Deputy county attorney says he believes the county would prevail if the matter went to court, and the total expenses — which the city most likely would have to cover — could rise as high as $800,000
During the final hour of an April 11 meeting of City and County of Sarasota staffs, it became County Administrator Tom Harmer’s refrain: “Our position is the payment’s not due.”
Harmer was speaking of what city staff says is approximately $5,169,345.48 — counting interest — the county owes the city as one final payment into the Downtown Sarasota Community Redevelopment Area (CRA) Trust Fund.
Regardless of the various approaches City Manager Tom Barwin took on the morning of April 11 in an effort to chip away at Harmer’s resolve, he made no headway.
Moreover, Deputy County Attorney Frederick “Rick” Elbrecht explained various legal defenses the county could pursue if the city ends up bringing suit against the county in court over that last contested CRA payment. Elbrecht pointed out that if the county prevails — as he feels confident it would — not only would the county be able to seek attorneys’ fees from the city, but the city would have to cover its own expenses. The total could reach between $500,000 and $800,000, Elbrecht added, considering that numerous depositions would be necessary and he expected “a lengthy trial” before a jury.
At one point, Barwin suggested the county could pay the disputed funds to the city over a period of three to four years.
The only viable option Harmer offered was a city application for assistance through the Community Reinvestment Program (CRP) the County Commission revived in 2015. That program enables municipalities — and county initiatives — to seek financial support for infrastructure designed to boost economic development.
Deputy City Manager Marlon Brown pointed out that city staff failed to win any funding from the CRP last year to assist with improvements at the Robert L. Taylor Community Complex in north Sarasota.
“At the staff level, it seemed to be moving along quite well,” Brown added of the city application. He was not certain why the funding ultimately was not approved, he said. It would be helpful, if the city submitted applications in the future, to avoid roadblocks, Brown added.
“I agree,” Harmer replied, and he encouraged city staff to apply again this year, with the funding in the CRP having been boosted to a total of $1.4 million.
“So cash flow isn’t an issue for you?” Barwin finally asked Harmer as Barwin turned back to the CRA issue at the crux of the April 11 meeting.
“Budgeting is always a difficult process for cities and counties,” Harmer replied, noting that the county has not recovered fully from the Great Recession. “That doesn’t weigh into the idea of ‘We need to pay this over multiple years.’ … We don’t agree that the payment’s due.”
Finally, County Attorney Stephen DeMarsh initiated a discussion of the next meeting in the formal conflict resolution process — laid out by state statute — under which the staff members were meeting that morning. The second session will entail a discussion of the CRA dispute among the city and county commissioners on April 26, beginning tentatively at 6 p.m. in the City Commission Chambers — the location of the April 11 meeting. The staff members agreed that the presentations of each side of the dispute would take a total of about 90 minutes. At that point, discussion would be expected to ensue between the two boards.
‘Yes, you do’ and ‘No, we don’t’
Presentations of the opposing views took up roughly two-thirds of the staff members’ session this week, which began at 8 a.m. and concluded about 11 a.m.
Because the city initiated the conflict resolution process, its staff made the “opening salvo,” so to speak. Assistant City Manager John Lege started with city documents and a review of sections from the Florida Statues, including Chapter 163.387, which sets out how payments are made into a CRA trust fund.
Established in 1986, the Downtown Sarasota CRA received tax revenue pegged to the increased value of the property in the specified area each year. The method is called “tax-increment financing.”
The city used the Downtown Sarasota CRA revenue to back two bonds used to improve various parts of downtown Sarasota. The Whole Foods Complex, the Sarasota Herald-Tribune Complex, Main Street, Bayfront Park, Pineapple Park, Five Points Park, storefronts and surface parking areas all benefitted from use of the money, as documented by the city and county staffs. The last series of bonds — which date to 1992 — matured on Nov. 1, 2016, which was part of the 2017 fiscal year, a city slide pointed out. State law requires the supporting CRA to remain in effect as long as there is outstanding indebtedness for which the revenue has been pledged, unless a specific exemption has been provided.
Another set of slides provided sections of documents to underscore city staff’s assertion that a 30th CRA payment of about $4,786,431 was due from the county for the 2016 tax year.
The county’s PowerPoint presentation focused partly on specific language in the Florida Statutes regarding CRAs: “Payments to Redevelopment Trust Fund are made by annual payments due ‘by January 1.’”
