HomeMy WebLinkAboutResolution 64, 2022CITY OF PALM BEACH GARDENS
CITY COUNCIL
Agenda Cover Memorandum
Meeting Date: October 6, 2022
Resolution 64.2022
Subject/Agenda Item:
PFM Group Consulting, LLC — Review of Key Strategies & Initiatives 2022 Consideration
for Adootion.
1XI
Recommendation to APPROVE
Recommendation to DENY
Reviewed by:
Originating Dept.:
Costs: $ NIA
Council Action:
(Total)
JAdministration
rApproved
� Lf[
] Approved wl
$ NIA
ConditionsR.
m
ax L aAssistant
to the City
[ ]Denied
Current FY
Manager
[ ] Continued to:
Advertised:
Funding Source: NIA
Attachments:
Date:
[ ] Operating
Paper:
[ ] Other
Resolution 64, 2022
- Exhibit "A": - PFM
Group Consulting,
[ X ] Not Required
LLC — Review of
Key Strategies &
---_---------------_--�_�__
Initiatives 2022
Contract/Agreement:
Effective Date:
NIA
Expiration Date:
Submitted by:
NIA
Assistant to the City
Manager
Joh oehm
Affected parties:
[ ] Notified
Budget Acct.#: NIA
Approved by:
City Manager
[ X ] Not R d
i; . F rris
Meeting Date: October 6, 2022
Resolution 64, 2022
Page 2 of 2
BACKGROUND: The City of Palm Beach Gardens (the "City") retained PFM Financial
Advisors and PFM Group Consulting (collectively, "PFM") to advise the City on several
key issues involving budgeting and economic development. Many cities seek this third -
party perspective as a part of a strategic planning process. PFM stated in the report,
"given the variety of impactful issues under consideration in the City, this was a logical
and pro -active undertaking by the City government leadership."
The project encompassed a seven -week period to assess the City's Budget and Policies,
Tax and Revenue Policies, and Economic/Community Development Strategies. The
findings and recommendations were evaluated analytically to determine whether they
provide a positive contribution to the City's economy and vision for the community. This
was augmented, where appropriate, with benchmarking, case studies, and/or financial
analysis.
The City held a Council Workshop on August 17, 2022, for PFM Group Consulting
Director Randall Bauer to present the report and address questions from City Council
about the report's findings.
COUNCIL DISCUSSION/ACTION: During the August 17, 2022, Council Workshop, City
Council directed staff to bring the PFM Report back at a later Council Meeting to consider
adopting the report as a Council Strategic Plan that will help streamline a vision for the
City's future.
With a majority affirmative vote by City Council, Resolution 64, 2022 will be approved and
adopted.
1 RESOLUTION 64, 2022
2
3
4 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM
5 BEACH GARDENS, FLORIDA, ADOPTING PFM GROUP
6 CONSULTING, LLC'S REVIEW OF KEY STRATEGIES &
7 INITIATIVES 2022 AS A COUNCIL STRATEGIC PLAN; PROVIDING
8 AN EFFECTIVE DATE; AND FOR OTHER PURPOSES.
9
10
11 WHEREAS, the City of Palm Beach Gardens (the "City") retained PFM Financial
12 Advisors and PFM Group Consulting (collectively, "PFM") to advise the City on several
13 key issues involving budgeting and economic development; and
14
15 WHEREAS, many cities seek this sort of third -party perspective as a part of a
16 strategic planning process; and
17
18 WHEREAS, the project assessed the City's Budget and Policies, Tax and
19 Revenue Policies, and Economic/Community Development Strategies; and
20
21 WHEREAS, the findings and recommendations were evaluated analytically to
22 determine whether these policies and strategies provide a positive contribution to the
23 City's economy and vision for the community; and
24
25 WHEREAS, the City held a Council Workshop on August 17, 2022, for PFM Group
26 Consulting to present the report; and
27
28 WHEREAS, the City Council directed staff to bring the PFM Report back to
29 consider adopting it as a Council Strategic Plan that will help streamline a vision for the
30 City's future; and
31
32 WHEREAS, the City Council deems approval of this Resolution to be in the best
33 interests of the health, safety, and welfare of the residents and citizens of the City of Palm
34 Beach Gardens and the public at large.
35
36
37 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
38 OF PALM BEACH GARDENS, FLORIDA, that-
39
40 SECTION 1. The foregoing recitals are hereby affirmed and ratified.
41
42 SECTION 2. The PFM Review of Key Strategies & Initiatives 2022, attached
43 hereto as Exhibit "A," is adopted as a Council Strategic Plan that will help streamline a
44 vision for the City's future.
