UTILITY ISSUES IMPACT `POCKETBOOK'

(First in a series)

Cape Girardeau voters will consider three separate but related issues when they go to the polls Nov. 5, and their decision could have an immediate affect on their pocketbooks.

Most special ballot items at local elections involve property or sales tax hikes, and a "yes" vote often means sacrificing income for some project or public interest.

But none of the three city issues on the ballot this year include a tax increase, and a "yes" vote on one of the items could save voters as much as $6 or $7 per month on water bills.

Citizens will vote on whether to approve new 20-year electric and gas franchises for Union Electric Co., and whether the city should issue $11.8 million in revenue bonds to finance the purchase of the city's water system from Union Electric and make various improvements to the system.

City Manager J. Ronald Fischer called the franchises, which give the city broader powers and enforcement capabilities, a new "partnership" between the city and Union Electric.

"These franchises allow the city and Union Electric to work together to accomplish controlled growth for Cape Girardeau," he said.

Fischer also said the water system purchase proposal is a "bargain" for residents.

To purchase the system, voters will be asked to approve the issuance of $11.8 million in revenue bonds to be financed over 20 years. The bonds would be sold to private and corporate investors.

"Voting for the purchase of the water system will not increase your taxes at all," he said. "The bonds will be paid off by revenue generated by the sale of water to citizens."

Fischer said the insured bonds are a good investment because they're exempt from state and federal income taxes.

"The citizens can actually own the bonds and, in effect, own a piece of the water system," he said. "It would truly be a citizen-owned utility."

One negative to the sale, though, has been expressed by Cape Girardeau School District officials, who say the district stands to lose $135,000 in property tax revenue if the city buys the system.

Because of the city's tax-exempt status, it would not pay property and real estate taxes to the school district. Those funds from Union Electric's ownership of the system have totaled about $135,000 annually.

But Fischer said that if the measure is successful at the polls, the city will wean the school district of the money over a five-year period.

The Cape Girardeau City Council has agreed to pay the district 100 percent of the taxes the first year, then reduce the payment 20 percent each year over the five-year period, said Fischer.

Although the three items on the ballot are related, the city manager said citizens must vote on them separately.

If, for example, voters approve the 20-year gas franchise for Union Electric, but reject the electric franchise, Fischer said the city would be forced to renegotiate the electric franchise or resubmit the issue to voters.

"I don't know really what more we can do as far as negotiating a franchise," he said. "I think it would be more a matter of just putting it before the citizens again."

One thing's certain, if voters reject the water-system purchase, Union Electric will sell the system to a private utility company. A Kansas City firm already has bid on the system and is poised to buy it should voters reject the city's purchase proposal.

Should an investor-owned company buy the system, Fischer said they would be able to file with the Public Service Commission for a 49 percent water rate hike.

The city has said it might raise rates a total of 3 percent if it buys the system.

"If voters reject the city's proposal, they can expect about a $6 or $7 increase in the water bill after the system's sold to a private company," Fischer said. "That's the real significance of this issue. This utility is for sale and the owner is willing to sell it to the city.

"It's very unusual that a company that owns a utility in any kind of a community is out there trying to sell it."

Fischer called the $8.5 million price for the system, which is 30 percent below its assessed value, a fair price. The remaining $3.3 million will be used for repairs, maintenance and operation of the system.

"It's very, very important that people realize Union Electric wants to sell the system," he added. "They've offered it to the citizens of Cape Girardeau at a figure at least 30 percent below the assessed value, and it's very important that we take advantage of it."

(Monday: City officials discuss why purchase of the water system would be a "bargain" and discuss the details of new electric and gas franchises.)