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County’s $3.5 Million Gamble on Pellicer Flats Raids Credibility of Land Program

| September 26, 2010

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Try building there. (© Cat Smith)

By Don “Toby” Tobin

I’ll think twice before voting for the next continuation of the millage tax to replenish the Environmentally Sensitive Lands Fund. Flagler County recently went “all in” when they decided to purchase Pellicer Flats–more than 900 acres of mostly wetland from Ginn-LA Hammock Beach Ltd. (Bobby Ginn and financial partner Lubert-Adler).

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Don Tobin

The county is paying at least $3.25 million for property assessed at just over $500,000. It’s a bad decision for several reasons. Foremost is the bet the county is making that the property can be converted into a wetland mitigation bank in the future.

Mitigation banks are established so that developers whose project plans require the loss of some wetlands can “offset” that loss by buying mitigation credits from a mitigation bank. Mitigation credits are assets. They can be bought and sold.

The $3.25 million purchase price was predicated on a value placed on the land as if a mitigation bank were already established. There is no guarantee a mitigation bank will be approved by the state and the Army Corp of Engineers. If one is approved, there is no guarantee there will be a market for mitigation credits at that time.

The county is taking a gamble. And it’s our money backing the bet. Risk taking is an appropriate behavior for businesses. They’re in a risk-reward world. It is less appropriate for governments. If the county believed that the land should be purchased, they should have held out for a much lower price, taking the mitigation bank gamble off the table.

Another reason I don’t agree with the purchase is that the property is mostly wetland with difficult access. The cost to develop it would be so high as to practically assure it will never be developed. The goal of preserving environmentally sensitive land will be accomplished by the circumstances.

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Thirdly, the county’s purchase takes the property off the tax roll. Effectively, we are taxed twice; first to collect the environmentally sensitive land funds, and second, to compensate for the loss of taxable property. In private hands, Pellicer Flats continues to generate tax dollars. If an owner succeeds in the pursuit of a mitigation bank, the assessed value will be raised accordingly, further increasing tax revenues.

Lastly, such a business transaction between the county and the Ginn Company at this time should have been avoided. They are in an adversarial position as Ginn appeals a County Board of Commissioners’ decision denying a Ginn request for a zoning change at Hammock Beach. In denying Ginn’s request, the Board overruled the county administration wholehearted recommendation for approval. The administration’s support of Ginn’s plan coincided with discussions they were having with Ginn over a possible Pellicer Flats purchase. However benign that coincidence might be, it provides unneeded fuel to prospective conspiracy theorists.

I’m amazed that such profligate spending raised barely a peep while a modest quarter mill attempt to fund our economic development program will likely be shot down at the upcoming election. Somehow an extravagant gamble in the name of environmental sensitivity is more acceptable than an economic development project that would create jobs and ultimately help offset future residential property tax increases by shifting more of the tax burden onto commercial and industrial properties.

Don “Toby” Tobin, an expert on the Ginn Co., owns Realty and publishes, where this piece originally appeared.

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1 Response for “County’s $3.5 Million Gamble on Pellicer Flats Raids Credibility of Land Program”

  1. I feel like I have been swindled. Unbelievable waste of money. I remember when buying Florida swamp land was synonymous with getting swindled. Now, in the midst of one of the worst financial disasters to come along in my generation a huge amount of badly needed funds gets pored down the rathole. Where is the common sense behind this? Maybe the County has so much money it doesn’t know what to do with it…not likely. Assuming the $3.25 million purchase price was conservatively invested, the yield could add to the Land Fund so that a more worthy purchase could be made when the right opportunity came along. I think the County Administrator should be fired.

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