- September 17, 2024
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Just two months ahead of the November general election, Palm Coast is launching an education program about a charter amendment that would expand the city’s financing abilities.
In the last several weeks, in part because of comments made by Vice Mayor Ed Danko at recent City Council meetings, residents have been reaching out to the city about the amendment’s vague language and the intent behind the amendment.
In an effort to set the record straight about the amendment, Palm Coast Chief of Staff Jason DeLorenzo and Communications Director Brittany Kershaw met with local media outlets on Sept. 6 to announce the launch of a new educational website to help explain to residents more about the proposed charter amendment. The website, palmcoast.gov/shapingourfuture, launched on Sept. 9.
DeLorenzo said the genesis of the charter amendment was when the council asked for a presentation about financing tools other communities are using that Palm Coast is not.
“In our research, we haven’t found a lot of communities that work under the same limitations that we do,” DeLorenzo said.
By limitations, DeLorenzo was referring to a specific section of the charter.
Palm Coast’s Charter Article VI, section (3)(e), outlines limitations to the council’s contracting authority.
It states: “Unless authorized by the electors of the City at a duly held referendum election, the Council shall not enter into lease purchase contracts or any other unfunded multiyear contracts, the repayment of which: extends in excess of 36 months; or exceeds $15,000,000.00.”
What that means, in essentials, is that the city cannot borrow more than $15 million at a time nor enter into contracts that take longer than 36 months to repay, without a referendum.
On the Nov. 5 ballot, Palm Coast voters will be asked to decide whether to strike the entire (3)(e) section.
The language on the ballot is as follows: “Shall Article VI of the Charter be amended by removing provision (3)(e) related to fiscal Contracting Authority that limits the City’s ability to enter into public-private partnerships, have the ability to address growth by having future residents contribute to infrastructure costs, respond to emergencies and use available financial instruments including, but not limited to, bonds.”
DeLorenzo said the charter amendment was proposed in the first place at the behest of the council last spring.
“The City Council is trying to have more tools when it comes to funding projects within the city,” he said.
Currently, Palm Coast uses a “pay as you go” system, Kershaw said, which means that the city saves up the money — through impact fees, grants and state appropriations — before beginning a project. On the new website, the process is likened
to a family saving up all the funds it needs before it buys a house, instead of taking out a mortgage.
“It takes about 20 years to save up those impact fees to be able to build a new fire station, where the need is much sooner,” Kershaw said.
Removing the amendment does not remove all checks and balances, DeLorenzo said. The city’s debt management policy outlines guardrails the city must adhere to when managing its debt.
Regardless, the $15 million limitation does not allow much in the way of purchasing power. DeLorenzo said that, according to the city finance department, once funds that are already obligated to projects are taken into account, the city’s actual borrowing power is only $10 million.
That $10 million would get the city “almost nothing,” he said.
“You can’t build anything with $10 million,” he said. “That sounds crazy, but really, everything is astronomical.”
At the Aug. 27 and Sept. 3 City Council meeting, Vice Mayor Ed Danko — who had previously approved adding the charter amendment to the November ballot — said he was changing his mind on the ballot amendment. He said that he had since learned the amendment was to allow a sports complex to be built in the west of the city.
“I did not know when we voted on this language. I did not know what this was specifically for,” Danko said. “It’s for a $90 million stadium in the westward expansion”
DeLorenzo and Kershaw said that while the sports complex was the impetus for considering changing the charter amendment, it is not the only reason city staff presented the option.
“It’s not only for that. That is a potential use,” Kershaw said. “I would be hesitant to say that that is the sole reason that they’re doing this, because there are other implications.”
The city is not pushing the charter amendment on behalf of the company, DeLorenzo said. Staff was directed by the City Council to work on a youth sports complex as a potential economic driver. A youth sports complex has been a council priority for three years, he said, though the feasibility studies were only presented last December and February.
In that study, it was estimated to cost $93 million for a company to build the complex, but it was estimated that it would also bring in $79 million in economic impacts in just the first year of operations.
It would take 17 years for the city to pay off the lease if it reinvested the complex’s extra revenue into the leaseback payments. The sports complex would be self-sustaining in three years, DeLorenzo said.
Through discussions with council for the sports complex, he said, bloomed the idea to amend the charter.
Primarily, the amendment is so the city can enter into these lease-purchase agreements and partnerships, and not just for the sports complex, Kershaw said.
When asked why the amendment doesn’t just strike the language prohibiting the lease-purchase agreements — which would allow the partnerships but not increase the amount the city can borrow without voter approval — DeLorenzo said staff discussed several ways to amend the charter, including just striking some of the language, but ultimately opted to present the full section removal to council.
“City Council could have changed that at any time,” DeLorenzo said.
If the amendment is approved, it wouldn’t mean the city would borrow money for the sports complex, Kershaw said. Instead, it would allow the city to enter into a partnership for “a private company to spend $93 million on our behalf” to build it, DeLorenzo said.
DeLorenzo said that having to go out for a referendum every time the city needs to enter into a contract outside of the charter limitation isn’t practical.
DeLorenzo said: “That’s not a way to run a business.”
According to the education website, public-private partnerships would allow the city to enter into agreements for infrastructure projects as well as commercial projects and spread the cost out over time.
Council member Theresa Carli Pontieri, in the Sept. 3 meeting, said that she was hesitant to remove the amendment from the ballot because of the benefits it would bring for additional infrastructure projects. Regardless, she said, the charter section needed to be updated.
“The pay as you go system is not working. It is not tenable. It is not sustainable. We have to be able to borrow money to fix infrastructure before it breaks,” she said.
Despite not supporting a motion by Danko to remove the amendment from the ballot at the Aug. 27 meeting, Pontieri did vote with Danko to remove the amendment at the Sept. 3 meeting. That second vote failed with a tied 2-2 vote.
But beyond the sports complex, DeLorenzo said, municipalities across the state have been using lease-purchase agreements and partnerships to fund infrastructure projects. Locally, staff has even had to turn away projects that could have benefited residents because of the charter limitations. One such project proposal was for a fire station, he said.
“We’re falling behind,” he said. “Just in general, we don’t have some of the great things that other communities have.”
This story was updated Sept. 12 at 1:30 p.m.
