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Burned Just 4 Months Ago, County Cooks Yet Another Risky Deal With Ginn on Public Dime

| August 30, 2010

pellicer creek

Ginn's public-dollar mitigation bank.

Ginn Development Co. in April walked away from a $2 million obligation to Flagler County taxpayers when it defaulted on a building the county built for it at the county airport. That building now sits empty, with public money making the $200,000 a year mortgage payment. Rather than pursue Ginn in court, the county settled for $37,000.

County Administrator Craig Coffey argued to the county commission at the time that it was likely the best scenario. A Ginn attorney, Meredith Pickens, stood before commissioners at a meeting, describing a desk “stacked very high with files for vendors and other landlords that we have been unable to pay.” She even challenged them to sue: “We can certainly try this in the courts, and it would probably go on at least two years if not longer, and at the end of the day, if a judgment is garnered against Ginn Development Company, it’s, it’s not collectible.”

Last week, Coffey, at times sounding more like an advocate for Ginn than an administrator for the county, presented a plan to the commission that would have taxpayers pay Ginn up to $4.7 million for 980 acres of mostly unbuildable land that Ginn wants to unload. The parcels, in the northeastern end of the county around Pellicer Creek, would increase the county’s environmentally sensitive land holdings and connect two such environmentally valuable corridors.

There’s no question that the lands are desirable from an environmental standpoint. But there’s no question, either, that the lands are almost entirely off limit to development anyway. More controversially: the price the county administration negotiated with Ginn is almost 10 times the value of the land, according to the Flagler County Property Appraiser’s 2010 calculations. And that value is still going down.

There was no mention of that disparity in last week’s discussion, because Coffey did not provide the property appraiser’s numbers.

There was no mention of Ginn’s former obligation to the county, either, or references to Ginn’s claim that it had no money, though in the land deal Ginn is ready to plunk down $250,000 immediately into an escrow account, with the county also putting in $250,000, as an investment in yet another risky scheme over the land deal that may or may not pay off—over 20 to 30 years. Coffey described the scheme as “a creative deal” that would increase the county’s environmentally sensitive land holdings and possibly make millions of dollars for the county in the long run.

The land buy would be part of the county’s Environmentally Sensitive Lands program (ESL), which taxpayers approved in a referendum, paying slightly higher property taxes to raise money to buy and preserve environmentally sensitive lands. The popular program has been beset by problems recently, as the county bought lands at prices significantly higher than their value.

Three commissioners weren’t ready to sign off on the Ginn deal, raising different sets of objections, particularly in light of those previous buys.

“I agree that we got burned on the last three parcels, one of which I objected strenuously to purchasing,” Commissioner Alan Peterson said. “I think that we’ve got to show the community that we’ve learned our lesson and that we are not going to gamble and take undue risk.”

One of the problems with the Ginn land deal is its lack of transparency and incomplete appraisal numbers. The documents Coffee submitted to commissioners did not include the full appraisals of the Ginn properties. It included an executive summary. The summary did not show how the appraisals reached their final number. Nor did it break down the parcels individually. That didn’t sit well with Peterson.

“Actually what the appraiser did, he didn’t value each parcel independently. That would actually yield higher values per parcel,” Tim Telfer, a county planner who was part of the negotiating team with Ginn, said. “We get the bulk-sale discount by combining the parcels and the quantity of the acreage,” Coffey said.

“I don’t believe that. I just don’t believe that statement,” Peterson countered. “If you’re going to value a piece of property or multiple parcels, you’re going to start with the value of each piece.”

Ginn's 8 Pellicer Flats Parcels' Just Market Value In the Last 3 Years

Parcel2008 value2009 value2010 value
Private appraisals Ginn is using to sell the parcels to the county put the combined value of the eight parcels at $4.1 million and $4.6 million. Source: Flagler County Property Appraiser.

The documents Coffey submitted to the commission ahead of the meeting did not include the legal descriptions of the parcels. A section of the background material for the commissioners that was to contain those legal descriptions was left blank. Had the legal descriptions of the parcels been included, commissioners would have been able to look up those parcels’ land-value history for themselves.

In fact, the land-buy proposal covers a total of eight parcels. At their most valuable, at the height of the real estate bubble, the eight parcels combined for a just market value of $2.2 million in 2008, according to the property appraiser. Their combined value in January 2010: $524,294.

