November 4, 2020
The following details the City’s responses to specific questions asked by Oakland Park residents regarding the Oakland Park Square project. These questions were asked in an article published on November 2, 2020. To see the original article in which the questions were asked click here.
At the bottom of the page is a list of links and resources provided by the City in an earlier response on Nov. 3, 2020.
Question # 1
Why must the City Commission vote on this now, when a new commission will take over in 2 months? The new commission will be saddled with this decision and the funding to afford the expenditures.
The Development Agreement, which contains the essential elements of the lease, has already been approved by the Commission. Exhibit C, of the First Amendment to the Development Agreement, provides for the lease to be executed within a certain time from the signing of that document.
Question # 2
How does being a tenant benefit the City? Shouldn’t the developer be responsible for finding an anchor tenant since they are being given the opportunity to develop?
Having the City as the anchor tenant for the building stabilizes the financial risk of developing in a market that has had no other comparable investment in the last 20+ year which makes the City’s downtown a high risk market for development financing. In addition, it accomplishes several city goals including centralizing City services and provides much needed parking in the downtown.
The City Commission previously approved the essential terms of the lease on three separate occasions:
9/20/2018: Purchase & Sale Agreement passed on First Reading by a vote of 4 to 1.
10/17/18: Purchase & Sale Agreement approved on 2nd Reading by a vote of 4 to 0; Development Agreement approved by a vote of 4 to 0.
8/6/2020: First Amendment to the Development Agreement approved by a vote of 4 to 0.
Question # 3
With the approval of the lease the City is obligating itself to 15 years of a lease totaling $16.5 Million. Why is a city that is struggling fiscally, allocating 16.5 million to rent, when they could take out a loan and renovate the current city hall for half that price?
The land once developed will result in the City collecting ad valorem taxes on the value of the building for as long as the building exists. This revenue stream will realize much more income than the lease costs over the life of the building.
The City conducted two evaluations of the current City Hall Facility – 2010 and updated in 2018. An analysis of both of these studies indicated that the cost of renovating and expanding City Hall and associated parking would exceed $16.5 Million. As presented on July 30, 2018, the estimated cost of centralizing City services, rebuilding City Hall, and constructing a parking garage coupled with the loss of ad valorem revenue and other associated revenues with the disposition of property will cost the City approximately $46 Million which represents a cost of $29 Million more to the taxpayers.
In addition to the rent what other expenses are associated with renting (maintenance, taxes, insurance, etc.)? What is the amount of these additional expenses? Since these monies would be spent on a property that is not City owned, how is this expense ultimately favorable to the City?
As the tenant, the lease requires the City to pay maintenance for the interior of the City Hall space, common area maintenance costs, direct utility costs, and would be responsible for maintaining its own insurance. The City currently insures all City properties. Note though that these costs are similar and may be less than the current costs at City Hall and Municipal Building as the new building will be in better condition and more modern systems, i.e. roof, HVAC, and new construction.
Pursuant to Section 4.8.7 of the Development Agreement:
4.8.7 Expenses: Tenant shall be responsible for all direct and properly allocated operating costs for the Premises. Tenant may elect to direct contract for utility, security, telecommunications and janitorial, property and general liability insurance services for the Premises. Landlord and Tenant shall agree upon the allocation (“proportionate share”) of Common Area Maintenance (“CAM) charges. Landlord and Tenant agree that CAM charges include:
a) Property Taxes attributable to the Premises
b) Insurance adjusted to reflect Tenant carrying insurance for the Premises.
c) Grounds Maintenance proportionate share for the South Lot Mixed Use building.
d) Parking Maintenance proportionate share.
e) Site Utilities proportionate share.
f) Property Management Fees proportionate share.
Is building on Greenleaf Park and current City Hall a part of the plan to generate tax revenue to afford future endeavors for the City, including the new location at Oakland Park Square?
The possible development of the existing City Hall property is not connected with the Oakland Park Square project. However, once the City Hall and Library move to new locations, the City will have the opportunity to consider the future of this area to benefit downtown redevelopment and the surrounding area.
Is the overall OP Square project with the City paying rent profitable in the long-term for the City and its residents? If so, how?
Answered above — By achieving the goals set by the City — added public parking, new residential units and commercial space in the downtown, generating ad valorem revenue, expanding tax base, centralizing city operations, etc. In addition, creating downtown foot traffic is essential for the survival of existing businesses and new investment in the downtown.
Highest and best use of City Property
Generation of new taxable value
Increase property values
Enable the development of residential to support businesses
Open other opportunities for potential development
Creation of Jobs
What happens after the lease is up?
That will be up to the City Commission. By the time the lease expires, the City will be at or near the end of paying off the current Facility bond. The City Commission could then decide whether to remain as a tenant of the building, move elsewhere or build a new City Hall. The revenues generated by this project in the long term will help support the construction of a new City Hall.
Does the City Manager feel there has been enough transparency within the community toward what the City is attempting to construct under the OP3D project?
OP3D is a contemplated Code update for the downtown. It has not yet been considered by the Commission and this does not impact the lease.
Responses from Nov. 3, 2020
The same day the article was published we received a response from the City :
Per our conversation, staff is preparing for tomorrow’s City Commission meeting and although unable to provide a response to you today, all the concerns listed will be addressed during tomorrow’s meeting presentation. In the meantime, we have included in this email all presentations on this topic to date. Please let me know if you have any additional questions. Thank you.
- 6/20/2018: City Commission Meeting, Oakland Park Square Project Update Presentation.
- 7/30/2018: Community Meeting: Presentation of Oakland Park Square during meeting at Jaco Pastorius Community Center. – attached
- 9/20/2018: City Commission Meeting, Purchase & Sale Agreement (1st Reading) Presentation. http://records.oaklandparkfl.gov/WebLink/DocView.aspx?id=165755&dbid=0&repo=City-of-Oakland-Park
- 10/17/2018: City Commission Meeting, Purchase & Sale Agreement (2nd Reading) Copy of 9/20/2018 presentation included as attachment. http://records.oaklandparkfl.gov/WebLink/DocView.aspx?id=165874&dbid=0&repo=City-of-Oakland-Park
- 8/6/2020: City Commission Meeting, included in presentation on the Assignment of Purchase & Sale Agreement, First Amendment to the Development Agreement, and First Amendment to the Purchase & Sale Agreement. http://records.oaklandparkfl.gov/WebLink/DocView.aspx?id=171971&dbid=0&repo=City-of-Oakland-Park