45
46 SECTION 3. This Resolution shall become effective immediately upon adoption.
Page 1 of 2
Resolution 64. 2022
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
PASSED AND ADOPTED this day of , 2022.
ATTEST:
Patricia Snider, CMC, City Clerk
APPROVED AS TO FORM AND
LEGAL SUFFICIENCY
R. Max Lohman, City Attorney
VOTE:
MAYOR REED
VICE MAYOR LITT
COUNCILMEMBER WOODS
COUNCILMEMBER MARCIANO
COUNCI LMEMBERTINSLEY
CITY OF PALM BEACH GARDENS, FLORIDA
Iaffis
Chelsea Reed, Mayor
AYE NAY ABSENT
a
Shared OocumentslRESOLUTIONS120221Resolution 64 2022-PFM Group Consulting -Adoption -Key Strategies-Initiatives.docx
Page 2 of 2
Resolution 64, 2022
W:4C11.=319OW
low.,
IND.-
%
rS T
"vv
;ere
.1 .. . ....... 7�-
PFIVI Group Consulting, LLC
BNY Mellon Center
1735 Market Street
42"d Floor
Philadelphia, PA 19103
In consultation with
Hank Fishkind, Ph.D.
— - -0- 1
MAN
CONTENTS
INTRODUCTION................................................................................................................. 2
CITY O VER VIEW................................................................................................................ 5
CROSS CUTTING OBSERVATIONS................................................................................ 7
IMPACTS OF A TRIPLE -A CREDIT RATING................................................................. 10
10-YEAR BUDGET FORECAST...................................................................................... 14
MAINTAINING A STABLE MILLAGE RATE.................................................................. 19
USEOF RESERVES........................................................................................................ 26
WESTERN GROWTH PROJECTIONS FOR NEEDS AND REVENUE......................... 31
CURRENT USE OF 1-CENT SALES TAX...................................................................... 35
VALUE OF 2024 COUNTY -WIDE 1-CENT SALES TAX FOR TRANSPORTA TION... 39
MOBILITY PLAN TO MOVE PEOPLE, NOT JUST VEHICLES .................................... 41
TRANSIT ORIENTED DEVELOPMENT DISTRICT IN THE DOWNTOWN AREA....... 45
ECONOMIC DEVELOPMENT INCENTIVES.................................................................. 49
WORKFORCE HOUSING................................................................................................ 55
DOWNTOWN DEVEL OPMEN TSIPGA STATION, FPL SITE, SALE OF LEGACY
PLACE, AND LOEHMANN'S PLAZA............................................................................. 59
THE TRANSFORMA TIONAL VALUE OF A PALM BEACH GARDENS CENTRAL
RAILSTATION................................................................................................................. 64
MIXED -USE DEVELOPMENTS....................................................................................... 69
RECREATIONAL AMENITIES EXPANDED AND UPGRADED .................................... 72
ANNEXATION INITIATIVES............................................................................................ 74
SUMMARY........................................................................................................................ 77
APPENDIX A: FINANCIAL MANAGEMENT POLICIES ................................................ 79
APPENDIX B: NON -FINANCIAL MANAGEMENT POLICIES ....................................... 83
I
INTRODUCTION
The City of Palm Beach Gardens (the City) retained PFM Financial Advisors and PFM
Group Consulting (collectively PFM) to advise the City on several key issues involving
budgeting and economic development. Many cities seek this sort of third -party
perspective as a part of a strategic planning process. Given the variety of impactful
issues Linder consideration in the City, this was a logical and pro -active undertaking by
the City government leadership.
The topics that PFM has analyzed include the following, which are grouped into the
following three broad categories:
City Government Budget and Policy
• Maintaining a AAA Bond Rating
■ 10-year budget forecasting
• Western Growth projections for needs and revenue
• Current Use of 1-cent Sales Tax
■ Value of 2024 Countywide 1-cent Sales Tax for Transportation
City Tax and Revenue Policy
■ Maintaining a Stable Millage Rate to ensure adequate reserves
■ Economic Development Incentives
City EconomiclCommunity Development Issues
■ Value of future Tri-Rail andlor Brightline Station
■ Transit Oriented Development District in the downtown area
• Mobility Plan to move people, not just vehicles
■ PGA Station, FPL Site, Sale of Legacy Place, and Loehmann's Plaza
• Mixed -Use Developments
• Workforce Housing Program
• Recreational Amenities expanded and upgraded
• Annexation Initiatives
2
Project Approach
Given the wide range of potentially impactful topics, PFM identified and used a senior
project team.' In general, the project team relied on a three -phased approach related to
each project area. These included a data gathering phase, an analytical phase, and,
finally, the findings and recommendations phase.
