Margaritaville will request an extension at a Special Joint Meeting of the City Commission and the CRA on Wednesday, April 3, at 5 PM, at City Hall. The announcement of this event, made today from the City Manager’s Office, is posted below. According to the City Clerk, “the agenda and backup are not completed at this time. When completed, the information will be posted on the [City] website.”
City’s Announcement:
“As you know, the City of Hollywood and the Hollywood CRA have been working with Margaritaville Hollywood Beach Resort LLC for the redevelopment of the Johnson Street property on Hollywood Beach after a two-stage competitive Request for Proposal process. A Development Agreement and Ground Lease was executed in February 2011 followed by a First Amendment in April 2012 which revised the timelines for development. Later, in September 2012, additional amendments revised the funding sources for the project including the diminished role of EB-5 financing, the introduction of a $23 million Compensated Funding Agreement with the CRA, and the anticipated role of Starwood Capital as an equity partner in Margaritaville Hollywood Beach Resort LLC. Third Party reimbursements (allowing the City and CRA to contract with advisors at the expense of the developer) and rental income to the City were increased as a result of the updated funding sources. Because the project had encountered unanticipated delays, an April 10, 2013 “outside possession date” was also established. Several important milestones would have to be satisfied by that date thereby allowing the property to be transferred to the developer for the commencement of construction. Although City and CRA staff have been vigilant in reminding the developer of the upcoming deadline and the developer has made significant progress, Margaritaville Hollywood Beach Resort LLC has asked to appear before the City Commission/CRA Board to provide an update on the project and to request one last extension. Representatives from Margaritaville, Lojeta, and Starwood Capital will be in attendance.
Margaritaville – New Plan
Hollywood residents in need of tax and fee reductions and City employees in need of salary increases …Time to Pay Attention!
As we all know by now, the Margaritaville project has been unable to secure funding from foreign investors as the original plan required. So now we have a new proposal in which the CRA is to give the developer $23 million for construction financing. When I learned of this plan, I initially opposed it as one more boondoggle — a massive developer subsidy like Radius, Hollywood Station, WSG, Great Southern, and Block 55, to name a few.
But when I actually read the legal documents now available on the City website, I discovered a huge difference between this “handout” and all the other ones. The new Margaritaville proposal provides millions of developer dollars for the City’s cash-strapped General Fund. This new revenue stream will significantly bolster the City’s ability to improve employee compensation and reduce taxes and fees without compromising services.
How Will This Work?
The CRA will receive the tax increment on this project (estimated to be more than $1 million a year) but the developer’s compensation for the $23 million CRA construction funding will take the form of doubling its rent payments from the original $500,000 to $1 million the first year, and substantially more in subsequent years. These rent payments will go directly into the General Fund.
How Can This Be?
A financially strong equity partner, Starwood Capital, will join the developer partnership. Starwood is a solid, well qualified entity both in experience (owning 2100 quality hotels around the world) and in financial strength. It not only significantly increases developer equity in the project but can also attract conventional financing that has been unavailable to the original Margaritaville-Lojeta partnership.
Bottom Line
The proposed new Margaritaville financing plan, while appearing at first glance as just another handout, in fact serves as a vehicle to significantly strengthen the City’s General Fund. For those of us who feel it is unhealthy for a city to have virtually all its disposable income in a single district while the rest of the city deteriorates from reduced services, this financing plan announces a new day. The CRA will get the entire tax increment on the Johnson Street property (over $1 million per year), but the Hollywood General Fund will receive substantial rent payments for the 99-year life of the ground lease (over $1 million the first year and growing exponentially in future years).
How To Learn More
To learn more about the plan and many other details not covered here, attend the public meeting on Tues., Sept. 4, 6 PM at City Hall, where city staff will present the new financing proposal for Margaritaville. This will be an important opportunity for all of us to learn the details and ask questions of City and CRA staff. The City Commission and CRA Board will both vote on the new plan the following day. You can find the legal documents on the City’s website.
Editor’s Note: This article is the opinion of only one of the Balance Sheet editors (Sara Case). The other editor, Laurie Schecter, is out-of-town and not available to weigh in at this time.
The Margaritaville project slated for Hollywood Beach is unable to start construction because the developer has not yet been able to raise enough money. The City has notified the developer that it’s in default. The developer is seeking more money and city staff are reviewing the project’s numbers to determine what if anything can feasibly be done.
Every member of the public we’ve spoken with is flatly opposed to investing more public funds in this project. It’s one thing to allow the developer more time to come up with the money it needs, if there is a reasonable prospect that additional time would produce results. But it’s quite another for the City or CRA to put public funds, again, in a development that can’t attract sufficient private investment. We’ve seen that way too many times. No more, we all say.
