Category Archives: City of Stuart

Own Versus Rent Even Government Has To Decide

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In the near future, Stuart will be offering the Triangle Property to developers. I believe the city is on the right track. Possible developers will ascertain uses for the property that are market oriented and not tied to any bureaucratic interpretation of what should be on the site. While a public component is not out of the question, there is no mandatory one. I am also encouraged that the city is not insisting that we net lease the parcel but is open to all possibilities.

That does not mean that the eventual developer will have no restrictions. The parcel still must meet current zoning and building codes. This will result in the developer having the same freedoms and restrictions that any owner of property would have.  It is truly market driven and not subject to bureaucratic dictates such as providing public parking. When placing any property out to bid, the city’s only interest should be whether the proposed buyer can close on the agreed upon terms.

The CRA can then take any proceeds and re-invest in other properties in the district to foster development. The purpose of a CRA is to help and promote private development in a designated area of the city. Government should not dictate and demand restrictions and uses to a buyer of city owned property simply because government was the seller of the property.

When government perverts the market by insisting on what should be built, it can result in adverse consequences not only on that property but also on the entire community.  Business should be left to the private sector. Government is notoriously bad at picking economic winners as witnessed by Digital Domain.  That is why I am, on principle, against Stuart being a landlord in almost every instance. If there will not be a public use for a property within a foreseeable period of time, it should be sold.

For many years, life insurance companies built and owned large real estate developments so that they would have predictable cash flows in order to pay claims.  Several centuries ago, Gompertz developed what became known as the “Law of Mortality”.  This is a mathematical formula that actuarially predicts how many people of a certain age will die each year. By owning these income streams, insurance companies proved to the regulators that they would have the money available to pay claims. Government is not an insurance company which needs streams of income. Government should not be in the private sector.

Being an owner of commercial real estate requires nimbleness and flexibility that governments, by their nature, do not possess. For argument’s sake, I will assume that during the course of the lease the tenant and assigns will make all rent payments as stipulated (with a lease of 50 or 80 or 99 years, this is a huge assumption). While land cannot technically become obsolete, the improvements upon it definitely do.  So even under the best case, the government will receive back an asset that is economically or physically obsolete. Which means it will have very little residual value.  You must have collected the correct amount of rent during the course of the lease or a loss will have occurred. The parties to this lease agreement are agreeing to rent terms for an economic future that is impossible to forecast.

I have been in the real estate business my entire career. I currently manage 500,000 square feet of commercial space and I have two non negotiable items. The first is that no lease term is for more than 15 years (the overwhelming majority of leases are for only 10 years) and the second is that there is a minimum percentage increase of rent every year with a CPI. Even after all these years I can’t predict market conditions for more than about a decade under the best of circumstances. Long leases lessen the value of the real estate if and when it has to be sold. Should the government have different requirements for the people’s real estate?

 

2014 A Good Year

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As we in Stuart and Martin County see the close of 2014, it has, for the most part, been a good year. What constitutes a good year is fairly subjective. There were no further releases from Lake Okeechobee this rainy season. However, water continues to find its way to our estuary through the various canals bringing unwanted nitrogen and phosphorus. We passed Amendment 1 which should give the state a dedicated money source to acquire and preserve land. The management and choice of what land to buy is in the hands of Tallahassee. Perhaps the citizens and the state pols will be in synch this time. As we have seen, just because we, the people, vote one way, the legislature and state executives have no problem ignoring our wishes.  One good example is the implementation of the fair redistricting amendment that the politicians and legislators went to court to prevent and used our tax dollars to pay to fight against us.

All Aboard Florida continues its plan to wreak havoc on Stuart and the rest of the Treasure Coast in spite of the immense grass roots uprising against moving forward. While it seems that Patrick Murphy and our local state legislative delegation is with us, Governor Scott, the legislature and Washington (including our two senators) are actively encouraging the plan or are silent. The good news is that it is still far from a done deal here on the Treasure Coast.

