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

Fixing the beach lease renewal process will help stem the subsidies from Escambia County Taxpayers for expensive properties on Pensacola Beach...

As we explained in Part I, the SRIA renegotiated two large condominium leases in 2016 that will result in $92 Million in unrealized income for Escambia County taxpayers over the term of those leases.

Congratulations to the individual owners of these condominiums for being on the positive side of such a favorable deal!  Good on ya!

But Escambia County and the SRIA are the losers here, because this creates a situation where millions and millions of dollars have been left on the table.  And taxpayers of Escambia County are and will be the losers.

Right behind these two 2016 condo complex renewals will come many more.  If we don't modernize the fees and standardize this process, just imagine how much revenue will be left "on the table" when these condos come in for renewal-----if we leave the rates unsustainably low as was the case with Beach Club and Emerald Isle??

That's why the disastrous method utilized currently to "renegotiate" these leases must be standardized and fixed on today's market rates.  Otherwise, Escambia County taxpayers will continue to absorb the subsidies that are being given to beach property owners via overly generous lease renewals.

How, you ask, does this affect Escambia County taxpayers?

Here's how.

Many of the services provided on Pensacola Beach are subsidized by Escambia County.  The less the SRIA takes in via leases, the more the county will have to pay (subsidize).  It is inversely proportional.

Here are some current examples:

Above:  A comparison of taxes paid by beach properties compared to mainland properties

Public Works and roads crews for Pensacola Beach  $2.5 Million Dollar subsidy from Escambia County Taxpayers

Via De Luna resurfacing?  $1.3 Million yearly paid for from County Funds.

Sheriff's Law Enforcement Services?  Subsidized more than $50,000.00 per year by Escambia taxpayers.

So we have to fix the lease renewal process going forward, we must.  This is the only way to insure everyone is paying a proportional amount for the services received.

This is an important issue I will stay-on until it is fixed.

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.

$92,100,096.

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 person....how 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

or

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.

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:

Pensacola Beach and the BCC: Reasonable Topics for Discussion

Tonight's joint meeting of the Escambia Board of County Commissioners and the Santa Rosa Island Authority is a meeting where, hopefully, reasonable topics can be discussed rationally and reasonably.  I called this meeting so some important, pressing issues could be discussed and also so  that a sense of where individual Commissioners and Authority Members are on these issues can be known.  Leases and renewals, Roundabouts, parking, and the toll booth---Are these reasonable topics for discussion?

I certainly believe they are and I look forward to the dialogue.

1.  Leases and lease renewals:  there are disparities and inequities among and between lease holders on the beach.  Some leaseholders pay taxes on the land and the improvements and lease fees, some pay tax on the improvements and not on the land (but they pay nominal lease fees and a beach fire MSBU), recently an entire condo complex of 93 units renewed their leases (lease fees) for essentially $280 dollars per year per unit--which is significantly, dramatically below market value.  The taxpayers were not treated well at all in that instance.  So what is reasonable here?  I think it is reasonable for the BCC to set some rules for renewals going forward so the taxpayers are treated fairly as these leases come in for renewal.  These $150 yearly leases were designed to incentivize beach development--and that has now happened.  Now it is time for market rate lease fees on new renewals, and  I will suggest that we require a few things of those interested in renewing their leases going forward....

--No master lease renewals? (lease renewals with individual property occupants only--not with master lease holders that charge sub lessees a margin over their cost)--is this reasonable?
--Individual leases to be renewed?  Should individual renewal leases carry either new language stipulating they become a perpetually renewing lease (that requires payment of ad valorem taxes on land and improvements and no lease fees) OR language delineating these individually as  99-year leases with a current, market rate lease fee on land payable yearly to SRIA (in an amount not less than what ad valorem tax on such land would be) and ad valorem taxes payable on improvements--and no lease fees to SRIA.?  Would this be reasonable?
--All leases to be recorded with the clerk.  Is this reasonable-- It is not happening now but I think it is reasonable to expect this going forward.
--Any other stipulations that make sense and are reasonable to guide the actual renegotiation of these leases?

2.  Parking--should we consider carving out some prime parking spots at the casino beach lot (perhaps 50% of the lot) for premium paid parking?  (with 50% of  casino beach and lots outside the beach core remaining "free parking")  How much more parking should we build and where?

3.  Toll Booth--should we make it fully automated, in stages over a two year period?  Should we reduce the cost to $.50 cents and make up the difference with the parking fees?  Should we remove the toll altogether and make 75% of the casino beach lot a paid lot to achieve the same revenue as the toll booth would have generated if we remove the tolls altogether?

4.  Roundabouts--do the residents want these--or would making the toll booth automated or removing the toll booth altogether alleviate the traffic to the point where roundabouts become unnecessary?  Do residents actually want the roundabouts?  Is this reasonable to ask?

I look forward to some interesting and hopefully reasonable conversations at tonight's meeting.

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 Lease Taxation: What If All Leases at Pensacola Beach Were Changed to be Automatically Renewing Leases?

What would the tax ramifications for Escambia County be if all leases on the beach were changed, by ordinance of the BCC through the SRIA, to automatically renewing leases?

........we are discussing this right now in our meeting, the overall beach issue as it pertains to leases, etc. I just threw an idea out; not sure if it would be good or bad, but since we know the taxation of beach properties in Santa Rosa County is lawful (I know the Circuit Court Judge that ruled on the Accardo v Brown case, the one that was upheld at the DCA and the Florida Supreme Court) because all leases on the Santa Rosa County portions of Santa Rosa Island renew automatically which is tantamount to "ownership" --But here is the million dollar question: What would happen if the BCC through the SRIA made an ordinance that all leases in Escambia County at the Beach shall now and forevermore in perpetuity be automatically renewing (like the ones in Santa Rosa County). If Escambia did this, we could tax all leaseholders in Escambia County for improvements and for land-- because we know from Accardo this would be legal to do--because leases that automatically renew are for all intents and purposes equivalent to "ownership" for taxation purposes. 

---Not saying such a move would be popular or that it would happen or could happen--but it seems it would put the current strife to an end, legally, once and for all......