Cape Coral City Council will regroup if a judge does not validate its issuance of a bond to be guaranteed with funds raised through the city's new fire assessment.
The issue came to the table monday after Councilman Rick Williams questioned City Manager John Szerlag on the need to continue to pay consultants Burton & Associates, and discussion turned to options the city may have to consider if the fire service assessment fails.
The council was asked to approve the payment to the company for the additional scope of work it was asked to do for the economic sustainability and revenue diversification and fire assessment studies.
That amount, of $35,218, was approved unanimously 7-0 (Jim Burch was absent).
Meanwhile, Szerlag had sent a memo to council on Nov. 15 to council outlining the history between the city and Burton & Associates.
Council had approved a study for $50,000 last November to determine the current and projected financial condition of the general fund over a 10-year period, identify revenue diversification scenarios and evaluate them in achieving financial sustainability.
In April, council approved a not to exceed of $14,000 for town hall meetings regarding the general fund diversification plan, monies which have not been spent.
After release of the study findings, the scope was expanded to include analysis not part of the original study. The additional scope cost was $18,368.
In May a proposal for $37,463, was accepted to conduct a study to update the Fire Assessment study conducted in 2009, which included recent legal precedents that would provide flexibility in terms of apportioning costs.
Additional meetings and analysis were required to address concerns during the preparation of the assessment resolution, as well as work required for the bond validation which had not been contemplated. The additional scope cost is $16,850.
The discussion soon turned to the fire assessment, in particular, to a memo Szerlag sent to council on Friday regarding the implications of both winning and losing the assessment battle in court.
Both sides submitted their proposed judgments to the court on Wednesday, and must now wait on Judge Keith Kyle's final decision.
When he does, the city has a plan of action for both possibilities, which he outlined in the memo.
If Kyle decides in favor of the city, a "budget amendment will be prepared to reflect changes in revenues and expenditures for capital needs, and repayment of reserves," the memo said.
Also, the remainder of the repaving plan would be completed, capital equipment needs would be funded and reserves would be repaid.
The city would also issue a note for $1.5 million for fire equipment, begin printing and issuing bills to property owners, and if the defendants appealed to the Florida Supreme Court, the monies would be held in escrow pending a final ruling.
But if Kyle rules against the city, Szerlag suggested requesting an expedited appeal to the Florida Supreme Court because the "ready to serve" methodology is the most equitable for Cape Coral as it recognizes the special benefit provided to all parcels within the city," the memo states.
Also, billing of the assessment would not occur and emergency capital needs would be funded upon failure only and paid using additional dollars from the reserve funds.
"Clearly, if the City receives an adverse ruling, our financial situation remains unsustainable. Consideration of moving toward the 'calls for service' methodology for the additional $12 million in fire services assessment revenue will need to be discussed," Szerlag said in the memo.
The drawbacks, Szerlag said, are that nearly all the $12 million would be collected from developed parcels, and those assessments would have to be redistributed to single-family homes, which would add between $40 and $60 per year to said homeowners, while vacant-lot owners would pay only $5 per year.
Calls for service would also require administrative costs and regular reviews from consultants.
There is no timetable for the judge to rule on the city's bond validation case.
And the end of the meeting, council voted unanimously to hold a special '"shade" meeting Tuesday to discuss that case, as well as other legal issues the city faces. Shade meetings are meetings between council and its attorneys and, by law, are closed to the public.