The project was relatively brief, encompassing a seven -week period. As a result, it was
agreed that the analysis and findings and recommendations would be focused to
accommodate the expedited timeline. As noted in the project plan, most topics were
evaluated analytically to determine whether they provide a positive contribution to the
City's economy and vision for the community. This was augmented, where appropriate,
with benchmarking, case studies and/or financial analysis.
Project Activities
To arrive at its findings and recommendations, the project team undertook the following
activities. it should be noted that the City staff that engaged with PFM were extremely
helpful — providing useful data and information, scheduling and participating in
interviews and site visits, and answering the dozens of questions that the project team
posed throughout the course of the analysis.
Project kick-off.
Attended by the project team and key members of the City leadership and staff,
this provided an opportunity to introduce the project and team, outline the project
plan and timeline, provide information and answer questions.
Data and information request.
PFM identified and the City provided documentation and information related to
the City finances and budget; economic development incentives, tools, and
policies; and specific data and information related to individual projects or
planned initiatives.
1 The project team was led by PFM Group Consulting Director Randall Bauer In over 16 years at PFM, Randall has
led dozens of projects focused budget and tax policy and economic development incentives for state and local
governments. Prior to joining PFM, he spent 18 years in state government, most recently as a state budget director.
also included PFM Financial Advisors Managing Director Jay Glover, who served as the engagement director and a
technical advisor on public finance and related City issues. PFM Director Dr. Hank Fishkind served as a primary
subject matter expert related to economic and community development issues. While Dr. Fishkind left the formal
employ of PFM during the project, PFM contracted with Dr. Fishkind to continue to provide advice and expertise for
the balance of the project. The project team also included Senior Managing Consultant Stan Geberer, who has over
30 years' experience related to real estate and community development; Senior Managing Consultant Deanna
Kimball, an expert on budget models and budgeting in general; and Senior Analyst Joe Buckshon. who is a key
member of the PFM economic development consulting team.
in Detailed interviews.
The project team conducted detailed interviews with City subject matter experts
on the topics addressed in the report as well as external stakeholders
representing the City business community as well as developers and community
development subject matter experts_
• Site visits.
The PFM project manager spent two days in Palm Beach Gardens meeting with
key staff, reviewing documentation and the City budget model, and touring key
City locations related to the project.
Project reporting.
PFM provided the City with written weekly reports detailing project activities from
the reporting period, planned activities for the next reporting period, and any
issues in need of resolution by the City.
As noted, City readership and staff were extremely helpful and forthcoming with data
and information throughout the project, and we thank them all for their efforts. The
project team also wishes to thank City Manager Ron Ferris for his project leadership
and support; Deputy City Manager Stephen Stepp for his tireless work as the City
project manager; and Administrative Services Manager Jamie Cobb, who skillfully
managed the thankless task of scheduling meetings and interviews through the project.
Of course, the findings and recommendations within the report (as well as any errors or
omissions) are those of the project team and do not necessarily reflect the policies or
perspectives of the City or its leadership and staff.
4
pin
Isnwall1 RATJI-WA
The City of Palm Beach Gardens is located in Palm Beach County in south Florida. The
City was founded in March 1959 when John D. MacArthur announced a plan to develop
about 4,000 acres of land into a new community_ MacArthur had a vision for a different
type of City, which included homes for 55,000 residents and winding streets named for
the beautiful vegetation that surrounded them. As development continued, MacArthur
made an additional donation to support the establishment of the new home office of the
Professional Golfers Association (PGA), which was completed in March 1965. In the
decades since, Palm Beach Gardens has matured into a thriving community with a
unique aesthetic honoring the original intentions of its founder.
As of 2019, the American Community Survey (ACS) reported the City had a population
of 56,219 residents.2 Most residents identify as white (78 percent), and more than half
are female (54 percent). Palm Beach Gardens is relatively affluent with a median
household income about 1.5 times the median in the state of Florida. The population is
relatively highly educated when compared to the statewide figures, and poverty levels
are lower.
