The Private Sector Component
Last updated 7/2/2020 at 12:35pm
It is impossible to overstate the importance of the private enterprise segment of a successful Community Redevelopment effort. Florida's Community Redevelopment Act illustrates the point. The very first section of the Act is entitled "Encouragement of private enterprise."
• Retained the services of S & M E, the established planning and design firm based in Raleigh, North Carolina, to overhaul its Community Redevelopment Plan.
• Unanimously approved the firm's overhaul of the CRA's Plan.
• Entered into a contract with the reconstituted Lake Wales Main Street, Inc. by agreeing to provide some financial assistance in exchange for Main Street's agreement to implement the Main Street program designed to attract private sector investment, raise property values, and create tax increment for the benefit of the City and the CRA district.
• After a comprehensive process and extensive work with the community, Dover-Kohl came forward with the plan to renovate the historic core known as "Lake Wales Connected," tying together Downtown, Northwest Neighborhood, and the public facilities in the Crystal Lake and Lake Wales Park areas.
• Accepted Main Street's contribution of $123,480 in private funds ($30,000 of which came from CenterState Bank to help with the Northwest Neighborhood portion) to go along with the CRA's $65,000 to pay for Dover-Kohl's total bill of $188,480 as the cost of the Lake Wales Connected plan.
• CRA unanimously approved the "Lake Wales Connected" plan for implementation.
• The Chastain-Skillman engineering firm was retained to convert the prototype segment of the Lake Wales Connected Plan – Park Avenue Redesign – from design drawings to construction documents sufficient for the CRA to send out for bids.
Funding. The most critical question concerning any public construction is paying for it – where does the money come from?
Florida law grants a CRA some special tools for bringing back declining commercial and residential areas so they can reach their highest and best uses for the benefit of the community as a whole. The most important tool in the box is a CRA's unique method for funding its projects, known as Tax Increment Financing. It starts by fixing the value of property in the CRA district as of the date the CRA starts its business. If the CRA's redevelopment efforts receive a positive response from the free market, property values will increase. The resulting increase in tax revenue from both the City and County (increment) is deposited into a CRA Trust Fund to pay for the cost of redevelopment and for use with further redevelopment. Payment for the CRA improvements come from the Trust Fund, not from the City's general revenue.
The Crucial Key. The Lake Wales CRA will have to borrow to help finance all or part of the project. Success of the plan will depend upon whether the project works to attract private investment in CRA District property, thereby increasing property values in the district to create the increment to pay off the debt incurred to bring the project about.
If the reader thinks that sounds like a private sector risk/benefit exercise, the reader is correct. Government is good at projects that are funded by a reliable taxation revenue stream set by the government itself. However, governments do not have the best of records when it comes to competing with private enterprise in the free market.
City Commission's Record. In May of 1990, the Lake Wales City Commission decided to rescind powers previously granted to the separate CRA board consisting of local business leaders, and assumed all powers of the CRA for itself. They were within the law in doing so, but in the ensuing 30 years, city commissioners sitting as the CRA board have done little if anything toward fulfilling the goals of the Florida Redevelopment Act and next to nothing to comply with Florida Statute 163.345, stating that "Any . . . municipality, to the greatest extent it determines to be feasible, . . . shall afford maximum opportunity . . . to the rehabilitation or redevelopment of the Community Redevelopment area by private enterprise. (emphasis added).
Private Sector Expertise. Paying for the improvements envisioned by Dover-Kohl will depend on increases in property values. As explained earlier, such increases will depend on risk/benefit judgment calls made by the City's CRA board. Fortunately, the greater Lake Wales community is blessed with successful entrepreneurs who love this place and most likely would be willing to help. The challenge is how best to take advantage of the private enterprise expertise that is among our midst.
The Next Installment: The Design Component