Thursday, January 19, 2012

The Beach: Promises made, promises not kept

During their individual campaigns, candidates and elected officials make promises to those who elect them (us) to serve as our representatives.  In fact, 2012 is a presidential election year and already we are hearing promises being made by those running in the various primaries leading to the upcoming November election.  The public, however, has become increasingly cynical about whether these campaign promises really mean anything.  They see the current stalemate in Washington as an example of a system that is broken.  They have lost faith in the ability of their elected representatives to make good on their campaign promises.

Have we done any better in Lake Worth?  There is one subject that has consumed most of the elections for the past 30 or so years here and that is the beach.  I think it is an important exercise to review where we stand in relation to promise keeping and the current beach project – especially due to its importance in the elections here over the years.  While the City hasn't kept some key promises related to the on-going beach project, it is still possible to keep the most important ones – those related to taxpayers' money.  What Commissioner Maxwell was talking about at the last regular City Commission meeting is the possibility to roll all project costs – above the $5 million previously stated grant amount and total beach project budget, as promised to our Commission's constituents – so that it is completely financed not by the utility rate-payers – but by those that chiefly benefit from the project.  This can be done either by tenants of the new Casino building or by parking lot users – it doesn't matter in the end about the proportion of how this is done.

Let's go to the first promise those on the dais made about the current beach redevelopment project.  “We are going to save the Casino building.”  Words like “restore” and “rehabilitate” were used frequently in public meetings.  Contractors were brought in by candidates claiming that they could save the existing building, that it was economically possible to save the building and that we would return it to its original 1922 “look.”  The Commission interviewed architects and these architects were chosen based on their ability to “save the building.”  As the city went forward with the project, it soon became apparent that this was “Mission Impossible.”  That didn't stop the city administration from proclaiming that this was still a rehabilitation project for the “existing building.”  The Palm Beach Post even picked up on the line being spun from the city that the “building was being gutted and not torn down.”  As the building came down before our eyes, yours truly made a complaint to the Office of the Inspector General about the validity of the city's position.  In September of last year, the OIG issued a report and found that the project represented a “substantial improvement” (building code language for NEW construction.)  The OIG concluded that 94% of the building value was to be considered a substantial improvement – only 6% of the original part of the building was saved.  Thus, the the first promise made by the City was not kept.

The second promise revolved around the city's former anchor tenant “John G's.”  They were part of the reason that the former building was still a destination, for tourists and people from all over South Florida, despite its condition.  Well, despite campaign promises and a lot of hoopla, John G's is now in a renovated restaurant space in Manalapan's Plaza del Mar and has no intention of coming back.  Now the city is in the business of searching for an anchor tenant or tenants to fill the void.  Promise number two, made to the public, was not kept.  Related to this was really a third promise that the city would make all sorts of efforts to keep the existing tenants that were in the building when it was closed.  Looking at the list of prospective tenants presented to the Commission to date leaves one to question how much this promise will be fulfilled.  And if it is, it may be done solely to satisfy the special interest of contributors to a certain Commissioner's campaign.

The fourth promise was that the “existing historic building” would be “rehabilitated” to a high LEED green building standard.  This was part of the package that sold the public on the project – and the elected or to be re-elected officials that proposed it.  We, the citizens, need to have a current status report on this, but from what I have seen there have been change orders related to the HVAC system and other aspects of the project that put more and more responsibility on the tenants themselves – in their build-out – to help the city achieve this promise.  And it really is more than just the city making a promise, according to state law, any new municipal structure now has to meet a minimal standard for green building practices.  We won't know for sure if the building will be certified in this manner until it is open, the tenants move in and the certification happens – after the ribbons are cut and the politicians have gone home, retired or have been re-elected.  We won't know how the city's promise number four fairs for a while.

The fifth promise, one that the city still has an opportunity to make good upon is that the project would pay for itself.  All of the casino building “improvements” would be paid for through the tenant leases – at market rates and that improvements to the parking areas and the remainder of the property would be through the Palm Beach County grant of $5 million.  In the County's interlocal agreement with the city on funding the $5 million worth of improvements on our beach, it specifically identifies the following:  “improvements to the existing drainage and utility infrastructure” and “undergrounding upper dune electrical facilities.”  In fact, Commissioner Maxwell recently verified that these utility costs were and are expected to be paid with the County grant money by an e-mail from Jon Van Arnam, Palm Beach County, Assistant County Administrator.

