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CREDIT SUMMARY
Cape Coral is located on the southwest coast of Florida in Lee County approximately 10 miles south of Fort Myers and 125 miles south of Tampa.
Historically known as a residential and vacation community, the city is more recently associated with the collapse of the U.S. housing market which has crippled the city's tax base and revenue raising capacity through traditional resources. The 2010 budget proposal identified $35.3 million in new recurring non-ad valorem revenues; however, city council opted to increase revenue more modestly, largely through an increase in the communication service tax (CST) and ad valorem tax rate that generate approximately $3 million in additional revenue on a combined basis. The ad valorem tax rate adopted for fiscal 2010 is 7.97 mills, up from 4.85 mills in 2009, leaving the city with considerably less flexibility under the 10 mill constitutional limit.
The general fund operating budget adopted for fiscal 2010 represents a two-year reduction in spending exceeding 20%. The budget includes approximately 200 fewer positions than in 2008 (a 10% decline) spread across departments and functional areas including public safety. Wage and benefit concessions were negotiated with each of the city's collective bargaining units, health care costs were reallocated, and support for non-essential programs and maintenance scaled back.
Officials feel the ability to cut spending further is extremely limited without affecting service levels. In Fitch's view, city council's willingness to adopt alternative revenue sources is a key to rating stability, given the expectation for additional tax base declines and the magnitude of spending cuts enacted to date.
As a result of the city's aggressive spending cuts reserve levels remain adequate at approximately 19% of spending at the close of fiscal 2009 (unaudited) despite a $3.5 million drawdown of the general fund balance.
The 2010 budget does not appropriate fund balance. Officials report no major variances in actual results relative to the budget through the first several months of the fiscal year.
Additional information is available at FitchResearch
Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties. Cities lose property tax dollars from homes that sit empty and lower property values.
Economic woes, such as unemployment or reduced income, are expected to be the main catalysts for foreclosures this year. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are the fastest growing group of foreclosures.
[quote=Robert.L.;13357900]CREDIT SUMMARY
Cape Coral is located on the southwest coast of Florida in Lee County approximately 10 miles south of Fort Myers and 125 miles south of Tampa.
Historically known as a residential and vacation community, the city is more recently associated with the collapse of the U.S. housing market which has crippled the city's tax base and revenue raising capacity through traditional resources. The 2010 budget proposal identified $35.3 million in new recurring non-ad valorem revenues; however, city council opted to increase revenue more modestly, largely through an increase in the communication service tax (CST) and ad valorem tax rate that generate approximately $3 million in additional revenue on a combined basis. The ad valorem tax rate adopted for fiscal 2010 is 7.97 mills, up from 4.85 mills in 2009, leaving the city with considerably less flexibility under the 10 mill constitutional limit.
The general fund operating budget adopted for fiscal 2010 represents a two-year reduction in spending exceeding 20%. The budget includes approximately 200 fewer positions than in 2008 (a 10% decline) spread across departments and functional areas including public safety. Wage and benefit concessions were negotiated with each of the city's collective bargaining units, health care costs were reallocated, and support for non-essential programs and maintenance scaled back.
Officials feel the ability to cut spending further is extremely limited without affecting service levels. In Fitch's view, city council's willingness to adopt alternative revenue sources is a key to rating stability, given the expectation for additional tax base declines and the magnitude of spending cuts enacted to date.
As a result of the city's aggressive spending cuts reserve levels remain adequate at approximately 19% of spending at the close of fiscal 2009 (unaudited) despite a $3.5 million drawdown of the general fund balance.
The 2010 budget does not appropriate fund balance. Officials report no major variances in actual results relative to the budget through the first several months of the fiscal year.
__________________________________________________ ________________________________________________
What is left out of this quote is the very good rating of Cape Coral's debt obligations. Read the section that precedes Robert's quote: Fitch Rates Cape Coral, FL's Gas Tax Revs 'A-'; Outlook Stable
Press Release Source: Fitch Ratings On Tuesday February 23, 2010, 6:01 pm EST
NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns an 'A-' rating to the following Cape Coral, Florida (the city) gas tax revenue bonds (the bonds):
--$6,985,000 series 2010A;
--$33,015,000 series 2010B (federally taxable Build America Bonds - direct payment).
