Chance assessments will dropBy Steve Estes
Property owners in the planned Cudjoe Regional Wastewater System service area began receiving their assessment notices last week.
And that didn’t make a large majority of them happy.
The county’s current assessment is set at a maximum of $5,700 per equivalent dwelling unit. An EDU is roughly equal to the average water flow for a typical single-family home.
According to the letter received from the Monroe County Wastewater Department, property owners in what is called the core Cudjoe Regional area, Upper Sugarloaf, Cudjoe and Summerland Keys, will see the assessments on the November 2012 tax bill. Residents can pay the entire assessment up front, or they can have it amortized over 20 years as part of the yearly tax bill.
The outer system users, Lower Sugarloaf, Ramrod, the Torches and Big Pine Key, will start paying the assessment with the November 2013 tax bill.
“That should halt the current practice of forcing people to upgrade on-site systems to advanced standards only to have to abandon those systems and hook into the central pipes,” said Kevin Wilson, county public works and engineering head.
Those who choose to have the assessment amortized will pay $538 per year per EDU.
And that figure is well above what the Florida Keys Aqueduct Authority, the county’s wastewater program manager, will pay in principal and interest.
The county plans to raise just over $50 million from users of the Cudjoe Regional through the assessments. The total to finance will be about $89.5 million which would mean an annual payment of about $409 per EDU.
But that doesn’t cover all the fees and costs associated with the borrowing of the money from the State Revolving Loan Fund at three percent interest.
According to Camille Tharp of Government Services Group, the consultant currently used by the county to manage the assessment program, the service fees for the loan will total about two percent. Under state rules, borrowers can only use 95 percent of the anticipated revenue for payback, and must also levy an amount that exceeds expected cash flow by 15 percent to cover in case the economy sours or the number of EDUs are decreased by appeals and modifications.
The Monroe County Tax Collector and Property Appraiser are allowed to charge three percent for certifying the tax rolls and collecting the assessment, and while neither has requested that as yet, says Tharpe, both offices will have new leaders following the November elections and they may ask that, so the anticipated costs are built in to the calculations.
The county must also offer discounts on property tax amounts for those who pay in a more timely fashion, and there is one percent of the yearly total built in for the county’s administrative costs.
That raises the effective interest rate to just over seven percent.
Wilson said that any excess monies collected, either through the 15 percent coverage or the fees, can be applied against the original principle amount of the loan in any given year.
“Typically that means that the loan is paid off three or four years prior to expiration, at which time the assessment would also end for property owners,” said Wilson.
The current numbers are based on the $5,700 per EDU assessment, a number which could well drop at the Board of County Commissioners meeting July 18 when the final assessment must be approved.
That was brought up by Commissioner Kim Wigington at the June meeting, but met with a lukewarm reception form fellow commissioners.
“We didn’t have the documentation in front of us that would support lowering the assessment,” said Commissioner George Neugent.
But he said subsequent meetings with staff have “probably” given him the knowledge he needs to lower the assessment to some other level. A figure of $4,500 has been bandied about, the amount paid by the most recent system users of county facilities at Big Coppitt and others. That would drop the overall assessment to just under $40 million and change the assessment numbers on a yearly basis.
“Staff believes we have enough unencumbered money in the infrastructure sales tax fund to apply to the project and bring the initial assessment down,” said Neugent. “All of the commissioners will be pleased to know that’s the case.”
Neugent said the elephant in the room continues to be the November referendum for voter approval of extension of the sales tax. That tax is due to expire in 2018 and is the final financing cog in the Cudjoe Regional system, a system estimated to cost $156 million at last count.
County officials, however, believe that the final cost will come down as large contractors able to handle the job shave prices in a still-down economy.
“If we get an extra $18 million or more from the current sales tax fund, with the $30 million from the state, we can get to the point of no return,” said Neugent. “Beyond that, we need the sales tax money to finish the job.”
The assessments, the remaining sales tax money and the state funds will allow the county to pay for about $90 million of the project without the tax extension. But the tax will pay the rest of the freight.
“I would expect overwhelming support from the Cudjoe Regional area for the extension,” said Neugent. “And the other taxing authorities need that money for ongoing sewer, stormwater and capital projects, not the least of which is roads and bridges, so they support the tax.”
It remains to be seen if the voters of those other areas support the extension.