About eight years ago Port St. Lucie had a bit more than $1 billion in debt. That number was central to a lot of political and policy discussion. It’s easy to remember, and stirs emotions.
It’s just not true anymore.
“Since then we’ve knocked it down 25 percent,” Mayor Greg Oravec told St. Lucie Voice in a phone interview.
But that $1 billion number seems to stubbornly stick around. For example, another media outlet recently reported about the city’s debt in a way that the mayor said left the impression the city still has about $1 billion in debt.
“They elected to add in the maximum conceivable interest to the remaining principal,” Oravec said.
He compared that to looking at a mortgage. He said homeowners think of the principal as what they owe and the interest as what else they’ll pay if they make only minimum payments toward the principal.
“There are a number of strategies to pay off your debt faster,” the mayor said.
Jeff Snyder, the city’s director of the office of management and budget, gave the City Council an update about the debt at the recent summer retreat. He told the council that the principal on the city’s combined debts will be down to $785 million by the end of the year.
That’s important to understand – combined debts. It’s easy to think of the city’s previous and failed attempts at economic development as where the debt came from. It’s not, by a long shot.
“Once you start to peel back the onion, another important factor is not all debt is the same,” Oravec said. “We all tend to fixate on the economic-development debt – Digital Domain and (the Vaccine & Gene Institute of Florida).
“It’s only a fraction of the whole. All of economic development debt, the whole kit and caboodle, it’s $120 million.” Or about 15 percent of the city’s outstanding debt.
The city guaranteed about $64 million in bonds for the nonprofit Vaccine & Gene Therapy Institute to construct and furnish a building at 9801 SW Discovery Way in 2010. VGTI declared bankruptcy in 2015, leaving the city, as the largest creditor, with an expensive, highly-specialized building to sell. RER Ventures has offered $14.5 million for the property. The city’s outstanding VGTI debt is about $53.3 million.
In the case of Digital Domain, the city was also a creditor to a business that flopped instead of creating promised high-paying jobs. The city, which again was a large creditor, got and sold Tradition Studios. Christ Fellowship Church gave the city $13 million for that property in 2015. The city’s outstanding debt for Digital Domain is about $19.8 million.
The other economic-development debt-makers were Torrey Pines Institute for Molecular Studies and the City Center.
Torrey Pines, at 11350 SW Village Parkway, is still standing. In 2007 the city approved a plan to borrow $70 million to be repaid with a portion of impact fees to construct a 100,000-square-foot facility to attract the California bio-tech to town. Impact fees dried up during the housing crash, resulting recession and slow recovery, which left city taxpayers covering bond payments. However, by last fall impact fees were again healthy enough to cover those costs. The remaining debt related to Torrey Pines is about $26 million.
The city’s debt for City Center is about $20.7 million. In the case of City Center, the city didn’t prop up a perspective employer. It paid for infrastructure to encourage development that hasn’t yet happened. That development stagnation is due in part to legal actions by the Securities and Exchange Commission against New Zealand developer Lily Zhong, former owner of much of the City Center properties. Late last year the SEC had reached a settlement with Zhong and it gave the greenlight to the court-appointed receiver to sell the land.
Once City Center is sold, the city’s economic-development debt will go down.
“The developer, the new owner, will take on that debt,” Oravec said.
Additionally, he said, “VGTI, we’re going to sell that building and put that to the debt.”
In other words, “that $120 million we’re reporting won’t even be $120 million,” the mayor said. “It’ll be less.”
The other 85 percent of the debt is mostly related to infrastructure, the largest part of that being utilities. That debt is about $384 million.