Dear Commissioner Katz:
Thanks for taking the time to reply.
While we are happy to run your verbatim response to our editorial, we cannot let your views of the iPic deal and the CRA go without stating the facts.
Further, we object to your use of loaded terms such as “egregious,” “wrongdoing” and “waste of taxpayer dollars.” While we defend your right to level those charges, we reserve our right to refute them and to remind you that as an elected official you have an added responsibility to be fair and accurate. Your words matter.
Again, we disagree with your continued criticism of the CRA’s lack of “concrete progress” in the Northwest/Southwest Neighborhoods. While we agree with the need to do more and that every agency (and elected official) can and should do better we feel you ignore the tremendous progress that has occurred as a result of nearly 20 years of commitment and investment in the neighborhoods you profess to be concerned about. Over $60 million has been invested in a vast array of impactful projects that has made a huge difference in the neighborhoods. Rather, than reiterate them here we invite you to take a guided tour of the area and look at the Community Land Trust homes, new parks, beautification, new sidewalks, senior housing projects and new private investment made possible by our CRA. Your remarks undermine those efforts and disrespect the work of hundreds and hundreds of people. Again, nobody is declaring victory or saying the work is done. But cavalierly dismissing the very visible progress that has been made is egregious (to use your word).
Now for the iPic project:
- The original RFP called for 50 public parking spaces. When those requirements were changed by the city commission, iPic reserved the right to ask for help, which is not atypical in a business transaction in which the terms have changed. “I’ll give you that, if you give me this” is not corporate welfare, it’s negotiation.
In 2012, a Tri-Party Agreement between the City, CRA and Chamber of Commerce was approved pertaining to the Old Library/Chamber of Commerce/City Parking Lot sites Per the Agreement the CRA agreed to pay the City $2,270,870 for the property and reimbursement for the shell at Old School Square garage to accommodate the Chamber of Commerce. The amount was based on appraisals prepared in 2012.
The CRA agreed that the City shall have the right to use 50 code compliant parking spaces located within 300 feet of the project site for public parking and these spaces shall be maintained and repaired by the CRA.
In February, 2013, a Request for Proposals (RFP) was issued to solicit proposals for redevelopment of the site. The 2013 RFP for the site included the provision that a minimum 50 public parking spaces shall be provided on-site or within 300 feet of the subject property.
- Of the four (4) proposals received in response to the RFP, the CRA board selected Delray Beach Holdings (iPic theater). Their response to the RFP accommodated 50 on-site parking spaces within the proposed 279 space parking garage. It is noted, the RFP response included a purchase price of $3.6 million dollars, which was greater than the appraised value. Their proposal included a $120,000 tax abatement for the 50 public spaces. (It is noted in September 2012, the property appraised at $2.94 million.)
- In the first year (year 2020), the project will generate $352,156 in increment revenue (TIF), which is currently $0. This is an increase of $65,324.from the estimated amount in 2013 ($286,832.00), when the economic impacts of the project were analyzed by PMG Associates. The following figures are also provided from the 2013 Economic Impact Analysis:
Jobs – 173 Office & 122 other jobs (295 total)
Employee Spending – Office: $912,288; Retail: $62,244; Total: $974,532
Sales Tax (2013 estimates @ 6%) – $876,000
The Purchase and Sale Agreement included a provision that the 50 parking spaces shall be provided on site and that the CRA would provide its pro rata share of the cost to maintain the spaces.
During the conditional use approval process the applicant proffered 40 additional parking spaces and the City Commission added a condition related to the replacement of existing parking,
resulting in 40 additional public parking spaces. This necessitated the construction of an additional parking deck within the parking garage (326-space parking garage). In addition, Delray Beach Holdings is acquiring an adjacent property to continue the alley as required as part of the alley abandonment approval. The project is also dedicating 8 feet for the east/west alley rather than the 4 feet that is typically required, in order to improve access and loading. The additional dedication resulted in the reduction of the Theater seating capacity from 529 seats to 497 seats.
- The City has indicated it will install parking meters for the 90 public parking spaces. The City will retain all revenue generated from the meters to use for City purposes. The revenue has been conservatively estimated at $167,400 per year.
- As the CRA will receive the increment revenue, the CRA will provide its pro rata share of the operations and maintenance costs for the parking garage (90 public spaces), which is estimated at $75,000 per year ($833.33 per space annually).
- During negotiations regarding the Parking Cost Sharing Agreement, Delray Beach Holdings, LLC requested assistance from the CRA with regard to the cost of constructing the 40 additional public parking spaces. The 40 spaces are in addition to the 50 spaces required as part of the RFP, so the cost was not anticipated in their original RFP response.
- The 40 additional public parking spaces are estimated to cost $1.5 million. The proposed Parking Cost Sharing Agreement includes a partial reimbursement by the CRA in the amount of $400,000, which is 27% of the construction costs for these spaces. The reimbursement would occur at $40,000 per year over a 10 year period, based on the increment revenue generated. Any reimbursement for the construction of the 40 additional spaces would not occur until at least one year after the garage is constructed. This is similar to the Development Infrastructure Assistance (DIA) Incentive Program (created in 2010) that was utilized for the Hyatt and Fairfield Inn Hotels.
The Agreement also includes a local hiring program similar to the program associated with the Fairfield Inn hotel DIA. This is a voluntary commitment on the part of Delray Beach Holdings to make good faith efforts to initially hire 20% of the permanent theater staff from the local community, which includes two (2) job placement fairs, and notification to the CRA of the process and timing of job openings, and the available Theater and Office staff positions.
- In October 2016, the City Commission approved a Parking Facility Easement Agreement and Project Covenant (PFA) between the City and Delray Beach Holdings, LLC. Paragraph 5 of the Agreement (Page 5) states “…nothing contained in this PFA shall preclude the Developer from requesting the CRA to enter into an agreement with the Developer for the CRA’s reimbursement of a portion of the Developer’s costs and expenses for such maintenance, repair, or replacement…”
All in all, we see this is a good business deal for Delray Beach and a welcome use in our downtown. While we respect your concerns, we don’t feel the CRA’s decisions—prompted by the Commission’s ask for more parking—constitutes wrongdoing or a wasteful spending. Delray taxpayers will net more money on this transaction than they will expend.