He responded as follows:  “Commissioner:  Regarding the Agreement for funding the improvements at the Lake Worth Beach,  Exhibit A-1 is the project description and Exhibit A-3 is the cost estimate.  Both Exhibits list 17 numbered items along with nine bulleted items and all items were intended to be covered by the $5 million appropriation.”

So not only the public has the impression of this promise being made, but also our grant giver, Palm Beach County does as well.  So apparently did our former City Manager in a March 2010 e-mail  exchange with yours truly:

WB:  Would "spending money we don't have" include work on the casino building?

SS:  No.... There is not a single dollar of tax payer money dedicated or programed for this project.  Which.... I suspect is not relevant to .... most people's opposition.

WB:  I do not oppose the project. I oppose any misrepresentation of reality.

SS:  I agree....  Like saying it is paid for with taxpayers money.  I guess.... Gee, we agree

SS:  The revenue will come from the money generated by rents, parking fees and making tenants not only actually pay their rent but CAM as well.  The city will stop, like the electric fund, sucking money from the beach to pay for things it can not afford...but wants to have.    

I know this sounds radical.  Maybe even unacceptable.  Even unlawful....  But it really is how most well run governments operate every day ....less the drama we do on to ourselves LW.

Rather conveniently, we are now presented with the prospect of improving utilities at the beach with the city's own utility funds – as a “cost of doing business.”  We hear from staff that “we would need to extend utilities to a new business anyway” and that “there is work on utilities that needs to be done on the beach property that had to be done anyway” as justification for using money from the city's utility for the project.  And this is just recently.  Now, this is not just the taxpayers' money, as identified by the former city manager, but utility customer money.  The City Commission needs to be reminded that every Lake Worth resident is essentially a utilities customer and most of them are taxpayers.  These millions of dollars are our money.  It is also money from people who the City Commission does not represent – in Palm Springs and unincorporated Palm Beach County. It is their money too.  They don't elect our City Commissioners and have no recourse with the Public Service Commission as to our rate structure or how the city spends their hard earned money they pay the City every month in their utility bills.

Don't discount this either – 80% of the City's total budget revenue is utility related.  In fact, the City Commission is more of a utility commission than a city commission and in a very serious way has more of a responsibility as far as the total budget is concerned to utility customers than to taxpayers.  But as had been shown time after time, the city finds it easier to fleece the utility customer than the taxpayer – the city is limited on the amount of millage that we charge based upon property valuation, but theoretically has no limit on how much it charges the utility customer.  That is why the City is in the situation it finds itself in today – with one of the highest utility rates in the state and especially in relation to other municipalities in Palm Beach County.

This is not the first time that the city undertook a renovation project at the beach.  In 1949, the city repaired and modified the Casino building after it had been destroyed by a hurricane in 1947.  I did some research on how the city handled the financing of those improvements and found something that is consistent with how the city has done things since.  According to City Commission minutes from 1949, $185,000 ($1.68 million in 2011 dollars) worth of Municipal Recreation Revenue Certificates were issued to “be repaid by the revenues from the use of the facilities along with surplus water and electrical revenue.”  City Commission Minutes 8/8/49  The city, in retrospect, could afford to do that in 1949.  Our city ancestors were about to go through a booming post World War II economy, improvements in transportation, greater wealth for a middle class eager to travel from cold northern climates to a warm, tropical one.  Most of the city's housing stock was built during the 50s and 60s. It was a bet that paid off.  We don't face the same circumstances anymore and instead face challenging economic times and an erosion of the middle class.  Utilities need to be paid every month and here they are not cheap.  The City Commission has to be careful using utility funds for purposes that don't drive down our customer utility rates.

We need to find a way for the additional costs associated with the beach to be solely supported by the beach.  Only then will the City be able to claim that it kept one of its original promises.