In Martin County, the one cent infrastructure sales tax was defeated by 72 votes. Though it was passed by Stuart residents, it was caught in the politics of Martin County. I believe it would have passed if past county commissions had used all of the funds from the last sales tax as intended. Instead, some of that money was used for things that many of us would not consider infrastructure such as Splash Water Park. Government should be concerned with infrastructure repair and improvements not theme parks. Martin County, Stuart and the other municipalities are now poorer for that earlier mistake.

The economy has rebounded with unemployment standing at 6%. While it was lower prior to the Great Recession it still is remarkable progress. Now that the economy is better, we need to encourage smart and sustainable growth within the urban service boundary. Martin County does need to grow in order to continue to be viable. The tax base needs to increase or the rest of us will pay more for fewer services.

Stuart also needs to grow … especially in population. We cannot sustain a city unless we have the people and resources to do so. If we cannot attract middle class young professionals, we will be a city of rich and poor.  The city cannot maintain services if less than 50% of the residents pay little or no tax. While Stuart is business oriented, the inequities of sales tax distribution allows the county to discourage business but still collect the overwhelming majority of sales tax (most of which is produced in the city). This is an inequity that cannot continue.

There were other good things that happened this year. We had a special meeting on the Palm City Road issues and the city commission will be sending the ideas expressed by the residents to the county for study and further implementation since they own the road.  The city commission also voted to have a camera installed in the chamber to record our meetings for viewing at home but also to have live streaming of the meetings in real time.

It seems to me that 2014 was a good year. While not many problems were solved, none are worse.  Maybe 2015 will be the year that we solve and eliminate some of those problems. I want to wish all a Happy and Prosperous New Year!

 

Why Is All Aboard Still Considered A viable Project?

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Why is All Aboard Florida still considered a viable project? The DES is nothing more than a cruel joke. It is supposed to be a serious study on the impacts that will occur if All Aboard is allowed to move forward. When will Tallahassee and Washington finally say enough and make them go away? Well don’t hold your breath waiting for that inevitability.

All Aboard Florida is an example of our capitalistic system run amuck. It is a story of the power of the lobbyist…the campaign contribution…the good old boy network at its worst. What is so galling is the fact that the company won’t even make an effort to mask their disdain for the process while we, the residents of the Treasure Coast, make an effort to decipher the DES and come up with alternatives to trains racing through our downtowns. The folks at All Aboard Florida couldn’t care less. They know that they have the politicians right where they put them.

These are neither bullet trains nor truly high speed. Those run through sealed corridors and at speeds not even anticipated by AAF. This is a sham perpetrated on all Americans but especially devastating to the Treasure Coast. Nothing that the company can do will change the insanity they want us to accept. Anyone who believes a stop in Stuart or Fort Pierce will ameliorate this destruction must be dreaming.

All Aboard Florida is a scheme in search of a reason to exist. Even with a stop in Stuart it is unlikely that I would use the train. Last week, my wife and I drove to Miami to catch a flight. In an hour and forty five minutes and for about $20 in gas and tolls we were there. No humping of bags up and down staircases or trying to get from our home to the station. A few days before that I drove to Orlando for a conference in a little less than two hours at about the same cost. There is no way that the train will be faster or less expensive or more convenient.

No, All Aboard is not a rational proposal. It is not a sound business model. It may be an excellent way to develop real estate in Miami but that could be accomplished without the havoc that this will wreak on the residents of the Treasure Coast. The company is willing to spend billions of tax payer money in order to build their properties. It could be in loans or government backed bonds or through subsidies, but in the end, there is no justification for this nonsensical scheme.

The River, Snug Harbor And Annexation

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Much has been made by some of the residents and one county commissioner regarding the City of Stuart bringing sewer services into Snug Harbor, a neighborhood that is in unincorporated Martin County. Stuart has received a grant to do this work, and the city is proceeding under an inter-local agreement. The City’s prime reason for doing so is to allow these homeowners to do away with septic tanks which would ultimately improve the river quality.

