East Naples redevelopment district looks to refinance loan to stay afloat

Collier County Commissioner Tom Henning on Newsmakers 3-4-12.

Collier County Commissioner Tom Henning on Newsmakers 3-4-12.

"Let's face it, the CRA is under water with these loans. We'd better start cutting back on these programs that have no clear financial benefit," Collier County Commissioner Tom Henning said.

— Time is ticking on the Bayshore Gateway Triangle CRA because a loan is coming due that, as of now, can't be paid.

The Community Redevelopment Agency continues to operate in the red, looking at an approximately $2 million shortfall this year, officials said.

"Let's face it, the CRA is under water with these loans. We'd better start cutting back on these programs that have no clear financial benefit," Collier County Commissioner Tom Henning said.

Collier commissioners decided Tuesday to halt discretionary spending in the CRA for 90 days while county Finance Director Mark Isaacson tries to refinance an approximately $10 million loan.

That means no CRA loans for residential improvements for at least the next three months; the residential area within the triangular-shaped district in East Naples hasn't been able to provide an economic stimulus.

On the other hand, commercial property owners receiving improvement grants from the CRA have shown a return on the CRA's investment, agency Executive Director David Jackson said.

CRA grants given for commercial property improvements have boosted property sales in the area and created jobs.

The CRA is largely dependent on property values increasing within its borders to bring in money. The tax money raised and pumped back into the community is based on the difference between what property owners paid in taxes in 2000, when the CRA was created, and what they pay now. However, this tax income is decreasing instead of increasing because of property value decreases in a down market.

The CRA awarded property improvement grants totaling about $240,000 to four commercial and nine residential property owners in fiscal 2011. Those property owners contributed about $1 million toward improvements. Since 2010, the CRA's grants encouraged businesses to move into Bayshore or expand their businesses, leading to 56 new jobs, Jackson reported.

Businesses, including the waterfront 360 Market to open this month where the former Tipsey Seagull sat vacant for years, looked at the grant potential before choosing whether to purchase properties in Bayshore, Jackson said.

David Jackson, Bayshore/Gateway Triangle Community Redevelopment Agency executive director

David Jackson, Bayshore/Gateway Triangle Community Redevelopment Agency executive director

Overall, however, property values have continued to decline despite improvements made to properties, as well as to streets, sidewalks, lights and crime statistics.

Yet the bleak financial reports aren't scaring Jackson — the end of the CRA isn't near, he said.

"We're not in crisis mode. We've got 18 months before the balloon comes due. We have time to negotiate with banks," Jackson said.

If the loan isn't renegotiated, the CRA has an $8.8 million payment due by September 2014. If the CRA defaults on that loan, it immediately becomes due.

Collier County government doesn't become responsible, under the current loan terms, for anything not paid by the CRA. Whether refinancing will allow for favorable loan terms is of some concern, Isaacson said.

Refinancing will happen, Jackson said.

"The bank needs the money. We're in a partnership with the bank. If they dissolve us, they'll have a note out there and nobody to pay it," he said.

Should the CRA default, any proceeds from the sale of land owned by the CRA would be directed against the loan, but the current property values are millions of dollars less than the amount owed.

The CRA purchased parcels for a total of $13.8 million between 2006 and 2011. The bulk of these purchases were in two areas, including commercial properties in what officials call the "mini triangle," an area near Davis Boulevard, U.S. 41 East and Commercial Drive. The CRA purchased six separate commercial properties totaling more than 5 acres and wants to encourage a developer to purchase them to create a unified project plan.

The other large purchase was nearly 18 acres of vacant residential properties near Sugden Park. That acreage is being rezoned in hopes of attracting development of a cultural center near the park.

The outstanding debt on these properties is $10.2 million while Collier County Property Appraiser's records value them at about $4.4 million.

The CRA brought in $2.3 million in tax revenue in 2008, compared with $996,000 for fiscal 2012. Loan payments alone are about $900,000 annually.

Jackson earns about $125,000 annually, so the CRA is operating in the red without getting any new improvements done and before paying for the four other CRA employees.

Selling property the CRA owns could offset the debt and maybe free up more dollars for program purposes, Jackson said.

Donna Fiala, Collier County commissioner.

Photo by submitted

Donna Fiala, Collier County commissioner.

Commissioner Donna Fiala wanted to be sure the goals of the CRA weren't lost if property is sold.

"The plan for the area was to add middle-income housing, so it's not all low-income housing. I wouldn't want to throw these on the market and lose that goal," Fiala said.

Similarly, she wanted to seek one developer for the whole "mini triangle."

"It's the entry feature into the East Naples community," Fiala said.

Commissioner Georgia Hiller has questioned some of the CRA's expenses, including residential stormwater improvements through a contract with Douglass N. Higgins costing the CRA $1.7 million — an expense she believed could be minimized by using staff and government equipment to dig the swales.

Other commissioners haven't supported her idea.

Either way, the CRA is to refocus its goals in fiscal 2012, officials said.

Jackson said economic stimulus will be his area of focus.

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