Pensacola Mayor D.C. Reeves repeatedly has pointed out that the ground lease that his team has worked out with Inspired Communities of Florida is much better than what Mayor Grover Robinson did with the developer and the Pensacola City Council approved in 2022.
At his presser on Tuesday, Mayor Reeves said, “The mayor’s office was tasked in February of 2022 to take an option for parcels 4 and 5 and turn that into a lease. That option was approved by that particular council (2022). The vast majority of that council still remains…We were handed that option, and what is being put in front of this council on Thursday is a significant financial improvement for what was already approved by this council.”
City Finance Director Amy Lovoy has compared the deals and provided it to the Council Executive Don Kraher, who shared it with the council members yesterday.
Don,
The Mayor asked me to compare the current proposed lease terms with the proposed lease terms in 2022. When doing so, I used the same inflation factors for increases in property taxes as well as the same method for determining what the taxable value would be between the 2022 and 2024 versions of the analysis.
When performing the analysis, I divided the project into distinct phases: unimproved, residential (which had 2 sub-phases), and commercial. The residential and commercial phases were made of equal value. So, the residential phase became $55 million, and the commercial became an equal $55 million.
Since the gross investment includes soft costs not typically included in valuation for tax purposes, I only used 70% of the gross for each of the developed phases. The unimproved phase is simply the taxes on the raw land, which will be due because the lease is 100 years.
Phase 1a is the Discounted or Affordable portion, which was 40% of the residential taxable total. The taxes were calculated with the total amount due to the CRA calculated at a 75% discount (maximum allowed under Live/Local).
Phase 1b is the Non-Discounted phase, which was 60% of the residential taxable total. These taxes were calculated with the total amount due to the CRA. Phase 2 is the commercial phase. These taxes were also calculated at 70% of the gross value multiplied by the tax rate due to the CRA.
The results are:
- The 2024 lease yields a taxable and lease return of $19,574,157, while the 2022 lease yields $529,380 plus parking a garage.
- The 2024 lease is only for lot 5, while the 2022 lease was for both lots 4 and 5.
If you could forward this to the Councilmembers ahead of tomorrow’s council meeting, I would appreciate it. Thank you. – Amy Lovoy