What would you do if you suddenly inherited $6.7 million?
That is a question the Marco Island City Council sought to answer in a special workshop this week as it tackled the water utility’s new five-year Capital Improvement Program, or CIP. The $6.7 million windfall in question is the money the city will recoup this September from the successful refinancing of its 2003 utility system revenue bonds. The funds have been held in escrow as insurance on the bonds since 2010.
“We are going to be successful in refinancing this debt, and that is going to free up $6.7 million for projects,” City Councilman Ken Honecker told the workshop attendees.
Not so fast, said councilmen Larry Honig and Larry Magel. They recommended paying down some of the utility’s outstanding debt when the funds are released in the fall, reducing both the principal amounts owed and interest.
“We ought to say the CIP is a totally separate process from the windfall we are confronting by being able to refinance this debt,” Honig noted. “We need to treat this windfall with respect and not use it to get off the hook to raise money for something else.”
To be sure, the question is a difficult one to answer when you consider two things: the amount of debt the city now carries and the hefty price tag of the new CIP. According to the city finance department, Marco Island Utilities currently has $167 million in debt, which has to be repaid by utility customers with interest.
Covering fiscal years 2014-2018, the new CIP encompasses some 42 projects totaling $26.3 million. Fourteen of these projects worth $8.4 million are to be funded through the utility’s Renewal and Replacement Program, and another 11 projects with a collective price tag of $2.9 million are supposed to be funded from the Capital Reserve Fund. Seventeen projects have no funding source.
In the end, Council directed Public Works Director Tim Pinter, Utilities General Manager Jeff Poteet and their staff to prioritize the projects over the next two to three years that are mandated by the Florida Department of Environmental Protection and that are “must-haves” for the system.
“We can see where the money is then,” Honecker said.
Councilman Amadeo Petricca encouraged city staff to focus on fiscal years 2014 and 2015, “period.”
Honig added, “We are going to fight for every penny that goes into the CIP.”