Tax cuts and other hot buttons
A passionate, sometimes nasty debate about Delray Beach’s finances broke out Tuesday night during the final hearing on the city’s budget.
As with all cities in Florida, Delray Beach’s fiscal year ends Sept. 30. Serious work on the budget starts in the spring. That’s the time for city commissioners to declare, let’s say, that they would like certain spending items in the budget or that they would like to cut the tax rate. Two weeks before the budget takes effect is not the time to be seeking major changes.
Although Delray’s budget maintains the current tax rate, some property owners—especially of second homes or businesses—could pay more because the value of their property has increased. Commissioners Shelly Petrolia (above) and Mitch Katz wanted the city to cut its tax rate. Not only did their request come late, it rested on a false premise.
As Petrolia explained it, the city could expect “collections” from assuming IberiaBank’s loan on the Auburn Trace housing project. The city also might get repayments from the bankruptcy action involving Auburn Trace. An outside lawyer is advising the city.
Any money from the court action, however, would affect only that year. Basing a tax rate—or extra spending, for that matter—on such revenue would be like a family budgeting for a $25,000 lottery prize. It might happen, but you shouldn’t expect it.
Further, the city’s original loan for Auburn Trace came from a federal grant. Any revenue tied to that grant would have conditions that likely would prevent the city from using it as part of the general fund budget. Finally, cities that use squishy revenue can draw critical attention from ratings agencies. A tiny, symbolic tax cut would not be worth a credit downgrade.
“I am not an accountant,” Petrolia, a Realtor, told me on Wednesday. “But I believe that we should be expensing some of the money from the second loan,” which the city assumed this year from IberiaBank. She took on the issue “because no one else was willing to do it.”
The tone turned nasty when Petrolia was complaining to Chief Financial Officer Jack Warner that she had not received answers to questions about the loan in particular and financial information in general. Warner ventured that Petrolia had received answers “but didn’t like them.” After Warner went through yet another explanation of why the money wasn’t available, he said, “I’m going to stop.” To which Petrolia replied, “That would be a good idea.”
The next tax-cut gambit involved City Manager Don Cooper. The budget includes a $2 million contingency fund for Cooper. Petrolia criticized the idea because Cooper “hasn’t earned my stripes.” How about directing that money toward a lower tax rate? The pesky Warner replied that since the $2 million came from the reserve fund, it would have to back there if it didn’t go into the contingency fund. “We can’t use it for a tax reduction.”
Eventually, the commission approved the tax rate, the budget and the $2 million for Cooper, 3-2, with Mitch Katz joining Petrolia in opposition and Mayor Cary Glickstein joining commissioners Al Jacquet and Jordana Jarjura in the majority. Glickstein correctly had called the use of one-time money for a recurring tax cut “nonsense.”
Despite the rancor that blew up like a squall, the commissioners seemed to agree that scrutinizing Delray Beach’s taxing and spending policies is a priority. They are right. In a growing city, the budget should be able to respond to growing needs. Delray Beach’s can’t, which the commission blames in large part on the fact that so much revenue from the thriving downtown goes to the Community Redevelopment Agency. “There is no millage rate reduction,” Glickstein said Tuesday night, “until we deal with the CRA.”
Another problem is that Cooper has been on the job just since January, and is overworked and understaffed. The finance department, which does most of the budget work, has four vacancies. In an email, Cooper said the vacancies are “causing backlogs,” but added that he hopes to fill three of the positions this month.
For perspective, Delray Beach went through 2013 and 2014 with an incompetent manager and an interim manager, who obviously didn’t make big long-term decisions. If you take your foot off the accelerator for a while, you can’t get back to cruising speed immediately.
Yet four of the five commissioners took office between March 2013 and March 2015, all with their civic jets revved. Cooper can’t correct two years of drift in nine months, though he’s getting there.
Meanwhile, the commission can address tough policy questions beyond the CRA.
Example: Should non-profit organizations continue to get almost $2 million from the city, as they will next year, when Cooper showed that city policy would limit those donations to about $500,000? As Cooper noted, that total “doesn’t include in-kind services.” You want a tax cut? Reduce those contributions.
Example: One of those non-profits is the library. Since the city and the CRA contribute 91 percent of its budget, should the library continue to operate under an independent board instead of as a city department?
