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Town sinks into water utility options

April 28, 2010

The Fort Myers Beach Town Council discussed different options to replace the current, inefficient and aging island water system as part of its Management & Planning Work Session Wednesday, April 21. The 2 1/2-hour conference meeting centered on ways to begin the project and focused on long-term borrowing measures and revenue needs for the delicate subject of many years.

"The decisions that you make today are going to affect people, town managers and council members in the future," said Town Manager Terry Stewart, who began with an overview on the history of the Beach water system before engaging in conversation with Council and Public Works Director Cathie Lewis to seek direction for the multi-year project. "Once we embark on this, we need to put together a public information campaign to remind people on a routine basis what it's all about, why it's being done and how it's being accomplished."

Town officials expect to use the same contractor which is working on the North Estero Boulevard Project, an undertaking which began in October 2009 and is expected to last until July 2010. That project has improved the water system for roughly eight percent of the island.

"I've been working with AECOM to negotiate a supplemental task authorization under the Town's ongoing continuing services contract, and I think we have reached an acceptable cost for the services," said Lewis. "AECOM will be doing a brief re-evaluation of their report by updating all of the costs that they've estimated with respect to the rehabilitation work. They are going to be also looking at the timing based on the constraints we have on the island as well as their recommended phases."

Stewart believes the report will be a good foundation for what needs to be accomplished in terms of cost and overall project details. He also thinks a referendum is needed for public input -a point Mayor Larry Kiker says is unneeded in the early going.

"There was a referendum that we received a 90-percent approval from the citizens who said to fix the water system," said Kiker. "We need to move forward, get a new water system and then figure out how to finance it."

As far as financing, one thought was to have the water corporation act on its own and take out a long-term loan, but the Town charter may legally stand in the way. Another financing measure would be to break the project down to three phases and borrow money for each phase. Stewart agreed on the borrowing phase.

"It would be insanity to go out and borrow $15 million on Day 1 to do this project," he said. "What you do is go out and borrow sufficient dollars to do the project you have on the plate for the next 2-3 years and keep the initial debt-service cost to a minimal as much as possible. Don't worry that once we set down on this road that we preclude ourselves from being able to seek grants and government funding. That's not the case."

Kiker would like to see a cash flow analysis completed to help with expense breakdown, a leverage for borrowing and legislative funding and grants. Councilman Tom Babcock would rather have a long-range Capital Improvement Plan.

"It's the revenue side that I think we need to start to think about today," he said. "My opinion is, even if you're looking at that 5-year CIP or a 20-year CIP, we are forced to finally take a hard position here on financing. I do not believe a cash flow is ever going to be sufficient to do the kind of capital programs that are on our plate."

Difference of opinions aside, Stewart and his staff will move forward on seeking overall project costs and an estimated yearly revenue to support the cost.

"What has been really solidified this morning is that there is common agreement among the Council," said Stewart.

History of Beach water system

"At one time our water utility was owned by a private corporation and eventually bought by Lee County," said Stewart. "It is a system that has many deficiencies. We still suffer from a structural perspective with certain particular areas that have water mains and pipes that are significantly too small and inadequate."

Stewart explained the current Beach utility structure involves buying bulk water from Lee County which is pumped over to Estero Island and contained in storage tanks. A much-needed upgrade is needed in at least the distribution end of the system which contains asbestos concrete piping.

"There is some significant concerns about that type of piping from the perspective of reliability," said Stewart. "We need to stabilize the system."

When asked about an estimated time line for completing the stabilization of the full project, Lewis answered "realistically 10 years" and "optimistically seven years."



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