Leif Ahnell: A Looming Budget Shortfall for Boca Raton?

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A financial time bomb is ticking in Boca Raton.

It won’t go off for three years, but City Manager Leif Ahnell issued a warning during the May goal-setting session. The topic could come up this summer and fall during discussions about next year’s budget.

The details are complicated. They concern the fact that even though the community redevelopment agency is part of the city, the CRA and the city maintain separate budgets and operate under an agreement with each other.

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Boca Raton City Manager Leif Ahnell

Under Florida law, cities can create CRAs to eradicate blight. Boca Raton did that in 1980, to redevelop the downtown, which is what the CRA’s boundaries include. All revenue from increased property values within a CRA’s boundaries stays with the agency. It’s called Tax Increment Financing, or TIF.

The Boca Raton CRA used that added money to pay debt service on the bonds issued to finance Mizner Park, which opened in 1991. The CRA made its final payment last December.

The CRA also reimburses the city for city-provided services within its boundaries. Yes, that seems weird. Downtown is part of Boca Raton. But the CRA doesn’t have its own fire, police and other departments, so under that state law the CRA budget must repay the city for downtown services.

According to a city spokeswoman, the CRA owes Boca Raton $13 million and is projected to make a payment this year of $10 million. Those annual repayments are a revenue stream for the city. Boca Raton’s long-range financial plan, however, shows repayments ending in 2022. The result could be a significant budget shortage, even if property values continue to increase.

As Ahnell said in May, “Taxpayers outside the downtown are paying for downtown services,” meaning that downtown property owners are getting a subsidy. In addition, the CRA is scheduled for abolition in 2025. Cities can authorize them only for so long. Assuming that the Camino Square project on the former Winn-Dixie shopping center is built, there will be no more downtown blight and thus no reason to reauthorize the CRA.

At that point, however, downtown once again will be part of the city from a budget standpoint. TIF revenue that has gone to the CRA from the Greater Boca Raton Beach and Park District and the county will stay with those agencies. The city itself will start to recover money that has been going to the CRA. That amount, minus revenue lost to the district and county, will be the shortfall.

Making that up, Ahnell said, could require raising property taxes 20 percent. “That’s unheard of in this town.” The city has lobbied the Legislature for a change in the CRA reimbursement law that might reduce the shortfall, but Tallahassee these days is more concerned with trying to punish cities with CRAs, not help them.

Ahnell got the attention of every council member with his comments. As Councilman Andy Thomson said, “Leif is tenderizing us” on the issue.

Meanwhile, the bomb ticks.

Best beach town

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Sunrise at the Boca Raton Beach

Here’s another potential marketing slogan for Boca Raton: One of America’s Top Five Beach Towns.

So said the financial website WalletHub.com in a news release Wednesday. The site issues some sort of city and state ranking every week, so many places stand to be recognized at anytime for almost anything.

Still, those that score high tend to advertise it. The site rated 192 cities—based on populations between 10,000 and 150,000 and having at least one beach ranked on TripAdvisor—and placed Boca Raton just ahead of Sarasota and just behind Carlsbad, Calif. Naples ranked first, ahead of Lahaina, Hawaii and Newport Beach, Calif. WalletHub’s 62 metrics got as detailed as the number of ice cream and yogurt shops near the beach.

Boca Raton ranked fifth in weather quality, which isn’t a surprise. It also ranked 29th in affordability, which may come as a surprise. Curiously, Boca Raton ranked 81st in safety. I must have missed the last violent crime wave.

More realistically, Boca ranked 26th in education/health care and 16th in quality of life.

More on the Boca National numbers

I reported last week on the disagreement between the Boca Raton City Council and the Greater Boca Raton Beach and Park District over the proposed Boca Raton National golf course. One aspect of that disagreement is the council’s displeasure with the district’s request that the city pay the entire cost of building the course while having a minority share—45 percent—of operations.

