CRA District Tax Increment Financing Analysis - Delray Beach … · 2019. 4. 1. · Delray Beach...

CRA District Tax Increment Financing

Analysis

Prepared By

Delray Beach Community Redevelopment Agency Tax Increment Financing Analysis

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REPORT COMMISSION

The Delray Beach Community Redevelopment Agency (CRA) commissioned this report to

complete an assessment of the CRA District’s tax base growth since inception and to forecast the

growth from 2016 to the CRA’s sunset date in 2045 in order to assist the CRA with development of

a funding plan for services, programs, and capital improvements. The commission also includes a

comparative analysis of selected Community Redevelopment Agencies in Palm Beach and

Broward counties as well as an economic impact analysis illustrating the contribution to the Delray

Beach economy from investments made by the CRA since inception. The motivation for the report

stems from discussions the CRA has had with the City regarding the amount of property tax money

annually returned to the CRA from the City and its impact on the City’s finances and property tax

rates. Additionally, project prioritization and alignment have been expressed as an additional

concern. Discussions had been underway that attempted to investigate how best to address these

issues. The CRA Board desired to quantify and study the issues commissioned in this report.


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BACKGROUND AND HISTORY OF THE DELRAY BEACH COMMUNITY

REDEVELOPMENT AGENCY

A Community Redevelopment Agency (CRA) is a legal entity that is created by a municipality or a

county to address slum and blight in a specific area of the community. It is largely funded

through property tax increments (TIF, or Tax Increment Financing) that accrue on the properties in

its defined area. The increment is the change in taxable values in any year, less the taxable value

that existed in the base year of the CRA’s creation. The millage rates adopted each year by the

impacted taxing authorities are applied to the increment in taxable value. Each taxing authority

then returns the amount of the incremental tax revenue for the year to the CRA. The purposes for

which this money can be spent are restricted under the laws of the State of Florida. The Delray

Beach CRA currently receives TIF funds from the City of Delray Beach and Palm Beach County.

The City of Delray Beach City Commission established the Delray Beach Community

Redevelopment Agency on June 18, 1985, with the adoption of Ordinance 46-85.

We have taken the liberty of providing certain background information contained in the CRA’s

most recently adopted Community Redevelopment Plan, adopted by Ordinance 27-14:

“The authority to undertake community redevelopment was undertaken in accordance with the

Community Redevelopment Act of 1969, F.S. 163, Part III. In recognition of the need to prevent

and eliminate slum and blighted conditions within the community, the Community Redevelopment

Act confers upon counties and municipalities the authority and powers to carry out "Community

Redevelopment” as defined in the Statutes:

"Community Redevelopment" or "Redevelopment" means undertakings,

activities, or projects of a county, municipality, or community redevelopment agency

in a community redevelopment area for the elimination and prevention of the

development or spread of slums and blight or for the provision of affordable housing,

whether for rent or for sale, to residents of low or moderate income, including the

elderly, and may include slum clearance and redevelopment in a community

redevelopment area, or rehabilitation or conservation in a community redevelopment

area, or any combination or part thereof, in accordance with a community

redevelopment plan and may include the preparation of such a plan.

The ability of a county or municipality to utilize the authority granted under the Act is predicated

upon the adoption of a "Finding of Necessity" by the governing body. This finding must

demonstrate that:

(1) One or more slum or blighted areas, or one or more areas in which there is a

shortage of housing affordable to residents of low or moderate income,


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including the elderly, exist in the county or municipality; and,

(2) The rehabilitation, conservation, or redevelopment, or a combination thereof,

of such area or areas, including, if appropriate, the development of housing

which residents of low or moderate income, including the elderly, can afford,

is necessary in the interest of the public health, safety, morals, or welfare of

the residents of such county or municipality.

Creation of the Community Redevelopment Agency

Upon a "Finding of Necessity" by the governing body and upon further finding that there is a need

for a Community Redevelopment Agency to function in the county or municipality to carry out

community redevelopment purposes, any county or municipality may create a public body

corporate and politic to be known as a "Community Redevelopment Agency." The Agency shall be

constituted as a public instrumentality, and the exercise by the Agency of the powers conferred by

F.S. Chapter 163, Part III shall be deemed and held to be the performance of an essential public

function.

The City of Delray Beach City Commission established the Delray Beach Community

Redevelopment Agency on June 18, 1985, with the adoption of Ordinance 46-85. The

organizational structure of the agency was also established at that time. It consists of a board of

seven members appointed by the City Commission. The term of office of the board members is

four years. A vacancy occurring during a term is filled for the unexpired term. The provisions of

Ordinance No. 46-85 have been codified in Article 8.1 of the City’s Land Development

Regulations.

Powers of the Community Redevelopment Agency

As authorized by the Community Redevelopment Act, a wide variety of powers are available to the

City of Delray Beach to carry out redevelopment activities. While most of these powers may be

delegated to a Community Redevelopment Agency, others may not. These powers, which continue

to vest in the City Commission, are as follows:

o The power to determine an area to be a slum or blighted area and to designate such

an area as appropriate for community redevelopment;

o The power to grant final approval to community redevelopment plans and

modifications thereof;

o Prior to the approval of the community redevelopment plan or approval of any

modifications of the plan, the power to approve the acquisition, demolition, removal,

or disposal of property and the power to assume the responsibility to bear loss;

o The power to authorize the issuance of revenue bonds.

The powers which the City Commission has chosen to delegate to the Delray Beach Community

Redevelopment Agency under City Ordinance No. 46-85 include the following:


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o The power to acquire property deemed necessary for community redevelopment,

except that the use of eminent domain (for public purpose) shall require specific

approval from the City Commission;

o The power to hold, improve, clear, or prepare any acquired property for

redevelopment;

o The power to dispose of property acquired within the community redevelopment

area for uses in accordance with the plan;

o The power to construct improvements necessary to carry out community

redevelopment objectives;

o The power to carry out programs of repair and rehabilitation;

o The power to plan for and assist in the relocation of persons and businesses

displaced by redevelopment activities;

o The power to receive and utilize tax increment revenues to fund redevelopment

activities.

In 1992, the City Commission adopted City Ordinance No. 17-92 which delegated the following

power to the CRA:

o The powers to appropriate such funds and make such expenditures as are necessary

to carry out the purposes of the Community Redevelopment Act of 1969.

Other powers authorized by the Act but which the City Commission has elected not to delegate to

the Agency are:

o The power to zone or rezone any part of the city or make exceptions from building

regulations;

o The power to close, vacate, plan, or re-plan streets, roads, sidewalks, ways or other

places and to plan or re-plan any part of the city.”


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The Community Redevelopment Plan

All public redevelopment activities expressly authorized by the Community Redevelopment Act

and funded by tax increment financing must be in accordance with a redevelopment plan which has

been approved by the City Commission. Like the City’s Comprehensive Plan, the Community

Redevelopment Plan is an evolving document which must be evaluated and amended on a regular

basis in order to accurately reflect changing conditions and community objectives. All

redevelopment financed by tax increment revenues shall be completed no later than thirty (30)

years following the adoption of this amendment to the plan. The most recent Plan was adopted by

City Ordinance on September 16, 2014.

It is worth noting here that the statutes place great weight on the Community Redevelopment Plan.

The law contemplates a document that is adopted by the elected City Commission and that only

those activities that are authorized by the document can be undertaken. Neither the CRA Board,

the City Commission, nor any of their appointed officers or employees can spend any funding

provided through the tax increment for activities outside those authorized in the adopted plan.

We emphasize this aspect of the law because it is designed to align the goals of the elected body

with its appointed Board. It is expected that plans and needs change over time, but that they

should be contemplated and deliberated through the process of periodically adopting the

redevelopment plan.


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PROPERTY TAX INCREMENT ANALYSIS

The CRA provided subarea maps that were used in establishing the areas for tax roll analysis.

Working with the Palm Beach County Property Appraiser’s Office (PBCPA), we obtained the

tax rolls and maps for the properties entirely within the boundaries of the CRA. For the base

year, the only records still available are microfiche (com fiche or computer output). The

images on the microfiche are the folio/parcel summary information that contained the

following information for each parcel:

1. Folio Number (Parcel Number)

2. Owner(s)

3. Owner Mailing Address

4. Short Legal Description

5. State Land Use Codes

6. Just (Market) Values of Land and of Buildings

7. Exemptions From Taxation

8. Taxable Value

9. Millage Rates Applied

10. Property Size

11. Mortgage Holder Codes

Since the last time the CRA used these records, changes in their use and accessibility have

been made by PBCPA. The office no longer allows anyone to handle the microfiche directly

and the staff that managed the microfiche operation have been eliminated from their budgeted

positions. After a few weeks of working with the PBCPA, they allowed the microfiche to be

couriered to a service provider that converted the images on the microfiche to an electronic

format that we were able to use on our systems. From these converted files, we extracted the

following information:

1. Folio Number (Parcel Control Identifier)

2. Just (Market) Values of Land and of Buildings

3. Exemptions From Taxation

4. Taxable Value

We would note here that the folio number used in the base year is a different format and

codification than the one used currently. The subarea information had to be applied distinctly


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to the base year information and to the computer files provided by the PBCPA (which began

starting with year 2000). We analyzed the data to make sure it was consistent from year-to-

year and found the data to be very reliable.

The PBCPA also provided copies of the tax maps to aid in the identification of parcels in each

subarea. The tax maps provided were hard copy plots. The maps utilized were for the

following areas, denoted by the sections, townships, and ranges within Palm Beach County:

1. 43-46-04

2. 43-46-08

3. 43-46-09

4. 43-46-16

5. 43-46-17

6. 43-46-20

7. 43-46-21

The microfiche cards related to these maps were provided to us in a converted format and were

as follows:

1. 248

2. 250

3. 251

4. 252

5. 253

6. 254

7. 255

8. 256

9. 260

10. 261

11. 262

The maps used for determining the geography of each subarea were provided by the CRA.

The map reproduced on the following page illustrates the subareas studied for this report:

(continued)


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Map Of The CRA And Its Subareas

Subarea 1=Beach District Subarea 5=N. Federal Highway

Subarea 2=Central Core Subarea 6=Seacrest/Del Ida

Subarea 3=West Atlantic Avenue Subarea 7=Osceola Park Subarea 4=NW Neighborhood Subarea 8=SW Neighborhood


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Historical Market Value Growth

This study focuses on both the growth in market value and the growth in taxable values.

Florida requires that all properties be fairly valued as of January 1st each year, though these

values are not generally formally set until July 1st, and then subject to slight changes afterwards.

Taxable value is the market value less any exemptions that might be applied to a property.

Prior to 1995, Florida allowed for exemptions generally for homestead properties and for

widowers on residential properties. Government and not-for-profit entities generally were

provided full exemptions from taxation. In 1995, voters approved the “Save Our Homes”

amendment that provided for annual caps of 3% on assessments to homesteaded properties.

Then, in 2008, voters also approved the “Portability of Save Our Homes”, which increased the

homestead exemption to $50,000 from $25,000 and allowed homeowners the ability to transfer

all or a portion of their accumulated Save Our Homes exemptions to a new property elsewhere

in Florida. As a consequence of these two changes, the spread between market value and

taxable value can be quite noticeable over time.

In this section, we’ll look at how the market value of the property has grown over the study

period. This is the value the property owner would be expected to receive in an arms-length

transaction. Chart 1 illustrates the growth in market value, which increased by

$2,030,596,320 or 779%.

(continued)


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Chart 1. Historical Market Value Growth Of Entire CRA Area

This growth rate is notable in many ways. The most noticeable trend shows the effect of the

real estate bubble that burst in 2007-2008. This is a classic bubble illustrated in hindsight.

The graph also allows a visual “connect” from the 2004 period, when values began to deviate

sharply higher to the 2012 year where the correction to prices seems to stabilize. If one looks

at the trend developing up to the bubble that started about 2005 and then ignore for the moment

the bubble that ended about about 2010, it seems apparent that the growth in the market value

is fairly linear. Only now in 2015 do values seem to have returned to their 2007 highs, but

they appear to be where they were headed in 2004. Values in the CRA area have a

compounded annual increase of about 7.3%, which includes all uses of properties in all areas.