Table 1: Selected Demographic Information
I
Median Age
Palm Beach
Gardens
51
State of Florida
42
Median Household Income
$87,969
$55,660
Poverty Rate
6.2%
14%
High school degree (or higher)
95%
88%
Bachelor's degree (or higher)
52%
31 %
Post -graduate degree
22%
11%
Median owner -occupied
housing unit value
$378,500
$245,100
Among municipalities in Palm Beach County, Palm Beach Gardens has the lowest
population per square mile, primarily because it has the largest land area in the county
(approximately 59 square miles).3 A significant portion of land within the city limits has
been designated for conservation. At the same time, several major developments have
recently broken ground or are in the final stages of design. These include the Avenir
development in the Western portion of the City and major redevelopments downtown,
Data in this section, unless otherwise noted, comes from the U.S. Census, 2019 American Community Survey, 5-
year estimate; 2020 Census data is under review after the figures were found to be inaccurate in March 2022
3 2021-2022 operating Budget, City of Palm Beach Gardens; Page 39
b7
including within the transit -oriented development (TOD) district. City departments,
external stakeholders, and residents have collaborated to develop several strategic
documents that organize these long-term efforts, including but not limited to:
• Palm Beach Gardens Comprehensive Plan (2016)4
• Transit Oriented Development Master Pian5
• Mobility Plan6
■ Citizen Surveys'
• Stormwater Master Plan'3
• One -Cent Infrastructure Sales Surtax Capital Improvement Plan'
The City also publishes an overall set of Strategic Goals with associated performance
metrics to track progress ("our Vision — A Strategic Plan").10
' https:llwww.pbgfl.com/160/Comprehensive-Land-Use-Plan
5 https:/lwww.pbgfl.mm/DocurnentCenter[Viewll4740/Ordinance-10-2020-GPTA-for-TCD?bjdld=
6 https:llwww.pbgfl.com/DocurnentCenterNiewll287O/Ordinance-15-19---Approving-and-Adopting the -Mobility -Plan-
a nd-Mobi I ity-Fee?bidld=
7 https://www.pbgfl.comJDocumentCenterNiewll4578/Palm-Beach-Gardens-2020--Resident-Satisfaction-
5urvey_Raduced?bid Id=
e httpsiltwww.pbgfl.comlDocumentGenterNiew/96/infrastrurture-PDF
9 https:/lwww.pbgfl.com/DocumentCenterNiew/l5932I2021-2022-Operating-and-Capital-Improvements-
8udget?bidld=
10 https:llwww.pbgfl.cornlDorurnentCenterNiew/15932/2021-2022-Operating-and-Capital-improvements-
Budget?bidld=
A
As the project team undertook its review and analysis of data and information related to
the City, region, and State, there were several themes that cut across individual areas.
Because it would be redundant to mention them in all the places where they apply, this
section will discuss them. In addition, it is useful to understand these `cross cutting'
concepts at the start, as they help explain some of what the City is currently undertaking
— or planning to undertake in the future,
■ Proactive approaches.
Throughout discussions with stakeholders (both internal and external) there were
frequent mentions of situations where City leadership has sought out
opportunities (as opposed to waiting for them). This has led to the City hosting a
variety of recreational and sporting events that might not otherwise have
occurred. It has also helped the City enhance its reputation within the region and
with prospective residents and commercial interests.
■ Teams -oriented planning and implementation.
City leadership has sought to approach most issues from a teaming perspective.
Many of the economic and community development issues discussed within this
report have benefited from the engagement and involvement of many City
departments. Besides the `usual suspects' on community and economic
development projects (construction services, engineering, finance, planning and
zoning), the City teams also include representatives from the fire and police
departments, neighborhood services, parks and public services, recreation, etc.
This provides a broader perspective on how to plan and execute projects and
avoids the `silo' mentality that often leads to poor communication and
bottlenecks.
■ Significant amount of community and economic development activity.
Within the City, there is a very large amount of planned or underway community
and economic development activity. Many (but not all) of that activity is discussed
within the report. That is an exciting (but not new) set of circumstances for the
City. This activity has the potential to dramatically alter the face of key areas of
Palm Beach Gardens, and it bodes well for the continued growth and
development of the City, both from the residential and commercial perspectives.