This does not obligate homeowners to hook up to the sewer system.  Each individual homeowner can make the decision to remain on their septic systems or hook up to the sewer. However if they do take advantage of the services the city is offering, one clause in the agreement would be agreeing to be annexed into the municipality at the city’s option. Stuart has never invoked this clause in the nearly thirty years of providing these services, but it could in the future. This, to me, does not seem like a cause for histrionics or other misplaced rhetoric.

The arguments being put forth by a few who are against the project are specious and misleading. At any time, the county can extend its sewer system to this neighborhood, but it has not done so for a very good reason. The cost, which was provided by county staff, was $23,000 per residence. The city’s cost would be $7,000. The price differential is strictly because Snug Harbor is surrounded by the city. This leads me to two observations—one, why would any home owner want to pay over 300% more, and two, why isn’t Snug Harbor part of the city anyway?

Recently Beau Rivage, which had been part of St. Lucie County, petitioned and was annexed into Martin County at the request of the residents. They also were an enclave similar to Snug Harbor, and services such as first responders would have to travel through Martin County from St. Lucie to reach the residents. Luckily for Snug Harbor, other agreements that the county and city have allow Stuart to respond to their emergencies. It would only seem logical that this particular neighborhood becomes officially part of the city which surrounds it.

What would be the downside to the residents in incorporating into the city? While a homeowner will save $16,000 on sewer hookup it would pay more in taxes and fees. A home valued at $500,000 (which is above the median and average for that neighborhood) would pay approximately $1500 more per year. Without taking into consideration future value of either taxes or the difference in the hook-up fees, it will take more than 10 years of increased taxes before approaching the cost of hooking up to the city.

With 5 years notice, either the county or the city may abrogate the agreements which allow each of the entities to provide water and sewer in certain instances within the other’s boundaries. If one of the parties were to abrogate the agreements, then it would cost the city approximately $12 million and the county $9 million to provide our respective residents those services. Which means each and every one of us would pay for it. From everything I know as of today, I as a city commissioner would not vote to abrogate those agreements. Unfortunately at present, one county commissioner seriously wants that commission to consider doing so. We all know the proverb “to cut off your nose to spite your face”. Perhaps the commissioner doesn’t realize we are all residents of Martin County.

The entire issue of the city’s boundaries needs to be addressed and done so in a thoughtful and enlightened way. Hyperbolic and incendiary language has no place in the discussion. A citizen of Stuart is still a resident of Martin County. He/she will pay the same taxes to the county except for the fire MSTU. Fire protection would then be provided by the city. He/she will still go to the county beaches and libraries. Annexation is not a divorce or separation; it is a choice to live in the community where you dine, live and shop. Here is another way to think of it….. if you are a member of the Lion’s Club and you also choose to belong to the Knights of Columbus, you don’t stop being a Lion when you become a Knight. The same thing goes for being a resident of Stuart…you don’t stop being a resident of Martin County.

Stuart’s Public Schools

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Last week became “Stuart Education” Week for me. I spent time at J.D. Parker and Stuart Middle School. Since these are the public schools that serve Stuart children, I thought it was appropriate to take a look. What I found was very pleasing to me and should be for every parent, tax payer and resident of the county.

I started off the week with Dr. Chris Jones, the principal of Parker. His enthusiasm for the kids and learning was contagious. It seemed the staff and teachers were delighted to be at the school. They were doing everything possible and were successfully motivating the children to learn their lessons. Children at this age are like sponges just soaking up everything around them. Language arts and math, of course, are most important, but the students also have art, music and P.E. to round out the curriculum. The only thing I would like to see would be the introduction of a second language in our elementary schools as is the case in most of the rest of the developed world.

For the past 46 years, Sigrid George has called Stuart Middle home. She started as a teacher and has now been the principal for several generations of students. Ms. George not only believes in the value of the school for our children but her own children and grandchildren have been students there. I spoke to several civics classes and was amazed at their general knowledge of government especially their knowledge of local responsibilities. If I am lucky, I will be invited back in the spring to speak to these kids again.