However, that growth rate has not been equal across subareas. Chart 2 illustrates the changes

graphically by subarea and Table 1 notes the compounded rates of return for each subarea:

(continued)


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Chart 2. Historical Market Value Growth Of CRA Subareas

-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

900,000,000

1,000,000,000

1985 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1-BeachDistrict

2-CentralCore

3-W.AtlanticAve

4-NWNeighborhood

5-N.FederalHwy.

6-Seacrest/DelIda

7-OsceolaPark

8-SWNeighborhood

Chart 2 shows that what is typically thought of as the “Downtown Core” has shown the most

improvement in values. This can be viewed as a type of testament of what can happen when

vision and planning are well executed. Clearly, the CRA over time has done a remarkable job

transforming this area and improving values to property owners. In turn, the CRA has reaped

the benefit from increased revenues. But, as noted, the overall growth rate in the CRA, while

stellar, has seen different outcomes in the different subareas, as noted in Table 1.

(continued)


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Table 1. Compounded Annual Rates Of Market Value Growth In CRA Subareas

1985-2015

2015 Subarea

Compounded

Return

374,030,529 1 - Beach District 6.96%

865,054,001 2 - Central Core 14.08%

165,010,063 3 - W. Atlantic Avenue 5.81%

91,214,328 4 - NW Neighborhood 4.38%

248,789,682 5 - N. Federal Hwy 7.42%

195,169,632 6 - Seacrest/Del Ida 5.60%

120,191,303 7 - Osceola Park 5.52%

231,850,474 8 - SW Neighborhood 4.40%

2,291,312,027 Total CRA Area 7.30%

The largest percentage change was in subarea 2. Percentage change can be one indicator of

growth, but looking at the subareas in absolute dollar gains in market value we can see the

growth in a different light. Table 2 notes the dollar change over 30 years for the CRA

subareas:

(continued)


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Table 2. Absolute Dollar Growth of Market Values In CRA Subareas

1985-2015

Subarea

30-year Dollar

Change

Percent

Change

1 - Beach District 324,367,295 653%

2 - Central Core 848,446,673 5109%

3 - W. Atlantic Avenue 134,665,141 444%

4 - NW Neighborhood 65,992,570 262%

5 - N. Federal Hwy 219,716,711 756%

6 - Seacrest/Del Ida 157,062,571 412%

7 - Osceola Park 96,224,555 401%

8 - SW Neighborhood 168,111,811 264%

Total CRA Area 2,014,589,343 728%

Here we note that the largest dollar value change over the 30-year period occurred in subarea 2,

the central core area. The subareas with the least market value increases were subareas 4 and 7,

which are largely residential in nature.

The composition at the last valuation date (January 1, 2015/Tax Roll 2015) shows that in all

subareas, residential uses are the predominant use. Some of the data from the PBCPA’s

office did not include the state land use codes. For Subarea 2, the majority of these properties

were mixed-use office/retail/residential. In the remaining subareas, we reclassified the

properties to their obvious current use. Table 3 notes the values of properties by use in each

subarea. We have omitted values that were in rights-of-way or otherwise undevelopable

parcels that had market values assigned by the PBCPA’s office. Thus, the sum of these uses

in Table 3 will be less than the total market value of each subarea or the CRA as a whole.

(continued)


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Table 3. 2015 Market Values By Property Use Category And Subarea

Subarea Residential Commercial Industrial

Government/N

FP

Misellaneous

Uses

Not Classified or

Mixed Use

1 - Beach District 213,276,960 109,344,861 - 6,746,993 - -

2 - Central Core 378,510,040 261,991,263 12,740,604 58,240,972 23,089,271 130,481,851

3 - W. Atlantic Avenue 71,638,001 25,820,637 253,752 65,368,359 - -

4 - NW Neighborhood 63,411,203 1,584,361 206,136 25,833,746 - -

5 - N. Federal Hwy 159,257,759 72,503,046 16,140,298 805,779 82,800

6 - Seacrest/Del Ida 152,317,385 15,663,608 1,219,729 25,968,901 - -

7 - Osceola Park 67,739,551 38,817,776 10,779,004 2,141,555 713,417 -

8 - SW Neighborhood 172,578,816 4,775,810 8,369,633 46,124,218 1,893 -

We have adjusted the Subarea 1 Government/NFP category to remove the beach area that the PBCPA includes in the CRA area. We have estimated

the market value of the city-owned parcel located at the corner of Atlantic Avenue and A1A. We have used the actual value of improvements and

valued the land at $175/sf based upon adjoining parcels.

As can be seen, the predominant use in each subarea as judged by market value is a residential

use.

Historical Taxable Value Growth

Market value is interesting to study because it represents the total value of the property to the

owner as of the valuation date. However, the effects of the various property tax exemptions

allowed on property can reduce market value significantly for property tax purposes. Also,

the CRA receives its tax increment revenue on the taxable value and this is what will be

forecast later in the report.

Using the same data and techniques previously described, we calculated the changes in total

taxable value over the study period. As can be seen in Chart 3, the taxable values in the CRA

district, as expected, increased significantly over the study period.

(continued)


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Chart 3. Historical Taxable Values In CRA District

-

200,000,000

400,000,000

600,000,000

800,000,000

1,000,000,000

1,200,000,000

1,400,000,000

1,600,000,000

1,800,000,000

2,000,000,000

1985 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

The growth rate in taxable values appears similar to that of market value, but, as Chart 4

illustrates, the spread between market values and taxable values jumped between the base year

and 2000 largely because of the Save Our Homes exemption enacted in 1998, and then again in

2006 because of the housing bubble. In 2008 and 2009, the Save Our Homes Portability

exemption came into effect. This would allow Floridians who moved into Delray Beach from

another Florida homestead to bring a portion of their accumulated homestead exemptions with

them. So, to the extent that actually occurred, it would explain part of the widening of the gap

between market and taxable values. Also in 2009, commercial properties would benefit from

a 10% cap on assessment increases, but this would not yet appear to have had a great impact.

The spread between taxable and market values appears to have stabilized, but there is a current

trend for the last three years where the gap is slightly widening. One can clearly see the benefit

to property owners of the exemptions provided for property tax purposes. We have also


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overlaid regression lines for both the market value and taxable value trends. It is interesting

to note the natural trends underlying the data as well as the relative spread between the two

values.

Chart 4. Historical Versus Taxable Values In CRA District

Chart 5 shows the taxable values for each subarea over the 30-year study period.

(continued)

-

500,000,000

1,000,000,000

1,500,000,000

2,000,000,000

2,500,000,000

3,000,000,000

1985 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Taxable Values Market Values Linear (Taxable Values) Linear (Market Values)


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Chart 5. Historical Taxable Value Growth Of CRA Subareas

0

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

700,000,000

800,000,000

1985 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1- BeachDistrict

2- CentralCore

3-W.AtlanticAve.

4- NWNeighborhood

5-N.FederalHwy

6-Seacrest/DelIda

7-OsceolaPark

8-SWNeighborhood

Much like the market values described earlier, the taxable values have also shown notable

increases over the study period. Table 4 shows the compounded increases over the 30-year

study period.

(continued)


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Table 4. Compounded Annual Rates Of Taxable Value Growth In CRA Subareas

1985-2015

Sumof2015TAXABLE

2015 Subarea

Compounded

Taxable Value

Return

269,428,230.0 1 - Beach District 5.98%

668,281,558.0 2 - Central Core 12.55%

72,578,378.0 3 - W. Atlantic Avenue 4.69%

31,536,479.0 4 - NW Neighborhood 1.89%

193,932,069.0 5 - N. Federal Hwy 5.68%

108,173,722.0 6 - Seacrest/Del Ida 4.22%

94,941,047.0 7 - Osceola Park 4.29%

119,228,901.0 8 - SW Neighborhood 3.09%

1,558,100,384 Total CRA Area 6.35%

Here we note a few things. The taxable values (which is market value less exemptions) are

1.89% and 3.09% in subareas 4 and 8, respectively. We can infer that the various homestead

exemptions, particularly the Save Our Homes amendment, have retarded the growth in taxable

values in those areas. Subarea 8 also includes tax-exempt uses and multi-family

affordable/workforce housing projects that typically yield a lower taxable value growth rate.

We recall from Table 3. 2015 Market Values By Property Use Category that these subareas are

almost entirely residential or governmental/not-for-profit uses. Governmental and not-for-

profit parcels are usually wholly exempt from property taxation. This has ramifications for

the CRA’s TIF. These low growth areas (as it concerns taxable values) are not likely to

provide much in the way of TIF revenue growth. Unlike the areas that have Commercial and

Industrial uses that can grow by as much as 10% per year, these properties will be capped at a

3% maximum per year, and likely less if inflation remains low (the Save Our Homes

amendment limits homestead properties to the lesser of 3% or inflation). Improvements that


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increase the values of homesteaded properties in these subareas won’t necessarily be reflected

in higher taxable values. Market values may improve, increasing the net worth of the

property owner, but taxation will likely lag. The areas that are heavily residential in nature

are not likely to show much in the way of taxable value growth unless they are redeveloped

and new owners are attracted to the subareas. Because of the nature of the residential

properties in those subareas, the CRA will need to rely upon the growth revenues from other

subareas that have had (and are likely to continue to have) the largest growth. Table 5 notes

the absolute change in taxable values over the study period.

Table 5. Absolute Dollar Growth of Taxable Values In CRA Subareas

Subarea

30-year Dollar

Change In

Taxable Value

1 - Beach District 222,261,380

2 - Central Core 649,039,002

3 - W. Atlantic Avenue 54,241,872

4 - NW Neighborhood 13,572,777

5 - N. Federal Hwy 156,999,699

6 - Seacrest/Del Ida 76,894,613

7 - Osceola Park 68,014,078

8 - SW Neighborhood 71,445,896

Total CRA Area 1,312,469,317

We’ll now compare market value to taxable value over time by subarea to further our analyses:

(continued on next page)


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Table 6. Differences Between Market And Taxable Value Returns

Subarea

Compounded

Market Value

Return

Compounded

Taxable Value

Return

Taxable Value

As % of

Market Value

1 - Beach District 6.96% 5.98% -14.1%

2 - Central Core 14.08% 12.55% -10.9%

3 - W. Atlantic Avenue 5.81% 4.69% -19.3%

4 - NW Neighborhood 4.38% 1.89% -56.7%

5 - N. Federal Hwy 7.42% 5.68% -23.5%

6 - Seacrest/Del Ida 5.60% 4.22% -24.5%

7 - Osceola Park 5.52% 4.29% -22.3%

8 - SW Neighborhood 4.40% 3.09% -29.6%

Total CRA Area 7.30% 6.35% -13.0%

This illustrates on a micro level how the lack of tax base diversification can create problems

for local governments, particularly those that are largely residential in nature. Of course,

overall, the City has decent tax base diversity and the subareas seem to have been designed to

capture geography with similar demographics or areas of focus. We next compare the

absolute market value to the absolute taxable value over time to see what this means in terms

of actual TIF funding:

(continued)


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Table 7. Absolute Dollar Differences Between Market and Taxable Values

Subarea

30-year Dollar

Change In

Market Value

30-year Dollar

Change In

Taxable Value Difference

1 - Beach District 324,367,295 222,261,380 102,105,915

2 - Central Core 848,446,673 649,039,002 199,407,671

3 - W. Atlantic Avenue 134,665,141 54,241,872 80,423,269

4 - NW Neighborhood 65,992,570 13,572,777 52,419,793

5 - N. Federal Hwy 219,716,711 156,999,699 62,717,012

6 - Seacrest/Del Ida 157,062,571 76,894,613 80,167,958

7 - Osceola Park 96,224,555 68,014,078 28,210,477

8 - SW Neighborhood 168,111,811 71,445,896 96,665,915

Total CRA Area 2,014,587,327 1,312,469,317 702,118,010

Base Year and Current (2015) Taxable Values and Current TIF Contributions By

Subarea

Table 8 documents the base year, current year (2015 Property Tax Year/2016 Fiscal Year) and

change is taxable values over the base year by subarea. The sum of these differences become

the basis for the annual TIF calculation by the CRA.