At the same time, it is also somewhat daunting. While the City's teams -oriented
approach can help spread some of the community and economic development
workload, there are still approvals and reviews that largely impact the same
group of people. It will be important for the City to ensure that it can maintain a
reasonable workload for those individuals. This is important for the City as well
as those impacted by the planning process. In the project teams interviews, it
7
YV�
was mentioned that the City can be a tough negotiator, which can lengthen
planning, review, and approval processes. On the other hand, there are many
instances where the submittals are deficient and/or do not meet City
requirements. Of course, the City should ensure that development plans and final
outcomes are in the City's best interest; at the same time, it will be important to
ensure that those processes are not being slowed down because of a lack of
staff time to undertake the necessary City activities. It is the project team's
understanding that the City tracks these metrics, which aligns with best practices
in this area.
Given all the activity within the City, it is quite possible that some of the
recommendations within specific sections of this report will have to be prioritized.
A sort of triage approach to activities within projects is generally necessary —
there are still only so many working hours in a week. The project team
recognizes that not everything that is under review will be accomplished within
the same timeframe.
■ Resource availability can also be a constraint.
While many of the community and economic development issues discussed
within the report will mainly rely on private investment, there are same that will
require significant public investment. Some of these have the potential to be
particularly impactful for the City and region — in particular, related to a rail station
in Palm Beach Gardens. While the project team believes that significant private
investment may also be possible in that case, for very large projects that require
significant City investment, resources may well be a constraint that will have to
be taken into consideration as projects move forward,
As will be discussed within the report, we believe the City made a good strategic
decision to issue revenue bonds in 2017 to finance infrastructure improvements
with its share of the County one -cent infrastructure sales surtax. We believe it will
also be important for the City to consider similar options and opportunities in the
future. While the City has generally preferred a pay -go approach to capital
projects, there may be advantages (primarily related to expediting projects) with
a similar financing approach.
Of course, the resource needs go beyond developing and maintain infrastructure.
One of the key issues for developers and new businesses is whether the City can
expeditiously act on their needs for permitting, planning, and approvals. While
the general observation of the project team is that the City has done a good job
in this area, all planned activities have the potential to strain the existing city staff.
It may well be necessary to augment that staff as major projects come to fruition.
N
■ Ongoing investments require a stable City budget.
As will be noted, the City has made significant investments in public amenities.
Based on survey results and other data and information, these are valued by the
City's residents and business community. It is also worth noting that these
amenities require staffing for programs, facility maintenance and, over time,
renovation. The City has been in the enviable position of having population and
commercial growth that has expanded its tax base. City policies have helped to
incent that growth. It has modified zoning in key areas to expand opportunities for
mixed used commercial development. It has also used targeted incentives, which
have brought Carrier Corporation, Alton Town Center, and increased commercial
employment opportunities along the Donald Ross corridor.
While these enviable conditions may well continue into the foreseeable future,
cost increases are also a likely expectation as well — and current inflation in the
national economy is an example of this. It will be important to ensure that the City
has the resources necessary to maintain the quality of amenities that city
residents have come to expect.
■ Interconnected nature of currentifuture initiatives.
The topics that the City identified for research, analysis and recommendations
are all important in their own right, and many of them are distinctly inter-
connected. Several initiatives are just getting started, and in many cases, the
COVID-19 Pandemic has slowed their development and/or implementation.
With so much new underway and so much interconnectivity, it is going to be
vitally important that the staging of implementation recognizes and reflects some
of the lynchpin nature of certain initiatives. In particular, workforce housing will
become vitally important as all the new office development comes online. Without
strong results for low to moderate income housing delivery, there is the risk of
losing economic and community development momentum because of lack of
available housing for a significant component of the labor force.
Recognizing this, in 2020, the City created a comprehensive workforce housing
program to incept workforce housing. The City is now actively implementing this
initiative. To date, approximately $5.5. million from the City's workforce housing
fund has been dedicated to these efforts. As a result, there are three affordable
housing projects currently Underway, marking important milestones in the
program implementation. These are positive and measurable responses, but the
demand for affordable housing is still expected to outstrip availability for the
foreseeable future.
R:
IMPACTS OF A TRIPLE -A CREDIT RATING
For many state and local governments, obtaining the highest credit rating (AAA from
Standard and Poor's or Fitch or Aaa from Moody's) is considered a significant
achievement. The highest rating is often relied upon as an affirmation of the
government's financial stewardship as well as an indicator of general excellence in
government service and the strength and vitality of the state or local community.
