Could there be a BCC VETO on an Upcoming SRIA Decision?

There is litigation ongoing regarding a lease renewal request from one leaseholder group and the Escambia County Property Appraiser's office. 

I was recently made aware of it and have subsequently spoken to numerous folks intimately familiar with the issue and the majority of whom believe a compromise proposal that has been put forward by the island lease holders in the case is fair and would solve the impasse in a way that is beneficial to the taxpayers.

I'm told this particular settlement/lease renewal proposal:

--Allows the leaseholder to renew the lease early

--makes the lease one that renews in perpetuity and therefore will pay ad valorem taxes on improvements and the land

--agrees to an annual lease fee to the SRIA that increases and will be tied to the CPI--which will be memorialized in the lease

Quixotically--it appears and I am told some staffers and others with the island authority are not on board with this settlement and lease renewal proposal and are working against it.

I hope not.  I've also heard anecdotally that my name got thrown into the mix as being a commissioner who would not support this settlement.

But nothing could be further from the truth.  We need to start getting better terms in these renewals for the owners of the property (the taxpayers of Escambia County) and worry less about the fees for the property managers (SRIA).  I've screamed this loudly on multiple occassions in the wake of the Beach Club FIASCO at the SRIA.  We desperately need one lease template for these renewals going forward, too.

My simple question is this:  Why fight this??  This settlement appears to be a win-win and could serve as a template for many other beach renewals that are in the pipeline.  It puts this property on the tax rolls, pays a lease fee with escalator to the SRIA   and settles the lawsuit currently arguing this land should not be taxable.  (a lawsuit that Escambia County taxpayers are paying for through the BCC's footing of the bill for Chris Jones' attorney to defend this suit)

In speaking with at least 3 different lawyers recently on this very topic--I just do not see why this settlement proposal is languishing.  Maximizing the benefit to the property owners (ALL the taxpayers of Escambia County)  MUST be the priority---not maximizing lease fees irrespective of the ad valorem taxation implications for the maximization of lease fees to SRIA.

So I am eager to see how this vote for this lease and settlement goes.  If it is not approved when it appears all the parties appear to agree it makes sense--then maybe we as the BCC need to veto the rejection and accept the terms of the settlement from these island leaseholder over SRIA's no vote.

Tens of millions of dollars are potentially at stake if this current lawsuit is lost.

Much more to come on this.

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,

Unpacking the Beach Lease Mess Part II: Fixing the Problem Going Forward

Although we may not be able to fix some very bad deals (For Escambia County) that were negotiated in the past, we MUST reform the re negotiation process going forward.  This MUST happen.  

As I've discussed at the last meeting, and as I discussed here, here, and here--there is a massive problem with the way several recent "re-negotiations" have been handled at Pensacola Beach.

Several have and/or will lead to a staggering loss of revenue for the taxpayers going forward.

Some are questioning now whether the most egregious of these renewals can or should be "unwound" because the terms are so destructive to the taxpayers that own these properties.  

We shall see how that unfolds....

Meanwhile, we must fix the problem going forward, we MUST prevent this abuse of the taxpayer from EVER happening again in the future.  I have put together a simple, multi-step plan that I believe will solve the problem, make things right, and address this issue going forward.  It goes like this:

   --Establish a moratorium on ANY more large condo lease renewals by SRIA and without BCC    authorization until a standard process and standardized lease models/templates can be put into place with the SRIA.

1       --No renewals of any existing “Master Leases” ever.

2     -- No leaseholder shall be compelled to renegotiate any executed, lawful lease prior to expiration         UNLESS such a leaseholder makes the affirmative choice to do this. (in other words, if the status quo of your lease is to your satisfaction, you do not have to make any changes to what you are paying now-if you want to renegotiate early—you can)

3      --Homestead property that currently carries a perpetually renewing lease and pays full ad valorem         

Unpacking the Beach Lease Mess Part I: Who Owns the Beach?

The subject of Pensacola Beach leases draws lots of heated opinions and positions.  I only care about insuring we don't ever again get taken to the cleaners via pennies on the dollar lease arrangements with the owners of million-dollar condos on the Gulf...

