Signing For 3 More Years at City Market Place, Palm Coast Explores New City Hall Options
FlaglerLive | April 24, 2012
In the past two years the Palm Coast City Council flirted with notions, enabled by all sorts of creative if not imaginary financing, of building itself a new city hall in Town Center. Public opposition obliterated the plans. Today, the Palm Coast City Council agreed to extend for three years its city offices at City Market Place, the shopping center near Walmart. Palm Coast signed its first lease there in November 2008, paying $20,000 a month for 21,000 square feet.
But the council also went far afield from its discussion on the lease, reviving talk of a new city hall and more novel ways to get there.
The new lease at City Market Place is actually cheaper: the city will pay $17,000 a month through next April, then pay $19,000 a month for a year, then $20,000 a month for the final year, suggesting that bank that now owns the property, after it went into foreclosure, is eager to keep the city there, for its own reasons.
“The bank doesn’t want this lease,” City Manager Landon said. “The bank wants to flip it. They’re going to try to sell these units, and so their whole thing is the future, that’s why—OK, we’ll make sure we get you to stay. We’re willing to take a little bit of a hit now, but we’re going to sell it so that’s why we want the higher price in the future so that it increases the value of the property. If you know what the other side is interested in, then that’s how you can come up with these kinds of numbers.”
The new lease also enlarges the city’s square footage somewhat, adding one storefront unit that could, potentially, be turned over to the Flagler County Sheriff’s Office for a substation there, though when city council members questioned City Manager Jim Landon about it, it appeared that he hadn’t had direct conversations about that possibility with Sheriff Don Fleming, but rather with Mark Carman, the sheriff’s captain in charge of Palm Coast policing. The sheriff provides law enforcement for the city on a contractual basis.
The added unit did not represent an additional cost. “They threw that added unit into the lease after we negotiated the price,” Landon said. Should the sheriff use it, the city would provide labor to fix the place to the sheriff’s specifications, but the sheriff would then pay utilities there—no rent. There’d been rumors earlier this month of a meeting between Landon and the sheriff—which never took place—for discussions about moving the sheriff’s operations to City Market Place, now that the sheriff is eager to leave his present, cramped headquarters on Justice Lane, at the edge of Bunnell.
For now, Palm Coast’s city hall will remain at City Market Place. “We knew three years ago, three and a half years ago, we got a very good deal, because the landlord at that time was pretty desperate to get us in here.” That hasn’t changed. “This is very competitive,” he said.
What might have been a dry discussion limited to the formalities of a new lease then took a turn for the unexpected when Bill Lewis, who last year had opposed a new city hall, raised a new possibility when he asked: wouldn’t this be a good time to look at lease-purchase opportunities? The question, which had a hint of the rehearsed, triggered a long discussion about the city’s eventual plans away from City Market Place, in a city hall of its own after all.
Long-term, Landon said, owning is better than renting. The city will have spent about $1.5 million in six and a half years at City Market Place, between November 2008 and April 2015, “with nothing to show for it,” Landon said. He suggested that a private-sector developer could build a structure at the city’s specifications, lease it to the city with an option to buy the building after a set term. But the city’s charter requires any lease-purchase arrangement that exceeds three years to be approved by voters. (A straight lease doesn’t have to be voter-approved.)
City Council member Frank meeker took the conversation in yet another unexpected direction: He said he doesn’t consider Town Center the “center of town” anymore, because the city approved two major developments to the west and north of the city, which will move the city’s center of gravity in that direction.
Meeker has been a foe of the way the Town Center development was set up from its earliest days. Town Center is a so-called CRA—a Community Redevelopment Agency, which is a special taxing district. All taxes generated in that zone, above a base amount, stay in that zone, essentially denying the city and the county a share of taxes that would normally have gone to those two governments’ general funds. The county isn’t fond of the CRA concept, wither, for that reason. The Town Center CRA might have had a better reputation had it actually produced the desired development. But it hasn’t. “Right now, the project is languishing,” Meeker said. (For details on the Town Center CRA, go here.)
Except for the retail businesses at its rim, along State Road 100 (Target, Panera, several other chain restaurants and stores, the Hilton garden Inn) and the Epic Theatre within it, Town Center has been a gaping failure—one of those projected successes that turned into a sprawling bust, typifying the real estate crash. Meeker now sees an opportunity to cut the CRA’s life short, allowing the city to “cash out” its expenses (by calling in its loans to the CRA) and redistributing the CRA’s taxes more evenly in subsequent years. Of course, the CRA and the city are not that different: the CRA board is the city council, and whatever cashing out takes place still ends up affecting taxpayers one way or another. But the CRA, which generates about $1.2 million in taxes every year, still represents a pot of money that, to Meeker’s thinking, should be used to finish the Bulldog Drive entrance (that is, “beautifying” it by enlarging it) to Town center, and using some of the CRA’s dollars to perhaps pay for an eventual city hall, either through a lease-purchase arrangement or by other means.
That $1.2 million a year, compared to $15.9 million in property taxes for the rest of the city, council member Jason DeLorenzo said, “that’s a pretty good chunk that could come back to the city if you could accelerate the growth in Town Center.”
“Now, will a city hall moving to that area be what’s necessary to jump start it? I don’t know,” Meeker said.
“That’s a question I would like to put to the private developers,” Netts said.
“The private developers will probably say it’s a great idea as long as I don’t have to put any money into it, and that’s where really our stumbling block. I think the citizens don’t have a problem with a new city hall in the Town Center. The problem is we don’t have the money to do it. But if you Mr. developer were to build one, and it was one that was, as Mr. Lewis says, necessary to our needs as a city government, why wouldn’t we consider leasing it?”
“That’s something we should at this point start looking at,” Lewis said.
“Getting Bulldog Drive is a needed thing to get us paid back in the general fund,” Meeker said, “and getting that money gives us a little bit more flexibility to accomplish some of these other things. I’d like to jump-start Town Center somehow and get that producing something and then, get rid of the CRA, move those taxing benefits back into the general fund, back to the county—it’s hurting the county too, you know, the CRAs hurt both, in essence, right now.”
Landon, the city manager said some companies specialize in lease-purchase arrangements such as the one council members are discussing. But even though the city is just now signing a new, three-year lease to extend its office arrangements at City Market Place, Landon said it would have to start to plan for its next arrangement soon, especially if it’s a lease-purchase arrangement that would result in transferring offices from one place to another.
While the city administration could work out a new long-term lease arrangement elsewhere, Netts said he would in no way condone a long-term arrangement that doesn’t involve voter approval: he was recalling last year’s furor over the city administrations’ plan—reached with city council support—to build a city hall supposedly without raising taxes, through a complicated shell game between city funds, but without going to voters, either.
“The reality is I’m not going to be comfortable with anything that appears to circumvent the intent of the charter. We established this city saying we’re going to go to voters with this kind of issues. If we can’t make a compelling case, then we shouldn’t do it.”