Viewpoint: Bonds, borrowing are no bargain for city taxpayers

The following is a viewpoint concerning the Community Maritime Park from Messrs. E. W. Hopkins, C. C. Elebash, and Warren Briggs. While Progressive Pensacola remains a cautious supporter of the Community Maritime Park project, we feel it is important to have healthy, vigorous debate on this and all issues of public interest.

The City of Pensacola is scrambling to borrow $40 million for the Community Maritime Park (CMP). An unstable municipal bond market is making it difficult.

If the bonds are sold, the money will go for site preparation, a public park and a stadium. The stadium will house the Pensacola Pelicans baseball team. Estimated cost for paying off the bonds is $90 million spread over 30 years. Almost $40 million of the payback will be for the stadium.

City Council had planned, and promised, to use Community Redevelopment Agency (CRA) revenues to pay off Maritime Park bonds. CRA revenues come from City and County property taxes collected in downtown Pensacola. A drop in property values has caused these revenues to decline.

A critical question has now arisen: Can the CRA support its existing obligations and also pay off the new bonds? The answer is “probably not”. City Hall is hoping for a brisk real estate recovery and a strong revival in CRA property taxes. This is unlikely to happen. We are in a deep recession, and almost all experts predict a slow recovery. The severe drop in residential property values has spread to commercial real estate, and most CRA downtown property is commercial.

Assuming the City can sell the bonds, Council probably will have to:

• Repay all or part of the debt from the General Fund (the City’s regular operating budget).
• Or shift existing CRA obligations to the General Fund so the CRA can make bond payments. (City Staff is already laying the groundwork for transferring CRA expenses to the operating budget.)

Directly or indirectly, the General Fund will be helping to pay off the CMP bonds. The City budget is already tight. This added burden will likely cause a cut in services or higher taxes, or both.

Pensacola citizens outside the downtown CRA district will pay twice when the General Fund takes on CRA obligations.

• Non-CRA citizens already pay once. The CRA receives revenues that are diverted from the City’s General Fund.
• They will pay a second time when the General Fund covers CRA expenses.

Ironically, the Pelicans may not survive until the stadium is finished. The club is not affiliated with a major league team. It plays in a so-called “independent league” — a candidate for failure in today’s topsy-turvy economy. Meanwhile, the Maritime Museum and the UWF classroom building are “on hold”, mainly due to State of Florida revenue shortfalls.

Council’s bond repayment strategy is very questionable. It shifts financial responsibility for the Maritime Park from the CRA to the General Fund. This puts additional pressure on an already stressed City operating budget. It also penalizes City taxpayers who live outside the CRA district.

The prudent course of action would be to cancel the baseball park and proceed incrementally. Top priorities are site preparation, the public park and amphitheater. This approach would put the CMP in position to attract private capital when economic growth resumes.

E. W. Hopkins is a former banker now active in real estate; C. C. Elebash is a retired finance professor and Chartered Financial Analyst; and Warren Briggs is a businessman and former Pensacola mayor. Progressive Pensacola does not necessarily endorse or share the opinions expressed in viewpoint contributions.