Last week the BCC had a good discussion on the various problems with the leases on Pensacola Beach.  For those that are interested, the video of that discussion is here.

The problem with any discussion about leases, lease fees, and taxes--is that other issues get brought into the discussion to conflate the underlying topic....then the discussion devolves among those various "camps" of folks that have differing agendas.  Beach Lease Holders that pay full ad valorem taxes on improvements and land+ Lease fees, Condo Owners that pay ad valorem taxes just on the improvements and not the land + Lease fees,  The property appraiser, The SRIA, the Escambia Board of County Commissioners, Activists that want to prevent fee-simple title from ever being granted to private parties for any part of this land, and last but not least, the Lawyers on both sides of the issue who make lots of money fighting over valuations of appraisals and other aspects of the leases and taxation.

For my part--I simply want equity by and between lease holders going forward.  I do not want to re-litigate the past, nor do I want to discuss the distinctions between fee-simple title and leases.

Should million dollar condos on the Gulf at Pensacola Beach pay about half the amount of taxes and fees of what million dollar condos on the Gulf in Perdido Key pay?

In short, I simply want to insure that a "Beach Club" type lease renewal NEVER again happens to the taxpayers.

So let's just boil it down and start with the basics, and work our way down to what matters, and to do this we will ask some rhetorical questions.  (then I'll provide answers that are my opinions and what I believe to be true with supporting facts, however I am open to any dissenting opinions)

1.  Who is the lawful OWNER of ALL the property that was deeded to Escambia County via the 1946 Public Act of Congress and subsequent 1947 Conveyance granted to Escambia County---including those portions that currently lie in Santa Rosa County?

Answer: The Citizens of Escambia County and NOBODY ELSE! (But multiple, subsequent sub- leases of various portions of this land have been made by Escambia to Santa Rosa County, and to private parties in Escambia County.  And multiple leases have been made between Santa Rosa County and private parties on the portions of properties leased to Santa Rosa County that lie in Santa Rosa County)

2.  Was it, and is it, legal for Escambia County to enter into leases, including leases that are perpetually renewing, for portions of this one large property that was given to Escambia County by the Federal Government in 1947?

Answer:  Yes--(otherwise someone would have challenged the underlying legality of the granting of these initial and subsequent leases  in court at some point--or the courts would have at some point weighed-in on this question and invalidated these leases at some point over the course of one of  the court's multiple "cracks" at this question during litigation over the last 5 decades on various aspects of beach leases.....)

3.  Is there a distinction to be made between Ownership of Beach Land under Land Title Law and Equitable Ownership of  the same Beach Land for Tax Purposes under the Law?

Answer:  YES--1000% yes  (More than half of the leases made by Escambia County to various 

The Return of Fee Simple??

Some folks want us to start the fee simple battle all over again........

The PNJ has a story out on the electronic edition today about the return of the fee simple bill that would allow for private ownership of leased properties at Pensacola Beach.

The Escambia Board of County Commissioners has taken a 5-0 vote to adopt a position on this topic of "no position."

We also passed a preservation ordinance that was the result of a lot of discussions, compromises, and gnashing of teeth.

We then put a non-binding referendum on the ballot-- just a few weeks back--- that passed by an overwhelming majority of Escambia Citizens.

So no, I do not think the fee simple bill is coming back.  That's my guess, that's my observation.

I'm told that Santa Rosa County is pushing hard for a return to the fee simple bill so that property owners in Navarre Beach can get fee simple title to their properties out there.

I don't know how that happens if step one is getting Escambia County to agree.  This will be an interesting conversation going forward.

For my part, I just want to see us get to a point where the lease structure is more equitable for current leaseholders out on the beach,  I want to make sure no more condo complexes get the sweetheart renewal deal the Beach Club recently negotiated (to the detriment of Escambia County as the owner

Fixing the Lease Renewal Process on Pensacola Beach

.....As discussed at our last meeting and also at our joint meeting with the SRIA--this Thursday we will start the discussion on formulating a uniform practice/policy for renewing leases at Pensacola Beach. 