Credit ratings are opinions of the credit quality of individual debt obligations or of an
issuer's general creditworthiness (without respect to individual debt obligations or other
specific securities). Municipal ratings are based on the analysis of five primary factors
related to municipal finance: market position, financial position, debt levels, governance,
and covenants. Each of the factors is evaluated individually and for its effect on the
other factors in the context of the municipality's ability to repay its debt.
A triple A (AAA) rating is the highest possible rating that may be assigned to an issuer's
bonds by two of the major credit rating agencies, S&P Globai Ratings and Fitch Ratings.
Moody's Investor Service uses a slightly different scale, and its top rating, Aaa, is
considered the same as the other services' AAA rating. AAA -rated bonds have a high
degree of creditworthiness, because their issuers are easily able to meet financial
commitments and have the lowest risk of default. Generally, a AAA high-grade rated
bond offers more security and lower profit potential (lower yield) than a "B-" rated
speculative bond.
The following table summarizes the comparable investment grade ratings of the three
major ratings agencies:
Table 2: Comparable Investment Grade Ratings for Major Ratings Agencies
Moody's
S&P Global Fitch Ratings
Investors
Ratings
Best Quality
Service
Aaa
High Quality
Aal..
. .
►
.. ..
►
.. ..
Upper-d
Grade
A2
A ►
►
►
...
B.aa3
131313-:::
10
The following summarizes the City's most recent ratings agency reports:
■ S&P Global Ratings: In September 2014, S&P raised its rating on the City's
general obligation debt one notch, to `AAA' from 'AA+' and its rating on the City's
public improvement revenue bonds one notch, to 'AA+' from `AA', both with a
stable outlook_ The stable outlook reflects S&P's opinion that with steadily
improving economic and financial metrics, Paim Beach Gardens will likely
maintain very strong liquidity and budgetary flexibility, further supported by strong
budgetary performance and management conditions."
• Moody's Investors Service: In December 2020, Moody's noted that Palm Beach
Gardens' credit position is exceptional, and its Aaa rating is well above the
median rating of Aaa for U.S. cities. Moody's identified several notable credit
factors, including a very strong financial position, an extensive tax base, strong
wealth and income profile, and extremely small debt burden.II
• Fitch Ratings: In May 2021, Fitch affirmed approximately $680,000 outstanding
non -ad valorem revenue bonds at'AA+' and its Issuer Default Rating (IDR) at
'AAA', with a stable outlook. According to Fitch, this reflects the City's strong
operating performance, solid revenue growth prospects that are further enhanced
by considerable independent revenue -rating flexibility, solid control over
expenditures, conservative budgeting, and a low long-term liability burden."
These positive ratings enable the City to achieve the lowest cost of borrowing when it
accesses the financial markets to fund capital pro}ects or to refinance existing debt. This
was most recently demonstrated when the City issued its Pubiic Improvement Bond,
Series 2021 at an all -in true cost of 2.19 percent with a 20-year repayment.
The following figure and accompanying table illustrate the potential impact of various
credit ratings on City borrowing costs based on the Municipal Market Data (MMD) index
on March 1, 2022.11
11 Standard and Poor's Ratings Services, "Palm Beach Gardens, Florida: Appropriations; General Obligation,"
(September 4, 2014).
