Commissioner Ziegler questions timing of tax-increment financing plan, given severe economic ramifications of pandemic
Four of the five Sarasota County commissioners this week continued to offer support for the potentially $150-million park project on 53 downtown Sarasota waterfront acres. However, during their Sept. 9 discussion, Commissioner Charles Hines voiced agitation over the fact that the Office of the County Attorney had yet to complete a draft of the interlocal agreement with the City of Sarasota that will govern the financial contributions from both the city and the county.
As laid out in past meetings, both local governments would contribute tax-increment financing (TIF) money to The Bay Sarasota. The funds would represent the property tax revenue resulting from rising values in the district encompassing both the site of the new park, with its arts and cultural amenities, and surrounding parcels. Jan. 1, 2019 would be the base year for the TIF district.
The last time the county commissioners discussed the proposed TIF agreement — in January — they voted 4-1 to authorize the Office of the County Attorney (OCA) to work on the necessary documents to create the TIF district and establish the makeup of the board that will oversee the expenditures of the resulting money.
This week, they voted 4-1 — with Chair Michael Moran again in the minority — to direct the OCA to complete the draft interlocal agreement “as soon as you can,” as Commissioner Charles Hines put it, and provide it to them for review. Then, Hines said, the commissioners could offer any tweaks in public before the City Commission addresses the document.
(In January, Moran said he could not support the diversion of county property tax revenue over 30 years, given expected continued growth of the community and the corresponding need to provide services for all the residents.)
Hines made his Sept. 9 motion after pointing out that he had anticipated the OCA’s having finished the draft prior to the board’s summer break, which began in early July. Addressing County Attorney Frederick “Rick” Elbrecht, Hines said, “You never told us you need another county attorney to work on this.”
Hines’ motion also called for the commissioners to discuss the draft during their next set of meetings.
County Administrator Jonathan Lewis pointed out that their agendas for their sessions on Sept. 22 and Sept. 23 are “very, very full,” so Lewis suggested the commission allow staff to put the item on an agenda for one of the regular meetings the first week of October.
Hines countered that he wanted the board to address the draft on Sept. 22 or Sept. 23. Therefore, Lewis assured the commissioners that staff would proceed accordingly.
Additionally, Hines offered direction to representatives of the Bay Park Conservancy (BPC), who are responsible for managing the park and raising money for it. He asked that they act with expediency to undertake research BPC Chair Cathy Layton had mentioned.
Layton told the commissioners that BPC leaders would like to talk with representatives of the other 40 conservancies in the United States to determine the best practices for setting up a trust fund or another type of account in which the TIF money from the city and county would be deposited.
“Those calls need to be made today,” Hines told Layton and BPC Chief Implementation Officer Bill Waddill.
(The BPC is the nonprofit successor to earlier entities that worked on various facets of The Bay Sarasota. Overall, as Waddill noted, the effort to create the park has been underway for about seven years.)
As Waddill explained on Sept. 9, the estimate for the amenities for which the BPC will be responsible is between $100 million and $150 million, with the expectation the construction will take place over 10 to 12 years. The Van Wezel Foundation, he noted, is the entity that will raise the money for a new performing arts center to replace the 50-year-old Van Wezel. That facility is expected to cost approximately $250 million.
Cheryl Mendelson, CEO of the Van Wezel Foundation, added that her organization hopes to have the new performing arts hall completed within six years.
Phase 1 of the Bay Park has been budgeted at $25 million, Waddill said, with philanthropic contributions and grants making up about 80% of the total. BPC leaders are working through a formal City of Sarasota planning process to win final approval for that first segment of The Bay.
Timing concerns
One other issue that arose on Sept. 9 — which Commissioner Christian Ziegler raised several times during the discussion —was not a factor in January: the economic repercussions of the novel coronavirus pandemic.
“The perception, if we approve a project like this,” Ziegler said, is that the county would be spending close to $100 million on a park “at a time when people are losing their jobs and businesses are struggling.”
“There’s a lot of uncertainty,” Ziegler added that, if COVID-19 case counts begin rising significantly once again, a second shutdown of businesses could be necessary. However, he noted, “I think the governor’s been pretty clear that we’re not gong to have another [shutdown].”
“I feel very optimistic,” Ziegler continued, referring to the falling infection numbers statewide over recent weeks.
Still, he said, “Our job up here is to be stewards of tax dollars [and] serve the public.”
“How do we combat that tone deafness?” Ziegler asked Waddill of the BPC.
First, Waddill responded, the commission’s contribution in the first year of the TIF would be zero. (Deputy County Administrator and Chief Financial Management Officer Steve Botelho made that point during a presentation that kicked off the discussion.) Therefore, Waddill added, the investment in The Bay would not have an immediate effect on the county’s budget.
