PLACEMENT: Departmental
TITLE:
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DISCUSSION FOR THE BOARD TO PROVIDE DIRECTION ON NEXT STEPS FOR THE PALM CITY PROPERTY PURCHASED IN OCTOBER 2023
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EXECUTIVE SUMMARY:
executive summary
The purpose of this item is for Board discussion to provide staff direction regarding the property approved for acquisition on October 10, 2023 in Palm City. The Board directed staff to acquire the property for $4,028,000 (which included closing costs) and establish an inter-fund loan from the General Fund as a bridge until a bank loan is secured, which is to be repaid via District 5 MSTU (Municipal Service Taxing Unit) and Old Palm City CRA (Community Redevelopment Agency) Tax Increment Financing (TIF) funds. Additionally, the Board directed staff to review options for public use of the property.
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DEPARTMENT: Administration
PREPARED BY: Name: Don G. Donaldson, P.E.
Title: County Administrator
REQUESTED BY:
PRESET:
PROCEDURES: None
BACKGROUND/RELATED STRATEGIC GOAL:
On August 8, 2023, the Board of County Commissioners (Board) directed staff to negotiate and sign a Contract, with financing options, contingent upon final Board approval for the JAMSZ property located in Old Palm City Redevelopment Area on the North side of SW Martin Highway between SW Palm City School Avenue and Danforth Creek and provides legal access to Oakbrooke Estates via SW Newberry Court. The property borders Danforth Creek, which is a major drainage flow way for Palm City and Palm City Farms.
On October 10, 2023, the Board authorized the purchase of the Palm City parcel and directed staff to fund the purchase utilizing an inter-fund loan from the General Fund as a temporary bridge to a bank loan that was to be repaid by the District 5 MSTU and Old Palm City TIF funds. The anticipated inter-fund loan term is estimated to be five years, with repayment of District 5 MSTU funding for years 1 and 2, and Old Palm City CRA TIF Fund revenues for years 3 through 5.
Furthermore, on October 10, 2023, the Board tasked staff with exploring potential public utilization options for the parcel, including considerations for stormwater management, community redevelopment, and park development needs. Danforth Creek exists along the western property line of the subject parcel, and Public Works has determined that retention of rights to the area adjacent to the creek will help to facilitate maintenance and access for a future capital project to improve the capacity and flow characteristics of the creek. The segment of the property allocated for stormwater public purposes is estimated to be valued at around $800,000. This funding is available within the stormwater and road infrastructure franchise fee capital fund, thanks to the commendable performance of investments overseen by the Clerk of the Circuit Court and Comptroller's Office, resulting in favorable interest collections.
Recently, there's been growing interest from the private sector in acquiring the remaining portion of the property. Should the Board decide to entertain this option, it would necessitate the solicitation of Request for Proposals (RFPs). These RFPs would be carefully crafted to reflect the Board's preferences and would outline both permissible and prohibited uses of the property, through the use of deed restrictions, reflecting input received from the public.
ISSUES:
The Board's decision to pursue a bank loan to restore the General Fund reserve within a five-year timeframe would entail an estimated annual payment of around $674,000. At a 4.25% interest rate, the total interest accrued over the loan's duration would amount to approximately $391,000 for the County. These calculations presume a down payment of $250,000 from District 5 MSTU and $800,000 from the stormwater and road infrastructure franchise fee capital funds. It's worth noting that this estimation excludes the cost of issuing the loan, projected to be around $50,000.
To maintain consistency with similar inter-fund loan arrangements involving Community Redevelopment funding, staff proposes to establish an internal inter-fund loan agreement between the District 5 MSTU and Old Palm City CRA TIF to reimburse the General Fund over a period of five years at a 0% interest rate. The projected annual payment would be $595,000, and this arrangement is expected to yield savings of around $450,000, encompassing both interest and issuance costs. Furthermore, this plan offers the advantage of prepayment flexibility, ensuring no penalty fees in case the Old Palm City CRA TIF exceeds estimated revenue collections, or in the event proceeds of a potential property sale reduce or eliminate the principal balance outstanding. Staff analysis has determined that the County’s fiscal status could support the phased replenishment of reserves over two years and would assist in mitigating any potential impacts on the ad valorem.
In accordance with Community Redevelopment Agency procedures, the expenditure of Old Palm City TIF funding would require approval from the Community Redevelopment Agency Board.
LEGAL SUFFICIENCY REVIEW:
This item has been reviewed for legal sufficiency to determine whether it is consistent with applicable law, has identified and addressed legal risks, and has developed strategies for legal defensibility.
RECOMMENDED ACTION:
RECOMMENDATION
• Move that the Board authorize a Budget Transfer from the stormwater and road infrastructure franchise fee capital fund reserves and a Budget Resolution to repay a portion of the property purchase price in the amount of $800,000 to the General Fund; and
• Move that the Board adopt the Board Resolution establishing the terms of the interfund loan at a 0% interest rate utilizing District 5 MSTU and Old Palm City CRA TIF funding to repay the General Fund reserve for a term of five years or until otherwise proceeds of the property sale reduces or eliminates the principal balance outstanding.
• Move that the Board authorize staff to draft a request for proposal, with deed restrictions, for the sale of the remaining portion of the Palm City property. Draft proposal shall be approved by the Board prior to solicitation.
ALTERNATIVE RECOMMENDATIONS
• Move that the Board authorize staff to begin community engagement to determine acceptable uses of the property; and
• Move that the Board authorize staff to pursue a bank loan to repay the General Fund utilizing District MSTU funds and Community Redevelopment Agency funds for repayment of the loan over a 5-year term with a 4.25% estimated interest rate; or
• Move that the Board provide staff with alternate direction.
FISCAL IMPACT:
RECOMMENDATION
Move that the Board authorize staff to formulate an interfund loan at a 0% interest rate utilizing District 5 MSTU and Old Palm City CRA TIF funding to repay the General Fund reserve for a term of five years or until otherwise proceeds of the property sale reduces or eliminates the principal balance outstanding.
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Funding Source |
County Funds |
Non-County Funds |
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Stormwater and Road Capital Franchise Fee (down payment - Stormwater portion) |
$800,000 |
|
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District 5 MSTU (down payment) |
$250,000 |
|
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District 5 MSTU & Old Palm City TIF |
$595,000 annually (split) |
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|
Subtotal |
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|
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Project Total |
$4,028,000 |
ALTERNATIVE RECOMMENDATIONS
Move that the Board authorize staff to pursue a bank loan to repay the General Fund utilizing District MSTU funds and Community Redevelopment Agency funds for repayment of the loan over a 5-year term with a 4.25% estimated interest rate.
DOCUMENT(S) REQUIRING ACTION:
☐Budget Transfer / Amendment ☐ Chair Letter ☐Contract / Agreement
☐Grant / Application ☐Notice ☐Ordinance ☒Resolution
☒Other: 2 Resolutions
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