Table 8. Base Year and Current Year (2015) Taxable Values By Subarea

Subarea

Base Year

Values 2015 Values Difference

1 - Beach District 47,166,850 269,428,230 222,261,380

2 - Central Core 19,242,556 668,281,558 649,039,002

3 - W. Atlantic Avenue 18,336,506 72,578,378 54,241,872

4 - NW Neighborhood 17,963,702 31,536,479 13,572,777

5 - N. Federal Hwy 36,932,370 193,932,069 156,999,699

6 - Seacrest/Del Ida 31,279,109 108,173,722 76,894,613

7 - Osceola Park 26,926,969 94,941,047 68,014,078

8 - SW Neighborhood 47,783,005 119,228,901 71,445,896

Total CRA Area 245,631,067 1,558,100,384 1,312,469,317


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Using the information developed from Table 8, we can now calculate the actual TIF revenue

provided by the City and County for the FY2016:

Table 9. Current Year TIF By Subarea and Source

SubareaTIF Taxable

ValueCounty TIF City TIF Total TIF

1 - Beach District 222,261,380 1,009,606 1,490,939 2,500,545

2 - Central Core 649,039,002 2,948,211 4,353,783 7,301,994

3 - W. Atlantic Avenue 54,241,872 246,390 363,857 610,247

4 - NW Neighborhood 13,572,777 61,653 91,047 152,700

5 - N. Federal Hwy 156,999,699 713,159 1,053,161 1,766,320

6 - Seacrest/Del Ida 76,894,613 349,288 515,813 865,101

7 - Osceola Park 68,014,078 308,949 456,241 765,190

8 - SW Neighborhood 71,445,896 324,538 479,262 803,800

Totals 1,312,469,317 4,846,033 7,156,399 14,765,897

Note: The total TIF is different from the adopted TIF amount by $8,720 in County TIF funds. For purpose of

this analysis, the amount is considered immaterial and a result of small adjustments in the tax roll file.

We can see how valuable property tax exemptions are to the property owners over time.

Notwithstanding the noticeable spread between taxable and market values, the growth in

taxable values has provided a strong base for the TIF. We’ll next explore how that funding

has developed over time from the different taxing authorities contributing to the TIF.

Cumulative Contributions To Each Subarea By Each Taxing Authority

After creation of the CRA, the City of Delray Beach, Palm Beach County, and the Children’s

Services Council of Palm Beach County (CSC) contributed to the CRA’s TIF. The CSC

contributed up until FY1993 and then ceased contributing. Palm Beach County Healthcare

(PBCH) contributed during FY1990 and FY1991 and then ceased contributions. During the

years CSC and PBCH contributed to the CRA TIF, the amounts were minor compared to the

amounts contributed by the City and the County. For ease of presentation and for those years

they made payments to the TIF, we have allocated the contributions from CSC and PBCH in


23

proportion to the County and City amounts. Table 10 details the amounts contributed (as

adjusted) by the City and the County for each Subarea.

Table 10. Contributions By Source To Each Subarea 1985-2015

Subarea Source Amount Percent of Total

Total 27,262,118 17.8%

County 10,563,693 6.9%

City 16,698,425 10.9%

Total 54,033,077 35.3%

County 20,941,770 13.7%

City 33,091,307 21.6%

Total 7,889,384 5.2%

County 3,051,544 2.0%

City 4,837,840 3.2%

Total 4,842,296 3.2%

County 1,871,866 1.2%

City 2,970,430 1.9%

Total 21,831,944 14.3%

County 8,440,970 5.5%

City 13,390,974 8.8%

Total 11,396,000 7.5%

County 4,414,941 2.9%

City 6,981,058 4.6%

Total 11,168,257 7.3%

County 4,319,579 2.8%

City 6,848,678 4.5%

Total 14,511,514 9.5%

County 5,619,804 3.7%

City 8,891,710 5.8%

Total 152,934,590 100.0%

County 59,224,167 38.7%

City 93,710,422 61.3%

6 - Seacrest/Del Ida

7 - Osceola Park

8 - SW Neighborhood

Total

1 - Beach District

2 - Central Core

3 - W. Atlantic Avenue

4 - NW Neighborhood

5 - N. Federal Hwy

Subarea 2 is the largest source of TIF revenue for the CRA. Over half (53.1%) of all TIF

money comes from subareas 1 and 2. Subarea 4 contributes the least to the CRA’s TIF,


24

amounting to only 3.2% of the TIF money. Over time, the County has contributed less than

40% of the CRA’s TIF money, with the City contributing slightly more than 60%. This has

been fairly consistent since 1998 and was not significantly different before that time.

Tax Increment Forecast Until Sunset

Having developed out the historical TIF growth over the last thirty years, our next task is to

provide a forecast for the the remaining thirty years. To develop the forecast, we take the

major uses of the parcels as a starting point and use a modified trend analysis approach that

takes into consideration the annual limitations on assessed (and therefore taxable) values and

adjust those trends for known changes in new development or redevelopment and the expected

date that those developments would be added to the tax rolls. Table 11 details the forecasted

tax base growth by subarea for the next 30 years.

Table 11. Tax Base Forecast By Subarea

1 2 3 4 5 6 7 8 Totals

2016 286,554,342 708,850,046 77,780,368 33,569,430 206,711,601 116,516,836 101,088,241 126,184,216 1,657,255,080

2017 304,814,887 869,371,139 83,389,436 42,135,053 237,483,038 125,514,113 107,664,546 133,564,947 1,903,937,160

2018 324,287,267 921,511,825 89,439,637 44,858,092 253,052,754 135,217,382 114,701,791 141,398,564 2,024,467,312

2019 345,054,302 1,079,969,070 130,836,241 47,758,911 344,902,978 145,682,610 122,234,289 149,714,421 2,366,152,821

2020 367,204,619 1,145,193,952 141,369,924 50,849,212 366,849,104 156,970,239 130,299,047 158,543,895 2,517,279,992

2021 382,474,429 1,189,809,618 146,475,567 52,382,096 381,199,528 162,336,797 136,259,377 163,787,858 2,614,725,271

2022 398,458,302 1,236,384,396 151,787,284 53,961,746 396,181,697 167,904,310 142,522,237 169,219,779 2,716,419,750

2023 415,193,026 1,285,014,372 157,314,449 55,589,616 411,826,644 173,681,210 149,104,138 174,847,155 2,822,570,609

2024 432,717,420 1,335,800,758 163,066,905 57,267,209 428,167,060 179,676,329 156,022,528 180,677,820 2,933,396,029

2025 451,072,443 1,388,850,173 169,054,997 58,996,074 445,237,386 185,898,915 163,295,856 186,719,963 3,049,125,806

2026 470,301,319 1,444,274,955 175,289,592 60,777,812 463,073,907 192,358,659 170,943,621 192,982,143 3,170,002,008

2027 490,449,668 1,502,193,478 181,782,116 62,614,073 481,714,864 199,065,710 178,986,441 199,473,310 3,296,279,661

2028 511,565,642 1,562,730,495 188,544,574 64,506,565 501,200,559 206,030,709 187,446,116 206,202,823 3,428,227,484

2029 533,700,074 1,626,017,501 195,589,592 66,457,047 521,573,474 213,264,805 196,345,696 213,180,471 3,566,128,661

2030 556,906,627 1,692,193,112 202,930,446 68,467,338 542,878,392 220,779,689 205,709,556 220,416,497 3,710,281,658

2031 581,241,964 1,761,403,471 210,581,096 70,539,315 565,162,532 228,587,620 215,563,472 227,921,618 3,861,001,089

2032 606,765,915 1,833,802,677 218,556,229 72,674,918 588,475,685 236,701,452 225,934,707 235,707,051 4,018,618,634

2033 633,541,666 1,909,553,233 226,871,294 74,876,149 612,870,358 245,134,673 236,852,091 243,784,540 4,183,484,005

2034 661,635,949 1,988,826,533 235,542,549 77,145,077 638,401,936 253,901,430 248,346,122 252,166,380 4,355,965,976

2035 691,119,249 2,071,803,364 244,587,103 79,483,837 665,128,837 263,016,573 260,449,059 260,865,447 4,536,453,468

2036 722,066,020 2,158,674,442 254,022,962 81,894,637 693,112,695 272,495,683 273,195,024 269,895,231 4,725,356,695

2037 754,554,920 2,249,640,986 263,869,083 84,379,757 722,418,538 282,355,122 286,620,119 279,269,862 4,923,108,386

2038 788,669,049 2,344,915,314 274,145,424 86,941,552 753,114,981 292,612,065 300,762,532 289,004,150 5,130,165,067

2039 824,496,213 2,444,721,483 284,873,002 89,582,457 785,274,440 303,284,551 315,662,670 299,113,614 5,347,008,431

2040 862,129,194 2,549,295,961 296,073,951 92,304,987 818,973,343 314,391,526 331,363,284 309,614,527 5,574,146,773

2041 901,666,040 2,658,888,346 307,771,585 95,111,740 854,292,362 325,952,893 347,909,609 320,523,949 5,812,116,524

2042 943,210,376 2,773,762,116 319,990,463 98,005,403 891,316,662 337,989,565 365,349,512 331,859,771 6,061,483,867

2043 986,871,724 2,894,195,429 332,756,465 100,988,752 930,136,154 350,523,520 383,733,642 343,640,759 6,322,846,445

2044 1,032,765,850 3,020,481,977 346,096,856 104,064,658 970,845,771 363,577,857 403,115,603 355,886,604 6,596,835,178

2045 1,081,015,131 3,152,931,876 360,040,377 107,236,087 1,013,545,763 377,176,861 423,552,121 368,617,965 6,884,116,180

Subarea


25

Having forecasted the tax base growth, we then look to see how much TIF revenue will be

generated. As a starting point, we will use the current FY2016 property tax rates levied by

the City and the County. Table 12 illustrates how the TIF revenue would grow if these

property tax rates remain constant at the FY2016 levels and the forecast holds true:

Table 12. TIF Revenue Forecast1

Year Forecasted Tax Base County TIF City TIF Total TIF

2016 1,657,255,080 6,412,196 9,603,342 16,015,538 8.46%

2017 1,903,937,160 7,532,731 11,281,531 18,814,262 17.48%

2018 2,024,467,312 8,080,230 12,101,503 20,181,733 7.27%

2019 2,366,152,821 9,632,311 14,426,005 24,058,316 19.21%

2020 2,517,279,992 10,318,795 15,454,130 25,772,925 7.13%

2021 2,614,725,271 10,761,433 16,117,054 26,878,487 4.29%

2022 2,716,419,750 11,223,372 16,808,887 28,032,259 4.29%

2023 2,822,570,609 11,705,555 17,531,036 29,236,590 4.30%

2024 2,933,396,029 12,208,971 18,284,986 30,493,957 4.30%

2025 3,049,125,806 12,734,665 19,072,301 31,806,965 4.31%

2026 3,170,002,008 13,283,736 19,894,627 33,178,363 4.31%

2027 3,296,279,661 13,857,342 20,753,700 34,611,042 4.32%

2028 3,428,227,484 14,456,706 21,651,347 36,108,052 4.33%

2029 3,566,128,661 15,083,111 22,589,495 37,672,606 4.33%

2030 3,710,281,658 15,737,915 23,570,174 39,308,089 4.34%

2031 3,861,001,089 16,422,547 24,595,525 41,018,072 4.35%

2032 4,018,618,634 17,138,513 25,667,804 42,806,317 4.36%

2033 4,183,484,005 17,887,402 26,789,391 44,676,792 4.37%

2034 4,355,965,976 18,670,888 27,962,793 46,633,681 4.38%

2035 4,536,453,468 19,490,739 29,190,658 48,681,397 4.39%

2036 4,725,356,695 20,348,818 30,475,775 50,824,593 4.40%

2037 4,923,108,386 21,247,090 31,821,089 53,068,179 4.41%

2038 5,130,165,067 22,187,629 33,229,705 55,417,334 4.43%

2039 5,347,008,431 23,172,624 34,704,900 57,877,524 4.44%

2040 5,574,146,773 24,204,383 36,250,132 60,454,515 4.45%

2041 5,812,116,524 25,285,343 37,869,051 63,154,394 4.47%

2042 6,061,483,867 26,418,075 39,565,508 65,983,583 4.48%

2043 6,322,846,445 27,605,295 41,343,570 68,948,865 4.49%

2044 6,596,835,178 28,849,868 43,207,527 72,057,396 4.51%

2045 6,884,116,180 30,154,821 45,161,913 75,316,734 4.52%

Current Tax Rates (FY2016) Change From

Prior Year

1 The forecast takes various property appraiser land use designations and anticipates growth based upon those uses. In

general, residential properties are forecasted between 3.5%-7% between 2017 and 2021, and then 3% thereafter, depending on

the use and the subarea; for commercial and industrial properties, the range is 3%-10%, between 2017 and 2021 and then 6%

thereafter; and for not-for profits by no more than 2.5% between 2017 and 2021, and then 1.5% thereafter. Known projects

have been added to the tax base forecast based upon the expected year they would go on the tax rolls. For Years 2016-2019,

projects underway have been added to the forecast for the year each is expected to be added to the property tax roll.


