City budgets aren’t rocket science. They’re harder than that.
At least with rockets the numbers are agreed on and consistent. Gravity won’t change. The math of government budgeting and debt isn’t like that. There are different proverbial bills and coffee cans from which they’re paid.
At the recent Port St. Lucie City Council Summer Retreat, a topic at once a point of pride and a sore reminder of perceptions came up. The $1 billion debt. Well, what was the slightly-more-than-$1 billion debt as measured by the principle back in 2010 when the city was making huge economic-development dice rolls that didn’t pay off. Those failed economic-development gambles weren’t the only or even largest reason for the city’s debt, but they do get a lot of discussion.
“By the end of this year, we will have cut 25 percent off the city’s debt,” Mayor Greg Oravec said at the retreat.
Jeff Snyder, the city’s director of the office of management and budget, gave the council an update about the debt at the first day of the three-day retreat, last Wednesday, July 25. He told the council that the principle on the city’s total debts will be down to $785 million by the end of the year.
However, the mayor and others bitterly complained that some media reporting still portrays the debt at $1 billion. That counts principle and perspective interest assuming certain payoff times, Snyder explained. He added that when people look at their mortgages they see the principle as their debt, not principle and perspective interest.
The outstanding debt resulting from failed economic-development projects, such as the Vaccine & Gene Institute of Florida, stands at about $120 million. The city guaranteed about $64 million in bonds for the nonprofit medical researcher to construct and furnish the building – located at 9801 SW Discovery Way, Tradition – in 2010. VGTI declared bankruptcy in 2015, leaving the city – as VGTI’s largest creditor – with an expensive, highly-specialized building to sell.
On June 27, the City Council had a special meeting at which it gave a unanimous nod to moving forward with a proposed sale to RER Ventures, which offered $14.5 million for the property. The deal hasn’t been finished. The city’s outstanding VGTI debt is about $53.3 million.
The other economic-development debt-makers were Tradition Studios, Digital Domain, Torrey Pines Institute for Molecular Studies, and the City Center.
In the case of Digital Domain, the city was also a creditor to a business that flopped instead of creating 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.
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. The city’s debt for City Center is about $20.7 million.
Snyder told the council economic-development debts will be paid off by 2043.
The largest slice of the city’s debt pie is related to utility and storm-water projects done to accommodate rapid growth. From 1980 to 2010 the city grew from about 14,700 residents to about 164,000. Utility payments are the largest revenue for repaying the needed projects. That debt is about $384 million. It, too, should be paid off by 2043.
“The city has made huge strides,” Oravec remarked at the meeting.