17 Moody's Investors Service, "Issuer Comment: City of Palm Beach Gardens, FL," (December 14, 2020),
13 Fitch Ratings, "Fitch Affirms City of Balm Beach Gardens, FL's [OR at'AAA'; Outlook Stable," (May 12, 2021)-
11 The MM❑ index is a proxy for where municipal bonds with various credit ratings would price on a given day.
11
3
2.5
a
2
a
1.5
m
1
0.5
Figure 1: MMD Index Based on Various Credit Ratings
(As of March 1, 2022)
7
2.36
.18
.93
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 2-0 2122 23 24 25 26 27 28 29 30
Year
-AAA GO -AA GO A GO -BAA GO
Table 3: MMD Index Based on Various Credit Ratings
(As of March 1, 2022)
Year
1
AAA
■
0.81
AA
■
0.87
A •
0.97
BAA
■
1.17
16
AAA
■
1.69
AA
GO
1.89
A ■
2.08
BAA
GO
2.42
2
1.05
1.11
1.24
1.44
17
1.71
1.91
2.1
2.44
3
1.15
1.23
1.36
1.55
18
1.73
1.93
2.12
2.46
4
1.24
1.32
1.46
1.67
19
1.75
1.97
2.16
2.5
5
1 1.3
1.39
1.52
1.77
20
1.77
2.01
2.2
2.54
6
1.37
1.51
1.68
1.93
21
1.8
2.04
2.23
2.57
7
1.44
1.58
1.76
2.1
22
1.83
2.07
2.26
2.6
8
1.47
1.63
1.8
2.15
23
1.86
2.1
2.29
2.63
9
1.5
1.66
1.84
2.2
24
1.87
2.11
2.3
2.64
10
1.53
1.69
1.87
2.24
25
1.88
2.13
2.31
2.65
11
1.59
1.75
1.96
1 2.31
26
1.89
2.14
2.32
2.66
12
1.61
1.78
1.98
2.34
27
1.9
2.15
2.33
2.67
13
1.63
1.8
2.01
2.36
28
1.91 1
2.16
2.34
2.68
14
1.65
1.83
2.03
2.38
29
1.92
2.17
2.35
2.69
15
1.67
1.87
2.06
2.4
30
1.93 1
2.18
2.36
2.7
As shown in the preceding table, the estimated difference between the AAA (1.93
percent) and AA (2.18 percent) interest rates is 25 basis paints - or 0.25 percent - over
30 years. Assuming a $20 million borrowing amortized over 30 years, the annual debt
service savings generated by having the AAA credit rating is approximately $30,000 -
or $900,000 over the fu11 30-year term of the proposed financing. It is important to note
that credit spreads change based on changes in the market conditions, and market
12
99
conditions have changed remarkably in the past couple of months as the Federal
Reserve has raised the federal funds rate and signaled additional future rate hikes;
therefore, the actual benefit of the AAA rating can change over time. Accordingly, these
figures are provided for illustrative purposes only.
Findings
The City is well -positioned to maintain its favorable ratings. In fact, ratings agencies
have very few criticisms of the City's approach and have identified few risks or
weaknesses. For example:
• Fitch Ratings noted that, while not expected, shifts in fundamental credit
characteristics — including a significant decline in reserves or erosion in the tax
base — could lead to negative rating action/downgrade.
• S&P noted in its 2014 report that if financial performance or available liquidity
were to weaken significantly, pressuring overall budgetary flexibility and liquidity
measures, it could lower the rating.
■ Moody's noted that the City has a somewhat inflated pension liability; its
Moody's-adjusted net pension liability to operating revenues (1.9x) unfavorably
slightly exceeds the U.S. median. Notably, the City's approach to long-term
planning directs it to monitor the funding progress of the public safety pension
plans, and act to reduce the impacts of the plans' unfunded liabilities.
Recommendations
The City should continue to monitor the factors considered important by the major rating
agencies and work to retain its highest credit rating. While there is some tangible
financial benefit to the highest rating for debt issuance true interest costs, there is also
substantial benefit from a `prestige' standpoint: cities with a AAA rating enjoy some
'benefit of the doubt' when rankings are made, or groups of cities are assessed.
The good news for the City is that the factors that drive the top credit ratings (stable or
growing tax base, conservative budgeting, strong reserves, low indebtedness, strong
community wealth profile) are all embodied in long-standing City policies.
Parenthetically, this also underscores the value of policies like maintaining the existing
tax base.
13
003
IilCs'A Vrm9VIaxel a : WSWV-il
Financial forecasting is the process of projecting revenues and expenditures over a
long-term period, using assumptions about economic conditions, future spending
scenarios and other salient variables. Financial planning uses forecasts to provide
insight into future financial capacity s❑ that strategies can be developed to achieve long-
term sustainability considering the government's service objectives and financial
challenges. Long-term financial planning -- the process of aligning financial capacity with
long-term service objectives — combines financial forecasting with strategizing. it is a
highly collaborative process that considers future scenarios and helps governments
navigate challenges. Long-term financial planning works best as part of an overall
strategic plan.
