by James C. Sherlock
Updated Sept. 14 at 11:14 AM
If an infrastructure project is assessed to be a potential commercial success, that judgement is based on a business plan.
Inevitably, because they are very good at what they do, the developers of Atlantic Park had one that would have served as the basis for a proposal.
If the numbers worked, private money would have designed and built it to maximize return on investment. It turned out that the developer team may not have accurately estimated the cost/demand/pricing/revenue case for the surf park, but that would have been their problem.
But the city owned the land, so developers needed city participation.
Providing public land under those circumstances could have been a good deal. Under the original cost sharing concept, Atlantic Park likely would have returned taxes and fees over its lifetime that, as city manager Dave Hansen wrote in 2018, would “let us tell them it will pay for itself”.
But neither the council nor the its development authority asked for a proposal to lease the land. And at least a couple of them did not share the city manager’s vision on taxpayer value.
The public private project got way out of hand early and everything about the process and its public funding was wrong. Over the seven years of the process they chose, council and the development authority socialized costs and risks and privatized profits.
The concert hall was not part of the developer’s original plan. The city shoehorned it into the deal. Since it was city requirement, the city should have paid for that and has. The parking garages owned by the city in the resort area make that district function. The ones at Atlantic Park are just two more. So those reasonably are city assets in the deal.
The cost to the city for what it owns should have been about $100 million in construction costs plus the land to which it still holds title.
Yet today total city investments exceed $200 million plus the land.
The developer’s promised expenditures are down today about $125 million from the inflation-adjusted $282 million ($230 million in 2019) agreed to in the “final” agreement.
So, in very round numbers, call it a $100 million dollar obligation swap accomplished incrementally over five budget years.
Budgets are adopted in May for the fiscal year that starts July 1. The budgets that moved the money were adopted in May of 2019 through May of 2023.
Members in office for all of those votes annotated with the percentage of their total campaign donations that have come from real estate and construction interests were Barbara Henley (28%) Rosemary Wilson (46%), Sabrina Wooten (56%) and Mayor Bob Dyer (47%). That does not count contributions from real estate and land use lawyers and the bankers who lend to developers.
That does not mean the money affected their votes, but it is not healthy in a representative body.
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