Boca Pension Fund Costs Rise & FAU Housing Project Voted Down

Boca Raton City Manager Leif Ahnell got everyone’s attention during this month’s goal-setting session when he said that the city would have to contribute $2 million more than anticipated in next year’s budget toward the police and fire pension fund.

Ahnell said investment returns were lower than anticipated. If this trend continued, Ahnell warned, it would present the city with a serious financial problem.

Cities like Boca Raton and Delray Beach that have their own police and fire departments maintain pension funds for retired employees. In Boca Raton, an eight-member board of trustees oversees the fund. The city appoints four members and the police and fire department each appoints two members.

Pension costs have been a recurring issue in Boca Raton and elsewhere. In 2014, contract talks between the city and the police and fire unions reached an impasse because the city was seeking pension reforms to control costs. The new contracts reduced benefits for newer hires but kept them the same for longer-serving employees and existing retirees.

The LeRoy Collins Institute at Florida State University regularly ranks local pension funds based on solvency over a 30-year period, the industry standard. In May 2019, the latest year available, the institute gave Boca Raton’s police/fire fund a D grade, what it has received for a decade. The fund for general employees got an A, what it has received for a decade. The difference reflects more generous benefits for first responders.

Assistant Fire Chief Matt Welhaf is one of the department’s representatives on the pension board. He told me Wednesday that several factors explain the gap that the city must fill from its general fund budget.

The state, Welhaf said, issued new mortality tables that funds must follow. In essence, he said, the tables forecast that people would live longer and expense projections rose. Welhaf said that factor alone accounted for $1.2 million of the deficit.

In addition, Wehalf said, a class of alternative investments underperformed by another $350,000. Welhalf said board members made that investment “with the blessing of the city” and that it is more of a long-term play. Finally, Welhaf cited recent figures that show improved returns.

Still, Welhaf acknowledged that the board needs to have “better communication with the city.” Ahnell’s statement seemed to catch city council members by surprise, and his tone was urgent. Any additional money that the city must contribute to the fund is less money for general services.

Mayor Scott Singer said the council has “discussed reviewing the management fees and asset allocations” in the fund’s investments “and comparing those to benchmark funds, and then discussing those with the trustees.” The police and fire contracts don’t expire until September 2023, so there’s no immediate option of changing the benefits, if any council member was inclined to do so.

In Delray Beach, dissatisfaction with pension fund performance caused the city commission to split the combined board and create one for the police pension and another for the fire pension. Such dramatic change is unlikely in Boca Raton.

Some changes, though, are coming. Welhaf said the board already has begun its own review to reduce fees and other administrative costs. The board May meeting takes place today, and Welhaf hopes to speak with Ahnell soon. I’ll have a follow-up when there are developments.

Liv Dies

No one will live at Liv on 5th.

At least for now.

At Tuesday night’s meeting, the Boca Raton City Council denied Cav Core’s application for the 182-unit student housing project on Northwest Fifth Avenue across the El Rio Canal from Florida Atlantic University. Three of five council members voted yes, but the project needed four votes because it would have required a land-use change.

As in December, Yvette Drucker, Monica Mayotte and Andy Thomson supported Liv on 5th. Singer and Councilwoman Andrea O’Rourke were opposed. That vote transmitted the proposal to the state for its review. The Department of Economic Opportunity saw no issues.

Singer and O’Rourke, however, saw Liv on 5th as an example of spot zoning—classifying a property in a way that is different from everything around it and serving no public purpose. Cav Core wanted to build six times as many units as current density allows on roughly 10 acres that are near single-family homes. The zoning would have gone from Residential Low to Residential High.

O’Rourke said she might have voted yes if the developer  had asked for fewer units. “It’s always the highest use,” she complained, referring to what developers seek. Though city and county officials said the project would meet traffic standards, O’Rourke said no studies could persuade her that Liv on 5th wouldn’t present problems. Though the developer would build a pedestrian bridge over the canal, O’Rourke said students would not walk to campus “in the heat and the rain.”

Singer said approval of any such project should be part of the city’s larger plan for a student-centric district near FAU. Five years ago, Boca Raton invested much time in trying to plan such an area on and around 20th Street, the eastern entrance to FAU’s campus. There was collaboration with the Treasure Coast Regional Planning and meetings with property owners. FAU students created ambitious designs.

