Latest Boca Citizens newsletter: Is This any way to a Public Entity…to Spend the Taxpayer’s Money????

19

In response to the Freedom of Information Act request I made over a month ago, I just received nearly 2000 pages of documents from the Boca Raton Beach & Parks District relating to the proposed purchase of the Ocean Breeze golf course property.

What those documents reveal is startling.

In his zeal to convince the Parks District to pay Lennar $24 million for the Ocean Breeze property and to get the City’s approval, Art Koski, the Executive Director of the Parks District:

  1.  Insisted that the results of the appraisal of the Ocean Breeze property commissioned by the Parks District be delivered only verbally;
  2. Tried, without success, to get the appraisers to justify a $24 million purchase price for Ocean Breeze;
  3. Hid the appraisal from his “bosses” — telling the Parks District’s Board on Feb. 6th that the valuation was not complete even though Mr. Koski had received the final results at least a week before;
  4. Told the City that “a variety of appraisals were performed on the Ocean Breeze property that ranged from $7 million to a high end appraisal of $33 million,” even though he knew that the only independent professional appraisal for the property (by Callaway & Price) had come in at $4.7 to $5.7 million; and
  5. Fudged the question of the availability of eminent domain by not clearly communicating his outside counsel’s conclusion that eminent domain was a viable option for acquiring the property.

The supporting information presented below in this newsletter may be dense . . . but it is much too important to ignore.

Note:  Where a document I relied on in writing this newsletter is available online, my citation to the document in the text below includes a link to the document.  A photograph of each of the other documents I relied on appears at the very bottom of this newsletter.  

The story the documents tell

On January 9, 2017, the Parks District’s Board authorized retaining Callaway & Price to prepare an appraisal of the Ocean Breeze property.

In an email on January 24, Rob Callaway, Partner/Executive Vice President of Callaway & Price, records the highly irregular fact that his firm had been retained to provide only a verbal report — so there is no formal written document documenting the results of the appraisal. [Source: January 24, 2017 email from Rob Callaway to Art Koski]. As a result, we know the results of the appraisal that the Parks District commissioned and paid for only because the results were mentioned in emails and in an opinion letter from the Parks District’s outside counsel.

On January 30, in an email to Mr. Koski, Mr. Callaway referenced his firm’s conclusion that the entire Ocean Breeze property was worth $4.7 to $5.7 million. [Source: email from Rob Callaway to Art Koski, January 30, 2017, 2:55 PM]

That email makes clear that the appraisal included the value of the portion of the property where a hotel could be located. Mr. Callaway specifically told Mr. Koski that Mr. Koski’s own estimate of the value of the hotel portion of the Ocean Breeze property ($5 to 7 million) “just makes no sense.” [Source: email from Rob Callaway to Art Koski, January 30, 2017, 2:55 PM]

Later that day, Mr. Callaway sent Mr. Koski an email with his firm’s final bill attached. That email reveals that Mr. Koski had been pushing Mr. Callaway to increase his estimate for the fair market value of Ocean Breeze to between $24 to $33 million. Mr. Callaway stated: “We are just nowhere near the $24,000,000 to $33,000,000 you were thinking and not sure that is even possible.”

The minutes from the Parks District’s February 6th Board meeting quote Mr. Koski as telling the Parks District Board: “still in the process of obtaining an independent evaluation of the property considering all factors.” [Source: minutes of the Parks District’s February 6th Board meeting] (In fact, as documented above, the appraisal commissioned by the Parks District was completed and the results communicated to Mr. Koski at least a week prior to the meeting). There is nothing in the minutes of subsequent meetings recording Mr. Koski providing the results of the appraisal to the Board.

The Parks District’s Board had a special meeting on Feb. 13th to discuss Ocean Breeze. The minutes of the meeting include Mr. Koski’s proposed responses to questions posed by the City’s Deputy Manager with regard to Ocean Breeze. Mr. Koski’s proposed responses included the following statement: “During the exchange process, a variety of appraisals were performed on the Ocean Breeze property that ranged from $7 million to a high end appraisal of $33 million.” [Source: minutes of the Parks District’s February 13th Board meeting] There is no evidence in the record that Mr. Koski ever obtained any independent appraisal other than the one that the Parks District commissioned from Callaway & Price which concluded that the Ocean Breeze property had a value of between $4.7 to $5.7 million.