26

The TIF revenue forecast in Table 12 presumes that the property tax rates remain static over

time. The City has expressed a desire to lower its millage rate. Over recent years, both the

City’s and the County’s rates have been fairly stable. A change in rates will naturally change

the expected TIF revenues generated by the forecasted tax base for any particular year.

Contributions By The CRA To The City of Delray Beach

Virtually all of the expenditures made by the CRA benefit directly or indirectly the City of

Delray Beach. The CRA, as an agency of the City, is a development tool that has been very

successful. There have been many examples of close coordination between the CRA and the

City. Table 13 details the projects and amounts from either audited or budgeted sources.

(continued)


27

Table 13. CRA Projects With Or Benefitting the City

Areawide & Neighborhood FY2011-FY2016

West Atlantic Redevelopment 1,869,899

Downtown-Master Plan 7,292,185

SW Neighborhood Plan 3,290,132

N. Federal Highway Redevelopment 44,492

Osceola Neighborhood 2,330,192

Other-Sidewalk (CIP) 529,589

NW/SW Neighborhood Alley (CIP) 300,000

Seacrest /Del Ida Plan 1,449,566

Pompey Park 200,000

Subtotal 17,261,563

Redevelopment Projects

NW/SW-5th Ave Beautification 784,261

Carver Square 135,936

Subtotal 920,197

Community Imp & Economic Dev

Grant Programs 1,373,952

DBMC & Downtown 2,109,587

City Contractual Services & Positions 11,025,381

Pineapple Grove 9,930

Community Resource Enhancement (A-GUIDE) 6,127,657

Green Market 657,677

Economic Development Initiatives 655,590

Digital Divide 130,867

OSS Retail Rent/Buildout 1,119,193

International Tennis Tournament 3,315,400

Warehouse / Arts Incubator 1,300,000

Subtotal 27,825,234

US1 Corridor Improvements Debt Services 849,298

Total 46,856,292

Table 13 summarizes the projects undertaken by the CRA over the last 6 fiscal years. We

further reviewed the audited financial statements from 1986-2014, the unaudited 2015 financial

information, and the budgeted 2016 amounts of the CRA expenditures by project or program.


28

The expenditures were then categorized, to the extent possible, those expenditures into each

subarea. Table 14 summarizes the expenditures by subarea:

Table 14

Expenditures By Subarea

1986-2016

Subarea 1986-2016

1 - Beach District 1,930,348

2 - Central Core 58,905,698

3 - W. Atlantic Avenue 66,324,807

4 - NW Neighborhood 14,405,965

5 - N. Federal Highway 8,978,525

6 - Seacrest/Del Ida 4,268,179

7 - Osceola Park 4,465,210

8 - SW Neighborhood 27,509,839

Areawide 18,676,219

Total CRA Area 205,464,790

Appendix “A” contains a more detailed breakdown of expenditures in each subarea.


29

Results of Interviews With Concerned Parties

During the course of our engagement, we interviewed most of the City Commission and CRA

Board, the City Manager and Chief Financial Officer, the CRA Executive Director, and Legal

Counsel, including Bond Counsel for the CRA. The discussions were either in person or,

generally, by phone. All discussions were made with the understanding the comments or

sentiments expressed by any individual would not be attributed to them in the final report.

This was done in an attempt to gain candor and genuine sentiment from the parties involved.

There was near unanimity among the City elected officials and the CRA Board members to

have the CRA Board and staff continue to oversee and operate the CRA. There was universal

agreement that regularly scheduled workshops with the City Commission and the CRA Board

be held. Everyone interviewed lamented that though this had been agreed to several months

ago, it had never occurred until recently. We feel, based upon the discussions we had with all

parties, that many of the issues and concerns that the City has with the CRA are the result of

insufficient communications between the City and the CRA. The CRA has been very

successful and has been given great autonomy by the City for almost all of its existence.

The City has recently demonstrated that the CRA’s success has come to some extent at the

expense of the City’s other operational needs. Our forecast anticipates that this will become

more of an issue over time.

All parties would like to capture as much of the County share of TIF funds as can be legally

allowed. It is also the consensus feeling that the best way to do this is for the City and the

CRA to coordinate their activities.

Most City officials expressed concern that the CRA goals were not aligned with the

community’s needs, particularly in the area of basic infrastructure like streets, roads, alleys,

and sidewalks. There is clearly a disconnect, again associated with communications, between

the perception of inactivity and what has been programmed by the CRA to address these

concerns. The CRA has budgeted for the improvement of alleys, streets, sidewalks, and other

basic infrastructure in many of the areas we heard were of concerns by the elected officials.


30

These are in addition to projects completed within those areas. However, the CRA, in

cooperation with the City, is implementing a more comprehensive infrastructure improvement

program in order to complete basic needs in a timelier manner. People are frustrated with the

speed with which projects progress. The CRA has been making the funding available for

many projects, but the time from budget to project completion is taking too long for projects

undertaken by the City. The overwhelming portion of these projects are funded by the CRA,

but those funds are given to the City to spend on the projects, using the procedures in place at

the City (procurement, project management, project execution). These are in addition to the

projects that the CRA completes. The elected officials consistently relayed that their

constituents continually complain about the lack of activity in their neighborhoods on these

types of projects. The CRA’s budgets have included funding for the necessary design work,

which can include time-consuming tasks such as surveying and soils testing and other items

precedent to actual construction. And, of course, public procurement rules can add several

months from project inception to actual construction. It may be that the current CRA

programming of these elements is not as robust as the Commission would like, but we suspect

that better communications can help give ammunition to the elected officials so that they can

better communicate the timeframe for improvements already underway in a few neighborhoods.

It is also likely that because of the lack of formal communications between the CRA Board and

the City Commission, projects critical to the Commission may not be known to the Board.

It is our impression that the Commission, while appreciative of the efforts of the Board, may

not be fully aware of all the programs the CRA undertakes for the City, especially in the area

of affordable housing.

Many of the Commission members voiced the same concern regarding certain projects

undertaken by the CRA that caused distress for the elected body. There were two recurring

themes in this regard, which were not necessarily unanimous among Commission members.

One was the redevelopment of the Ipic movie theater and its corporate headquarters and the

other was the scale of improvements to the Old School Square facility. In the latter case, it

seemed that the improvement themselves were not necessarily the concern, but the priority of


31

these improvements over other projects that Commission members deemed had more

immediate need. Again, this issue becomes one of communication.

There was consensus that both the City and the CRA have a shared vision and that this be

reduced to an action plan of some type that is adopted by both bodies. This, in essence, is the

basis for the Community Redevelopment Plan that is adopted by the City Commission.

Specific infrastructure projects are then included in the City 5-year Capital Improvement

Program.

There were definite legal concerns about reducing the City’s portion of the TIF without

reducing the County’s portion of the TIF. Additionally, there are issues of reducing or

restricting the sources of revenues through elimination of “subareas” or contribution

percentages of either the City or the County. The revenues have been pledged to bondholders

of the CRA and the City is ultimately responsible to these bondholders. Bondholder approval

for these reductions would seem to be required in advance.

It was generally felt that the shared funding of the current programs and services by the CRA

should be continued.

Some of the members of the CRA Board felt that the City did not fully appreciate the level of

support currently provided the City nor the extent to which they felt they had addressed the

City’s concerns in the past. Our impression, again, was that this stemmed from

communication issues.

Most Commission members wanted to know what the “end game” would be. Specifically,

what is it that the CRA area should look like when it’s done 30 years from now and how will

those revenues that accumulate over time be used to achieve those goals and how will the CRA

be wound down. We believe this goes to the heart of the matter. This sentiment seems to be

espousing a need for a long-term plan for the CRA that governs the next 30 years of activity

and how the money will be spent to achieve those goals.


32

Some Commission members believe that the downtown area has achieved its goals and that the

the CRA should move onto other areas. They were aware that the Board was addressing

some of the other areas, but felt more could be done. Board members were pretty unanimous

in voicing their opinion that they felt they were addressing other areas but that some of their

budget needed to remain in support of the downtown, particularly in the form of police and

beautification efforts.

While all Commission members did not want the Commission to take over the CRA Board’s

functions, they were pretty consistent in their attitude that they would be forced to if the two

entities goals were not aligned.

The City administration was very concerned about the state of their finances and felt that the

TIF funds being returned to the CRA was in effect forcing the City to keep its tax rates too

high, as the majority of growth in property taxes went back to the CRA. They also wanted to

keep as much of the County funding as possible. They believed the CRA’s TIF funding was

adversely affecting their annual budgets, preventing them from being able to address their

needs. They also felt that there were opportunities to coordinate their efforts with the CRA.

It was our impression that they felt it would be to their advantage to directly or indirectly

control the CRA activities so that they would be better coordinated into the City’s operations.

Our impression is that the City does not have a full appreciation of the number of programs and

projects undertaken annually by the CRA, some of which are typically provided directly by a

city in the absence of a CRA.

All of our conversations were civil and without exception we found that all Commission

members and all Board members had a desire to work together and be on the same page.

Here we again emphasize that everyone believed that meeting quarterly or monthly would help

all parties work together and communicate better. Monitoring and adjustments to a strategic

long-term plans could also be undertaken at these meetings.


33

Recommendations For Guidelines For Annual Funding By The CRA For Direct or

Indirect Contributions To the City

In the course of our analysis, the City’s Chief Financial Officer had produced a 10-year

financial forecast for the City Commission’s consideration during their goal setting session.

The forecast is an illustration of the how the City’s administration believes the 10-year period

will develop if the current financial structure between the City and the CRA remains in place.

The forecasts provided by the CFO include one that holds the millage rate constant and another

that reduces the millage rate. Both forecasts provide for an increase in the assessed value of

properties of 4% annually. Other revenue streams in the City are forecasted using the revenue

history developed in the City since FY2007, including unaudited results from FY2015 and

budgeted amounts for FY2016. We would note here that this period included years from the

Great Recession and are not likely reflective of future growth. The 10-year forecast uses the

average of the annual revenue growth from each year. We believe this forecast understates

several of the revenue streams that accrue to the City annually. Both forecasts also presume

that the City can hold its annual operating expenses to 2.5% annually. We also feel that this

understates the likely expenditure growth the City will experience. Lastly, we would note

that the capital needs for the City are estimated to be $177,752,588 and the CRA’s capital

needs are estimated to be $126,324,204. This is a combined capital effort of $304,076,792

over the 10-year period, and this does not include any capital expenditures within the City’s

utility system.