Board member Steven Engel emailed to say that the post may have implied that the district-city split was an arbitrary number. Engel wanted to explain the 55/45 split.

“We arrived at this by taking our financial obligation to Boca National—$5 million (in cash) to purchase the east side of the property plus $19 million in repayment obligations to the city for the bond issue they underwrote, for a total of $24 million.” Then, Engel said, the district added the $20 million “we have asked of the city” and took “the percentage of the total for each side’s contribution.”

Engel’s math is correct in terms of the percentages. He added, “Truth be told, when you add in the interest on the debt service and fees paid, our financial commitment comes to nearly $30 million, rather than the $24 million we used in our calculations.”

Even if they agree on the math, council members may not agree on the district’s conclusion. But Engel wanted the city to know the origin of those numbers.

Lord & Taylor news

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One of Boca Raton’s concerns about the future of Mizner Park is the future of the Lord & Taylor store that anchors the southeast corner.

Last week came the announcement that Lord & Taylor President Vanessa LeFebvre is resigning. She had been on the job for about a year. In a statement, LeFebvre said of her short tenure, “This hasn’t always been easy, but I am grateful for the journey.”

Hudson’s Bay Company owns Lord & Taylor. In January, Hudson’s Bay closed Lord & Taylor’s former flagship store on Fifth Avenue in New York City. The company recently announced the closing of a store in Maryland and another in Michigan. A trade publication reported that Hudson’s Bay has been “exploring strategic alternatives” for Lord & Taylor.

LeFebvre visited the Boca Raton store in February. It opened in 2013, succeeding Jacobson’s and Robb & Stucky in that space. Boca Raton officials very much hope that the store—the only one left in Florida—will survive the problems of a once iconic retailer.

A spokeswoman said Lord & Taylor “does not disclose information about the performance of individual locations.” She added, “While we continue our review of strategic alternatives for the business, the company has formed an interim Office of the President under the direction of (Hudson’s Bay CEO) Helena Foulkes. Throughout the review, announced last month, Lord & Taylor’s customers remain its top priority.”

Why the Camino bridge delay?

Camino Real Bridge, June 2019 (Courtesy Commissioner Robert S. Weinroth)

I wrote Tuesday about the delayed reopening of the Camino Real Bridge near the Boca Raton Resort and Club. It had been scheduled for today.

From the office of County Commissioner Robert Weinroth, who represents the city, come details about the unfinished work on the new span. The county’s lead contractor obviously was too optimistic about the completion date.

According to an email from the company, firing wiring will be completed this week. Electrical tests are scheduled for June 30 and July 1. Mechanical operating tests will happen just before that. All roadwork, including signs, should be done this week.

A county official said “the best case scenario” for the reopening is July 3. If the electrical contractor comes up short, the bridge may not open until July 13. That’s why the talk is now mid-July. Given recent events, it makes sense to assume the later date.

Boca election residency requirements

Boca Raton may vote on more than mayor and city council seats next March.

Councilwoman Andrea O’Rourke recently brought back her idea for changes to the city’s election requirements. Boca Raton has among the lowest standards of any city in Palm Beach County.

O’Rourke addressed the 30-day residency rule and the fact that the city, not the candidate, must verify whether the candidate lives in the city. The residency questions arose during last year’s special election for mayor. The candidate in question ducked the issue until finally submitting documents that never settled the question.

It would improve the system to require proof of residency before a candidate could qualify. O’Rourke also has a point that 30 days is a very short time. Councilman Thomson was more hesitant than others on this point. When he ran unsuccessfully against her in 2017, O’Rourke and her supporters criticized Thomson for having moved to Boca Raton only recently, even though he had lived just outside the city for a long time.

Another issue is whether the city should ask candidates to provide signatures of support, like a petition drive. There seems less sentiment for that requirement than for tightening the residency rule. A proposed charter change could be on the March city ballot or one of next year’s statewide primary and general election ballots.

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