In response to another of the Deputy City Manager’s questions — whether the Parks District would consider or undertake an eminent domain proceeding to acquire the Ocean Breeze property — Mr. Koski proposed to give two reasons for rejecting eminent domain. First, “the variation of the prices of the appraisal valuation” which in Mr. Koski’s telling ranged up to $33 million. Second, “outside counsel has concluded and advised that the District would not have eminent domain authority to acquire the hotel site, or the property that is appurtenant to the hotel.” [Source: minutes of the Parks District’s February 13th Board meeting]

Needless to say, Mr. Koski’s first reason for ruling out eminent domain is dependent on the existence of independent professional appraisals that have never been produced or recorded in any document.

Mr. Koski’s second reason for rejecting eminent domain is a mischaracterization of the opinion of the Parks District’s outside counsel. What outside counsel actually opined is not, as Mr. Koski’s response said, that the Parks District could not acquire the entire Ocean Breeze property by eminent domain. Rather, the outside counsel concluded that the Parks District would be able to acquire the entire Ocean Breeze property by eminent domain, but, if it did so, it might not be able to put a commercial hotel on the property.

The outside counsel’s opinion letter reads in relevant part:

“. . . it is clear that the District cannot legally acquire the subject property through eminent domain and then convey it to a private hotel developer and/or operator. We have some additional legal concerns as to whether the District’s effort to permit a private enterprise to construct and operate a hotel on the property would satisfy the public purpose element in the context of the incidental benefit limitation. However, this may, arguably, be done pursuant to a lease. It would be beneficial for the District to confirm whether the development of a hotel on the subject property is a condition of Academy’s interest in locating a facility on the property . . .

“Conclusion and Recommendation: The taking of the Ocean Breeze golf course by eminent domain is a legally available option for the District, subject to the concurrence of the City Council of the City of Boca Raton or to the approval of the District electorate by referendum, as required by the District Charter. In our opinion, the proposed taking of the golf course satisfies the public purposes and reasonable necessity elements of an action for eminent domain, subject to our stated concerns about the potential hotel option.” [Source: February 16, 2017 opinion letter of Goren Cherof Doody & Ezrol PA]

The Parks District’s Board approved Mr. Koski’s draft responses to the Deputy City Manager. With those answers in front of them, the Board also authorized Mr. Koski to request “the City’s concurrence and support for the District to purchase the Ocean Breeze property for $24 million.” [Source: minutes of the Parks District’s February 13th Board meeting]

At a joint meeting of the Parks District’s Board and the City Council on May 8th, Mr. Koski asserted that “the District does not have an appraisal for the Ocean Breeze property.” [Source: minutes of the joint City Council/Parks District’s Board May 8, 2017 meeting] Of course, as documented above, Mr. Koski had in fact obtained an appraisal by Callaway & Price of $4.7 to $5.7 million in January.

During the May 8th meeting, Mayor Susan Haynie asked for a valuation of the Ocean Breeze property. {Source: minutes of the joint City Council/Parks District’s Board May 8, 2017 meeting] To date, the Parks District has not provided it. Ironically, in a January 13th letter to the City Manager, Mr. Koski had called the then ongoing appraisal by Callaway & Price “material and relevant to the District’s response to the City.” [Source: January 13, 2017 letter from Art Koski to City Manager Leif Ahnell]

Council MUST take over the acquisition of Ocean Breeze

We are asking City Council to recognize that it can’t turn a blind eye to the tainted process that led to the Parks District’s approval of a $24 million purchase price for the Ocean Breeze property.

And, of course, neither can the City ignore the fact that paying $15 to $20 million more than the Ocean Breeze property is worth would be an inexcusable waste of taxpayer money.

The City must take over the acquisition of Ocean Breeze and acquire the property at a reasonable price (if necessary, by eminent domain).

Judy
Judith Teller Kaye
Boca Citizens for Fiscal Responsibility

Contact your public officials

The names and email addresses of the Mayor and City Councilmembers are below, as are the names and email addresses of the Parks District’s Commissoners. Please feel free to call or write them.

City of Boca Raton – 561-393-7708

Mayor Susan – Haynie shaynie@ci.boca-raton.fl.us
Deputy Mayor Jeremy Rodgers – jrodgers@ci.boca-raton.fl.us
Councilmember Andrea O’Rourke – AORourke@ci.boca-raton.fl.us
Councilmember Scott Singer – ssinger@ci.boca-raton.fl.us
Councilmember Robert Weinroth – rweinroth@ci.boca-raton.fl.us

Boca Raton Beach & Parks District – 561-417-4599

Commissioner Steve Engel – sengel@mybocaparks.org,
Commissioner Craig Ehrnst – cehrnst@mybocaparks.org
Commissioner Robert K. Rollins, Jr. – rrollins@mybocaparks.org
Commissioner Susan Vogelgesang – svogelgesang@mybocaparks.org
Commissioner Erin Wright – ewright@mybocaparks.org

I would appreciate receiving a copy of any emails you send. My email address is: Judith.Teller@Teller-Kaye.com.