Comparing The TIF Forecast With The City of Delray Beach 10-year Financial Forecast

The City forecasts also provide for various options to address the shortfalls that occur. Below

we discuss the options:

Option 1: Economic Development. This option uses the same assumptions as in the base

case, but presumes the tax base growth is 5%, not 4%, presumably from an economic

development focus. The City’s long-term tax base growth has been close to 5.5% over the

long-run, but this includes the CRA area, which has grown more than elsewhere in the City.


34

The CRA revenue growth does not directly benefit the City’s annual budget. This option

reduces the forecasts annual deficits, but not by an appreciable amount.

Option 2: Redeploy CRA Spending. This spreadsheet takes the CRA capital spending

and reducing it starting in FY16 and eliminating it by FY19. The money is not apparently

redistributed to the City’s capital spending. In this scenario, the City’s overall capital

spending deficits are reduced beginning in FY17 and turn to surpluses in FY 21 as compared to

the base case scenario of operating deficits. The annual total deficit (operating + capital)

turns into a surplus in 2021. This scenario has a few problems with it. First, it presumes

that the CRA’s planned capital spending can be reallocated to the full extent to the City’s

capital spending. While there is likely a good deal that could be put towards City needs in the

CRA area, the amount may not be a dollar-for-dollar exchange in the forecast. It also

presumes, much like the city’s capital forecast, that funds are or should be available for the

projects. That may not be the case. However, as an illustration, it does demonstrate that to

the extent the City and CRA can align their projects, the forecasted deficit can be eliminated by

the end of the forecast period.

Option 3: Increase Other Revenue. We believe the City’s other revenue streams are

understated because of the fiscal years used in the forecast. However, this forecast assumes

some revenues other than property tax revenues increase at a faster rate than in the base case.

In this scenario, the operating deficit is eliminated by 2019 instead of 2021 and the operating

surplus grows after that. The capital deficit remains and the overall deficit remains. This

scenario was developed to illustrate the impact that implementing new fees and other revenue

streams would have on the budget, which would serve to help reduce, but not eliminate, the

forecasted deficit.

Option 4: Reduce Grants. This spreadsheet changes the base assumptions by limiting

grants to not-for-profits to 1% of ad valorem revenue. This reduces the forecasted operating

deficit from FY2020 to FY2017, but does nothing to reduce the capital or overall forecasted


35

deficits. Ostensibly, this would eliminate the donations by the city to the land trust, historical

society, library, Spady museum, and Old School Square.

Option 5: Increase Productivity. This spreadsheet seeks to illustrate the impact to the

forecast in reducing personnel counts beyond those anticipated in the base forecast.

Manipulating this assumption demonstrates that the operating deficit is eliminated in FY2017

and the operating surplus grows through the forecast period. The capital deficit is not

impacted, though the overall deficit is reduced.

Each of the forecast options seeks to illustrate the impact on the budget forecasts (both

operating and capital) of various changes in the budget fundamentals. The forecasts begin

with the City’s most current adopted budget (which presumes that there are not unique or non-

recurring costs in that budget which would skew any forecast) and uses estimates of annual

increases in revenues and expenses which may or may not be reasonable based upon current

trends in the City. For a basic planning tool, the documents are attempting to illustrate the

budget direction for the next 10 years. The budget direction is significantly impacted by the

City’s 10-year capital needs, which, as previously noted, is $177,752,588 for the City and an

additional $126,324,2042 for the CRA. The capital program seems to us to be fairly

aggressive. Many of the items in the capital programs are for projects that are longer-lived

than 10 years and might better be bonded over the life of the project, which may be up to 30

years.

With these observations and caveats in place, we will now reconcile our TIF forecast with the

City’s 10-year forecast. First, we look at the CRA’s TIF over the City’s 10-year forecast

period and then apply the deficits projected by the City in its Base Case projection. This

analysis presumes that the all of the projected deficit could be reduced by using the TIF funds

for those projects the City is wanting to undertake. While some of these projects will be

within the CRA boundaries and likely eligible for the TIF money, many may not:

2 The 10-year capital needs amounts are calculated as the sum of each of the10-years forecasted by the City’s CFO for both

the CRA and the City.


36

Table 15. Effect On CRA TIF When Funds Are Used For City Forecasted Deficit

Reductions

Fiscal Year TIFNet City Cash

Flow Forecast

TIF Available

After Reducing

City Deficit

2017 16,015,538 (3,654,720) 12,360,818

2018 18,814,262 (18,441,256) 373,006

2019 20,181,733 (11,393,450) 8,788,283

2020 24,058,316 (14,656,871) 9,401,445

2021 25,772,925 (19,116,141) 6,656,784

2022 26,878,487 (11,029,748) 15,848,740

2023 28,032,259 (10,795,841) 17,236,418

2024 29,236,590 (10,526,574) 18,710,017

2025 30,493,957 (10,220,074) 20,273,883

2026 31,806,965 (9,874,399) 21,932,567

The City Cash Flow Forecast is taken from the City’s10-year financial forecast and represents the City’s estimate of if deficit cash flows for

each year.

The table illustrates that the TIF would eliminate the deficits but it would also likely hamper

CRA operations in FY2018 through FY2021 because of existing CRA obligations. In most of

the other years, the CRA’s operating budget, after funding existing commitments, would be

greatly reduced; however, beginning in FY2022, the absolute cash available from the TIF after

helping to reduce the City’s annual operating deficits, would be larger than that available in the

FY2016 budget. It should be noted that the utilization of TIF funds must be consistent with

the adopted Community Redevelopment Plan as required by Florida Statutes.

It is likely that if the City reduces the amount that it contributes to the CRA’s TIF, then a

proportionate reduction in County contributions would also be required. The ratio of TIF

contributions is currently 40% from the County and 60% from the City. That ratio, predicated


37

upon current property tax rates, is assumed in our projections. The following table examines

what would happen if the County contribution were also reduced in proportion to the City’s

contribution:

Table 16. Effect On CRA TIF When Funds Are Used For City Forecasted Deficit

Reductions, With Proportionate Reductions In County TIF Funds

Fiscal Year TIFCity Cash Flow

Forecast

TIF Available

After Reducing

City Deficit

TIF Available If

County Funds

Proportionately

Reduced

2017 16,015,538 (3,654,720) 12,360,818 10,898,930

2018 18,814,262 (18,441,256) 373,006 (7,003,496)

2019 20,181,733 (11,393,450) 8,788,283 4,230,903

2020 24,058,316 (14,656,871) 9,401,445 3,538,697

2021 25,772,925 (19,116,141) 6,656,784 (989,672)

2022 26,878,487 (11,029,748) 15,848,740 11,436,841

2023 28,032,259 (10,795,841) 17,236,418 12,918,081

2024 29,236,590 (10,526,574) 18,710,017 14,499,387

2025 30,493,957 (10,220,074) 20,273,883 16,185,853

2026 31,806,965 (9,874,399) 21,932,567 17,982,807

This table demonstrates that the current CRA budget would not recover until sometime after

FY2024 and that in two years it would be in a deficit position. For fiscal years FY2017 through

FY2024, the funding is reduced to amounts that would not fund existing commitments of the

CRA.

The City desires to slow the growth of its anticipated deficits by reducing funding to the

CRA’s TIF fund. It is likely that if the City reduced its contribution to the TIF, then the

County would also require a proportionate reduction. Our estimate of the loss of those funds

is detailed below:


38

Table 17. County TIF Funding Lost If City Reduces Its Contributions To Eliminate

Annual Deficits

TIF Available If

County Funds

Proportionately

Reduced

Fiscal YearCounty TIF

Funding Lost

10,898,930 2017 1,461,888

(1,088,882) 2018 7,376,502

7,326,395 2019 4,557,380

7,939,557 2020 5,862,748

5,194,896 2021 7,646,456

14,386,852 2022 4,411,899

15,774,530 2023 4,318,337

17,248,129 2024 4,210,629

18,811,995 2025 4,088,030

20,470,679 2026 3,949,759

Total 47,883,629

It’s clear that the loss of the funds from the County portion of the TIF is substantial over the

City’s 10-year forecast period. It will be important for the City and CRA to coordinate their

activities to maximize the funding from the County portion of the TIF. To the extent

programs and capital improvements are eligible for TIF funds, a great deal of the City’s

forecasted deficit could be reduced, but care should be taken to stay within the legal confines

under which the CRA operates, per Florida Statute §163, Part III.

While the CRA is a separate legal entity, it is ultimately a tool and under the control of the City

Commission. The planning of the CRA needs to be tightly integrated into the City’s financial

planning and long-term goals of the Commission. This is accomplished primarily through the

adopted Community Redevelopment Plan, as is contemplated and required by state law. The

document is ultimately adopted by the City Commission and becomes the City’s vision and

sets the intermediate goals of the City for the CRA area.


39

The City’s ongoing budget issues stem in part from the amount of City contributions made into

the CRA TIF. As the success of the CRA’s efforts have increased the tax base within the

CRA boundaries, the TIF funding has increased with it. The City has been unable to lower its

property tax rate because a large portion of its property tax revenues are returned to the CRA.

This is the dynamic that has led to current funding issues between the two entities.

Both the CRA and the City recognize that it is in the City’s interest to maximize the funding

from other taxing authorities that pay into the CRA TIF. It is paramount that both parties

tightly coordinate their planning efforts to achieve this goal. It is also extremely important

that the vision and goals of the City Commission be aligned with the CRA Board so that the

activities of the Board do not conflict with the City’s policies or desires.

Ideally, policy makers should look to the end game of what the CRA area will look like in

2045 and work backwards to implement that vision through the periodic adoption of the

Community Redevelopment Plan.

The expanse of projects undertaken annually by the CRA would require the City Commission

to spend many more hours each month in oversight of the operations that is currently done by

the Board. We believe that given the scale of these operations, the separate appointed

governing Board is the best mechanism to implement and provide primary oversight of the

Community Redevelopment Plan. It is very important for the City Commission to respect the

efforts of the Board and to consider their recommendations and interim decisions that are

offered or executed. It is also very important for the CRA Board to be consistently in lock

step with the policies of the Commission. Ultimately, the City Commission can step in and

act as the governing body of the CRA. It is our impression that this would be an action of last

resort by the Commission and their preference is for the Board to continue to operate

independently, but under the guidance provided by the Commission.

The current appointed Board structure in preferable to the City Commission acting as the

CRA Board and we recommend that it remain in place.


40

We acknowledge that this report was commissioned by the CRA Board and that this

recommendation may appear to be advocating the Board’s position, but it’s our opinion

unaffected by that commission that the CRA needs an oversight Board that can devote

significant amounts of time and energy to the many programs and services that are undertaken

by the CRA. The amount of programming, projects, and services that are currently provided

through the CRA is extensive and robust. We have attended or viewed a few meetings of the

CRA Board and are impressed with the level of detail that Board members engage in during

the course of their meetings. They ask thoughtful questions and debate issues carefully.

They are not reluctant to question their staff and offer opinions on issues. It is time

consuming work by unpaid appointed individuals who express a genuine interest in their

community. Ultimately, they are responsible to the Commission and need to be responsive to

that body and governed by the Community Redevelopment Plan. It is our opinion that the

City would have difficulty in operating the CRA as if it were just another department within

the City. It is effectively operating as a city within a city, but with good reason and at the

behest of the Commission. The scale of its operation seems to merit the current structure.

The issues of City finances, project and program emphasis, and particular decisions of the

Board can be addressed through routine planned meetings of both bodies and better financial

and redevelopment planning that is expressed in the adoption of the Community

Redevelopment Plan.

Communications between the Board and the Commission is imperative. The lack of

periodic meetings to coordinate the activities and review the current status of the Community

Redevelopment Plan goals has led to misunderstandings and unnecessary surprises. The

City should schedule these meetings with the Board. The meetings should focus on the

current status of Plan implementation and also any changes in direction that may arise.

Current efforts of both the Board and the Commission should be discussed and areas of

concerns should be addressed at the meetings. Action items for reporting at future

meetings should be prepared.