Moreover, Waddill stressed, “This is a long-term capital investment in the future. … People are looking for hope.” Approving funding for The Bay, he added, is a way “to deliver on that hope.”
Multiple speakers who addressed the commission during the Open to the Public session at the start of the meeting emphasized the need for the commission to be visionary. Among them were former County Commissioner Jon Thaxton, who was representing the Gulf Coast Community Foundation as a senior vice president of that nonprofit, and Teri A. Hansen, president and CEO of the Charles & Margery Barancik Foundation.
Additionally, Waddill told Ziegler, “It’s only going to get more expensive to [create this park] in the future, as you know, with inflation.”
Further, Waddill said, “Every dollar [from the TIF] gets leveraged three or four times,” mostly through contributions from private individuals and philanthropic entities.
Commissioner Hines emphasized his belief that if the board approved continued work on the TIF district, that would show that “the Sarasota County Commission believes in its community and believes in the future and is willing to invest … in taking Sarasota County from a good or great community to an exceptional community.”
Referencing a comment Ziegler had made earlier — about Ziegler’s desire to see a “destination playground” created on the bayfront — Hines added of The Bay, “It’s not just a park with a playground. That’s one amenity.”
Then Hines reminded Ziegler that Ziegler last year put considerable focus on water quality, in the aftermath of the devastating red tide event that lasted more than a year. One major feature of Phase 1 of The Bay will be water quality improvements, including enhancements of the mangrove bayou near the site where the G.WIZ science museum stood. “Our community is screaming for us to fix water quality,” Hines pointed out.
Payments and promise
The county’s early TIF payments, Hines continued, are expected to be relatively small amounts. (A chart Deputy County Administrator Botelho showed the board, with updated figures based on the revised property values that the Sarasota County Property Appraiser’s Office released this summer, put the first TIF payment at $99,647 at the end of the 2021 fiscal year and $299,556 at the end of the 2022 fiscal year. The payment would rise to an estimated $507,868 for FY 2023. Hines characterized the latter amount as “real money,” but he stressed that the board members at that time could deal with the loss of such a relatively small amount of property tax revenue.
Altogether, Botelho noted that morning, the expected county payments over the 30-year life of the TIF agreement are projected to be $92,130,317. For the city, the anticipated total is $97,288,084.
The figures, according to his chart, assume no changes in city and county millage rates, plus taxable value growth between 6% and 8% in the first 10 years and then 4% for each of the remaining 20 years.
In his view, Hines continued, “The property rates around this [park] will make up all this increment [that would be diverted to a fund to pay for the amenities].” However, he reminded his colleagues, if property values do fall in any given year, then no increment would be paid. “There’s really no risk here.”
Waddill pointed out to the board, “The No. 1 attraction in the United States is Central Park. … Think about the real estate adjacent to Central Park.” That property, Waddill continued, is the most valuable in Manhattan.
With the completion of The Bay, he said, “In perpetuity, we’ve created incredible real estate value within a few blocks of this Central Park for Sarasota.”
When the commissioners’ children have become young adults, Hines said, and they are looking for a place to gather with friends — including those from out of state — “[The Bay] is going to be the thing that makes Sarasota County and our region exceptional.”
He was on the county board during the later years of the Great Recession, Hines pointed out. (He first was elected in 2012.) Because of the economic downturn, he added, many people told the commissioners not to spend money on projects, including the Emergency Operations Center, libraries, and the renovations at Siesta Public Beach. Yet, he stressed, “Those were the best things that we did. … It’s not the time for us to waffle on this.”
Commissioner Alan Maio talked of the multiple conversations he has had with Waddill — who was Maio’s business partner for 18 years with the Kimley-Horn consulting firm in Sarasota. About 435,000 people live in the county, Maio said, and “this is for everybody,” not just residents of the city of Sarasota.
Maio told Waddill, “I wish you all had brought this to us next year.” Still, Maio continued, he understood the concerns about inflation driving up the costs and the potential loss of philanthropic support, to which Waddill had alluded that day, if the board withdrew its support for the TIF plan.
Commissioner Nancy Detert told her colleagues that she wanted to offer an analogy that none of the rest of them could provide: “This is sort of like being pregnant.” Every time she was expecting, she said, people would tell her it was “a really bad time to be pregnant. … It’s never a good time,” she added. “You do it anyway, thinking of the future.”
“You’re always going to have naysayers,” Detert continued. “Naysayers are never visionaries. For one thing, they’re not optimistic enough to look to the future.”