19 COMMENTS

  1. It is important for all citizens to be completely informed of all facts of this proposed acquisition of Ocean Breeze. To “cherry pick” or to selectively publish portions of documents is misleading.

    First, both the opinion of outside counsel and the City Attorney conclude that the use of eminent domain to acquire Ocean Breeze is not effective. The eminent domain process cannot assure the acquisition of the commercial portion of the property. Neither the City nor the District desire to own or operate a hotel and the intent to transfer this important element of the property to a private entity violates the necessity of “public purpose” required for an eminent legal action. Eminent domain does not assure the acquisition of either the golf course or the commercial property. The legal opinions verify this conclusion. More importantly, the outside counsel opinion concludes that an eminent domain proceeding could result in an acquisition cost in excess of the currently negotiated purchase price.

    Second, the issue of appraisal estimates is not indicative of the true value to the community. This is a purchase of 215 acres of open space for the community. Such public ownership is not capable of being measured by comparisons to failed golf courses in South Florida. We are talking of a vision for the future, not engaging in a debate of appraised values.

    Third, this brings us to the negative comments of Ms. Teller Kaye regarding the District’s discussions with its appraisal consultant. It is true that the initial conversations conclude an estimated appraised value of $5.7 million. However, if she had looked more carefully at the communication, she would have noticed the commercial element was based on an assumption of a 50-60 room hotel. Had Ms. Teller Kaye continued to review the April documents, she would have noticed that the District’s land planner estimated that a 130-room hotel was feasible for this site. Extrapolating the Appraisers’ value per room results in an increase in the current valuation to $7 million, a number that has been consistently communicated by the undersigned at public meetings.

    Finally, it is absolutely clear that the purchase price of the 215 acres in its current condition cannot be supported by a conventional appraisal for a failed golf course and no person or entity is attempting to convey that impression. What is being conveyed to the public is the opportunity to exercise a vision to acquire the last remain large tract of open space within the City limits of Boca Raton, an action to control further unnecessary development and the willingness of the Greater Boca Raton Beach and Park District to once again step up to preserve and create an amenity for the entire community consistent with the manner by which the District has acted over the past 45 years to make Boca Raton a “City within a Park”.

    • Judy Teller has attended only 1 meeting of the Greater Boca Raton Beach & Park District over the last 12+ months that the Ocean Breeze property has been discussed, yet she thinks that she knows all about this issue by reading the minutes or looking at emails and then selectively publishing her negative opinion. Eminent domain is NOT the answer as the resulting price could be significantly higher and the District would be required to pay all of the attorney fees which would simply be wasting hundreds of thousands or millions of dollars if the result was not the acquisition at a lower price which cannot be guaranteed. In an eminent domain proceeding Lennar would be expected to ask over $73 million as clearly illustrated by the value placed on the sell of the current municipal golf course (less $5-$10 million for buying out the Boca Teeca deed restriction-as compared to only $350k needed to buyout a portion by MCZ Centrum). Lennar would be the winner in eminent domain and the taxpayers would lose.

      THANK YOU BEACH & PARK DISTRICT for seeing the importance of acquiring over 200 acres for under $125,000 per acre which is certainly a steal in today’s real estate market. More importantly, thank you for the vision to bring golf to the public in an area known for its many golf courses. This is truly a Win-Win for all taxpayers in our city.

  2. Eminent domain is one of the most overused excuses that cities, counties, states, and corporations use to take land away from its rightful owners. The use noted in this article is yet another flight of fantasy example of government overreach.

    I agree with the other poster, all the of the info should be published on this email forum or on a website for the citizens of Boca Raton to review so they can form their own conclusions.

    • If Lennar wanted to make a large profit on the Ocean Breeze property, then they would buyout the deed restriction for $5-$10 million and then the property would be valued at more than the $73 million for the smaller golf course property the city has multiple offers at $73 million. $24 is a great deal since the typical developer would do the deed restriction buyout, get it rezoned and then sell the property for over $100 million and/or build 500-750 homes themselves. This is a good deal for both Lennar and the taxpayers who should net almost $50 million after the city sells the west Glades road golf property – how much simpler can this be?