41

During its first 30 years of activity, the CRA Board was given wide latitude to design the

elements of the Community Redevelopment Plan and has been extremely successful in its

redevelopment efforts over the years. Most recently, however, the City Commission has

expressed its desire to redirect some of the priorities of the Board to projects the Commission

feels have a more immediate need. There apparently exists within the City of Delray Beach

certain neighborhoods and communities that believe the efforts in their areas need to be given

priority. Every Commission member interviewed offered the same commentary. They are

frequently approached by members of the public with the view that they would like to see the

same level of improvements in their neighborhoods that they see in the downtown area.

Interesting, but not surprising given the absence of periodic meetings between the two bodies,

there have been substantial changes to the Plan to provide funding for the neighborhood

projects that are being demanded. Meetings between the two parties would have reinforced

the idea that the Board had been active in addressing the Commission’s desires and that many

projects were underway but may not have progressed to the point where the public would see

any physical activity.

The City staff and the CRA staff should be tightly integrated on a routine basis so that both

parties understand what each is doing and aren’t at cross purposes and are fully effective in

implementing the vision and goals of the Commission as provided for in the Community

Redevelopment Plan.

The City Manager is the City Commission’s chief appointed executive charged with

implementing the Commission’s policies and direction. Likewise, the Executive Director is

the CRA Board’s chief appointed executive charged with implementing the Board’s policies

and direction. Each of these executives will have daily as well as long-term challenges

presented to them. They will often have advance notice of issues that have not yet been

presented to the Commission or the Board. Many times these issues will overlap both entities

and coordination of efforts and responses should be undertaken. Both entities need to

understand what the other is doing. To that end, we believe the CRA Executive Director

should routinely meet with the City Manager and executive staff of the City to discuss issues


42

and actions underway within the City. There is a good level of communication currently, but

clearly the CRA was somewhat surprised by issues regarding budgets, financing, and other

issues. It would have been better for the City Commission and the CRA Board to have had

these issues fleshed out and cooperatively addressed at the staff level with solutions presented

to both the Commission and the Board for their approval. Issues such as those that have

recently arisen should also be discussed at the periodic meetings of the Board and the

Commission so that disagreements can be resolved and policy direction can be set.

A long-term financial plan for the City that also incorporates the long-term financial plan of

the CRA should be prepared.

The CRA has been very successful in improving the taxable values within the CRA area. The

property tax revenues that are now derived from the CRA area are substantial and the diversion

of those growth revenues from the City to the specific area of the CRA have had consequences

to the City as a whole and its ability to deliver services and improvements to areas other than

the CRA properties. The CRA financing mechanism also provides for substantial sums from

Palm Beach County, which in effect are de facto grants used for the purposes provided within

the Community Redevelopment Plan. The City is constrained in their operating and capital

budgets by the diversion of these growth monies. It has had the effect of requiring a higher

property tax rate than otherwise might exist and the City contends that it hampers their ability

to provide for necessary maintenance and replacement of aging facilities and equipment.

There are many moving parts between these two budgets, but the overall goal is obviously to

keep as much TIF funding from other taxing authorities as is legally possible, while at the same

time providing as much relief to the City’s finances as can be legally undertaken. The current

redevelopment plan of the CRA was not developed with this dynamic in mind. The staffs of

the City and the CRA will need to work together to devise a long-term plan that coordinates

these efforts. Projects and Programs that can legitimately be undertaken by the CRA and that

provide relief to the City’s operating and capital budgets should be identified and prioritized.

Projects and programs that provide the best possibilities for improvement or maintenance of

the CRA’s property tax values should be given precedence over other projects and programs.


43

When contemplating whether or not to reduce the TIF funding from the City, the impact of

the potential loss of County TIF funds should also be evaluated. When deciding how to

reduce TIF funding, a percentage reduction of overall funding would be preferable to an

elimination of a subarea or other contraction of the CRA boundaries. Both methods

should only be undertaken only after other options that address the City’s needs for funding

or projects have been exhausted. It should be the method of last resort but it will ultimately

need to be implemented within the long-term financial planning of the City and CRA.

Subareas 1, 2, and, to a lesser extent, 5 are the economic engines of the CRA. Eliminating

one of these subareas would result in a loss of substantial funding that could be used in areas

that need improvement. Execution of this as a means of reducing the City’s contribution to

the CRA is a relatively clumsy and probably irrevocable action. Once removed, it seems

likely that the County would not agree to put it back into the CRA’s boundaries or that they

may no longer meet the conditions for inclusion into a CRA. A more precise tool would be to

effect a percentage reduction of contributions that not only considered the loss of City TIF

funding, but also the loss of County TIF funding. Ideally, if such a reduction were

implemented, it could be adjusted up or down as circumstances evolved and would not

necessarily be permanent at any level of reduction. As Table 12 demonstrates, the anticipated

growth of CRA TIF funding may reach levels where a percentage reduction is likely. The

financial planning recommended above should consider a gradual reduction in TIF funding

over the last few years of the CRA’s existence and should plan for the transition of services

and programs away from the CRA back to the City. This will likely mean that the CRA and

City forego some of the County TIF funding, but the growth of the tax base will make this less

painful.


44

Comparative Analysis of Select Peer Community Redevelopment Agencies

The Delray Beach CRA has been in existence since 1985 and has made significant and

noticeable improvements within its boundaries. Table 18 illustrates the changes over the last

15 years. The CRA’s market value base has done 88% better than the City as a whole and the

CRA’s contribution to the City’s market value base has grown from 11% to 20%, almost

doubling.

Table 18. Market Value Comparison Between CRA and City

Fiscal YearTotal City Market

Value

Change From

Prior Year

CRA Changes In

Market ValueDifference

CRA Percent Of

City Market Values

1999 3,677,106,381

2000 3,970,026,911 8%

2001 4,232,905,017 7% 11%

2002 4,824,553,609 14% 66% 374% 16%

2003 5,438,135,827 13% 12% -6% 15%

2004 6,266,438,727 15% 23% 52% 16%

2005 7,248,585,022 16% 21% 36% 17%

2006 8,825,215,027 22% 33% 53% 19%

2007 11,937,071,793 35% 38% 8% 19%

2008 11,935,940,389 0% 3% NA 20%

2009 11,224,196,182 -6% -6% 1% 20%

2010 9,280,584,827 -17% -18% -1% 20%

2011 8,119,548,674 -13% -12% 6% 20%

2012 7,942,508,722 -2% -3% -13% 20%

2013 7,998,166,069 1% 0% NA 20%

2014 8,701,989,160 9% 10% 11% 20%

2001-2014 206% 386.9% 88%

It’s interesting to note that in the economic downtown, the values in the CRA declined slightly

more than the City as a whole but recovered better as well. It’s also important to note that it

took 8 years (2006-2014) for market values to return to the point where they stood in 2006.

Community Redevelopment Agencies are common throughout South Florida and they are

generally successful when well-managed. The CRA has chosen a few as a peer group to

compare certain benchmarks. Collecting information from agencies can be challenging as

surveys and questions that sometimes require significant staff time tend to get assigned a low


45

priority. We emailed surveys to each peer CRA and followed up with more emails and phone

calls. Mostly, we relied upon published financial statements, budgets, plans, and other

documents in order to collect the base information.

Size of Agency

The Delray Beach CRA is the 2nd

largest CRA studied in terms of acreage:

Pompano Beach, Northwest 3,084

Delray Beach 1,961

Hallandale Beach 1,920

Boynton Beach 1,650

Riviera Beach 1,044

West Palm Beach, City Center 990

Hollywood, Downtown 580

Lake Worth 518

West Palm Beach, Northwood/Pleasant City 459

Boca Raton 344

Fort Lauderdale, Central Beach 344

Hollywood, Beach 239

Pompano Beach East 158

Creation Date

Most of the CRA’s have been existence for nearly 3 decades. Boca Raton has the oldest

CRA:

Boca Raton 1980

Boynton Beach 1982


Pompano Beach, Northwest 1984

Riviera Beach 1984


Delray Beach 1985

Hallandale Beach 1985


Lake Worth 1989





46

Sunset Date

The CRA’s compared in this report were created prior to July 1, 2002, with the initial term of

30 years and a maximum length of term of 60 years:






Boca Raton 2025

Hallandale Beach 2026

Lake Worth 2031

Boynton Beach 2044

Pompano Beach, Northwest 20441

Delray Beach 2045


Riviera Beach 2045

1Pompano Beach is currently in litigation with Broward County regarding the extension of the CRA term.

Base Year Taxable Value

The beach-area Hollywood CRA started with the highest taxable value. Delray Beach ranked

6th

:

Hollywood, Beach 545,881,010

Hallandale Beach 377,757,750

Boynton Beach (expanded area in 2001) 309,821,849

Pompano Beach, Northwest 297,388,021

West Palm Beach, City Center 251,511,950

Delray Beach 245,631,067

Pompano Beach East 136,437,980

Lake Worth 136,427,940

Riviera Beach 132,767,499

Fort Lauderdale, Central Beach 118,537,320

Hollywood, Downtown 103,167,427

West Palm Beach, Northwood/Pleasant City 86,933,276

Boca Raton 73,763,740


47

Current Year TIF Value

The current year TIF value for Delray Beach is third behind Hollywood Beach CRA and West

Palm Beach City Center CRA:

Hollywood, Beach 2,676,809,490

West Palm Beach, City Center 1,860,942,074

Delray Beach 1,312,469,317

Hallandale Beach 1,186,025,250

Boca Raton 1,046,328,743

Pompano Beach, Northwest 850,703,940

Boynton Beach 797,500,525

Fort Lauderdale, Central Beach 791,672,620

Riviera Beach 699,330,308

Hollywood, Downtown 560,881,500

Pompano Beach East 356,428,920

West Palm Beach, Northwood/Pleasant City 286,768,468

Lake Worth 175,272,497

Governance

Most CRA’s are governed by the City’s elected body:

# Elected #Appointed

Boca Raton 5 0

Boynton Beach1 5

1 0

1

Fort Lauderdale 7 0

Hallandale Beach 5 0

Hollywood 7 0

Lake Worth 0 7

Pompano Beach 6 0

Riviera Beach 5 0

West Palm Beach 6 0

Delray Beach 0 7

1A 7-member advisory board was recently created.


48

City Requested Funding

Every CRA had requests from their City for funding for maintenance, security, or other

services. Hollywood’s budget includes items apparently related to overpayments made by

other taxing authorities.

Lake Worth $20,000 General city services

Pompano Beach $195,155City Central Services and Allocation of City Departments

Services

Fort Lauderdale $94,497City central services; City Employees assigned to CRA paid

by CRA.

Riviera Beach $123,979Lease payment to city; $6,788,586 in related party

transactions for an event facility

Boynton Beach $300,000 Community policing and maintenance

Boca Raton $2,000,000 Debt service deficiency payments at Mizner Park

Hallandale Beach $2,240,928Code compliance, public works project management,

transit services, human services, planning and zoning, and

Hollywood $2,934,267

Police, general fund administrative payments, transit, and

beach maintenance. Budget also includes $5,000,000 of

current TIF to be repaid back to the City and other taxing

authorities. The City had considered abolishing the Beach

CRA. The CRA rebated funds to the City for FY16 and

also a proportional amount to other contributing agencies.

This assisted the City with their budget.