The next slide read, “A term requiring something occur ‘by’ a certain date includes the date mentioned and does not mean the day before the date mentioned.” Furthermore, the slide continued, “In computing time to determine whether an act was performed within a specified period of time, the first day is excluded and the last day of the period is included.”
Therefore, Deputy County Attorney Elbrecht told the city staff members, the last payment from the county to the Downtown Sarasota CRA Trust Fund was due Jan. 1, 2016; that payment was made on Nov. 4, 2015.
As Assistant City Manager Lege had done, Elbrecht referenced a number of documents — including interlocal agreements — to support the county’s position. Elbrecht also offered video clips from local government meetings to emphasize that the county board and staff had planned for years for the trust fund payments to end after the 2016 tax year.
No common ground
Following the presentations, Barwin told the county representatives, “It is my great hope and, I think, the city’s, that we begin to move away from an adversarial position on this. … Do you have any ideas for possible specifics to put on the table today to attempt to resolve this dispute?”
“Obviously, we feel strongly that the evidence supports that no additional payment’s due,” Harmer responded for the first time in that segment of the discussion.
Then Barwin talked of the city’s being “a cash cow, when it comes to the county,” with the city being responsible for 13% of the county population but its residents contributing 17% of all county property tax revenue, as well as 25% of county sales revenue and about one-third of annual Tourist Development Tax revenue.
Harmer pointed out that the county had invested $60 million in the CRA over the 30-year life of the agreement, and that it also had contributed to a number of other projects in the city, such as the new Ringling College of Art + Design soundstage. Moreover, he said, the county is negotiating to purchase the land and undertake the necessary improvements to extend The Legacy Trail from Palmer Ranch to Payne Park in downtown Sarasota. That initiative has been estimated between $50 million and $60 million.
When Harmer brought up the Community Reinvestment Program (CRP), City Attorney Robert Fournier asked whether Harmer could provide city staff a summary of how it functions.
“We provided it to the mayors and the city managers through the [county Council of Governments] group over a year or so ago,” Harmer replied.
The projects the county hopes to fund through the CRP would be similar to those paid for under the auspices of a CRA, Harmer added.
Deputy City Manager Brown then pointed out that the process to win the funding is competitive.
“It is an expectation that the municipality [applying for funding] would contribute in some form or fashion [to the project],” Harmer noted, adding that he would be happy to talk further with city staff about the process.
When Barwin asked whether the city could get $5.1 million from the CRP over three or four years, Harmer responded that no guarantee existed that the city would win any of the money. Still, Harmer said, the opportunity for the city to propose a project exists.
At another point, Barwin said, “I’m not sensing a willingness here to explore resolving this dispute.”
Harmer responded again that the city’s view that the county owes it more than $5 million for a final CRA payment “is not something we are interested in talking about.”
When Barwin asked whether county staff had a counter-proposal, Harmer again mentioned the CRP.
Barwin also talked of the planning underway for the 42 acres of city bayfront property envisioned as a public and cultural district, and he noted the need to build a larger, acoustically perfect venue for the Sarasota Orchestra. Additionally, Barwin said, “the Van Wezel [Performing Arts Hall] is now about 50 years old and has some stiff competition from other venues that have come online.” Replacing it has been projected at $250 million, Barwin added.
The Bayfront 20:20 project is still in the planning process, Harmer countered.
The Sarasota Bayfront Planning Organization’s proposal should be released within 12 to 18 months, Barwin said.
“But I’m not sure how it relates,” Harmer told him.
“I put it on the table, Tom, because I think it’s … a vitally critical issue for both of our governments to consider,” Barwin responded.
On April 11, Harmer pointed out, the issue was the city’s claim that the county owes it more than $5 million.
About that different tack …
The staffs also debated the fact that the city chose to follow the state guidelines for the conflict resolution process, instead of taking a more flexible approach the county had suggested. That exchange began after Barwin asked a question: If, between now and the April 26 session with the city and county boards, an idea arises on either side that might help resolve the dispute, should it be exchanged between the managers or the attorneys?
“You have to have an open meeting to discuss things between the two parties,” County Attorney DeMarsh told him.
That was one reason the county staff had offered the idea of pursuing the alternative process, Harmer added.
“We proposed an alternative process for months and months,” Brown responded, “and it was completely rejected. … This was sort of a last-minute resort for us, Mr. Harmer.”
The city still would have had the right to bring suit against the county if the alternative process had not resolved the issue, Harmer replied.