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 12, 2018

How $92 Million Was Given Away, and Nobody is Held to Account, Part I

Two (2) ill-conceived lease renewals at Pensacola Beach in 2016 will cost Escambia County Taxpayers more than $92 Million in un-realized revenue over the course of these particular lease terms.  This should not have happened, and it should never happen again.

In 2016 a lot was going on.

There was a campaign going on, and it was drawing lots of attention.

There were local campaigns, and folks were pre-occupied with a lot of stuff.

I had my hands full with my own campaign for BCC in 2016.  I was busy.  We all were busy. I wasn't on the Board of County Commissioners yet.

Amid this backdrop, two very important things happened that will cost Escambia County Taxpayers a TON of money going forward...  How much, you ask?   How about this.  Get Ready.


This is a tremendous sum of money and the taxpayers should not have been subjected to this steep a loss---but the deal is done, it happened, and there is no going back and unwinding it.

This is what we lost..... But how did this happen??

Two condominium complexes on Pensacola Beach "Re-Negotiated" new 99 year leases at ridiculously LOW per year, per unit lease fee rates for their respective Gulf-Front properties in 2016.

The immediate impact is the lease fees for these properties are significantly less than what similar properties in Perdido Key are paying.  When one looks at the delta between what similar properties in Perdido Key pay and what these two complexes in Pensacola Beach will pay--it is inconceivable to the average could this have been allowed to happen?  How?

There's a huge delta between Pensacola Beach property tax payments and what similar properties in Perdido key, above, pay.

Because we don't have a time machine and we cannot go back after the fact and "unwind" these deals-the only thing we can and should do going forward is to learn from our mistake. We should never, ever allow the taxpayers to be treated so badly.  Ever.

So how do we fix this going forward?  Here is what I propose....

From now on, ANY new lease with SRIA, any renegotiated lease, should be required to be either

A.  Perpetually renewing, which courts have determined will pay ad valorem taxes on property and improvements


B. Renegotiable at 99 year increments--which will preclude ad-valorem taxation.  But such leases will, and should, however, pay a MARKET RATE lease fee to SRIA for the land portion of the property, complete with escalation clauses worked into the renewal to insure the lease fees keep pace with inflation.

It has to be one or the other, this is only fair.  It can never again be a re-negotiable lease with a lease fee that is at the 1946 level.  This is nothing but a ripoff.  So we have to fix it by allowing the lessee to pick between two options as I have listed above.

If we do this, we will never, ever, again be taken to the cleaners like we were with the Beach Club and Emerald Isle Condo lease renewals in 2016.

We will fix this, it is time, and it is fair.


WRay said...

Commissioner Bergosh,

Our beach lease has the following language; "The Leesee, if not in default hereunder, may renew this lease for an additional term of 99 years upon the same taxes, conditions, and rentals, by giving written notice of renewal at least 6 months prior to the expiration of this term." I'm guessing this language is not unique and is some type of boiler plate language that may exist in may other land leases on Pensacola Beach.

Given this language, how do you propose to negate the terms and conditions that exist in the lease? I'm not an attorney, but it seems to me whatever rate was negotiated in 1959 for our land lease will remain in effect until 2058 if we're not in default. This may be true for other land leases, too. Do you know if the 2 land lease renewals that offend you were just a renewal at the same terms and conditions of the original 99 year lease? If they were, how did the county lose millions of dollars? If they were not the same renewals, could you explain how they were different than the original land lease?

I can't speak for our association, but it seems that any change like the change you're proposing would be met with another class action type lawsuit like the one against Chris Jones. At this point the county has already spent millions of dollars on that lawsuit and lost (requiring the county to refund millions of dollars). If funds are an issue, how can you justify another action by the county that will undoubtedly be challenged by lease holders at Pensacola Beach?

One more point - at a SRIA meeting this past year when they discussed some of the ramifications of your 100 year lease language, one SRIA board member brought up the fact that such action would harm them in getting funding for beach renourishment from the state. Are you aware of this, and if so, could you clarify why the language change would impede state funding?

All the best,

Bill Ray

The last sane person on Earth said...

Commissioner: You do good work. I’m pleased you serve our county. However, in this unfortunate circumstance, you and your fellow commissioners are directly at fault since you have direct authority over SRIA actions. You can delegate authority, but not responsibility/accountability.

If I understand this issue correctly, these multi family residences renewed their leases early. That should have been the lever used to compel them to accept a market rate.

Furthermore, revenues from Pensacola Beach are being mismanaged entirely. The Commission should be actively pursuing fee simple. Fee Simple would make more properties taxable ($1.3 million per year in added taxes according to Chris Jones). In addition, beach property values are depressed due to the unwieldy lease system. Fee simple would lead to higher values leading to higher County tax revenues. It is unfortunate that the Commission allowed itself to be kowtowed by Dianne Krumel and her acolytes at the PNJ.