The City’ s overall debt has been decreasing in recent years due to principal paydowns and refinancing. Will the City’ s debt increase again now that it has to assume payment of these special assessments until the land is sold?
No. The debt associated with Southern Grove has been taken into consideration and included in the City’ s overall debt portfolio since 2007. In the past, the debt service was paid for by the land owner. Now, the City’ s cash flow will be impacted and it must find funds in its budget to pay the debt service, but the overall amount of debt will not increase as a result of this.
How will this situation in Southern Grove affect residents and taxpayers?
The City has a goal to not increase property taxes. City staff will evaluate the budget to identify funds to pay about $ 5 million in debt service and taxes next fiscal year. Currently, the market is robust and there is significant investment in Southern Grove. The City’ s longterm goal of creating a jobs corridor in Southern Grove remains intact. Port St. Lucie will still be in control of its vision to create employment opportunities for its residents. The City will be focused on selling the parcels and carrying out the disposition plan as quickly as possible.
Why does the City believe it can sell these commercial properties when Tradition Land Co. could not?
Because Tradition Land Co. is not a specialized developer or marketer, it did not adequately invest in marketing the area. The City has a solid vision and plan for the jobs corridor that will be instrumental in guiding staff and its consultants to aggressively market this land to the appropriate potential buyers. With Council’ s vote on March 29 to conceptually accept the land transfer, staff immediately began working on a disposition action plan for the sale of these properties. Staff conducted due diligence, advertised for possible joint venture partners and negotiate all closing costs. The City is highly motivated to ensure that the market remains stable and its vision for the jobs corridor remains intact.
Is the City bailing out a private developer?
The City would expend no funds to purchase this property, rather, the land would be a transfer. No matter which option the City Council chooses, the city will have to pay the debt service if Tradition Land Co. exits our market without buyers for its land in Southern Grove. This land is extremely critical to the City’ s future jobs corridor and the City must stay engaged with it. The City would be preserving its future by accepting the transfer of 1,247 acres from Tradition Land Co.
How is this situation different from what happened with City Center in eastern Port St. Lucie?
If the City were to accept option one or two, the results could be similar to the situation that occurred with City Center in eastern Port St. Lucie. In that case, the original developer pulled out of the City during the Great Recession. The land went to a tax sale and it fell into the hands of a private developer. After that new owner was accused of fraudulent dealings, the property ended up in the hands of a US Securities and Exchange Commission( SEC) receiver for several years. The City lost control of the land, making it even more difficult for the City to fulfill its vision for that land as a multi-use cornerstone for eastern Port St. Lucie. Additionally, the debt service continued to accumulate over the years making it much more challenging to sell the property. The City is working to avoid any possible repeat of this situation regarding Southern Grove.