Hollywood City Commissioner Peter Hernandez says the Beach Community Redevelopment Agency should be abolished because it has had increasing property tax funds for its use — at times exceeding its needs — while the “rest of the city is starving” to pay for operations and needed improvements.
While his proposal has yet to gain support from his colleagues, Hernandez and other city commissioners, who also serve as directors of the CRA, have directed the city’s staff to explore options that would redirect the Hollywood Beach CRA funds left over at the end of the year to the city. Such a revenue give back would mark a first for a CRA in Broward.
In the past, the Hollywood Beach CRA has been accused in a state audit of circumventing state law by rolling over end-of-the-year funds to the next year, a large part of which in recent years has backed the $147 million Margaritaville hotel-entertainment complex in the redevelopment area. The complex is expected to open in October.
In suggesting that the Beach CRA should be abolished, Hernandez said the district — which encompasses less than a square half-mile at 293 acres — “is not really blighted and a slum.’’ Those conditions, he said, are to be met to qualify for redevelopment funds under state law.
The city, Hernandez said, has been operating on “bare bones budgets” while the CRA has given $28 million in incentives to the private developer of Margaritaville. In addition, the city gave developer Lon Tabatchnick valuable, city-owned beachfront land for the project and endorsed construction of a $38 million parking garage project using bonds to be paid back with parking revenues over 30 years.
The CRA district was established in 1997. According to city documents, property values there have jumped since the initial assessment of $546 million. Property in the district is now assessed at about $2.7 billion, which will bring in about $27 million in tax revenue, according to the city’s new annual budget that starts Oct. 1.
Abolishing the Beach CRA and redirecting its tax revenues to the city, Hernandez said, could result in Hollywood being able to cut its citywide property tax rate, the highest among municipalities in Broward County, by 1.5 mills — or $1.50 for every $1,000 of assessed property value.
CRA executive director Jorge Camejo did not respond to repeated calls for comment.
With the city in need of funds for operations and other purposes, city officials, at the urging of some commissioners, have presented a variety of proposals aimed at shifting to the city a sizable portion of an estimated $5 million in anticipated unused end-of-year CRA funds for the coming year.
The Beach CRA gets its revenue from tax increment funds levied on property within its redevelopment boundaries. The $5 million in anticipated unused funds are drawn from four sources: Hollywood, $2.7 million; Broward County, $2 million; Children’s Services Council, $179,000 and the South Broward Hospital District, $54,000.
Unless the city finds a way to shift the money, the funds must be spent on redevelopment within the CRA’s boundaries.
Looking at options
City officials are examining a variety of options to obtain the CRA funds — from having the CRA proportionally refund unused tax dollars as outlined above, with the city receiving only $2.7 million, to reducing the percentage of tax increment funds earmarked to the Beach CRA, resulting in the city receiving $4.7 million, or even abolishing the CRA.
Abolishing the Beach CRA, however, would endanger $116 million in projects in the CRA district, including installing underground utilities, the reconfiguration of the Hollywood Boulevard Bridge over the Intracoastal Waterway, and street flooding/drainage improvements, according to a city document.
Two other options require county approval: one calls for Broward to agree to give up its $2 million to the city, resulting in the city receiving a total of $4.7 million; the other calls for removing the Diplomat Hotel from the CRA, resulting in $3.3 million going to the city rather than the CRA.
Hernandez said he expects city officials to begin discussions with the county soon regarding about how best to proceed.
Ralph Stone, director of the Broward County Housing Finance and Community Development Division, said it “would be a first” should a CRA seek to return unused end-of-the year funds to its municipality for citywide uses.
About a year ago, the county said it planned to monitor and take action against CRAs that hoarded funds at the end of the year rather than spending on needed projects. Under state law, CRAs that have funds at the end of the year must spend that money on projects to be completed in three years or pay down debt. If not, CRAs must return the money to the agencies that contributed those public tax dollars.
The county’s concern followed findings by the Broward Inspector General Office that the Margate CRA deliberately mishandled $2.7 million in funds, rolling it over for several years without specific purposes. The Inspector General also found that the Hallandale Beach CRA had $2.2 million in questionable expenditures — an allegation denied by the agency.
In February 2013, the Florida Auditor General cited the Hollywood Beach CRA for failing to report $36.2 million in unspent year-end funds from year 2009-2010 and $34.2 million from 2010-2011.
The Beach CRA, Hernandez said, had “rolled over the funds for Margaritaville.”
Frank Schnidman is a community redevelopment expert/consultant and professor of urban and regional planning at Florida Atlantic University. In an interview, he said that over the years the Hollywood Beach CRA has complied “with the spirit of the law” in its use of end-of-year funds, but added it “has been rolling [funds] over and built up quite a bank account” that was a key funding tool for the city-backed Margaritaville project.
Schnidman said city officials seeking funds for citywide expenses and projects should also consider talking with the county about the option Hernandez has suggested: abolish the Hollywood Beach CRA.
Florida Bulldog is a not-for-profit news organization created to provide investigative reporting in the public interest. Contributions are tax-deductible. www.floridabulldog.org