  3. It is refreshing to see a position paper written that is based on research rather than rhetoric. And please know that I am all in favor of acquiring any open space we can, because “they aren’t making any more”! But to over-pay for this property is ludicrous.

    Mr. Koski states, “It is important for all citizens to be completely informed of all facts”.

    I agree. So please publish, for the record, the appraisal that was received by B&P. We (taxpayers) paid for it. I, for one, would like to read it.

    Mr. Koski states, “Second, the issue of appraisal estimates is not indicative of the true value to the community. This is a purchase of 215 acres of open space for the community. Such public ownership is not capable of being measured by comparisons to failed golf courses in South Florida. We are talking of a vision for the future, not engaging in a debate of appraised values.”

    This is nothing but rhetoric. We ARE, in fact, talking about a failed golf course. And unless something changes, the only possible use for this property is a golf course. So it’s not surprising that it should be appraised as such. It can never be anything else…..

    Regarding the valuation of the proposed hotel, Mr. Koski states, “Extrapolating the Appraisers’ value per room results in an increase in the current valuation to $7 million, a number that has been consistently communicated by the undersigned at public meetings.”

    OK, so maybe the value is $7M instead of $5.7 M. That still does not answer the question of: Why on earth would we (taxpayers) pay $24M for this property? Somewhere between three and four times what it is worth?

    It is worth noting that No one can do anything with this property except for operating a golf course. What that means is that our negotiating position is very strong. Let’s use this position to buy the property at a fair price for the taxpayers of this city!

  4. This boils down to what is the value of the Deed Restriction held by the Boca Teeca property owners and is it reasonable to expect that Lennar can buyout these deeded rights with their financial resources. If yes, then what is the property really worth compared to the over $73 million the city has been offered to sell their smaller golf course property located several miles west of the Ocean Breeze property.

    Of course Lennar has the financial resources to buyout the Deed Restriction from a majority of Boca Teeca property owners, so then the Beach & Park District (taxpayers) would be looking at a $73+ million tab for the Ocean Breeze property. By comparison the $24 million asking price is a bargain that taxpayers should be thanking the Beach & Park District for acquiring in order to bring championship level golf to the public in Boca Raton.

  5. Al Zucaro was at the last joint meeting of the city council and the beach & park district, yet he continues to publish Judy’s negative comments even though 95+% of the 200+ residents in attendance were in favor of the acquisition of the ocean breeze property for the $24 million being proposed in this deal. Is Boca Watch only representing the residents downtown and south of Glades Rd? That appears to be their main concern and this one-sided view on Ocean Breeze by a solo resident who lives in a private country club is misleading residents who are not able to attend the numerous meetings on this issue. $24 million is a great deal for over 200 acres in east Boca!

    • Mr. Feingold, BocaWatch has published all arguments regards this property acquisition without censorship. I have attended virtually every public meeting on the subject and have reported fairly throughout. Thank you for your comment but filling a room with 200 interested residents is not a sufficient sampling of the residents/taxpayers citywide. BocaWatch reaches a citywide readership. BocaWatch is trying to provide a broader base the various arguments on this important topic. In the end, the decision will be made by 5 elected officials who are charged with that task. So I suggest that you concentrate on counting to 3….Once you have three votes the result is determined….Al Zucaro

  6. Judy claims to be some sort of taxpayer watch dog via her own non-profit org, but maybe she needs to go back to remedial math since $73 million minus $24 million results in Boca Raton taxpayers benefiting by $49 million into our treasury as a result of these 2 golf course deals. Doesn’t sound like the self-proclaimed taxpayer watch-dog understands basic math.

  7. The only way this property can be valued at $20 mill + is to value it as private home lots, something that is not realistic with the deed restrictions!

    • What is the value of the deed restriction? The former owner, MCZ Centrum, bought out a portion of the deed restriction for only $350,000 on 30 acres of the approx. 210 acre total and easily received rezoning for 211 units. Does this mean that the deed restriction on the entire 210 acres could be bought for 7 times the previous amount?-$2.5 million Maybe not, but Lennar has the financial resources to buyout the deed restriction for $5-$10 million, at which time the property would be valued at well over $73 million due to the eastern “ocean breeze” location as compared to the $73 million offering price for the golf course west of the turnpike that is approx. 15 acres smaller in size.. So, if Lennar really wanted to make money on this deal, they would buyout the deed restriction for an estimated $10 million and then they would have a property that is valued at $75-$90 million for building 500-750 homes. Clearly this scenario is not in the best interest of the city residents, but for those that challenge the $24 million valuation, this is clearly a “below market price” based upon what could be done under this likely scenario if the sell to the Beach & Park District does not go through.