Delray Beach never will have Boca Raton’s tax base. Boca has $19.6 billion worth of taxable property compared to $8 billion in Delray. Boca, of course, is almost 50 percent larger. Delray’s tax base, though, is nearly double that of Boynton Beach, which is the same size. It’s 80 percent of the tax base in West Palm Beach, which has nearly twice as many residents.
My guess is that most Delray Beach residents want first-rate services more than a symbolic tax cut. That takes more work, but the payoff is much greater.
FAU same sex case
A year ago, Florida Atlantic University was a test case in the same-sex legal world. On Wednesday, FAU lost, but the result was hardly surprising.
Gildas Dousset sued FAU in 2014, demanding an in-state tuition rate based on his marriage in Massachusetts to a Florida resident. In denying Dousset’s request, FAU cited a 1997 law prohibiting any state agency from recognizing a same-sex marriage. The law predated by 11 years the state constitutional ban on same-sex marriage.
Dousset went back to court, and on Wednesday the 4th District Court of Appeal in West Palm Beach ruled in his favor. In its one-page opinion, the three-judge panel cited last June’s U.S. Supreme Court ruling that legalized same-sex marriage nationwide and thus trumps state laws that discriminate against same-sex couples.
At this point, though, FAU may be out of it. George Castrataro, a Fort Lauderdale lawyer who represented Dousset, believes that “because so much time has elapsed,” his client “is enrolled in another institution.” Castrataro noted that Dousset’s case is one of many related to “subordinate rights” that the high court ruling affects.
There does remain the matter of $20,000 in legal fees to represent Dousset. Most of that, Castrataro said, would go to the National Center for Gay and Lesbian Rights, Dousset’s primary counsel. Reimbursement would come from the state. Attorney General Pam Bondi, however, is trying to avoid paying $700,000 to lawyers who challenged the marriage ban. The twice-divorced, childless Bondi, Castrataro correctly noted, has brought “the full weight of the state” against same-sex advocates—and lost.
Boards on the way out
In July, Boca Raton staff presented city council members with a plan to reduce the number of advisory boards. Some have become obsolete or redundant, yet all take up staff time.
At Monday’s workshop, the council will hear a recommendation that Boca eliminate the Advisory Board for People With Disabilities, the Community Relations Board, the Education Advisory Board and the Elder Affairs Advisory Board. Replacing them would be an 11-member Community Advisory Board, to act as a “clearinghouse for information pertinent to the needs and interests of city residents.” Given that broad portfolio, the change likely would be addition by subtraction.
FAU student housing
The push to build more student housing near Florida Atlantic University continues.
At Monday’s workshop, the Boca Raton City Council will hear a presentation from land-use lawyer Charlie Siemon. He will ask the city to consider changing its comprehensive plan and land-use regulations to create a category for university housing. Siemon represents CAV Core Boca, a local entity of a Chicago company that owns vacant land on Northwest Fifth Avenue across the El Rio Canal from FAU. Siemon also represents University Village, the project proposed for 77 acres just north of FAU. It also would be marketed to students.
Siemon’s proposal would allow as many as 80 residential units per acre. Each site would have to be at least eight acres, which happens to the size of his client’s property. Among other things, buildings could be no higher than 50 feet, and the site would have to provide direct shuttle, bike or pedestrian access to FAU from no more than 200 feet away.
It’s an interesting concept, and the city and FAU have talked about a student district near the university, though anchored six blocks south on 20th Street. The council will have to determine if this is a proposal for wider use or just for this applicant’s use.
MEETING CHANGE NOTICE
Delray Beach has changed the location for tonight’s public meeting on the beach makeover. It is now scheduled for 6 p.m. at the Delray Beach Marriott.
About the Author
Randy Schultz was born in Hartford, Conn., and graduated from the University of Tennessee in 1974. He has lived in South Florida since then, and in Boca Raton since 1985. Schultz spent nearly 40 years in daily journalism at the Miami Herald and Palm Beach Post, most recently as editorial page editor at the Post. His wife, Shelley, is director of The Learning Network at Pine Crest School. His son, an attorney, and daughter-in-law and three grandchildren also live in Boca Raton. His daughter is a veterinarian who lives in Baltimore.