Differences between government and private appraisals aren’t uncommon. Disparities of 90 percent are.

Property Appraiser Jay Gardner told the commission that land values have fallen by roughly another 10 percent this year. Peterson said the appraiser’s values may be too low, but that the Ginn asking price is also too high. Peterson repeatedly noted that most of those parcels are unbuildable, which reduces their market value further.

The reason the ESL program has been so successful historically, Commissioner Milissa Holland said, “and why we’ve had such public support for our ESL program is because we’ve taken our time and taken a lot of careful thought into partnerships, and I don’t see a lot of that going on. I really think, if this is such a great parcel, we don’t necessarily have to spend the money today. We have the money. It’s there. I feel like we’re a little bit like a kid in a candy store. We can’t wait to make these purchases. I really am concerned, and I think it would be far better if we just waited, and perhaps if they sell the parcel, to negotiate with future owners if the market continues to decline.”

The 980-acre deal would be broken down into three phases.

Phase one would be an outright buy of 735 acres for $2.75 million. Just 60 of those acres are uplands. That means the county would be buying 675 acres that can never be developed anyway. The county would borrow the money to make that buy, because there isn’t enough money in the ESL program to enable it upfront.

The administration defends the approach based on how the rest of the deal is structured.

In phase two, the county and Ginn would put $250,000 each into an escrow account that would finance the creation of a wetlands “mitigation bank.” Here’s how that works. When developers build anything in Florida, they have to protect wetlands. They can’t always do so. If they can’t protect a wetland on the property on which they’re building, they have to “mitigate” that demolished wetland by either acquiring and protecting a wetland elsewhere or buying wetland “credits” that achieve the same end, as those credits are backed by an existing, protected wetland. The Ginn parcels are rich in freshwater and saltwater wetlands that can be turned into mitigation credits worth millions of dollars to whoever owns them. That can’t happen just because the wetlands exist. The property owner—either Ginn or the county—must “improve” the wetlands to strict standards in order for them to qualify as wetlands credits. It’s not a given that they will. It’s a risk the property owner (or the county) assume, in hopes of creating the “mitigation bank.” Even if that “mitigation bank” is approved, the prices those mitigation credits will fetch will fluctuate. And nothing says there’ll be buyers for the credits, even though the Ginn property would have saltwater wetlands, which are potentially far more valuable than freshwater wetlands.

John Miklos, president of Orlando-based Biotech Consulting, which is employed by Ginn and would help develop the “mitigation bank,” said it’s difficult to project how much money the bank would eventually yield. “That number is kind of hard to pin down,” Miklos said. “It’s not a real black and white issue. Sometimes it’s equated to used-car sales.”

But phase two of the land buy relies on those “used car sales.” The county administration is betting that the mitigation bank will succeed. If it does, then phase three kicks in: the county would close on the remaining 245 acres of the Ginn parcels (again, overwhelmingly undevelopable land) for $1.75 million. Those dollars would not come from the ESL program, but from the sale of “mitigation bank” credits. But they’re still public dollars. Which is to say: taxpayer dollars.

The higher value of the Ginn land is supposedly driven by its potential as a lucrative mitigation bank, which Coffey speculates might yield from $13 million to $19 million over the next 20 to 30 years. It’s not clear, then, why Ginn itself isn’t holding on to the land to develop its own mitigation bank, as it very well could, and cash in on the proceeds. One reason it isn’t doing so is the “used car” risk involved.

That’s the risk the county is taking on—just as the county took on the risk when it built that $2 million airport hangar for Ginn, on the promise of lucrative future returns that never materialized.

That’s the risk that makes Peterson nervous.

“What happens if the bank doesn’t go through? If we buy phase one and the bank doesn’t go through, do we get our money back? Is the deal void?”

No, Coffey said.

“See, we’ve got the risk. Again, we get the risk,” Peterson said.

“No, we bought an environmentally sensitive land,” Coffey says, referring to the initial 735 acres, which would be the county’s regardless.

“Correct,” Peterson countered. “For $2.75 million. If I owned this land, I’d be ecstatic. Let a governmental agency take the risk, I walk away with most of the value, giving up almost no upland.”

Commissioner Barbara Revels was more inclined to accept the deal only if the risk was Ginn’s alone.

