Sarasota Performing Arts Foundation project team shows commissioners much higher figures than city finance director has used
Call it the $775-million question.
As the members of the Sarasota City Commission this week sought answers to a multitude of questions related to the proposed construction of a new Performing Arts Center (PAC) within The Bay Park in downtown Sarasota, they had to contend with far different projections for a special revenue source that would be used to help pay for the project.
During their March 17 discussion with representatives of the Sarasota Performing Arts Foundation and PAC consultants, commissioners made it clear that much of their concern is focused on how the city would pay for the estimated $407-million complex. (See the related article in this issue.)
Foundation CEO Tania Castroverde Moskalenko was the first to mention that revenue projections for a special trust fund showed that a total of $775 million would be expected to be accumulated by 2049 for use in paying for the remainder of The Bay Park’s amenities, plus the PAC.
The money derives from a tax-increment financing district (TIF) that encompasses not just the 53-acre park but developments around it. The City and County commissions seated in November 2020 agreed to the creation of the district to help pay for development of the park, which both have stressed is a regional destination open to all people. Every year that the value of property increases in the TIF district, the city and county staff applies the lower of the two local governments’ millage rates to the value to determine how much property tax revenue each would receive from the district. Then, the resulting revenue is placed in the trust fund.
The base year for the property values in the TIF district is 2019.
However, even though the agreement was established for 30 years, a clause that former county Commissioner Alan Maio had inserted in it — which won approval of the City Commission, as well — would allow the county board to stop its contributions to the trust fund sooner. That withdrawal from the TIF agreement could come if the revenue tally ended up at the level needed before the 30 years was up.
Maio offered that as a compromise, as county commissioners — especially Mike Moran — expressed worries that, given the desire for the county to be able to maintain its levels of service as the number of residents grew over the decades, the county would need the money that was being set aside in the TIF trust fund.
During a Feb. 11 workshop discussion between the city commissioners and the Foundation group, Commissioner Jen Ahearn-Koch was the first to suggest that the city should not rely on any of the county money in the trust fund being used for the PAC expenses.
During the March 17 City Commission meeting, Mayor Liz Alpert asked how the Foundation team had arrived at the $775-million figure. Castroverde Moskalenko called up Alex Stokes, whom she described as the Foundation’s lead person in creating the nonprofit’s economic impact study for the SPAC.
The county’s numbers for the TIF district revenue are based on the average property value increase recorded in the county, Stokes said, in accord with state projections. He arrived at the $775-million total for the city and the county on the basis of projects underway in the TIF district, projects already completed and projects for which plans are in the works, Stokes added. Since 2018, he pointed out, he has been coordinating his work with the Bay Park Conservancy, which manages the park, and the Foundation.
“We’ve had to look building by building,” he continued, to arrive at estimates.
Just within the past five years, Stokes pointed out, the property value in the TIF district has grown 16% a year, “more than doubling the assessed values since [the district] was created. We have a faster rate of growth than the average rate of growth for the county.”
Then Bill Waddill, former chief operating officer of the Bay Park Conservancy stressed to Alpert that “the state does a high-level, macro projection” of property values for each county, going out five years. Steve Botelho, the deputy county administrator and chief financial management officer, told him, Waddill added, that county staff uses a 4% increase in value beyond the five years to reach the outer-year figures for the TIF district revenue.
When Alpert asked Stokes about his credentials, Stokes replied that he had been an economic development consultant for 15 years, working first for the HR&A firm that has been a consultant to the Foundation on the plans for the new performing arts center and then going out on his own. Stokes added that he had worked on TIF district issues around the United States, including the City of Atlanta’s TIF districts since 2012.
Alpert then summarized Stokes’ and Waddill’s comments as noting that the county uses “just a conservative estimate.” She added that when the TIF district was approved, “There was a lot of vacant land [within it].”
Waddill indicated that, as of the 2019 base year for the district, the Quay Sarasota property — which was bought out of bankruptcy — had a tax value of $25 million. Since then, he continued, eight buildings within Quay have been completed, with a value “at about two-and-a-half billion dollars.”
Later, Ahearn-Koch showed her colleagues yet another, revised set of TIF district revenue figures that she said Waddill had given her on March 14. The total projected revenue on that chart — through the 2049 fiscal year — was $861,293,870. Of that, the chart showed the city’s share would be $431,583,481.
She wanted to make sure the other commissioners had those numbers, Ahearn-Koch added.
‘Best-case scenario’
When Ahearn-Koch asked Stokes whether he had factored in recessions, for example, as he had calculated his figures, Stokes told her he had not. “This projection is made on basically a status quo basis,” he added, though he acknowledged that recessions and periods of excess property value growth could occur between now and 2049.