West Palm Beach $3,576,593 Police, engineering, and general administrative costs

Delray Beach $3,621,367

Street maintenance, city demolition, clean & safe program,

project engineer, Plan Reviewer II, Planning/IT/parking

management, Neighborhood Planner (50%), and Housing

Rehab (50%)

City Requested Funding Policies or Guidelines

None of the CRA’s surveyed had formal policies or guidelines that established the amount of

funding the CRA could contribute towards City services or improvements:

Boca Raton No

Boynton Beach No

Delray Beach No

Fort Lauderdale No

Hallandale Beach No

Hollywood No

Lake Worth No

Pompano Beach No

Riviera Beach No

West Palm Beach No


49

Current Budget

The Delray Beach CRA has the 7th highest total budget and 5th highest after deducting

carryforward amounts:

Total Budget TIF

Amounts

Carryforward

Amounts Other

% Budget

From TIF

Lake Worth 2,954,128 1,705,236 1,165,392 83,500 58%

Hollywood, Downtown 8,621,340 5,889,420 2,664,720 67,200 68%

Boynton Beach 10,419,593 9,319,593 0 1,100,000 89%

Pompano Beach 16,991,693 9,077,445 7,600,916 313,332 53%

Fort Lauderdale 17,045,063 9,713,118 1,575,512 5,756,433 57%

Hallandale Beach 17,218,552 8,690,421 4,885,586 3,642,545 50%

Delray Beach 26,026,456 14,757,176 7,557,636 3,711,644 57%

Boca Raton 26,977,200 8,300,000 7,796,200 10,881,000 31%

Riviera Beach 28,175,272 7,122,728 11,758,624 9,293,920 25%

Hollywood, Beach 32,734,291 27,383,861 5,215,430 135,000 84%

West Palm Beach 46,230,891 28,357,087 17,027,606 846,198 61%

1The Boca Raton CRA budget includes transfer payments to or related to the Mizner Park development lease. The operating budget other than those payments

appears to be $4,196,500

(end of section)


50

Comparison of Selected Municipality Without A CRA

In the original Scope of Services, the CRA had sought only a comparison of its operations to

other Community Redevelopment Agencies to be determined prior to the commencement of

work. During the course of contract execution, we were asked to also compare the CRA to a

comparable municipality that had not established a community redevelopment agency. We

were agreeable to this added work because we believed it would be an interesting component

to the report and would not require much effort. We also did not increase our bid price for

this work

Unfortunately, neither we nor the CRA was able to find a municipality with similar

characteristics (a beach area with a proximity to a downtown core; a large residential

component; and a community established for many decades) that was in a similar market to

Delray Beach. Virtually all of the municipalities in Broward and Palm Beach counties have

CRA’s that have been established for several years. We looked at older municipalities in

Broward that did not have a beach component but perhaps had intracoastal waterways within

their boundaries, but also found that either these communities also had CRA’s or that they had

characteristics that made then incomparable.

We discounted Miami-Dade County because the communities with municipalities with beach

access (Golden Beach, Aventura, Sunny Isles Beach, Bal Harbour, Surfside, and Miami Beach)

were definitely not comparable to Delray Beach.

We did not feel that communities north of Palm Beach county would be comparable to the the

market conditions in Delray Beach, and, in any event, many of them also have well-established

CRA’s.

We then explored the possibility of Lee County, but found that most of the comparable

municipalities there had CRA’s also, with the exception of Bonita Springs. We investigate

the possibility of using Bonita Springs, but ultimately abandoned this effort because the

community was not very comparable in terms of market or geography nor was information


51

dating back to 1985 going to be available in any reasonable manner. We would be able to

gather some data back to about 1995.

While we were disappointed in not being able to find a comparable municipality with which

we could be comfortable providing comparative information, we will be glad to return to this

in an amended report should we or the CRA be able to find a good candidate.


52

Economic Impact From Projects Created In The CRA Boundaries

As new projects are brought into the City’s CRA area, jobs are created both locally and

regionally. Using the U.S. Department of Commerce Bureau of Economic Analysis’s

Regional Input-Output Modeling System II (RIMS II) multipliers for the West Palm Beach-

Boca Raton-Delray Beach Metropolitan Division, we have estimated the economic impact

from the payrolls associated with the use of the properties that were added to the tax base since

1988. In determining the impact, we have relied upon standard ratios of employees per

square foot of structure and State of Florida published average salaries of typical positions for

the use of the property. We have not estimated the total economic impact, or “final demand”

from the new projects because that analysis would require us to know for each project the

annual supplies and services consumed by each business in each project. With that

understanding, the reader should assume that the actual economic impact annually is likely to

be significantly greater than the amounts herein estimated. These forecasts are never held out

to be exact numbers but are used to facilitate an understanding of how new development

impacts local and regional economies. As a further note, we utilized the Palm Beach County

Property Appraiser files and we have only included those structures that have been built since

1988, having used that year as a logical “first year” that a building would have been

constructed after the CRA’s creation. This did not account for any structure which was built

before 1988 but that had been remodeled or repurposed. Since 1988, there has been

6,286,432 square feet of new floor area added to the CRA with a current market value of

$826,783,273. This amount does not include the value of the land. The analysis leads us to

believe that the following jobs and payrolls are currently being impacted within the CRA’s

boundaries. Because the current market values do not reflect the actual construction values in

the year the building was constructed, we have assumed for the sake of this analysis that the

actual construction value was 65% of the current market value, or $537,409,127. Using that

inference, we can estimate the Final Demand solely from the construction of new buildings:


53

Table 19. Economic Impact and Jobs Created By Construction, 1988-2016

Initial Impact 537,409,127

Final Demand, output 1,165,640,397

Tota Impact 1,703,049,525

Employment 11,392

Earnings 392,254,922

Total Impact Metropolitan Area

Table 19 estimates the one-time impact from new construction. The ongoing economic

impact is estimated in Table 20, that shows the substantial employment impact created by the

new development:

Table 20. Annual Jobs and Salaries Created

Use Employees Payroll

Initial Impact

Hotel Uses 429 14,147,562

Retail and Restaurant Uses 698 18,949,304

Office Uses 1,320 65,346,296

Warehouse/Industrial Use 114 3,539,208

Total 2,561 101,982,370

Direct Effect

Hotel Uses 540 18,737,031

Retail and Restaurant Uses 849 24,222,895

Office Uses 2,132 84,865,235


Total 3,664 132,242,447

Total Impact

Hotel Uses 969 32,884,593

Retail and Restaurant Uses 1,547 43,172,199

Office Uses 3,452 150,211,531


Total 6,225 234,224,817


54

Impact From CRA Investments and Programs

Since 1986, the CRA has spent $213,130,571 on various activities other than general

administrative tasks. These projects and programs included $39,487,778 in debt service

expenditures. Deducting that amount, which represents repayment of amounts spent on those

projects and programs, we are left with an initial investment in the community of $173,642,793.

We have categorized the projects and programs into those input and output categories in the

RIMS II model that best fit their description. Using those inputs and approach, we have

estimated the impact to the community and metropolitan area to be as follows:

Initial Impact Direct Effect Total Impact Jobs Earnings Average Wage

173,642,793 374,270,456 547,913,249 3,660 129,546,896 35,399

These impacts occurred irregularly from 1986-2016 as the money was spent on the projects

and programs, but this analysis illustrates how the CRA’s expenditures affect the local

economy. These amounts are in addition to those created by those private developments in

Table 19.

Impact To Areas Outside The CRA But Still In Delray Beach

The RIMS II model used for the analysis above used data from the West Palm Beach-Boca

Raton-Delray Beach Metropolitan area. There are no input/output models unique to just

Delray Beach, so it is not possible to gauge the impact to areas outside the CRA but still within

the city limits. We did look at property values within the city and have noted that investments

focused on the redevelopment area have improved the values of property within the CRA by

more than twice that which occurred elsewhere in the City of Delray Beach. Table 21

illustrates how the CRA area has seen both market (“Just”) values and taxable values increase

at much greater rates than the City outside the CRA:



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Table 21. Changes In Just and Taxable Values For Properties Inside and Outside Of

The CRA Area

Change In Just Value,

2000-2015

Change In Taxable Value,

2000-2015

Delray Beach Not In CRA 151% 124%

Delray Beach CRA Area 319% 312%

Percent Difference 211% 251%

The differences noted here are stark and illustrate the degree of success the City has received

because of the CRA efforts. It seems clear that the investments made by the CRA over the

years has generated tremendous returns in increased property values.


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Redevelopment Examples

In addition to the projects listed in Appendix A, scores of new development or

redevelopment of existing sites have occurred as a result of the CRA efforts. In this section,

we will examine a few of those projects that illustrate how effective the CRA has been in

attracting development to the City.

Atlantic Grove

Atlantic Grove is a mixed-use development located on Atlantic Avenue, just west of Swinton

Avenue. It is comprised of condominiums, lofts, townhouses, office, and retail spaces. The

site was previously a deteriorated commercial site with a liquor store. The new project is

worth $9,852,275 in taxable value to the City and is estimated to have produced 169 jobs

during construction and an estimated 66 permanent on-site jobs when fully occupied.



57

Before Redevelopment:

After Redevelopment:


58

Pineapple Grove Village

Pineapple Grove Village is located just north of Atlantic Avenue in Downtown Delray Beach

in the Pineapple Grove Arts District. It contains 2 condo buildings and six townhomes. The

project is estimated to be worth $35,580,011 in taxable value to the City and has brought in

838 metropolitan-wide jobs during construction.




59

City Walk

City Walk at Pineapple Grove is a luxury condo building in the heart of Downtown Delray

Beach. City Walk at Pineapple Grove is a mixed-use residential and retail building with 40

residences from 1,004 to 2,238 air-conditioned square feet. It’s current taxable value to the city

is $15,022,994 and provided 344 metropolitan-wide jobs during construction. It is estimated

to have 51 employees when all commercial space is occupied.

Before Development:

After Development:


60

Hyatt Place Delray Beach

Located adjacent to the Pineapple Grove district and one mile from the beach, the Hyatt Place

Delray Beach has 134 rooms and is an upscale select service hotel. Its current taxable value

to the City is $13,729,123 and it is estimated to provide 87 jobs onsite. During construction,

it is estimated that 291 metropolitan-wide jobs were added.

Before Development:

After Development:


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Seagate Hotel and Spa

Located on Atlantic Avenue, the Seagate Hotel and Spa is located within the business district

and beach. It is a full service resort with 154 rooms. Its current taxable value to the City is

$25,545,001 and it is estimated to provide 140 jobs. During construction, it provided 492

metropolitan-wide jobs.




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APPENDIX A

DETAIL OF CRA PROJECTS BY SUBAREA

1986-2016

Project Subarea 1986-2016

Areawide and Neighborhood Plans/ Downtown Master Plan

E Atlantic Ave Media 1 1,130

Trombone Mast Arms 1 247,865

Visitors Center 1 13,000

Downtown shuttle 1 895,350

Banners, signage, lights 1 89,979

CBD Code Revision 1 58,334

Downtown Clean (signs, lights, etc.) 1 32,926

Park Management Pedestrian Crosswalks- Gleason/Venetian 1 160,000

Tree Grate Replacement 1 41,827

Redevelopment Projects/Downtown Core Improvements/Bridge

Tender 1 34,511

Redevelopment Projects/Downtown Core Improvements/Parking 1 147,655

Redevelopment Projects/GAE (Traffic Performance Standards) 1 14,621

Misc. Pre-Development Costs-Other 1 37,848

Community Improvement and Economic Development/ Grant

Programs

Site Dev & Grants 1 57,500

Business Development Program 1 15,400

Paint-up Assistance Grants 1 15,037

CRA Subsidized Loan Program 1 67,365

TOTAL OF SUBAREA 1 1,930,348


Downtown Master Plan Implementation 2 521,966

Downtown Mixed Use Redevelopment 2 719,592


SE/NE 1st Street (One-way pair) 2 1,229,748

SE/NE 5th Avenue (Federal Highway pairs) 2 965,250

Loan to City/Chamber Relocation 2 210,274

Old School Square Facility 2 200,000

Old School Square Maintenance 2 300,000

Downtown Shuttle 2 895,350


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Parking Management Projects 2 185,000