My children were already adults when we moved to Stuart so they did not attend Martin County schools. So like so many of our residents, I really did not know what to expect when I walked through the door of these schools. I was both surprised and pleased to know that our children were learning not only the basics but also have the opportunity to take elective courses such as marketing which introduces different concepts but reinforce math and language arts.

Could things be improved at these schools? Sure they could. Both principals have ideas and plans that will do just that. There is no panacea for making our education system better. When we compare ourselves to the world, our reading scores are 17th, math 31st, and science 23rd. While Martin schools rank near the top in the state, Florida is still not a top tier state for education.  But any failings belong to us as a community, a state and a nation and not the students who attend the schools.

Just because I no longer have children in school doesn’t mean I shouldn’t remain involved in our schools. These kids are going to grow up and be the nation’s future. I want to support them all I can. All of us should.

 

 

Why I Support the Infrastructure Sales Tax

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Where does Stuart derive funds for its infrastructure projects? Some of the money comes from state and federal grants that usually require local matching dollars. We could borrow the money, but we are fairly conservative and have not typically resorted to that. That leaves either increased real estate taxes or sales taxes. Real estate taxes are 100% paid by city tax payers while sales taxes are paid by anyone who shops and dines in our city. This means we can have our entire infrastructure improvements paid for by an increase borne only by the residents or collect a good portion of the funds by non-city residents.

For many years, the American Society of Civil Engineers has rated America’s infrastructure at a D. We are not spending enough to maintain our roads, bridges and water systems. Unless your dream is to have our 20th century civil improvements disappear, then it is urgent that we spend money to fix and improve our aging infrastructure. You would not allow your home to go unpainted and the roof to leak. It is the same for society’s homes and roofs.

Stuart’s city manager, Paul Nicoletti, has put together a video which is on the city’s website, and I urge you to take a look as he explains what the city will use some of the proceeds of the sales tax to do. Beside road and water projects, Stuart wants to finally install bathrooms at Memorial Park, improve the only recreational center for our children and expand our down town Riverwalk. In order to continue to be a place that people want to live and visitors and tourist want to shop and dine, these are needed improvements.

A city doesn’t remain static…it either grows and improves or shrinks and deteriorates. We do not need to sacrifice our old Florida feel and charm to accomplish the former. But we do need to provide amenities so that our young people want to remain and raise families and our seniors can stay and age in place. This question of livability does not come by burying our heads and saying nothing needs to change. We need to spend our dollars carefully in procuring the needed infrastructure maintenance and improvements. But maintain and improve we must.

Within the city’s borders, we collect 65% of all sales tax generated in the county. Yet because of our small population in relationship to the total county population, we receive less than 10% of the taxes collected. Imagine if every penny of the local portion of the sales tax stayed in Stuart, would there even be a need for ad valorem taxes? Lewis Mumford wrote, “The cities and mansions that people dream of are those in which they finally live.” Stuart is a good place to call home. Let’s continue to improve on the good and make it great.

All Aboard Report

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I have just finished browsing the All Aboard Florida impact study. Rich Campbell of the Stuart News is correct that the study was bought and paid for by the All Aboard folks therefore how impartial are the results? The Feds allowing FECI to pay for a report and providing the consultant the “facts” to convince our government to give the company our tax money to prove its plan is feasible is worthy of a Koestler or Kafka novel.

The report highlighted the myriad ways that already exist to go from Miami to Orlando. There is Amtrak and busses and planes and, of course, cars. If you believe the purveyors of this new train fantasy, their train will be the optimal way to go between those two points. Maybe it is true, but is it worth spending tax payer dollars to find out?

The U.S. is not Europe or Asia where high speed train travel is a viable alternative. Since the AAF fare rates are not published, we have no way to judge whether it makes sense to take their train or just drive. Before moving to Stuart, I lived in Connecticut and had the option of taking the train or driving when I went into Manhattan. During the day, there was a train every half hour to and from Grand Central Station, and it took just about an hour. After rush hour the train ran every hour.