As we all saw and heard from property appraiser Chris Jones's presentation last month--there are a lot of inequities between residents in terms of who pays taxes, who doesn't, and who has market-rate lease fees and who doesn't.  

There are lots of problems with the way the leases have been written-lots of inconsistency where taxpayers were treated very poorly---including the disastrously bad renewal recently of a huge condo complex where  the lease fees--- for these posh $750,000K-$1.5Million Dollar Gulf-front condos--will be a mere $185 dollars a year on the land portion of the tax bill!

This was a great deal for owners of that condo complex--but a horrible deal for the true owners of all the land--Escambia County Taxpayers.  Too late to fix that one.....

So to prevent deals like that from ever happening again to Escambia County Taxpayers--I asked our attorney to draft some potential guidelines  topics of discussion for the board related to lease renewals going forward that the BCC could codify into a policy that would standardize the lease renewals.

This will all be discussed this Thursday at the committee of the whole.  See the very intelligent initial ideas in the six slides below:

So What is Going to Be Discussed at the Joint BCC/SRIA Meeting next Month?

There will be several topics of great interest discussed at next month's BCC/SRIA joint meeting....

I was asked today, by a member of the media, what sort of topics would be discussed at the joint BCC/SRIA meeting next month....

I replied that the agenda is not yet compiled, and I have no idea what topics my counterparts might bring--but that I will be bringing the following 4 items for discussion:

--Toll Booth (full automation and price reduction to ease congestion at toll plaza)

--Beach Parking (Addition of some paid, premium parking to make up revenue from toll reduction with the goal of achieving a revenue-neutral outcome from the adjustments)

--Lease Renewals (Working toward equity between and among lease holders)

--Roundabouts (Do residents believe these are necessary and do residents want these?)

I anticipate these topics will elicit some robust debate/discussion......

Beach Breakthrough?

After months and months of discussions and back and forth arguing--there is the potential for an agreement on preserving the public areas of the beach and keeping them public--precluding future leases in areas that are currently public, etc.

Commissioner Robinson has put forth several proposals in an attempt to compromise with folks who prefer to have a ballot initiative.

The frustrating thing for me to watch is the fact that I think both parties want the same thing--open areas of the beach to be preserved for the use and enjoyment of the public.

The draft resolution, below, may just do the trick.  The full BCC will have to weigh-in--but this could be it, this could be the "Beach Breakthrough" we have all been waiting for

We shall see......

What are the Economic Consequences for the BCC if the Beach Property Tax Decision Stands?

Escambia County is holding $9.8 Million Dollars in escrowed tax proceeds from Beach Leaseholders--and will return this money to taxpayers if the recent ruling from the DCA stands

Some Pensacola Beach Condominium owners were happy with last week's decision from the 1st District Court of Appeals--because the decision sided with their cause;  they will not have to pay ad valorem taxes on the property they lease--only on the improvements made to the leased land--if this decision stands.

The story was covered extensively by the local media.

News outlets have also reported, and I have confirmed with reliable sources, that this decision will be appealed by the property appraiser.

But what are the economic consequences for the BCC's budget  if the beach tax decision stands for Escambia County (Pensacola Beach) lease holders?

I have asked the question of staff and have been told that we (Escambia BCC) have escrowed the funds that were subject to this decision for the last five tax years, 2011-2016, in the event that the monies collected have to be returned to these lease holders.

Currently, the county holds roughly $9.8 Million dollars in reserves for repayment of these tax remittances--if the court upholds the DCA ruling and we are ordered to refund the monies collected.

Although it is difficult to ascertain the exact financial impact the decision would have if it stands--I am told that it would be safe to estimate the reduction in tax collections for the county going forward to be between $1.2-$2.2 Million dollars yearly.....

But everything remains in limbo for the time being and until such time as all the appeals are settled.  And we will keep escrowing these funds as we collect them-- in the event that we have to return them at some point down the line.