If the developer can raise the needed money within the next six months to a year, and we can continue to use the garage and the public park meanwhile, then we say consider doing that. If not, then it’s time to start over.
One of our readers, Craig McAdams, has a suggestion for the property that we print in full below. As you can see, he is interested to hear what others think.
“I hope to see an Aquatic Fitness Center on the site currently planned for Margaritaville. If the hotel and bars are not going to proceed, I want to propose something healthy and attractive for residents as well as visitors. Several pools with water aerobics, learn to swim, competition and diving. Surrounded by a health club and juice bars and a healthy alternative to the alcohol scene. Most of the local hotels don’t have the space to provide a pool and this is why Joseph Young originally put a pool on this site. Yet it was demolished years ago. We need a place to swim when the ocean is contaminated and closed. As well as when it’s too rough or sea lice and man o war. A pool is the best facility the city could provide on the public land, not a hotel with restaurants and bars. I would welcome your opinion as well as the opinion of others to see if my idea is popular among the residents and guests that read your blog.”
The Balance Sheet has long advocated for public use on this publicly owned beachfront property. We’ve also recommended health and fitness uses along the broadwalk. We think Mr. McAdams is onto something. What do you think?
Update March 8, 2012: The CRA Board voted yesterday to scrap the camera aspect of the emergency phones and to install the phones already purchased in the ArtsPark and around the downtown garages. Spots for eight of the phones have been identified. Commissioner Furr requested that another be located in the Dog Park down by Pembroke Road. IT Director John Barletta was reported to be exploring a different type of camera set-up based on a privately owned wireless network, but this appeared to be in an exploratory stage only as no details were presented. The entire cost — both purchase and installation prices — of up to 10 phones for downtown (and maybe dog park) will be borne by the Police Department’s forfeiture funds.
February 18, 2012: Those with long memories will recall Police Chief Wagner back in 2008 announcing a plan to curb crime by installing emergency phones with zoom/tilt cameras in the downtown Parkside and Royal Poinciana areas. The City subsequently purchased ten of these phones which have been in storage ever since. For a variety of reasons this project has repeatedly stalled, but now we’re told the emergency phone/camera project will be on the CRA Board’s March 7 agenda. An additional ten phones will be discussed for the beach.
There’s been both controversy and lack of clarity about this project for at least three reasons: (1) the cost, (2) technological complications related primarily to the cameras, and (3) whether the phones will function more as an attractive nuisance than a crime deterrent. And finally, with the proliferation of sophisticated cell/camera phones now in the hands of so many private citizens, the question has to be asked (and not just dismissed) as to whether the emergency phones are a project more appropriate to yesterday.
1. The Cost
After the Sun-Sentinel reported the ten downtown phones with camera attachments would cost $450,000 ($45,000 per phone), many reacted with shock. How could the City afford such a costly project? What we’ve learned is that the City’s cash-strapped General Fund will not be tapped for this project. Instead the CRA has committed $100,000 and the rest is to come from LEAF funds (Law Enforcement Assistance Funds). These latter funds can be spent only on police-related projects.
While the phones have already been purchased, the cameras have not. The projected cost breakdown we’ve received from Bryan Cahen, CRA Finance Manager, is as follows:
Phones – purchase price $47,111.75
*Cameras and wireless network $239,753.10
*Poles for video $8,244,10
**Installation/electrical $150,000
____
* Wireless network and poles are required for cameras, not for phones
**Installation costs would be reduced if camera component is not purchased
2. Cameras
A wireless video network must be set up for the camera component of this project. In other words, wi-fi. The Police Department, which has taken the lead in promoting the emergency phones, defers to John Barletta in the City’s IT unit when questions are raised about the feasibility of such a network in the downtown, given potential interference from tree cover and tall buildings. (The Beach is another story, because the broadwalk is a more open environment.) Given Mr. Barletta’s role in the failed city-wide wi-fi venture, we are uneasy at the thought of deferring to him on yet another wi-fi project.
Assuming the network could be made to work reliably, the video feed would be transmitted to the City’s 911 Communications Center. How monitoring this feed would complicate the already-complex 911 staff work has not been explained, to the best of our knowledge. One city staffer told us the cameras would be live 24/7 and continuously monitored by the Police Dept. But one elected official told us the cameras would come live only if someone made a call on the emergency phone. What is the plan for the cameras?
3. Attractive Nuisance
Is video surveillance a significant crime deterrent, greater than the phones, as some have advocated? Or is it unworkable downtown, or too costly? And if so, will the emergency phones without video be more likely to attract pranksters and vandals? These are open questions.
