Much has been spoken and written regarding the city’s investment and potential use of the Wildflower property, purchased with taxpayer dollars in 2009 for $7.5 million. Our city leaders, in spite of all of the controversy, are pursuing exactly one option – leasing the grounds to the Hillstone Restaurant Group, the only respondent to the City’s Request for Proposal (RFP). So, at current course and speed, our city leaders are about to embark on a Public-Private Partnership of epic proportions.
Here are the reasons this may be a bad idea.
It’s a Bad Investment for Taxpayers
Depending on whose numbers are used, it will take 15-20 years for the city to break even on its initial investment. No rational business person would invest $7.5 million, in cash, up front, for a 5% payback that begins in 20 years. This does not include the time value of the original investment or other alternative uses (opportunity costs) that could have been made with this investment.
Our city leaders have not been recognized for their financial acumen or fiduciary brilliance in the area of Public-Private Partnerships.
A clear example is Mizner Park. While Mizner is a great destination, it has been a financial disaster for the taxpayers of this city, and it keeps getting worse. After all these years of paying (interest on the bonds, maintenance, property management, etc.), we now learn that General Growth Properties (GGP), who manages the property on behalf of the city, is about to exercise their option to buy the land underneath all of the businesses at Mizner Park! In other words, GGP will end up taking title for the revenue-generating pieces of Mizner, while the City will be left owning the pieces that generate expense! What a bargain…..
When asked about the investment in Mizner Park, our current city leaders will defer, unanimously, to the notion that “this deal was done before I got here”. While true, this should send up another red flag – the people who are making decisions about the Wildflower will have no long term responsibility for the outcome. In fact, twenty years from now, very few citizens will even remember their names. But they will have to live with the financial impact of this business adventure for a long time hence.
It’s a Bad Investment for Prospective Businesses
Apparently, the only business who is willing to invest in this enterprise is Hillstone, and then only when subsidized by the taxpayers of Boca Raton. If this site were such a great place for a restaurant, one would think that a half dozen or more of the various restaurant groups would have at least made an RFP proposal. Why did Darden (Red Lobster, Olive Garden), Bloomin’ Brands (Carrabas, Outback), Brinker (Chili’s), Landry’s (Morton’s, McCormick) etc. decide not to bid? Even when the taxpayers are carrying the original investment? This is a red flag.
More broadly, one has to wonder why, during all of the years this property was available for sale, that a business enterprise did not buy Wildflower and turn it into something profitable. Is it possible that no rational business person could see a profit in doing so? Is it because real businesses risk their own money when they invest (I.e.; they do not have the luxury of a bottomless bag of taxpayer money to draw upon)? Why would we think our city leaders are better at being commercial landlords than the people and businesses who do this for a living every single day? In other words, this has to be a Public-Private Partnership because a 100% private investment would not work in a pure business environment.
The Will of the People
Some of our city leaders would assert that the Wildflower purchase was intended, all along, to be a revenue generating acquisition/investment. If this is true, why did the city host a public meeting on October 18, 2011 at the 6500 building requesting public input on the subject of how to use this property? The city also hosted an online survey on June-October of 2011 for the same purpose. One could easily draw the conclusion that the property was purchased without a clear purpose in mind. Based on the documented input from the public (see http://bocawatch.org/wildflower-was-meant-to-be-a-park/ ), one could also draw the conclusion that a restaurant was the intention all along. Which is correct?
Remember Ocean Strand? This was the project where publicly owned property was potentially going to be leased to a hotel and used as a cabana club. Eventually, thankfully, the project was rezoned to preclude such uses. It was very clear that voters believe that public properties, purchased with tax dollars, were not to be used to subsidize private business interests.
A City is not a Business
There are many who believe that our city leaders should not be using tax dollars to break into the commercial real estate business. Why? Because the risk of the investment is undertaken by taxpayers, rather than entrepreneurs. What do our city leaders know about running a restaurant? What do they know about the economics of commercial/restaurant real estate? What happens if things go wrong? The taxpayers will be on the hook, of course….
Here’s an example: After all this time, talk, and taxpayer investment, it is becoming apparent that the Wildflower site, by itself, may not be adequate for the purposes at hand. So what is the solution? There is already talk, from our city leaders, about the notion of buying yet more property to the north and south of Wildflower in order to mitigate the site’s shortcomings. And who pays for that? You guessed it – us taxpayers!
In other words, the project has shortcomings, even before it is started, and the way to fix it is to, yet again, dig into the endless sack of taxpayer dollars.
Folks, this is not a hot dog concession at a ball field – it’s serious business, it costs big bucks, and it has very long-term implications!
The Time is Now
So what next?
Hillstone is in regular meetings with our city staff, negotiating the lease terms, site plan, etc. The deal could close at almost any time. If the items above make you nervous, as they do me, please write to our city councilors and let them know. Their email addresses are
Mayor Susan Haynie – firstname.lastname@example.org
Deputy Mayor Robert Weinroth – email@example.com
Councilman Mike Mullaugh – firstname.lastname@example.org
CRA Chair,Councilman Scott Singer – email@example.com
Jeremy Rodgers – firstname.lastname@example.org