The Rating Outlook on the gas tax bonds is Stable.
The bonds are expected to sell competitively the week of March 15, 2010.
Fitch also affirms the following ratings:
--$93.4 million in outstanding special obligation revenue bonds, series 2006 and series 2007 affirmed at 'A';
--$18.8 million in outstanding capital improvement revenue bonds, series 2005 affirmed at 'A+'.
Last edited by rikoshaprl; 03-19-2010 at 09:29 PM..
Reason: add line
What is left out of this quote is the very good rating of Cape Coral's debt obligations. Read the section that precedes Robert's quote: Fitch Rates Cape Coral, FL's Gas Tax Revs 'A-'; Outlook Stable
True, but again, alot of places, big banks and investment houses were rated as "A"'s as well, just before going bust.
At the moment, I dont see Cape Coral in a position of having to default on anything. But the continued pressure from foreclosures, business closings, increasing costs, etc, can reverse that in almost an instant. We live in interesting and fiscally dangerous times.
As job loss, and income reduction continue in the area, and more people become comfortable with strategically defaulting on underwater assets, the tax base will probably keep eroding.
I actually think the government has been doing a pretty decent job in managing a strained budget the 20% budget cut was the largest in the state. they could have gone to a 10 milliage but kept it under 8 mill. The foreclosure tide has already turned (still a lot to go) but 40% lower than previous year regardless of where they are coming from.
I think we are all in agreeance that employment is the whole ballgame. It's not getting worse but not getting any better. It is like standing in the middle of a seesaw and can tip either way.
The season does not look like it has been as robust as I have hoped for but I also thought home sales would slow during 4th qtr and inventories would have climbed a little but that didn't happen either. The next 3 months are typically the strongest months in home sales for the area it will be interesting to see if it can chop away at the inventory that dropped from a 21 month supply to a 5 month supply but have been stuck there for about 6 months.
despite what some are saying about home prices, they have gone up. the avg selling price in cape coral has gone up quite a bit. It has been masked by being lumped in with lehigh acres and north ft myers where the avg selling price is 60k and 77k. Believe it or not the avg selling price in south east cape coral is now at $177k. info was pulled from the ellis group year end summary which breaks down by sections of cities. I'd give a link but I'm on my cell phone typing and havn't figured out how to do that yet.
CREDIT SUMMARY Cape Coral is located on the southwest coast of Florida in Lee County approximately 10 miles south of Fort Myers and 125 miles south of Tampa.
Historically known as a residential and vacation community, the city is more recently associated with the collapse of the U.S. housing market which has crippled the city's tax base and revenue raising capacity through traditional resources. The 2010 budget proposal identified $35.3 million in new recurring non-ad valorem revenues; however, city council opted to increase revenue more modestly, largely through an increase in the communication service tax (CST) and ad valorem tax rate that generate approximately $3 million in additional revenue on a combined basis. The ad valorem tax rate adopted for fiscal 2010 is 7.97 mills, up from 4.85 mills in 2009, leaving the city with considerably less flexibility under the 10 mill constitutional limit.
The general fund operating budget adopted for fiscal 2010 represents a two-year reduction in spending exceeding 20%. The budget includes approximately 200 fewer positions than in 2008 (a 10% decline) spread across departments and functional areas including public safety. Wage and benefit concessions were negotiated with each of the city's collective bargaining units, health care costs were reallocated, and support for non-essential programs and maintenance scaled back.
Officials feel the ability to cut spending further is extremely limited without affecting service levels. In Fitch's view, city council's willingness to adopt alternative revenue sources is a key to rating stability, given the expectation for additional tax base declines and the magnitude of spending cuts enacted to date.
As a result of the city's aggressive spending cuts reserve levels remain adequate at approximately 19% of spending at the close of fiscal 2009 (unaudited) despite a $3.5 million drawdown of the general fund balance.
The 2010 budget does not appropriate fund balance. Officials report no major variances in actual results relative to the budget through the first several months of the fiscal year.
Outside this forum, the real estate market in Cape Coral is correcting itself, every single day, to reach its appropriate sticky (!) price level.
Residence of Cape Coral, the ones who still have the will and the health for mobility, are still moving away but foreclosures have made it very difficult to sell/resell houses. No doubt that property taxes will increase. Cape Coral has an eroding revenue base.