Most times, whether for business or pleasure, I would drive. Several factors went into my decision. If I was going to Manhattan, the train was quite convenient if my plans kept me in the vicinity of Grand Central Station.  If I would have to take a subway or a bus or a taxi to reach my ultimate destination from Grand Central and then do the same to return to catch the train home, I would drive.  What AAF never mentions is that going from Miami Station to Orlando Station in three hours does not take into account where you actually begin your journey and where the journey actually ends. A trip seldom ends at a railroad station.

If you have to drive to the station and pay to park and then when you reach the other station either rent a car or take a taxi or get on another train, where is the savings in time? Ultimately, that is why train travel in the U.S. is a non- starter. We are not a station to station nation. Stations are only one part of the travel equation.

If you look at what the existing Amtrak and inter-city busses charge, no family will pay about $100 per person to reach Disney. All they need to do is pile into the car and go from home to the theme park without any intermediate steps and it will cost less. That leaves the business traveler as AAF’s target audience. Even if you captured every business person in both directions and all other busses and Amtrak service were eliminated and those business travelers would pay what you charged, could AAF still be profitable? I doubt it. The advances in technology have made business travel a shrinking market not a growing one. As a business person, the last thing I want to do is sit on a train for three hours in each direction (not counting getting to and from the stations) unless I absolutely had to make the journey.

If all of AAF’s dreams come to pass, will it be successful? Past history regarding schemes like this would say no. The free market has rejected train travel except in large commuting metropolitan areas (where it is heavily subsidized) for the past seventy years. Let the market decide whether All Aboard Florida is viable but the market should do so without the aid of taxpayer dollars.

 

Development And The Sailfish Fields

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I am pleased to now serve on the Stuart City Commission. How we grow as a city going forth is the most important issue we face. It will be critical that the right choices are made. We can absolutely continue to enjoy the Stuart lifestyle while increasing our population, businesses and jobs. We need to provide reasons for our young people to stay in the city to raise their families and grow their businesses in an inviting environment. The development of the Sailfish ball fields will be one of the ways to accomplish this.

Before explaining my current thoughts on Sailfish, I want to mention my background. I am currently a licensed real estate broker in Florida, New York and Connecticut and, in the past, have been licensed in other additional states. For over 40 years, I have focused on commercial real estate as an owner, manager and broker. I have taught real estate courses and hold the CPM and CCIM designations.  While I have never practiced in Stuart, I am quite familiar with how real estate is developed. This development will be critical to our future.

Within the next year or so, the city will look to develop those fields. What I don’t want to see happen is the city administration creating an RFP that will preclude many of our local builders and developers from participating. If it is one large, 8- plus-acre package without our city designating the grid pattern and infrastructure, I fear that we will have something that will not fit the character of our city.

The reason to develop those fields is to increase population and ad valorem taxes. We also need and want connectivity which would be provided by a street grid pattern aligning with the rest of the city. What I do not want to see happen is a gated community closed off from the rest of Stuart. We don’t need cul de sacs and walls to keep neighbors apart. Why we choose to live in Stuart over the suburbs is because it is a city.  I don’t want Stuart to develop enclaves with walls and gates that separate one resident from another.

The best way that this can be accomplished is by the city creating the grid pattern, designate mixed use (retail and residential multifamily) development, and selling individual lots for development along that grid pattern. This will allow our local Stuart and Martin county builders to buy, finance and construct almost immediately accomplishing our stated goals. The history of Stuart is not the grandiose but the manageable. Our development should not be based on someone from Broward, Palm Beach or New York sweeping in with plans that never quite come to fruition. Just look to North Point which eight years after a lease being signed is still not developed, built and creating income for us.

I do believe we can accomplish our goals of more people, jobs and businesses. Let us not play Monopoly with this project but organically allow development to happen. Instead of elaborate plans with Disney like fantasies, we should use the building and zoning rules we have to build this addition to Stuart. We have chosen to live here because of the way our city has developed and grown. I propose to continue that development and growth in a way we have already embraced and that has brought us our enviable way of life.

