Committee of the Islands

Keeping Sanibel Special Since 1975

Sewer Debt: Help the city, Help yourself

View Article Archives

January 06, 2012

Sewer Debt : Help The City , Help Yourself By John Harries , Board Member Committee of the Islands ( Published January 6 , 2012 , in the Island Reporter and Island Sun . ) The Sanibel City Council did well in managing the 2012 budget process . Despite a 20 % decrease in property values since 2007 , the City has managed to reduce expenses over the intervening years , avoiding the need to increase ad valorum taxes next year . There is , however , a notable exception related to the Sanibel sewer system debt . The City and its property owners have borrowed over $ 71.5 million to develop and expand the sewer system since the City of Sanibel acquired it in 1991 . The non ? valorum assessment on our tax bills each year provides approximately thirty ? seven percent ( 37 % ) of the annual debt service payments ( principal and interest ) required on the state revolving fund ( SRF ) loans debt . Because of meeting debt coverage ratio requirements next year , the City paid down the remaining SRF debt an extra $ 2.2 million in 2011 . This reduced the balance of the bond and SRF loans yet to be retired to about $ 31 million . However , there was still a projected shortfall in meeting debt coverage ratio requirements on the debt . Therefore , city council increased sewer utility bills by 3 % for the 2012 fiscal year . Sanibel property owners received the first bill for the increased amount in November . How Sanibel Homeowners Can Help Starting in 2001 , as residents hooked up to the sewer system , they were assessed a fee which could be paid in full at the time of connection or amortized over 20 years . As of May 1 , 2011 , there were 1444 residences that still had outstanding sewer assessments in the amount of nearly $ 9 million . This amounts to about 29 % of the total outstanding sewer debt . Property owners can help the City and help themselves by paying off any residual debt that is being carried in their name . Since the interest rate charged on this debt is 3.0 ? 3.5 % and current money market investments are typically paying less than 0.5 % , it may make sense for many homeowners to pay off this loan . If the amount of the outstanding sewer loans were reduced , it may eliminate the need to increase residential and commercial sewer rates again in 2013 . Homeowners who are interested in eliminating their outstanding sewer debt can call the City of Sanibel’s Finance Department ( 472 ? 9615 ) to find out how much they currently owe . Since the rate changes each day as interest is accumulated , the specific amount you need to pay will be determined on the day you actually give the Finance Department a check . Committee of the Islands invites your input and ideas on this important subject . Please email your comments to coti @ coti.org . You can read commentaries on other island issues on our website at coti.org and / or visit Committee of the Islands on Facebook .

Download document

Click here to download article.