Historic District 2 80,490

Old Library Site 2 180,421

Alley and Street Improvements 2 188,131

CBD Code Revisions 2 58,333

Project Development/Implementation 2 122,067

Veterans Park 2 100,000

Northeast 3rd Street / Alley Improvements 2 436,420

Downtown Parks - Worthing Park 2 100,000

Site Development & Improvements - East Atlantic, Federal,

Pineapple 2 7,466

Pineapple Grove Parking Lot (313 NE 3rd Ave) 2 144,232

NE 1st Ave Streetscape Improvements 2 596,832

Pineapple Way North Entrance Feature 2 149,000

SE 4th Ave Beautification 2 100,000

Downtown Core Parking Analysis 2 31,900

Arts Incubator Parking Lot (362 NE 3rd Ave) 2 184,816

NE 4th Ave Beautification 2 55,863

Committee meetings/marketing 2 10,345

Redevelopment Projects/Downtown Core Improvements/Main

Street 2 46,912

Community Improvement and Economic Development/

Downtown Marketing and Promotions

Downtown Marketing Cooperative 2 2,795,894

Downtown Joint Venture - Promotions 2 1,140,295

DMC Art and Jazz 2 294,888

DDA cluster study/merchant 2 50,827

Legal fees 2 89,519

Redevelopment Projects/Downtown Anchor - Parking 2 43,917

Redevelopment Projects/Bankers Row 2 113,558


Downtown Business Plan 2 20,131

Business Recruiter Chamber 2 87,083

Christmas Tree Maintenance 2 297,190



Community Improvement and Economic

Development/Pineapple Grove Administration

Administration 2 54,512


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Pineapple Grove (Construction) 2 919,931

Organizational Support 2 325,144

Debt Service - Pineapple Grove 2 112,188

Community Improvement and Economic Development/Old

School Square

NE 1st Avenue Acquisition 2 6,242,533

Parking Garage 2 6,500,000

Land Acquisitions 2 1,332,961

Organizational Support 2 1,570,000

Legal and other fees 2 101,505

Redevelopment Projects/Block 76 Parking

Redevelopment Projects/Block 76 Parking 2 3,040,866

Redevelopment Projects/Block 77 redevelopment (Worthing

Place)

Downtown Mixed Use - Block 77 2 161,891

Legal and other fees 2 9,422

Community Improvement and Economic Development/Green

Market

Personnel and staff 2 432,172

Entertainment/vendors 2 123,415

Supplies and materials 2 64,216

Administration and operations 2 82,092


Programs

Property Acquisitions 2 1,103,178

Incentives 2 355,822

Programming/Microlending 2 358,563

Economic Development Marketing 2 58,489




Develop Regions Grant 2 50,000

Historic Façade 2 270,000

Signs, banners and advertising 2 99,853

A-GUIDE Funding 2 3,732,479

Riverwalk 2 2,604

Downtown Core Improvements/ Parking 2 147,655

Downtown Cinema Mixed Use Projects 2 525


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Economic Development Incentives 2 355,822


Old School Square Retail Space Rent 2 605,000

Old School Square Retail Space Build Out 2 469,193

Warehouse/Arts Incubator 2 1,611,344


Other Projects 2 574,441

Riverwalk 2 2,604

Redevelopment Projects/Tenneco Redevelopment 2 2,400

Parking and Parking Management 2 489,735

Alley and Street Improvements 2 67,497

Beautification Project 2 1,889,806


Legal fees 2 67,618


Site Development & Improvements - West Atlantic & NW/SW

Neighborhood

Areawide and Neighborhood Plans/ West Atlantic Avenue

Redevelopment Land Acquisition 3 24,780,063

Gateway Feature 3 1,670,729

Sidestreet Improvements (SW 2nd Avenue) 3 583,175

West Atlantic Public Plaza (Libby Wesley Plaza) 3 337,943

Fire Headquarters Public Plaza 3 310,921



Swinton and Atlantic Intersection 3 52,693

West Atlantic Redevelopment Plan Update 3 200,000

West Atlantic Avenue Grants 3 169,693

West Atlantic Beautification Phase III (6th-10th Street) 3 113,184

Economic development - hotel loan 3 1,500,000

Rev JWH Thomas Park SW 9th 3 590,821

Project development and implementation 3 300,792

Library Contribution 3 666,000

Legal fees 3 432,317


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SW Neighborhood Grant 3 893,851

Beautification - NW 12th Ave 3 1,667,645

Southwest 9th Avenue Parking Lot 3 540,837

SW 10/9 Ave Improvements 3 200,000

Block 8 Alley 3 138,028

NW/SW Neighborhood Alley 3 300,000

NW 12 Ave -Atlantic to MLK 3 1,185,000

Beautification - West Atlantic (Median) 3 34,550

South County Courthouse Expansion 3 1,698,746


Areawide and Neighborhood Plans/Other

Streets and Alley Improvements 3 812,669

Miscellaneous Infrastructure 3 10,792

Bus Shelter 3 19,721

Misc. Predevelopment Costs 3 1,964

Legal Fees 3 20,779

Redevelopment Projects/Affordable/Workforce Housing

Program

La France Hotel/Apartments 3 2,454,278

SW 9th Avenue Apartments - Renovations 3 1,005,434

Land Acquisitions-CLT 3 594,284

135 NW 5th Avenue 3 299,879

Redevelopment Projects/Redevelopment Sites

Block 60 Parking Lots 3 52,415


CBD Code Revision 3 58,333

Downtown Shuttle 3 895,350



Redevelopment Projects/NW/SW 5th Avenue Beautification Spady/Muse Project 3 583,538

Munnings Cottage Project 3 57,536

Property Acquisitions and Fees 3 3,310,564

NW/SW 5th Avenue Redevelopment 3 874,589

NW 5th Ave Acq/Alley Construction 3 1,350

Muse/Harvel Project 3 4,741


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Block 20 Alley Improvements 3 75,000

Building Renovations and Improvements 3 953,239

95 SW 5th Avenue Parking Lot 3 83,135

Mount Olive Parking Lot 3 137,626

57 SW 5th Avenue Parking Lot

Management Fees 3 284,955

Harvel Cottage 186 NW 5th Avenue 3 319,938

Beautification and Planning - NW 5th Ave 3 95,612

Project Development 3 1,543,995

Legal Fees 3 32,084


Programs 3 177,816

Site Dev & Grants




Curb Appeal Assistance Grant 3 187,500

A-GUIDE Funding 3 36,551

International Tennis Tournament 3 3,654,609

Redevelopment Projects/Block 60 Historical Homes and Parking 3 4,004,575

Project Development Grant- Saki Room & CRA match 3 1,862,224

Ted Center 3 66,053

Community Improvement and Economic

Development/EPOCH 3

Program Grant

60,000

Architectural fees 3 793,014

Contractual Services 3 16,642

West Atlantic Redevelopment Coalition 3 483,006

Administration (insurance, audit, telephone)

Marketing & promotions 3 83,438

Cultural Loop 3 71,971

Community Improvement and Economic Development/Delray

Beach Public Library Administration 3 5,030

Public Library Administration

3 1,156,000


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West Atlantic Redevelopment Coalition

Administration 3 83,438

Marketing & Promotions 3 71,971

Cultural Loop 3 5,030



Redevelopment Projects/West Settlers Historic Grant Program

Upgrade Historic Homes 4 137,095

Neighborhood Improvements 4 11,996

Rehabilitation grants and loans 4 122,780

Legal Fees 4 14,250

Areawide and Neighborhood Plans/ Downtown Master Plan Cultural Loop and MLK Jr. Dr. Phase I 4 605,776

MLK Jr. Drive Phase II 4 426,006


Program

Franklin House 4 73,147

Eagle Nest 4 112,814

Second Mortgages/Relocations 4 498,269

Affordable Housing 4 2,485,117

Renaissance Program - Property Acquisitions 4 650,400

Renaissance Program - Reimbursable Expenses 4 2,925

Subsidies - Affordable Housing 4 296,234

Land Acquisitions-CLT 4 1,189,567

Construction - single family - CRA 4 16,055

Construction - single family - CLT 4 3,377,296

Consulting Services 4 404,050

Housing Study 4 50,000

Community Land Trust (CLT) 4 2,630,650

Housing Authority 4 201,000



Pompey Park Concession Stand 4 200,000

West Settlers Condo Association 4 23,648


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Programs


Digital Divide 4 65,434

Property Acquisitions 4 551,200


Areawide and Neighborhood Plans/N Federal Highway

Redevelopment

Neighborhood Park ( La Hacienda) 5 178,277

Beautification 5 32,309

Market Analysis 5 4,660

North Federal Highway 5 598,957

Matching Grants - Federal Highway Grant 5 88,434

Note Payable - City 1400 Federal 5 85,000

Federal Highway Plan Update 5 38,500

Legal Fees 5 3,236

Dixie/Federal Connection 5 67,108

Areawide and Neighborhood Plans/ Downtown Master Plan SE/NE 5th Avenue (Federal Highway pairs) 5 965,250

Former Chamber Site 5 449,661

Redevelopment Projects/Pre-Development Planning 5 62,189


Programs







Debt Services Former Chamber Site 5 3,614,190

US Highway 1 project 5 2,270,870



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Areawide and Neighborhood Plans/Seacreast/Del-Ida

Neighborhood Plan

Seacrest Del-Ida Neighborhood Improvements (property &

parking) 6 1,167,948

NE 2nd Avenue/Seacrest Blvd 6 2,669,760


Programs







Areawide and Neighborhood Plans/ Osceola Neighborhood

Residential Area Improvements 7 250,000

Other Projects- Osceola Park 7 148,700

Alley 7 439,140

Business Area Revitalization (SE 2nd St/Ave/Alley) 7 1,985,044

SE 4th St Sidewalks 7 219,224

Legal Fee - Osceola Plan 7 5,233

Areawide and Neighborhood Plans/ Downtown Master Plan SE/NE 5th Avenue (Federal Highway pairs) 7 965,250

Former Chamber Site 7 449,661


Programs



Redevelopment Projects/Carver Square Neighborhood Acquisitions, relocation and planning 8 1,801,903

Remediation and site development - Carver Square 8 587,017

SW 2nd Terrace 8 77,514

Legal fees 8 38,562

Areawide and Neighborhood Plans/Southwest Neighborhood

Plan

Parks (Carver Square, Rosemont, Sunshine) 8 309,064


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Neighborhood Resource Center 8 488,664

Village Square Grant 8 119,709

Village Square Elderly Loan 8 2,700,000

Project Development/Implementation 8 94,335

SW 12th Auburn Avenue Beautification 8 3,355,332

SW 12th Avenue Duplexes 8 635,650

SW 14th Avenue Beautification 8 735,625

SW 2nd Street Beautification 8 1,175,527

Merritt Park 8 120,000



133 SW 12th Avenue Triplex 8 45,635

SW 12th Avenue Duplex Renovation (127-129 SW 12th Ave) 8 180,000



Program Construction - CODA 8 1,541,553

SW 14th Ave(Townhouse Land/Design) 8 1,603,533

Construction - triplex 8 696

Land Acquisitions-CLT 8 2,057,872

Land Acquisitions - CRA 8 2,761,023

Construction - SW 14th Avenue townhouses 8 72,336


Programs



Digital Divide 8 65,434

A-GUIDE Funding 8 2,301,026





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Planning, IT and parking manager Areawide 1,265,500

Clean and Safe Program Areawide 6,207,404

Lobbyist Areawide 1,003,000

Housing Rehab Areawide 179,599

Streetscape Maintenance Areawide 142,961

Project Engineer Areawide 7,369,112

Plan Reviewer II Areawide 671,714

Neighborhood Planner (Resource Center) Areawide 346,497

City Demolition Areawide 50,000

City Contractual Services - Cultural Arts Study Areawide 28,000

Community Improvement and Economic Development/ City

Contractual Services Total Areawide 17,263,787


Maintenance Areawide 533,625

Business Relocation Areawide 30,000

Project Development/Implementation Areawide 4,312

Property insurance Areawide 364,051

Property taxes Areawide 296,218

Legal fees Areawide 7,976

Water Areawide 35,926

Utilities Areawide 140,324

Redevelopment Projects/Redevelopment Sites Total Areawide 1,412,432

TOTAL

205,464,790

CRA District Tax Increment Financing Analysis - Delray Beach … · 2019. 4. 1. · Delray Beach...

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