Community Redevelopment Agency Bonding Outlook Worse Than Expected
Written by Yudislaidy Fernandez on March 12, 2009
By Yudislaidy Fernandez
Revenue projections now show Overtown’s redevelopment agency may only be capable of bonding $50 million to upgrade the area, a tenth of what the agency’s chair demanded two weeks ago as her price to approve a Florida Marlins stadium.
Yet Miami’s city commission, sitting as the Overtown/Park West Community Redevelopment Agency board, is to decide today (3/12) whether to approve bond issuance of up to $500 million to finance redevelopment in the area.
To issue the bonds, the agency seeks OK to expand its boundaries and extend its life until 2030, both vowed a 2007 county-city agreement that aimed to advance a cluster of projects that include a port tunnel, museums in Bicentennial Park and the stadium.
The agency turned last week’s scheduled board meeting into a workshop because Chairwoman Michelle Spence-Jones and vice chair Marc Sarnoff were the only commissioners present.
Miami Chief Financial Officer Larry Spring told the pair he is updating his 2007 financial projections for the area because the real estate market and economy have weakened since they were drawn. He said he plans to present the new projections during today’s meeting at City Hall.
"We need to develop a real budget plan," he said. "In today’s market, some of these numbers and projects are not there."
Mr. Spring said that before going to the bond market, the agency must update the list of private developments slated for the district as a 2007 list has changed, with some large projects halted.
He said he will only seek to bond what the district’s revenues can support. In his initial calculations, the intent was to bond out 66% of tax increment revenues in the district.
Ms. Spence-Jones said if the city can’t bond for $500 million, then it will bond less to help build parks and roads needed in Overtown.
"Give the people something," she said.
Mr. Spring said in a later interview that since the agency can only bond based on existing revenues, the first series could yield about $50 million — less than the $100 million figure tossed around at the workshop as more realistic than the $500 million Ms. Spence-Jones had demanded for redevelopment area funding.
If city and county commissions approve a bond issuance in the months to come, he said, the city could issue the bonds by late fall, because bonding usually takes 60 to 90 days.
Mr. Sarnoff was quick to challenge Mr. Spring’s projections at the workshop, saying his 4.8% growth projection was wrong. Mr. Sarnoff said the real estate market could fall a further 20% to 25% in coming years.
"This is a worldwide recession," he said. "No one is coming to our aid."
Mr. Sarnoff said he doesn’t see bonding capacity beyond $100 million over the extended life of the agency.
Expanding the taxing district, designed to generate dollars to improve blighted areas and slums, would allow the agency to use the generated money to fund projects within the new bounds.
But according to Mr. Spring’s 2007 projections, the new boundaries would only add $22,000 a year in tax increment dollars.
With county property valuations expected to drop this year, once the agency expands it could find itself with a bigger district and fewer dollars to reinvest in it.
"The existing funding for the CRA will be spread over a larger area," Executive Director Jim Villacorta said last week.
This past year, the Overtown/Park West district generated about $7 million in tax increment dollars, he said, and property values in Overtown did not start rising until 2000.
The agency would have to wait for property values in the expanded area to rise before it could collect any tax increments from those properties.
Mr. Sarnoff said the boundary expansion could act as a drain and "for the better part of 10 years the geographical increase could harm the core of Overtown."
Ms. Spence-Jones responded that expansion is needed to help areas not helped before.
The need exists, she said, because Overtown is one of the poorest communities in the city.
Mr. Villacorta said an engineering firm that the agency hired to review infrastructure needs in Overtown’s existing boundaries and the expansion area estimated needs at $300 million.
Ms. Spence-Jones tried to disconnect the workshop from the upcoming Marlins vote by saying the meeting had nothing to do with the stadium.
But two weeks ago, her office released her statement demanding approval of the boundary expansion and bond issuance before she could vote in favor of the stadium.
She said at the workshop she was not asking for anything new and that her intention was not to stop the stadium but to make sure her district isn’t forgotten as the city advances projects from the package of major projects such as Museum Park and the ballpark.
"The issue was not stopping anybody’s stadium," she said.
The stadium vote deadlocked 2-2 Feb. 13, with all commissioners present except Ms. Spence-Jones, who was on maternity leave — making her vote key.
Commissioners Sarnoff and Tomás Regalado voted no.
The redevelopment agency’s plan to expand boundaries and issue millions in bonds requires redevelopment agency, city and county approval.
Ms. Spence-Jones said she is confident of county support. Earlier that day, she said, she spoke with Miami-Dade Mayor Carlos Alvarez, who assured her things would move quickly from his end.
The day before, Mr. Alvarez had announced at a press conference cancellation of the county’s meeting to vote on the stadium, saying that some city commissioners were putting conditions on the deal that had "absolutely nothing to do with baseball."
Ms. Spence-Jones said she also spoke with county commission Chairman Dennis Moss about moving forward the redevelopment plan. At the workshop she urged residents to contact their county commissioners to rally their support.