- March 6, 2025
Hopeful that a Walmart would be built on Old Kings Road, the surrounding property owners made a deal with the city in 2005 to four-lane the road. Eight years later, the city is debating the best way to collect the money, and from whom.
Although the city wasn’t planning to expand Old Kings Road at the time, the property owners agreed to fund the improvements themselves with an extra line item on their tax bills through a special assessment district if the city would accelerate its plans to four-lane the road from State Road 100 to Palm Coast Parkway. It was a deal that would benefit everyone, it seemed, because Walmart would bring hundreds of jobs and stimulate the commercial growth of the corridor.
But when it came time to fund the improvements in 2008, the financial markets had tanked. The special assessment district couldn’t get bonds, and so the City Council at the time unanimously approved a $5.3 million interfund loan from the city’s utility fund to the Old Kings Road Special Assessment District.
The project moved forward, but only the southern portion: The four-laning only was completed from State Road 100 to Town Center Boulevard, not to Palm Coast Parkway. Now, the city’s bond attorney, Ken Artin, has told officials that they need to start collecting on the $5.3 million. So far, the owners have only been paying interest on the loan.
Liens have been placed on the properties in the district to ensure that owners have incentive to pay the money back, and therefore, “the utility customers’ money was never placed at risk,” said Cindi Brownfield, communications and marketing manager for the city.
Dennis McDonald, a local government watchdog, disagrees. He claims the customers have been placed at risk because the city’s recently increased utility rates are the result of the interfund loan.
In fact, he is supporting a petition to recall Mayor Jon Netts, the only remaining member of the City Council who made the unanimous vote. A petition to that effect states that Netts “has caused the citizens and taxpayers of Palm Coast undue financial harm in the form of increased sewer and water fees by more than 20% in the near term.”
McDonald also says the loan was illegal because borrowing that much money should only be accomplished via referendum.
The city’s response, from Brownfield: “Because it was an interfund loan, and we weren’t borrowing money from an outside source that would be paid back with general fund dollars, there was no requirement for a referendum vote.”
During a dry run of the petition, McDonald said, 500 signatures were collected in 10 days.
Once the recall attempt is in motion, there is a 30-day window for the petition to reach 2,700 signatures.
If that many are collected, then the city will write a letter to Netts, who will have the opportunity to write a 200-word rebuttal or resign. If Netts chooses to rebut, then the group would need to collect 8,100 signatures within a 60-day period.
McDonald said another group is filing an ethics complaint against Netts, and once that is filed, the petition will begin circulating.
Chris Quinn, the city’s finance director, said it was an investment decision to use the utility fund’s available cash to collect higher interest rates from the property owners in the assessment district. As a result, the city collected $640,000 in interest from 2010 to 2012.
However, the city now must begin to collect on the principal, in addition to legal, design and permitting fees, for a total of $7 million. The City Council is expected to vote on May 21 on an interlocal agreement with the Flagler County Tax Collector’s Office to begin collection of the Old Kings Road Special Assessment this fall.
The property owners in the south say the northern property owners should be included in the tax. The northern property owners disagree, stating that their portion of the road was never built, and so they shouldn't have to pay right now. That methodology is still being worked out, officials said.