The View From Federal Highway

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This weekend I walked from the Roosevelt Bridge to Colorado along Federal Highway. When driving, the trip can take less than 20 seconds if the lights and traffic allow.  But, when you are walking, you have more time to notice your surroundings, and I ended up with a feeling of “emptiness.” As you go south from the bridge, there are a few office buildings interspersed by one story retail spaces, boat yards, car dealers, decaying motels from a bygone era, fast food restaurants, empty lots, downtown Publix center and 2 gas stations. It is neither beautiful nor inspiring.

In the past few years, Stuart has made great strides to develop downtown and Colorado Avenue. We have been woefully negligent of the Federal Highway corridor in our development. We have a charming downtown. Colorado is being reborn. The Sailfish fields are being considered for mixed use with primarily residential development. What about Federal Highway which connects the outside world to Stuart?

Should we continue to have it zoned for these clearly underutilized uses? When these parcels, on such a valuable roadway, are used for a gas station or used car lots, they bring very little in real estate taxes to the city. No matter how much sales tax these businesses generate, Stuart still receives only their proportionate per capita share or roughly 10% of the local county sales tax collected.

We should be looking for the majority of the lots to be a mix of retail and office. There are several such buildings now along that corridor. The empty parcels closest to Palm City Road, which already has residential neighborhoods of one family homes and condos, should be considered for residential development in keeping with the area’s current character. It would be foolish to allow the wrong development to take place because it is expedient so that one or two people can profit at the expense of the entire city.

If we are to grow and prosper, we have to think what is best for all citizens. The economic arguments clearly do not support that the highest and best use for those properties are currently being utilized or imagined. For the City of Stuart to thrive and continue to be a good place to live, our tax base must increase. That is done basically in two ways…more citizens and higher real estate taxes. The way I envision this corridor developing, it will result in both these things occurring. At the same time, it will add almost nothing to the cost of services Stuart provides because they are already in place in this area.

So the questions becomes do we, as citizens, allow this underutilization to continue to our detriment or do we embrace an opportunity to grow in  a responsible manner and at the same time spread the cost of government to more people and entities? I believe the latter. We have chosen to live in a remarkable place. Now we need to think about how we keep it a remarkable place for the next 100 years. The question is not whether we will allow empty parcels to develop (because it is inevitable they will) but how we allow them to develop. The wrong choice by us will have wide repercussions to the amount we pay and the quality of services we receive by the city.

 

GETTING READY

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In less than two weeks, I will assume my seat on the Stuart City Commission. On that night, I will vote on the upcoming budget for the next fiscal year. During the last two months as an incoming commissioner, I have studied that budget and have had many questions concerning it. Every staff member that I contacted and spoke with including the City Manager, Budget Director, other Department Heads and individual employees has been gracious with his/her time in answering those questions. I want to thank them for being consummate professionals.

Just because my questions were answered does not mean that I agree with every aspect of the budget.  It should be remembered that during this budget process, I have had no input on any of the line items. I have brought up several of my concerns with the City Manager. I look forward to working with him, staff and my fellow commissioners to address those issues in the upcoming year.  Approving a budget does not mean that changes cannot be made at a later date. From my experience, I know there are ways that the city can improve on the delivery of services to our residents and other stakeholders while remaining within those approved budgetary lines.

Between now and the end of the year, there are other issues and projects that will be coming before the commission that may be considered controversial. With each, I promise that I will weigh the benefits and liabilities to determine whether it is good or bad for the city before casting my vote. I am neither anti- nor pro-development, but I am for smart development. For Stuart to be a viable city and political entity, it needs to have more residents, jobs and businesses. The ultimate responsibility for the city commission is to measure how any one project impacts that goal and the vitality of the entire city.

As I have written and said many times, I want to see Stuart maintain its quality of life and small town Florida ethos. That does not mean we stand still as I believe that change is inevitable, constant, and if carefully planned, beneficial. Without positive change, we become rigid and stale and ultimately wither and fade. When people think of Martin County, they think of Stuart. We need to market and encourage that. As a commissioner, I will seek to balance seemingly competing interests so that the best outcome can be achieved.