Facts on the Gulfstream Hotel
As published on Facebook:
Gulfstream Hotel
Ok gang – here are the facts again. As you know I am not a professional writer so please give me some leeway on the explanations.
We keep hearing that the City of Lake Worth Beach is writing a check for $10 Million Dollars for the developer. We don’t know where this number comes from. We do know that it’s not right.
The City Commission made a deal with us in September 2020, renewed in May 2021, that agreed to four “economic incentives” from the city to make the Gulfstream project possible. They have fancy names, but here’s what they really are:
• 𝘼 𝙨𝙝𝙖𝙧𝙚 𝙤𝙛 𝙩𝙝𝙚 𝙣𝙚𝙬 𝙪𝙩𝙞𝙡𝙞𝙩𝙮 𝙛𝙚𝙚𝙨 𝙩𝙝𝙖𝙩 𝙩𝙝𝙚 𝙝𝙤𝙩𝙚𝙡 𝙜𝙚𝙣𝙚𝙧𝙖𝙩𝙚𝙨 𝙛𝙤𝙧 𝙩𝙝𝙚 𝙘𝙞𝙩𝙮. The city owns the electric, water, and sewer services, and it makes money when those services are used. Currently, the empty property isn’t using utilities, so the city utility companies are making about $0 from the property. The city code already provides that if a new project creates new utility revenue, the city will give back a small part of those new revenues. It’s a one-time payment, estimated to be about 5% of the new utility revenues that the Gulfstream project will create in the first 5 years. If the project doesn’t generate the expected revenues for the city utilities, the city doesn’t pay us. That City program is called the “Economic Investment Incentive” and it’s offered to every new development in the city, not just the Gulfstream. The city has this on its website if you want to review.
• 𝙋𝙖𝙧𝙩𝙞𝙖𝙡 𝙩𝙖𝙭 𝙖𝙗𝙖𝙩𝙚𝙢𝙚𝙣𝙩 𝙤𝙛 𝙣𝙚𝙬 𝙥𝙧𝙤𝙥𝙚𝙧𝙩𝙮 𝙩𝙖𝙭𝙚𝙨. The city and the CRA have programs in place to help new projects by giving back a portion of the new taxes created by a project. The city isn’t writing a check to us for this money. It’s just sharing a part of the new property tax revenues if and when the project creates them. Again, it’s not money out of the city’s bank account. It just partially reduces the new money that the city will get from our project. Plus, it’s not a full “abatement” – we still pay property taxes. In 2021, the taxes due for the hotel and the entire adjacent property were approximately $150,000. The project will continue to pay that amount or more. After the first year of operation, the project is expected to pay three times that amount, over and above the abatements. When the partial abatements expire, the project’s property taxes are expected to be 1000% higher –we mean this literally, ten times higher--- than they are with the vacant property now, paid every year. This money will then go to fund the city and the school district.
• 𝙏𝙝𝙚 “𝙎𝙪𝙨𝙩𝙖𝙞𝙣𝙖𝙗𝙡𝙚 𝘽𝙤𝙣𝙪𝙨 𝙄𝙣𝙘𝙚𝙣𝙩𝙞𝙫𝙚.” This “incentive” doesn’t give us a single dollar. The city charges property owners for the right to build a taller building. We’ve asked the city to waive or reduce the fees for this, especially because the referendum specifically approved the project’s height. The city calls this “giving” us the “value” of those additional floors of the building but they don’t actually give us any money. They just give us permission to build extra floors on the building—the same extra floors you all approved in the referendum.
• $1𝙈 𝙤𝙛 𝙣𝙚𝙬 𝙞𝙣𝙛𝙧𝙖𝙨𝙩𝙧𝙪𝙘𝙩𝙪𝙧𝙚 (𝙘𝙖𝙡𝙡𝙚𝙙 𝙩𝙝𝙚 “𝙀𝙘𝙤𝙣𝙤𝙢𝙞𝙘 𝙄𝙣𝙫𝙚𝙨𝙩𝙢𝙚𝙣𝙩 𝙄𝙣𝙛𝙧𝙖𝙨𝙩𝙧𝙪𝙘𝙩𝙪𝙧𝙚 𝙄𝙣𝙘𝙚𝙣𝙩𝙞𝙫𝙚.”) We’ve heard people say that this is writing a million-dollar check to the developer, but this incentive won’t gift any new money toward the costs of the project. This is only a reimbursement of money spent by us if we agree to do extra work for the city. In this “incentive,” the city would pay us to perform upgrades in the streets, utilities, and sidewalks around the project, IF those upgrades were in the City’s Five-Year Capital Improvement Plan. Meaning, if the city already had a plan to do that work to the public streets and utilities, and we did it for the city as part of our construction, the city would pay us back for the work we did for them. But not more than $1M, even if we spent more than that on the City’s work, designed by the city. These upgrades go beyond what we would be required to do as part of our project. That $1 million dollar reimbursement number was set in 2020, and we don’t believe that the City’s requested work to its streets and sewers can be done for $1,000,000 anymore. Of course, we’d like pretty new public streets, sidewalks, and benches around the restored hotel, but the project can’t afford to subsidize the city on this. Construction costs have gone up, continue to go up, and we may need to drop this “incentive” and leave the city to do its own work under its regular public works schedule.
Restoring an historic building is way more expensive that tearing it down and building new. Construction costs have gone up more than 25% since we first negotiated with the city—and honestly, we did not ask for much.
The only “real” money in all of this is the last one—which we are willing to walk away from. The others are all monies that only show up if the property is up and running and producing—which means its already paying in MORE because the money they are giving us is a discount off what we are already paying. It’s like going to the store and buying a dress and getting 20% off—You only get the discount if you are already paying for the dress—not if you don’t buy it.