    • Did you read Mr. Koski’s reply? Also, if Judy went to the meetings and did the math that benefits taxpayers, then maybe this blog would not be publishing selective points mentioned by Judy. What is Al’s ultimate objective with these repeated postings by a single resident? Does he want to make sure that his online blog creates a divide between residents as a result of one person’s position that does not make sense financially?

  8. Let’s keep this simple! This golf course is going to generate a lot of money for the city. Parks and Rec have made it clear that this is going to be a world class course. One cannot assess its true value in it’s current state.

  9. Boca Raton the only South Florida city without a municipal golf course? Nope. Ocean Breeze will be one of THE best courses in Palm Beach County and at $24m a good deal for the City compared with the $73m the City will get from the sale of a smaller golf course. Taxpayers will net the difference and revenues from Boca golfers and visitor golfers will bring a lot more money to the City than just open green space. A win for the City. A win for taxpayers and a win for golfers.

  10. I have attended every meeting held by the BBPD concerning the purchase of Ocean Breeze Golf Course Keep Golf In Boca has also been there from the beginning. It has been a slow process from the beginning. Every effort has been made and every scenario has been discussed fully out in the open at every meeting. Yes, there are many choices and everything has consequences. The Beach & Park District has extensively debated all options and decided the only way to obtain this land at this time and guaranteed is at the price Lennar set – $24 million. The deed restriction is the only reason that it is at this price. Remember that the deed restriction is working in our favor to keep the price down and make it affordable for the Beach & Park District to obtain it. When the Beach & Park buys it, the deed restriction is not enforceable. So how do you value this piece of land to the community? It’s priceless! The Beach & Park District made a great decision and knew that there would be a lot of chatter over Ocean Breeze but they had the vision and the community in mind. Now for Judith Tiller Kaye, who appeared out of the blue at one of the Beach & Park meetings and only one meeting and was accompanied with no less then the GLhomes representative. GL homes, from the beginning once they put a bid in for the western golf course, has sent out numerous cards and flyers to every owner in Boca Teeca trying to destroy this sale to Beach & Park District???. I, personally, have spoken to GL homes and their lawyer and have asked them directly why are you trying to destroy this deal or is it to destroy Lennar’s reputation and hopping that they will look like money grabbers in regards to Ocean Breeze, so the city will select GL Homes for the purchase of the MUNI; WHO KNOWS WHAT THEIR STRATEGY IS. All I know is that Judith came out of the wood work to mimic GL homes comments regarding the sale of Ocean Breeze. GL homes representative, who has attended almost every meeting pertaining to the Ocean Breeze sale, which shouldn’t and doesn’t even concern them. They do not even live in town, so why ?? Are we and you being used to their advantage. None of GL homes reps.that attended meetings live in Boca. So you still have to ask what’s in it for them? Remember GL homes does not get involved unless they smell money. Judith, you are so misinformed if you attended all the meetings you would not have to fill in the gaps with your opinion as truth . you are a watch dog for the city where were you to speak up about the city losing money for years with the Municipal Golf Course? $350,000 last year alone! $650,000 to refurbish it a couple of years ago .. also the Wild Flower property 7.5 million dollars for not even 2 1\2 acres that’s outrages what was that appraised for at the time a codemed building . Who woke you up in the matter of Ocean Breeze? Is there a link with ? or did you get a boost in your donations lately? It’s only a question. I’m not accusing you of anything. If you did good for you, you deserve it for all the hard work and research you have supplied BUT WHY

  11. The valuation of the Ocean Breeze property is easily comparable to the $73 million being offered to buy the city course less the value of the deed restriction. The deed restriction value is clearly less than $10 million (buyout a majority at $10k/Boca Teeca resident) as compared to the previous buyout at under $250/resident by MCZ Centrum who did not have the capital to make a more substantial offer–unlike Lennar. Accordingly, the value of the Ocean Breeze property is at least $63 million and the offer to buy it at $24 million should be grabbed ASAP. Thank you to my Boca Teeca neighbors for not taking the money and then eliminating the financial ability for this deal to make sense.

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