“I’m fairly impressed with the creativity of the deal,” Revels said. “Not that I say that it’s got the things in it that I’d like to see or that the price is right or the timing. There may be some other structure to this deal. But you have to look at it as it does have the ability to produce income for us to further our programs, and we don’t have that on any of the other properties.”

Revels would prefer to close on the entire property at once (all 980 acres), for much less than the asking price, with Ginn essentially on the hook for the portion of the sale that depends on the mitigation credits: if those don’t come through, Ginn doesn’t get its additional money (the value of the land being based on its “mitigation bank” potential anyway). But the county keeps the whole 980 acres. If the bank does come through, Ginn gets its money and the county gets its bank and potential future revenue, which can be invested in other sensitive-land deals. So Ginn would be holding a mortgage on part of the property, at zero interest, Revels said. Ginn would get paid as credits are sold.

That prompted one of the instances Coffey reacted as a Ginn advocate rather than a county administrator.

“To say that the mortgage is at zero percent interest, from a property owner’s standpoint,” Coffey said, “if you own property and you closed free of charge, at that time, and you took a mortgage, you would want some interest for that time holding money.”

That prompted a rebuke from Holland: “We’d like the money paid back for the airport Craig, I mean, come on. I’m sorry, this is ridiculous.”

Ginn isn’t about to make good on that deal, however.

The county commission will take up the land deal again at its Sept. 8 meeting, and likely vote on it then.

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24 Responses for “Burned Just 4 Months Ago, County Cooks Yet Another Risky Deal With Ginn on Public Dime”

  1. Dorothea says:

    Flagler County voters have twice approved acquiring environmentally sensitive lands. I looked for any discussion of this latest proposed acquisition in the minutes of the county’s Land Acquisition Committee. Here’s what I came up with: .

    You are here: Home > Archive Center

    Land Acquisition Committee Minutes All Archives

    No Docs

    I’m trying to get my head around this. Ginn defaults to the county for $2 million dollars and settles the debt for $37,000. The county settles because they believe that they would not be able to collect on a $2 million judgement because Ginn is broke. If Ginn owns all this environmentally sensitive land worth by Ginn’s estimate, over $4 million, how was the original proposed judgement going to be uncollectible?

    I’m all for buying environmentally sensitive land. But this proposed deal stinks. The commissioners need to reject this deal and get a new county administrator, preferably one without good old boys connections.

  2. BeachcomberT says:

    Land values tend to be more theoretical than real, especially in the volatile market Florida has experienced in recent years. If I were a Flagler county commissioner, I would treat the county appraiser’s value as the “most real” figure available Whatever value Ginn has been willing to pay taxes on should be the starting point for negotiations. Seems suspicious for Ginn to be paying taxes on land valued at $524,224 this year, then to turn around and tell the county, “If you want this land, pay us $2.7 million right away and another $2 million later on.” If Ginn argues their land is really that valuable, or potentially that valuable, then they should be asking the county appraiser to raise their 2010 assessment. And how about St. John’s Water Management — what’s their independent judgment on the value of this land?

  3. D says:

    Public perception is everything. The ESL program has been a good thing for the residents of Flagler County for many years, which is why we keep approving it. But this kind of wrong thinking (and presentation) on the part of the County Administrator will turn people against it and sour the program if the commissioners fall for it. I agree with both of the above replies, especially the idea of canning the County Administrator, who seldom seems to come up with a good idea. How’s this for an idea: instead of settling for the paltry sum of $37,000, why didn’t the county take this environmentally sensitive land to satisfy Ginn’s $2 million obligation to the county? Seems like a fair swap to me. I’d also suggest that the County Administrator, as well as the Commissioners, do their homework on Mr. Ginn, a master of deceiving the public. They could start by reading “Profits and Politics in Paradise: The Development of Hilton Head Island”, in which authors Michael and Patricia Danielson sumup Bobby Ginn’s failed development activities by saying, “Ginn left a trail of broken promises, angry property owners, and dashed hopes.” During the 1980’s, on Hilton Head island, it was not uncommon to see bumper stickers that said, “Honk if Bobby owes you money.” So…here we go again. But we don’t have to. Flagler County commissioners have the power, as well as the obligation, to not let the residents of Flagler County be victims like the residents of Hilton Head were. Let’s hope our elected officials recognize and accept their obligations. And if they don’t show them each the door the next time they are up for re-election, as we have already done with one of them.