Conclusion
Everyone can have an opinion on the questions this project raises, but opinions without sufficient back-up facts are not helpful in the difficult decision-making process required to make our community as safe as possible. We look forward to a clear, reliable presentation and discussion of both emergency phones and the video component — both pros and cons — at the March 7 CRA Board meeting.
Why does downtown look so bleak?
The obvious answer is “Way too many boarded up stores.” But there are secondary problems as well. Too much litter, graffiti and shabbiness, panhandling and loitering are all concerns that create an uninviting environment. The CRA is betting that addressing the secondary problems will make it easier to recruit new business to the empty stores. We’ll see.
One of the strategies the former city manager used to balance the budget was to divert as much CRA money as possible into the over-spent General Fund. As part of this project, the Downtown CRA has been paying the City’s General Fund some $187,000 annually and supposedly getting in return “enhanced services” to clean up downtown. Despite these enhanced services, downtown remains essentially shabby. The once lush landscaping is littered with cigarette butts, crumpled papers, and bits of plastic. Earlier this month, the CRA made the decision to restructure its “enhanced services,” since the annual $187,000 wasn’t working. Enter Block By Block, a national company active in 39 cities across the country.
In a word, it’s privatization. We’re skeptical, as are many of you, about turning over city functions to private concerns. At the same time, if a city is not able to perform satisfactorily, other approaches must be explored. Fortunately, in this case, there will be no pink slips for city employees. Chuck Ellis, the City’s Parks Director has informed us: “There are no layoffs due to the Block by Block services. Our staff will continue to pick up the trash and oversee the median maintenance.”
Instead of paying the City $187,000, the CRA will pay $153,000 to Block by Block to pick up litter, clean out tree wells, paint, mulch, power-wash sidewalks, and perform other maintenance tasks. In addition, Block by Block will assist with “quality of life” issues like panhandling and loitering. Its mode of operation is to coordinate its work closely with a city’s regular services so as to augment but not replace them. This is a new approach for Hollywood. If it doesn’t work, the CRA can terminate the contract.
With this company, the CRA expects to get the full-time services of four workers to be hired and supervised by Block By Block. CRA staff has informed us that qualified Hollywood residents will receive priority in hiring. To start, these workers will be scheduled from 7 AM – 3 PM, but their hours may be changed as needed. They will wear a uniform that identifies them as “Hollywood Ambassadors.”
We’re supposed to get a cleaner, snappier downtown. No more cigarette butts in the tree planters. No more plastic bottles in the gutters. No more graffiti and dirty sidewalks. And above all, a more welcoming environment for new business as well as residents and visitors. Let’s hope so! Time will tell.
February 3, 2011
Note: See earlier article here.
What was once a voter-approved $2.2 million plan to renovate Hollywood’s A1A fire station (2200 N. Ocean Dr.) has become a costly $15.8 million land acquisition/new construction project further south on A1A that would replace the existing facility. How did this happen?
In short, the Beach CRA went rogue. Back in 2006, it bought 3 parcels on A1A (between Madison and Monroe) at a cost of $6.7 million. One of the sellers was the founder of Cops and Firefighters Business Network. He made $1,140,000 on this deal, an 84% gain on property he held not quite two years. The remaining sellers also made handsome profits as the CRA dished out top dollar for this project which was to include a brand new fire station that would also store beach safety vehicles.
Although both Miami Herald and Sun-Sentinel reported this morning that the City Commission OK’d $7.9 million to construct this new building, they failed to include the debt service over 15 years on funds the city must borrow to cover a portion of the construction budget. Nor did they mention the exorbitant $6.7 million the CRA spent to acquire the land. When those figures are added in, we see a $15.8 million fire palace.
|
Land Acquisition (3 separate parcels) |
$ 6.7 million |
| Construction & Related Costs (including debt service) |
$ 9.1 million |
| Total Cost (excluding demolition costs) |
$15.8 million |
Bottom Line: Expenditure of $15.8 million for this project seems unreasonable if not unconscionable considering that the existing fire station could be renovated for much less. Only Mayor Bober and Commissioner Furr voted against the project yesterday, citing its excessive cost in light of the city’s over-stressed budget. We think their vote was responsible given that the commission will be considering not only cutting staff and services in the next budget year but also declaring a state of financial emergency in order to break union contracts.
When possible, the Balance Sheet tries to make helpful suggestions or offer alternative ideas to solve problems. In this case all we can do is ask the Commission to do a better job as stewards of the tax payers’ money.
BALANCE SHEET BLOG - HOLLYWOOD, FL 