on Monday morning, Town Council held a ‘special meeting’ to discuss the state’s revolving fund application regarding the Town’s waterline replacement project. That project, called ReFresh Fort Myers Beach was approved by the voters via referendum in 2007 and validated in 2011. The project broke ground in 2013 when workers began replacing the Town’s aging and outdated water lines under side streets off of Estero Boulevard, Bay Beach Lane and Laguna Shores, then moved to the main road in anticipation of Lee County’s Estero Boulevard Reconstruction project.

    The total estimated cost of the water line replacement project is $41 million. The Town is expected to borrow a total of $34.1 million over the next four years for the project through the Florida Department of Environmental Protection State Revolving Fund Loan program. Water rates are anticipated to climb by approximately 25% between 2016 and 2020 to cover the cost of the waterlines project.

    “The facilities plan was completed in June of 2015 so what we’re asking for now is a resolution – this is the final step for the Town to seek financing from the revolving fund,” said Town Manager Don Stilwell.

    Jim Steele, a member of the Audit Committee who has volunteered to work with the Town on financing for both the waterline project and the stormwater utility, explained that he was asked by Council to create a cash flow projection for the waterline project.

    “The Town will be hiring a rate consultant, who will do a much more detailed analysis,” he said. “This cash flow starts at the end of the last fiscal year, with a balance of -$228,000. It’s anticipated that a 6.82% rate increase will be necessary to fund the borrowing needed going into 2017. That increase will show up on residents’ water bills in October of this year.”

    Steele estimated that $7 million needs to be borrowed for the fiscal year ending on September 30, 2017; $7.2M for 2018; $9.2M for 2019 and $10.7M for 2020 – which would fund the project, expected to be completed in 2020. The four loans would each be for 20 years with an interest rate of 2%. The total estimated cost for the project – which has cost residents nothing additional so far – is $41 million.

    “To pay off the debt service for all the borrowings, we’ll likely need a rate increase of $300,000 per year, which is about 6% per year, or $2.75 on an average $45 monthly water bill,” he said. “By the time its all said and done, the rate will be increased a total of about $11/month – that’s not really all that significant.”

    Mayor Dennis Boback said that – combined with the rate increases associated with the stormwater utility – most people will find it significant.

    “Since the Town does buy its water from the county, additional future rate increases may be required to cover that plus additional operating expenses,” Steele continued. “We have decided on a company to do the rate study, and they will also be doing a comparable between residential/condominium and commercial rates.”

    Boback wanted to know if the Town had applied for any grants or approached any local banks, and Town Administrative Services Director Maureen Rischitelli said a bank had been contacted but their loan could be called at any time. She added that the revolving fund was selected because that program has the lowest interest rate available.

    “Most of the grants out there would have been for preliminary things,” she said.

    Vice-Mayor Summer Stockton said she’d like Council to pass a resolution saying water rates would go back down once the loan is paid off, and Attorney Dawn Lehnert said the current council cannot bind future councils.

    “Can we stop stormwater while we’re doing this?” asked Councilwoman Tracey Gore, and Councilwoman Rexann Hosafros said absolutely not as she is hearing from her neighbors that both projects need to be addressed immediately.

    Rischitelli pointed out that the proposed rate increase is a ‘worst case scenario’ and that number will likely go down.

    At their meeting later that afternoon, Council authorized Stilwell to submit an application for the waterline project to the State Revolving Fund Program.

     

    Keri Hendry Weeg