  4. over it says:

    “Those who cannot remember the past are condemned to repeat it.”

    Great job Coffey. Kudos. Sheeeeeeeeesh. 6th graders trading video games are more shrewd…….

  5. ART WOOSLEY says:

    Why would our county even consider entering into any more dealings with this corporation after all they have seen over these many years, could it be short term memory loss, let’s hope not ?

    It was not that many years ago when this same corporation wandered down I-95, and just about took over ownership of our county, as it’s politicians and other (so called players), all fell in line, tripping over themselves in an effort to kiss the “new guys” ring.

    Palm Coast also had a number of well known people (players) in the front of that crowded line.

    If I am correct, I believe the new leader of the pack, might have also hosted at least one nice party for their city, in order to help them celebrate an anniversary, or something.

    ONLY the residents of little old Flagler Beach (“THE ALAMO”) stood alone, and had the real wisdom and fore-sight to see through it all. Those attributes were then combined with the courage and durability of it’s residents, which in turn enabled us to fight those guys off for two years, and at long last send them all packing.

    Just think what might have happened to our great little city if we had failed to fend off their heavily financed and lengthy assault upon us. ( maybe there would be huge bulldozed tracts left vacant, without a tree in sight for miles, just an occasional fire hydrant etc. as happened elsewhere.)

    Truly a great victory was achieved, simply because four hundred or so people dug their heals in, stood their ground,and fought a hard battle against the guys in the five thousand dollar suits, they with their millions, us with our meager resident donations.

    Knowing some of this history , I would hope, that if the county has not been burned enough already, that they will at least check into this corporations track record well beyond our county, and do so before they spend any additional money.

    Whatever the case please proceed with the utmost caution.
    ***How does that old saying go ? ” fool me once shame on you, fool me twice shame on me )

  6. Robert says:

    If the land is unbuildable then why such an urge to purchase it. Let Ginn keep it. The ecology of the land will remain unchanged. Better still walk away and let Ginn keep it or give it to the county.

    This deal sounds similar to the city of Palm Coast paying above and beyond the value of a parcel of real estate on Bull Dog Drive.

  7. MJH says:

    Egads!! Lets go back to basics here and ask each county commissioner if they would fall for a sham like this if they weren’t using tax payer money. I’m always amazed that since money is sitting in a fund already that it’s not considered tax payer money any longer but some slush fund to dip into for any hair brained idea. Mr. Ginn owes money all over Florida and has managed to wheel and deal his way into every ones pockets one way or another. Please don’t let him dip into any more Flagler County pockets than he already has. Remember he burned all his so called “favorite” customers over the years here and left many unhappy people in the dust. He seems to be setting up the county for the same deal. How the county wouldn’t feel that we are owed this land in lieu of the airport fiasco is beyond me. If this gets passed there isn’t a commissioner on that board that will ever get my vote again. STOP THE SPENDING when everyone else is feeling the pinch. Sensitive land is sensitive land and there isn’t much that can be done with it anyway. It will be there forever as long as the county doesn’t decide to give a break to someone and let them build there. The county holds all the cards here. Let’s get it right this time. Stop giving away our money to someone who couldn’t care less about Flagler County than he does about any other place he’s left devastated. Our funds will only be used to pay off some debts in some other county.

  8. silent says:

    I’m all for buying environmentally sensitive land. But this proposed deal stinks.

  9. emile says:

    I’ve been told that Flagler has an overabundance of wetlands, and there is no market for mitigation credits here.

  10. tulip says:

    After reading this twice, I’m confused on something—-I thought Ginn was no longer involved with that property? There’s been so much ado about Ginn over the last couple of years, my brain is clogged. Does anyone know if Ginn is still involved in the deal (maybe behind the scene) or not?

  11. Imagine says:

    How “bout this…..a big fat NO!

  12. SAW says:

    Just one more reason to vote “YES” on Amendment Four, Florida Hometown Democracy don’t forget to tell all your friends to do the same !

  13. C.L says:

    Commissioners, do your job for the taxpayers.. send Ginn packing.
    This Coffey proposal stinks.

  14. Gerry says:

    A big NO on this. Coffey needs to be replaced asap.