Then the effort languished. City council members wanted to schedule a meeting with FAU’s trustees. It never happened.

Singer said approving Liv on 5th would set a bad precedent. Any developer, he said, then would have been able to propose student housing and seek much more density.

Later in the meeting, council members asked Ahnell to restart discussion of that student corridor. In theory, Liv on 5th could return as part of such a district. For now, though, that land will remain vacant.

Resort inks deal with Major Food Group

The Boca Raton Resort & Club has announced a partnership with Major Food Group (MFG) for new restaurants that will be part of the resort’s $150 million makeover.

In a news release, the resort’s CEO, Daniel Hostettler, said MFG has a “reputation for the highest level of culinary excellence and ability to make every guest feel like a VIP” and predicted that “the results will be nothing less than extraordinary.”

According to the release, the first restaurant, called The Flamingo Grill, will open in “early summer.” Next will come a Boca Raton outlet of Sadelle’s, MFG’s brunch place in Manhattan’s SoHo neighborhood.

News reports noted that MFG is one of the few restaurant companies to have expanded during the pandemic. Like other New York restaurateurs, MFG has sought a presence in South Florida. The company opened a South Beach outlet of Carbon—which is in Greenwich Village and which one publication called a “celebrity magnet”—and a ZZ’s Sushi Bar in Miami’s trendy Wynwood neighborhood.

Jeff Zalaznick is one of MFG’s founders. He said of the partnership with the resort, “The opportunity to create this sweeping, dynamic culinary offering at such an iconic propert simply hasn’t been done before.”

Crocker Changes name

One of Boca Raton’s premier companies has a new name.

Crocker Partners is now CP Group. The real estate investment firm is much different than it was 35 years ago when Tom Crocker founded it. Crocker, who built Mizner Park and the Midtown neighborhood before it was part of Boca Raton, is no longer affiliated with the company. Managing Partner Angelo Bianco and Partner Chris Eachus run things.

CP Group has roughly 11 million square feet under management and now employs about 200 people. Roughly 30 percent of that space is in Boca Raton, most of it being the Boca Raton Innovation Campus, formerly the IBM headquarters at Yamato Road and Congress Avenue. CP Group also owns three properties in Midtown.

Cernich update  

Remember Michael Cernech?

He was the Delray Beach City Commission’s first choice in late 2019 to be city manager. But Mayor Shelly Petrolia, who hadn’t ranked Cernech first, blew up contract negotiations, causing Cernech to withdraw and stay on as manager in the Broward County city of Tamarac.

In recent weeks, four of Tamarac’s five commissioners have made news in the wrong way. They have given themselves benefits—such as full health insurance for themselves and their families—that are far above what elected officials receive in cities of similar size and even larger. Tamarac’s population is 66,000, slightly less than Delray Beach’s. Those commissioners are seeking even more perks.

When the South Florida Sun Sentinel got details of the benefit grab, at taxpayer expense, the paper ran a critical editorial. The commissioners then wanted Cernech to have staff say that the editorial was wrong. Cernech refused. Of the editorial, he said, “I was unable to find any false statements.”

Cernech now is one of five finalists for the manager’s job in Clearwater, near St. Petersburg. A Clearwater council member told the Sun Sentinel that Cernech’s character impressed him. He could say no to the people for whom he works.

Petrolia blocked Cernech’s hire because she preferred George Gretsas. Six months after Gretsas started, Petrolia led the charge to fire him. Amid all the turmoil in Tamarac, Cernech looks good to any city that values truth. Cernech must be glad that he didn’t get the job in Delray Beach.

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Randy Schultz, a native of Hartford, Connecticut, has been a South Florida journalist since 1974. He worked for The Miami Herald until 1976 and for The Palm Beach Post from 1976 until 2014, where he served as managing editor and editorial page editor. Since 2014, he has written a politics blog, commentaries and other articles for Boca magazine. His writing has earned first-place awards from the Florida Magazine Association and the Florida Society of Newspaper Editors. Randy has lived in Boca Raton with his wife, Shelley Huff-Schultz, since 1985. His son, daughter-in-law and their three children also live in Boca Raton.