I am one member of a five person board. The opinions I express on this forum are mine only, and do not necessarily reflect the views or opinions of the Escambia County Staff, Administrators, Employees, or anyone else associated with Escambia County Florida. I am interested in establishing this blog as a means of additional transparency to the public, outreach to the community, and information dissemination to all who choose to look. Feedback is welcome, but because public participation is equally encouraged, appropriate language and decorum is mandatory.

Wednesday, December 19, 2018

A Disastrous Deal for Taxpayers: The Beach Club Lease Renewal of January, 2018

The Beach Club lease renewal will result in lease fees that are so incredibly low, the unrealized revenue to SRIA/Escambia County will amount to $50 Million dollars over the life of this lease term.  How was this allowed to occur?

The 128 unit Beach Club condominium complex at Pensacola Beach recently renegotiated their lease with the Santa Rosa Island Authority.

The original 1949 lease had been amended in 1985 (but this amendment was not recorded) and it was amended again in 1985 a second time (recorded).  The original lease was set to expire in 2048--but instead the Island Authority renegotiated this renewal, ahead of schedule and on VERY favorable terms for Beach Club.  This happened in 2017 and the parties signed a new amendment in January of 2018--starting the clock on a brand new 99 year lease.

Because of the changes made to this renewal that was just completed and finalized this year--the properties on this land will only pay ad valorem taxes on improvements, not on the land.  The property's owners will pay a lease fee to the SRIA.

This lease fee, according to the property appraiser, is a total of $23,593.78 yearly----- or just $184.33 per unit per year!!

This amount of a lease fee for such a valuable piece of Gulf-front property is ridiculously low, so much so that I feel it is borderline scandalous.  Why was this rate negotiated down to such a small amount?  Who decided this was appropriate?  Why are the taxpayers that own this land being treated so unfairly in this deal?   These are questions I am asking and that I will continue to ask until I get a good answer.  So far I have received no good answers. (Similarly priced condominiums on the Gulf of Mexico in Perdido Key pay in excess of $4000 MORE yearly in taxes and fees as do the 128 owners of Beach Club now as a result of this "re negotiation.")

Meanwhile, a quick look at section VI of the second amendment to the original Beach Club lease, signed in 1985, clearly states that the minimum rent [lease fee] will be $25,000.00 or $500.00 per unit per year, whichever is greater.[EMPHASIS ADDED]    So why is the lease fee only $184.33 per unit 20 years later in 2018 when the minimum per unit 20 years ago was $500 per unit?  Why?

This same section, section VI, goes on to state that the rental amounts will be tied to the "CPI, 1967,

all urban consumers" and recalculated every 5 years based upon this rate.  I am told this escalation did not occur in 2015, nor was it enforced in 2010.  I have asked if contract provision was enforced in 2005 and I have been told by the Island Authority that "we're not sure."

($500 dollars today, in 1988 dollars, is $1,065.25)
$500 dollars today, in 1967 dollars, is $3773.02

What the heck is going on out at SRIA?????


The last sane person on Earth said...

Keep after it Commissioner! Our county needs the revenue. We also need transparency and fairness.

I’m convinced that we need to transition to fee simple on the beach. If I am correct, we will eventually get there. The only unanswered question is how much tax revenue our county will forgo before we come to our senses and take action.

Scott Trotter said...

As Jeff has stated in the past, we can structure the lease fees and taxes to match what the property taxes would be if they owned the land with out fee simple. We just need to do it.

Anonymous said...

Who is on the hook for cleaning rubble on Pensacola beach after the next hurricane?

If fee simple makes the people, who in my opinion, are foolish enough and are risk takers to actually build something on a barrier island responsible to clean up then go to fee simple. It should have never been built on in the first place. Wise man builds his house upon a rock, foolish man builds his house upon the sand.

Get the money in the general fund of the county for ad valorum and put the cost for the clean up on the ones who chose to build there.

The tourists come over the mainland roads and clog up traffic so lets get the money for infrastructure in the budget for the rest of the county.

Thanks for trying to sort this out although there will be weeping and gnashing of teeth, you seem to be destined for some of the harder jobs in the county because you have a backbone and a brain. Great combination.

We did the non binding referendum and most don't want more building out there, so honor that, oh and don't sink debt in stupid pedestrian tunnels and round abouts. How asinine is that? Funny dudes from Gulf Breeze want that and no one is having a cow, like the PEDC Gulf Breeze whiners.

Even if it does make a bunch of yellow shirt Democrat women all riled up, do it if you can't get an equitable lease fee settlement otherwise.

Democrats these days are not the smartest bulbs on the ole Christmas tree ya know. I mean they don't want a wall? How crazy is that?

Anonymous said...

edit *brightest bulbs

Jeff Bergosh said...

Merry Christmas to Anonymous and the "Last Sane Person on Earth." I do not believe fee simple is in the cards any time soon, too heavy a lift given all that has transpired over the last 18 months on that topic. Additionally, the BCC has taken an official position of no position on this matter. With this as the backdrop, and making no value judgments as to what is better, lease fees or fee simple, I believe we MUST go to plan B, which is ensuring lease fees for newly renegotiated leases match what ad valorem revenue would be or would have been for the same property. We also need to let the owners of the properties make the choice upon renegotiation: 99 year perpetually-renewing lease or 99 year lease with option to re negotiate and renew at the end of the term. But in either case, full taxes or market rate lease fee with ENFORCED CPI escalation clause added. This way, everyone pays full rate, no more wink and nod sweetheart deals like Beach Club. That disaster, which is being looked at closely as we speak, was a scandal. And the amount being charged does not even come close to what was mandated through a 1985 addendum to that lease. Not sure about how/why that happened but I have several folks looking at that deal under a microscope. We cannot ever allow that sort of game to be run on the taxpayers. Anonymous, I appreciate your complimentary words, and I certainly do not mind going after the problems and leading the way to a solution. But it has been one thing after another since I got on this board. I can't wait to actually start working proactively for the county rather than re actively. Hopefully we can start this in 2019?

Anonymous said...

Merry Christmas Happy New Year Do the people who live there and lease there want Escambia County to give.. Seriously. GIVE.. The leased property to them? Dude Looks like a lady seems to advocate that... So sell it to them?? I think this is just going to go on and on and on.