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Palm Coast Approves Surtax Tool as It Looks To Recoup Old Kings Road Widening Costs

| December 18, 2012

Old Kings Road’s widening was a costly best that Palm Coast has yet to begin repaying. (© FlaglerLive)

Ever since the Palm Coast City Council lent itself $6.3 million to four-lane the southern end of Old Kings Road as a welcome mat for Walmart, the council has been looking for ways to pay itself—or rather, Palm Coast taxpayers—back. On Tuesday, the council voted 4-0 to lay the groundwork for a special taxing district in the area.

That means starting next year, property owners along that portion of Old Kings Road may have to pay a surtax on their property bill. If so, it could be a steep one, because the property owners are few, and the many developments that the city expected would be there by now, bearing the brunt of a surtax, never materialized. Old Kings Road’s vacant parcels is to be a reminder of Palm Coast’s role in a real estate bubble whose bursting continues to reverberate.

“The four-laning of Old Kings Road between Town Center Boulevard and State Road 100 was actually completed at the request of the property owners,” Jim Landon, the Palm Coast city manager, said. “They were interested in seeing these improvements occur to encourage their property to be developed. Obviously the economy then hit us, and it did not occur as anticipated.”

Palm Coast also bears some responsibility for going ahead with the four-laning of the road well after the market had crashed. In Palm Coast, the market peaked  in 2006 and early 2007. Design for the road had begun in 2005. Construction on the road began in February 2009, the same month that Walmart closed on the 31-acre property along Old Kings, nearer SR100, where it planned to build a 187,000-square-foot Supercenter.

Walmart was to pay some of the costs of the road (namely, its shift closer to I-95, where drivers could see the store), as was Palm Coast. But that left a chunk of money to be paid from another source. That’s where the property owners along the road came in, agreeing to a special taxing district. But that district was established when the city assumed it could sell 30-year municipal bonds (a sort of mortgage for capital projects like roads) and bill the property owners to repay the bonds over those 30 years.

When it came time to sell the bonds, the market had collapsed. No bond holder wanted bonds backed up by real estate, especially not real estate in Palm Coast. The city had a problem on its hand. The project had been designed. Walmart had closed on its property. That didn’t mean it would build. The future was unclear and getting darker. But the city made a bet. It figured that Walmart would soon build. And it looked at four-laning Old Kings Road as a build-it-and-they-will-come sort of spur to activity.

Landon told the council as much in 2009, when he was justifying the city’s $6.3 million loan from its utility fund to underwrite the costs of the four-laning: “This is really more of an economic development initiative than anything else at this point, with the economy the way it is,” Landon told the council in January 2009. “This really is an opportunity to see that area start to grow with a more commercial base.”

Perhaps it was a worthy bet. But Walmart never built, and still won’t give the city any indication of when it might do so. One reason it’s holding out is that the four-laning of Old Kings Road is only half done. It stretches from Town Center Boulevard down 1.5 miles to SR100. It’s still a two-lane road from Town Center Boulevard to Palm Coast Parkway, and the city has no money to finish that portion.

Still, the 1.5 mile project was completed, handsomely, by May 2010. The city and the property owners had agreed to a new arrangement for the money at stake. Property owners would, over three years, pay 5 percent interest to the city for the money the city “borrowed” from the utility fund to complete the project. But that agreement ends this month.

“So next year we have to develop a mechanism for hopefully a long-term solution to having these property owners pay back the debt for this street improvement,” Landon said Tuesday. “One of the options is still to add it to their tax bill, the taxing district, assessment district.”

The council agreed to do just that. It did not vote for a tax. It merely gave itself the option to establish that taxing district in 2013. It did not talk tax rates or even when it might impose that tax, if it will at all. But it is looking like it will, because the city is out of options, and it cannot leave its loan hanging. Meanwhile, Landon and his administration are continuing negotiations with property owners. The council’s action today gives Landon more leverage in his talks with property owners.

Of course, no taxing district could be established without public hearings, if and when the council decides to enact such a district.

“We are attempting to work with the property owners to come up with a funding mechanism, a financing mechanism that would be acceptable to those property owners, because obviously we need to have their support to pay back the loan,” Landon said. “So we have started that dialogue, we have a couple of proposals, we have a meeting set up in January that has to occur in 2013. This needs to be one of the options on the table for your consideration.”

Landon warned the council: “It doesn’t require you to start that assessment district but if you don’t do this, once again, you would take that option away from yourself. It has to happen before the first of the year, and that’s why it’s on your agenda today.”

With no discussion, the council voted 4-0 to approve the resolution.

The Affected Landowners:

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18 Responses for “Palm Coast Approves Surtax Tool as It Looks To Recoup Old Kings Road Widening Costs”

  1. glad fly says:

    kind of a waste of money considering palm coast’s reputation for an arrogant city commission and it’s red light cameras. why would anybody want to shop here or much less move here?

    • Anonymous says:

      Why ? Because its still a great city and a great place to live!!