“For me,” Ahearn-Koch responded, “this is a best-case scenario.” She was on the Planning Board when the Great Recession began, she continued, so she well recalled the fact that city staff members had to be let go, so the city’s budgets could be balanced.
Some local governments had to contend with double-digit drops in property values, Ahearn-Koch added.
Moreover, she noted, climate change and the effects of hurricanes such as those that caused extensive damage in the area in 2024 could affect property values in the future.
Going back to the $431.6-million figure projected for the city’s share of the TIF revenue, Ahearn-Koch pointed out that the Foundation team has put the city’s expense for the PAC at approximately $407 million, but the city will also have to pay for more parking spaces, as well as the necessary infrastructure to serve the new complex.
“When you add all those up,” she said, “what’s left for The Bay Park” and the renovation of the Van Wezel Performing Arts Hall, which will have to remain in use — per an agreement between the Foundation and the city — at least until the PAC could be completed.
In response to a comment from Vice Mayor Debbie Trice, City Attorney Emeritus Robert Fournier — as Trice referenced him — did point out that the TIF interlocal agreement with the county excluded any funding appropriation for the Van Wezel, unless both the County Commission and the City Commission agreed that money could come out of the trust fund for the Van Wezel.
Jennifer Jorgensen, the city’s director of governmental affairs, confirmed that. City staff is looking into other options to pay for whatever work that will be needed to keep the Van Wezel functioning, Jorgensen added.
Waddill, the former Bay Conservancy chief operating officer who has returned to the Kimley-Horn consulting firm in Sarasota, told the commissioners that he is the person who probably has been most involved with the county commissioners over the past seven or eight years in regard to the development of The Bay Park, and he continues to talk with them.
“I was with several of them over the weekend. They are passionate supporters of The Bay Park,” he stressed. “They will be by our side for the park, for sure,” including upgrades to landscaping and improvement to the 10th Street Boat Ramp. Nonetheless, Waddill did acknowledge that they have questions about the plans for the PAC. “But let’s not give up on them.”
Waddill was the long-time business partner of former Commissioner Maio, at Kimley-Horn, before Waddill began working with the organization advocating for and then creating The Bay Park. Maio also has returned to Kimley-Horn, The Sarasota News Leader confirmed by checking his LinkedIn account. A year ago, the News Leader learned, as well, Waddill wrote on his LinkedIn account, “I’m happy to share that I have returned to Kimley-Horn!” He is listed as senior planner and landscape architect with that firm.
What about bonds?
When Commissioner Kathy Kelley Ohlrich asked Kelly Strickland, the city’s finance director, whether Strickland had talked with the city’s bond counsel about issuing bonds to help pay for the PAC, Strickland replied that she had not done so since the city issued $48 million in bonds to cover its $48-million expense for Phase II of The Bay Park.
Strickland explained that bonds cannot be backed by revenue that is projected out 25 years, given the uncertainty of those figures. Therefore, she continued, the city has to pledge its non-ad valorem tax revenue, such as its sales tax revenue and the money it receives from fines and forfeitures.
Moreover, Strickland said, if the city were to issue another bond that it expected to be paid back by the TIF revenue, those non-ad valorem sources also would have to be tapped.
The property tax revenue makes up 50% of the city’s General Fund each year, she pointed out, noting that that fund contains the city’s operating money. (The General Fund covers the budget of the Sarasota Police Department, for example, and other departments that generate no money of their own.)
If the city cannot make a bond payment, Strickland continued, the non-ad valorem revenue “is what will make the bond payment.”
Then Ohlrich asked Strickland whether the city could afford bonds for the PAC.
Strickland replied that revenue bonds could be issued. Those could be pledged to money generated by a surcharge on ticket sales at the Van Wezel until the PAC were completed, and then on ticket sales for performances at the PAC.
Showing the board members the page in the March 17 backup agenda materials with the heading, City Funding Plan, she pointed out that she arrived at the total of $146,249,492 available for the PAC from the TIF trust fund through 2049 by taking the figure expected to be generated for the city’s portion, based on the county staff’s calculations as Waddill had explained them. Then she deducted the debt service funds that will be needed for the city.
Adding in $6 million dedicated to the PAC out of revenue that the city will receive from the county’s Surtax IV penny sales tax program, which will continue through 2039, that gave her a total of $152,249,492 for the PAC, Strickland continued.
When Ohlrich asked how much the city is expected to receive out of the Surtax IV program, Strickland replied that the figure is $12 million a year for 15 years. (Surtax IV began this year.)
Strickland also explained that when staff is building the budget for the next city fiscal year, the first priority “is to make our debt service payments,” and that will affect future budgets. If the TIF revenue does not come in at the level projected, Strickland continued, then the non-ad valorem revenue would have to be used for those payments. “That’s going to cut into other services.”