  15. Interesting facts. So, the County is going to pay $4700+ per acre of swampland, and at the same time appraisea the Ocean Hammock golf course at $1,000 per acre. I came across this year’s Ocean Course property appraisal. The proposed 2010 property appraisal is $6.376 million. This compares with a 2009 tax year appraisal of of $22.496 million and a purchase price of $37.676 million on December 21, 2006. Tax savings from the prior year will probably be $200,000 +/-. The breakdown for the current year appraisal:
    Buildings – $3.664 million; Land – $.192 million; Golf Course Improvements – $2.521 million
    The primary reason for the big drop in valuation is a change in the methodology for the land valuation, which dropped from $15.331 million to $.192 million.
    The land is now valued as open space at $1,000 per acre. This same methodology was applied to all golf courses in Flagler County for the first time this year. Part of the rationale is based on prices that golf courses in Florida have been selling for (many of which are probably distressed). The appraiser indicated that this generally results in a value of approx. $150,000 – $200,000 per hole. Due to its location, amenities, condition, etc. the Ocean Course valuation was set at slightly over $350,000 per hole, including buildings.
    The appraiser implied that three local courses (presumably Pine Lakes, Cypress Knoll, Matanzas) may sell in the near future for less than $10 million combined. The appraiser also said that while he could defend the significantly lowered appraisal for the Ocean Course, it doesn’t necessarily reflect what it might be able to be sold for. The revenue streams were apparently not a consideration in establishing the valuations.
    I think Ginn ought to dismiss his appeal of the NOPC and lower the price to $500 an acre…and be thankful to get that!

  16. Justice for All says:

    Would a fully permitted salt water mitigation bank (Pellicer Flats) add value to the heretofore undevelopable lands in Ocean Hammock?

  17. Alex says:

    Coffee’s judgment is questionable at best.

    If the land worth so much as Ginn and Coffee claims, our property tax people must be wrong and they should take immediate action to correct the situation. Commissioners should follow up on the tax angle.

    After the primary we have several lawyers looking for work. Send them after Ginn to recover our money spent on the airport.

  18. Kevin says:

    Coffey should be fired just for being so stupid as to even dare breach discussion of such a large acherage purchase $4,795.92/acre! They aren’t worth shit to someone else, unless they expect to buy them and store them as a long-term capital asset, because building on them now with inventory increasingly available in the area would be a bigger loss and foolish to say the least. Not to mention much of the price includes wetlands.

    Their loss should be Flagler’s gain but also exercise priorities as well. Just how many police can that money support for two years or longer that I suspect are more crucial to the County/city than are acquiring wetlands for the environment.

    Coffey demonstrates exactly why many municipalities are in a position of distress. He appears unseasoned and childlike when it comes to their business accumen and negotiating skills. His job is not to make a deal which they both don’t like, his job is to make a deal that puts their dick in the dirt as he walks on top of them for what they pulled got away with as a result of the county’s last few bad deals with Ginn.

  19. Kevin says:


  20. Peachie says:

    Fire Coffey.

  21. silent says:

    The county commissioners should be required to state their option. No to Coffey’s recommendation – why is he still around?

  22. John Coffey says:

    Fire Coffey, he has gotten us into too many money loosing deals. It’s starting to appear that he has a different set of motivations than serving the best interests of the tax payers. I say investigate him throughly and determine what his real motivations are.

    How could anyone even think about doing business again with a company that has screwe us several times, leave the land alone and eventually Ginn wil default on it’s real estate taxes and the County can get it for free.

    The Attorny representing Ginn obiviously told less than the truth when see told the Commission that Ginn had no money to pay it’s bills, it obiviouly Ginn had assets that the County could have attached and is now willing to pay for with our tax dollars.

    Coffey has got to go, before he does any more damage. Maybe he can get a job in Iraq where his talents could be better utilized now that the combat has ended. Bottom line he needs to go as quickly as possible.

  23. Kip Durocher says:

    Selling Florida swamp land to unsuspecting fools is as old as Florida. Goes back to the Spanish.
    This is the first case I have ever heard of selling Florida swamp land to a Florida government agency.
    I have personally been all over the area they are talking about and it is useless. Our County Administrator should be fired for bringing this foolishness before the commission. Four million dollars – sounds like Alice in Wonderland material. The Commissioners should be voted out of office for listening to him

  24. palmcoaster says:

    Now we have all these county government thieves sticking it to Palmcoasters again, with the Dunes Bridge.
    We need a class action on a contingency basis with an out of Fl legal team representing Palm Coast tax payers.

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