“ Cape Coral has a total of $835 million in outstanding principal on dozens of bonds:
• The city owes $199 million in general government debt. That’s for some road improvements, city buildings and equipment. Your property taxes and gas taxes pay this debt.
• There is $230 million outstanding for utility expansions. This is all paid through utility assessments. If you’re paying for water, sewer and irrigation pipes, you’re paying down
this debt.
• Cape Coral has $404 million outstanding for water and sewage treatment plant expansions. If you’re paying a monthly utility bill, a sizeable chunk of that bill pays down this debt.
• $1.6 million is outstanding in the stormwater fund. Most people pay $75 a year for a stormwater fee. A piece of that is paying down this loan.
Cape Coral has a tough year ahead as it looks to pare down the budget while keeping services in tact. Recession-battered residents certainly fear an increase in their property taxes.”
The city is counting on an eroding revenue base: tax revenues (housing, utility, gas, etc.) will continuously decline through foreclosures, free fall of prices, unpaid utility bills, rise in unemployment and a declining population.
“Cape-Fort Myers foreclosures jumped 31 percent month-over-month increase in local metro; second highest foreclosure rate reported nationwide
Foreclosure filings in the Cape Coral - Fort Myers metro area skyrocketed between January and February.
The area saw a 31 percent increase in foreclosure activity, giving it the second highest foreclosure rate in the nation, representing 1 in every 92 homes currently in foreclosure
Economic development, or lack there of, could dictate home values in the coming months.
Then there's the unemployment rates, which continue to rise both locally and statewide, that could very well dictate the number of people who walk away from their homes.
"I believe that still continues," Tate said of foreclosures. "A lot of it is unemployment, or people just being so upsidedown they feel they have no other choice."
Outside this forum, the real estate market in Cape Coral is correcting itself, every single day, to reach its appropriate sticky (!) price level.
Residence of Cape Coral, the ones who still have the will and the health for mobility, are still moving away but foreclosures have made it very difficult to sell/resell houses. No doubt that property taxes will increase. Cape Coral has an eroding revenue base.
“ Cape Coral has a total of $835 million in outstanding principal on dozens of bonds:
• The city owes $199 million in general government debt. That’s for some road improvements, city buildings and equipment. Your property taxes and gas taxes pay this debt.
• There is $230 million outstanding for utility expansions. This is all paid through utility assessments. If you’re paying for water, sewer and irrigation pipes, you’re paying down
this debt.
• Cape Coral has $404 million outstanding for water and sewage treatment plant expansions. If you’re paying a monthly utility bill, a sizeable chunk of that bill pays down this debt.
• $1.6 million is outstanding in the stormwater fund. Most people pay $75 a year for a stormwater fee. A piece of that is paying down this loan.
Cape Coral has a tough year ahead as it looks to pare down the budget while keeping services in tact. Recession-battered residents certainly fear an increase in their property taxes.”
The city is counting on an eroding revenue base: tax revenues (housing, utility, gas, etc.) will continuously decline through foreclosures, free fall of prices, unpaid utility bills, rise in unemployment and a declining population.
“Cape-Fort Myers foreclosures jumped 31 percent month-over-month increase in local metro; second highest foreclosure rate reported nationwide
Foreclosure filings in the Cape Coral - Fort Myers metro area skyrocketed between January and February.
The area saw a 31 percent increase in foreclosure activity, giving it the second highest foreclosure rate in the nation, representing 1 in every 92 homes currently in foreclosure
Economic development, or lack there of, could dictate home values in the coming months.
Then there's the unemployment rates, which continue to rise both locally and statewide, that could very well dictate the number of people who walk away from their homes.
"I believe that still continues," Tate said of foreclosures. "A lot of it is unemployment, or people just being so upsidedown they feel they have no other choice."
And yet, we have to finance two useless and expensive elephant projects: Swimming pool complex ( at least $40 Million) and renovating the Shopping Square downtown ( no disclosed cost).
For whom? For elderly? For tourists?
Bernie Madoff had AAA rating and took in $40 BILLION from people who took comfort in such rating!
Last edited by yoko; 03-22-2010 at 03:19 PM..
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