      • Bronx Guy says:

        Anon., are you serious? Have you tried to drive along Palm Coast Parkway, west or east ,and having to stop at each intersection because of the quick- changing yellow lights and the tension inspired by the cameras? The ITT brochure we received in March of 1971 indicated that Palm Coast, when fully built out, would have 300,00 residents. Palm Coast now cannot handle the traffic generated by 75,000 residents. When will the city take steps to synchronize the lights in Palm Coast? BTW, I thought WALMART paid some of the costs of widening that section of the road. They may never build that store as they have a store six or so miles away and the new stores at Town Center apparently have not hurt their bottom line.

  2. Diego Miller says:

    Welcome to my world Flagler. This project is way overdue. Traveling on this road is very dangerous, check the statistics, it was designed with horse and buggy in mind, not high powered dodge rams and ninja bikers.

  3. The Spiel says:

    Due to an increase in Palm Coast water rates, now a Special Surtax, a proposed FPL increase, extending the 1/2 cent penny sales tax – I’m in the red before the year begins with my COLA Social Security increase. The poor are being forced out of Palm Coast. Wait until Landon wants a new City Hall built. It’s coming folks!

    [Keep in mind, the special taxing district would be limited to the property owners along Old Kings, if and when the council decides to enact it.–FL]

  4. Ben Blakely says:

    Since Palm Coast has no problem installing spy cameras at most intersections in town to feed off their citizens, then why don’t they just go ahead and install toll booths?

    Seems in keeping with the general rapacious psychology and direction of mad for money Palm Coast officials.

  5. Deep South says:

    What portion of the cost will the County pay ?

    • Anonymous says:

      The county isn’t responsible for the city sine the city incorporated in 1999. It the city was grown up enough to stand on it’s own, it never should have incorporated and moved out of the nest. The county is paying for the majority of the city police services….palm coast needs their own police department!

  6. Jim Neuenfeldt says:

    I wonder how much of the 6.5 million dollars spent on the road, would have instead gone to storm sewer the way it should have and then we all wouldn’t be paying the 12-25 per month we now have to pay?

    However instead of blaming Jim Landon, lets realize he is but the fall guy for the city commission acting as a whole. You could change Landons name to Pope Paul or JC hisself if you wanted to… If he wanted to be city manager………He would still come up with the multi-level taxing schemes. I’m thinking he probably had a great side income as an AMWAY or Tupperware distributor to boot!

  7. Shark says:

    Another Landon and Netts white elephant. Take some of Landons 200K salary to pay for it!!!!

    • Bronx Guy says:

      I have a suggestion. Please publish the names of everyone on the city payroll earning more than $50,000. I think this will be an eye-opener.

  8. PJ says:

    Just more proof of how mismanaged we are.

    When will the cty council make a change in the city manager?

    We need someone who is respectful to the residents not arrogant to just about everyone. They the council don’t know how to listen to us and are led around on a leash like dogs by this city manager.

    Simply we suffer the cost over and over again…………………

  9. says:

    it appears to me from reading all these articles about palm coast council and manager, they have made a lot of bad decisions. i guess they want this city to be like st johns center overnight. use your engergies trying to bring some livable wages here first

  10. confidential says:

    I agree only if the special taxing district will be charged only to the benefited business property owners in Old Kings Road, as their properties increased in value with this road improvement and we need our 6.3 million from our utility fund, back. If we will oppose it then those taxes will be forced on us and probably via further water rate increases. Sure I want the money back as was taken from our Palm Coast Utility Reserve Fund. No wonder our rates keep going up I thought our utilities reserves should no be used for other purposes..City should not raise our rates to fund infrastructure for rich developers…that should be illegal…That infrastructure should be funded by bonds based in the creation of a tax district and not funded with utilities reserves $$. If bonds are denied then NO Project! Since when our utilities become a lending institution aka bank?
    How come our council tell us that no utility $$ can be used for the deteriorated storm water repairs (increased for storm water just applied to us all), but can be used to widen to four luscious lanes Old Kings Road to benefit developers and large corporations like Walmart?

    Yes they need to get our 6.3 million back and after this experience never again touch that utility reserve for that type of funding.

    Hope City Council uses common sense from now on when it comes to “our $$$” as we never know when the economy of our country will recover or collapse again. Lets save some for rainy days! I do it, why don’t you..? Same advise to BOCC! Stop spending like drunken sailors “other peoples monies”

  11. Joe says:

    Its not the Commissioners, Mayor or Landon that is making all of these bad decisions, its the voters of Flagler County and Palm Coast fault for voting them back in to office. Wake up!!!!!!

    • Bronx Guy says:

      They are all to blame. The City Council sets policy and Jim Landon implements it. Yes sometimes the council rubber stamps his pet projects.

  12. PJ says:

    HEY JOE!!!! you are so right, we are lousy voters.

    The Mayor won because only 5% of the entire population voted and he won by a slim margine. He needed to go too………………PJ

    • Rick says:

      Why wasn’t those that belong to the RRR handing out voting lists and working during the last city election, like they did in Nov instead of wanting special elections now for a strong Mayor? The city doesn’t need the expense of special elections.

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