Interesting timing on the downtown venues deal. On July 27, mayors Buddy Dyer and Richard Crotty provided the taxpayers of Orange County with a stylish albatross to wear around their necks for the next 30 years in the form of $1.8 billion worth of public spending on three downtown venues. One month later, on Aug. 26, the astute journalists at the Sentinel finally noticed that the downtown condo market has gone to be with the Lord. Remember that the Sentinel is the one that lauded the venues deal as fair, groundbreaking, historical, monumental, heroic, patriotic, seismic and perhaps even inspired by Jesus Christ himself. The heavens opened, the seas parted and we got three new venues from on high, practically free. Praise Buddy! Praise Richard! Amen, brothers and sisters, amen.
In other words, only a couple of weeks after lauding a deal premised on a sizzling real estate market and soaring tourism-tax revenues, the Sentinel finally stopped ignoring the obvious, took a look around at all the desperate developers hawking empty condo towers and asked, “Why? Why are there so many people not living downtown? Why are there so many condo projects that were announced and never built?” I’m not going to cast aspersions on the timing … OK, that’s exactly what I’m going to do.
See, the problem here is that the success of the downtown venues scheme hinges on everything going exactly right: People will move into the downtown condos, which will rise in value, which will enable the downtown Community Redevelopment Agency – via a mechanism known as tax incremental financing – to generate enough revenue to pay off $150 million in bonds to pay for the performing arts center and renovations to the Citrus Bowl. Meanwhile, our white-hot downtown will help the city unload the Centroplex property for $90 million to developers hungry to build – that’s right – more condos and retail! (Except over there the condos and retail are part of a “creative village,” meaning the people not buying them will be computer geeks.) The proceeds from the sale of the arena land will also help the city pay off those bonds.
Man, did those rose-colored glasses come off quickly.
First, as the Sentinel finally noted, the condo market is dead. Lifeless. Moribund. Deceased. That’s not going to change in the near term because the soft real estate market is a reflection of national problems, and downtown condos are vastly overpriced. What if the real estate market continues to sink, property values downtown drop and the CRA can’t collect enough tax revenue to pay off the bonds?
Bad news. But there’s worse. Even if everything were going according to plan, the mechanism to pay off the revenues bonds might be illegal. The Florida Supreme Court seems to think that taxpayers should have a say in how tax-incremental financing money – exactly the funding source the city wants to tap via the CRA – should be spent. In a Sept. 6 ruling, they kind of said as much. Apparently they just don’t understand how much Dyer and Crotty really want this to happen.
The news hit City Hall like a bunker-buster. Dyer went on TV and as much as vowed to raid city workers’ lunch money if necessary to keep his precious (and precarious) deal from having to face a public referendum; Crotty did the same at the county. Both men are well aware that if the public had a say, the answer would be “no.”
And then there’s the arena. The official word from City Hall is that the Supreme Court ruling doesn’t affect the arena, because that’s being paid for from tourist-development taxes and Magic owner Rich DeVos’ stingy contributions. “Let the tourists pay for it” was the mantra that rallied the uninformed into not water-boarding every public official involved in this egregious bit of corporate welfare, and it worked.
But tourism, as we learned about this time six years ago, is not immune to national trends; quite the opposite, it’s very susceptible to them. July figures show that tourist-tax collections in Orange County are up only 2 percent over 2006, which is basically flat. Seminole County’s numbers dropped 5 percent in March and April. Economic shockwaves from the imploding housing market, perhaps? Maybe.
Bottom line is this: The venues deals have stretched the city and county’s finances to the limit. To be successful, they depend on everything going exactly right. And suddenly things aren’t going exactly right. Would you plan your own finances that firstname.lastname@example.org