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Cape Coral presentation shows capacity for $406M of proposed bonds; council warned of higher annual debt service
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Summary
Financial advisers told the Cape Coral City Council a sample plan to issue roughly $406 million in non‑ad valorem bonds over 2026–27 would raise annual debt service from about $18 million today to roughly $36 million at its peak, and that keeping liquidity ratios near current levels will be key to maintaining the city's double‑A2 credit rating.
Cape Coral — Financial advisers opened the City Council’s Jan. 30 budget workshop with a sobering look at the municipality’s borrowing capacity and how proposed projects could change annual debt costs.
Julie Santa Maria of PFM told council members the city now carries about $49 million in general‑obligation debt and roughly $177 million in other governmental debt. Using sample bond issues of about $88 million in 2026 and $318 million in 2027 — a combined example the presentation labeled roughly $406 million — the city’s non‑ad valorem annual debt service could rise from roughly $18 million to a peak near $36 million in 2028 before settling around $29 million annually over the long term.
The consultant said Cape Coral’s credit profile is “very strong” and currently sits at Moody’s double‑A2, but that “this amount of additional debt would move some of the leverage metrics into a lower rating category,” and agencies could change outlooks within 12–18 months if metrics deteriorate.
Council members pressed for clarity on which obligations were included in the presented totals. PFM clarified the examples exclude enterprise‑fund and special‑assessment debt (water/sewer, stormwater) and do not include pension or OPEB liabilities; the sample issues were modeled as revenue‑backed non‑ad valorem borrowings rather than additional general‑obligation millage debt.
PFM also outlined options for generating capacity to support new debt service: dedicating existing public‑service‑tax (PST) revenue that now goes to charter schools (about $2.6 million a year), levying an additional PST increment (the presentation estimated an extra 3 percentage points would yield roughly $7 million annually and could support about $114 million in bond proceeds under their assumptions), or reallocating other committed revenues. The advisers cautioned that absent new revenues or reduced recurring expenses, capacity for additional debt would be limited.
Council members also discussed project‑specific structures cited in the presentation: the yacht club reconstruction, charter‑school athletic facility and the Bimini East acquisition were described as projects that could be supported by dedicated revenue streams such as leases, TIF receipts, or user revenues rather than the general‑millage pledge.
Next steps: staff said it would supply project‑level debt cost estimates, clarify which revenue streams would back each issue and provide updated scenarios for council review ahead of summer budget hearings.