Many governments have a comprehensive long-term financial planning process
because it stimulates discussion and engenders a long --range perspective for decision
makers. It can be used as a tool to prevent financial challenges; it stimulates long-term
and strategic thinking; it can give consensus on long-term financial direction; and it is
useful for communications with internal and external stakeholders. The Government
Finance Officers Association (GFOA) recommends that "all governments prepare and
maintain a long-term financial plan that projects revenues, expenses, financial position,
and external factors for all key funds and government operations at least five years into
the future."15
It is also considered a 'best practice' by credit rating agencies. As Fitch Ratings wrote in
a Special Report (on the Impact of Management Practices on Municipal Credit), "The
multiyear plan's value is to anticipate future challenges that may be encountered due to
projected revenue and expenditure imbalances. This allows executives and legislators
to `get in front of potential budget stress and take corrective action long before
budgetary gaps develop into crises. The multiyear plans for New York and Philadelphia
serve as good models that can be emulated by local governments, large and small." It
should be noted that PFM assisted the City of Philadelphia with its multi -year plan and
has done the same for dozens of local governments around the country.
The goal of the City Council for the next 10 years is to continue to strive to accomplish
its stated vision while at the same time maintaining the operating tax rate flat at 5.5500
mills and the debt service tax rate at zero, thereby providing residential and commercial
taxpayers a level of confidence when formulating future financial decisions. To
accomplish this, the City employs a conservative financial strategy directed by the
following guidelines:
15 "Best Practices: Long -Term Financial Planning," Government Finance Officers Association, Board Approval Date:
March 4, 2022- Accessed electronically at https://www.gfoa.org/materials/long-term-financial-planning
14
• Utilize debt financing only for essential capital projects, and only when it can be
demonstrated that borrowing is more advantageous than funding capital items on
a pay-as-you-go basis, e.g., extremely low interest rates; impacts to reserves;
accelerating projects to take advantage of low construction costs, etc. Reduce
existing debt service expenditures using debt refunding, when financially prudent
to do so.
■ Maintain a strong financial position by ensuring compliance with the City's fund
balance policy regarding use of reserves.
• Ensure future collective bargaining and public safety retirement agreements are
financially sustainable.
■ Examine alternative delivery of service methods.
■ Focus on goals/objectives/performance measures so that logical and fair
decisions can be made regarding the effectiveness of various services.
■ Promote a diverse tax base so that there is less reliance on residential
properties.
• Closely monitor the current economy and new legislation, s❑ that pro -active
measures may be taken. This is especially critical, considering the current
COVI❑-19 pandemic and its effects on the local economy.
The City has identified the following as the biggest challenges it faces that affect its
financial strategy and long-range plan for the next ten years and beyond:
• Growth issues related to development of the Avenir project, a mixed -use
community on 4,700 acres of land in the western fringes of the City, adjacent to
protected conservation lands. The Avenir project began construction in 2020.
• Ensure compensation is competitive to attract and retain highly qualified
employees. At the same time, the City must be sure that future collective
bargaining agreements are not only fair, but financially sustainable.
• Monitor the funding progress of the public safety pension plans, and act to
reduce the impacts of the plans' unfunded liabilities.
While the preceding are the most significant challenges that have been identified by the
City, it is notable that other factors can — and do — impact the City's approach to
financial strategy and long-range plans, including (but not limited to) inflation, supply
chain issues, natural disasters, and the effects of the CGV1D-19 pandemic.
To develop its 10-year financial plan, City leadership reviewed the following:
• Pertinent items contained within the various planning documents.
■ The City's current year budget and actual historical data regarding revenues and
expenditures.
im
■ An analysis of the City's General Fund revenues, current taxable valuation, and
projected valuation from future developments. Available alternative revenue
options were also considered when formulating the forecast.
■ The City's Capital Improvements Program.
• Constraints imposed by tax reform legislation which placed caps on local
governments' future tax revenues.
• Substantial new construction and resulting anticipated new revenue has been
factored into the forecast. Very significant fiscal contributions are expected from
the Alton and Avenir development projects as well as the entire TOD area,
including but not limited to Downtown PGA, PGA Station, and PGA Office
Center/FPL.
• An analysis of financial policies as they relate to desired unassigned fund
balance levels. The minimum level, as set forth in the City's Fund Balance Policy,
is a minimum of 17 percent of operating expenditures.
• Beginning in 2007, Palm Beach County and the City of Palm Beach Gardens
experienced several years of declines in the real estate and housing markets.
However, as noted earlier, there have been several new residential and non-
residential projects approved recently, as well as an increase in construction
activity on existing approved developments. In addition, property values in the
City have increased for ten consecutive years, increasing by 3.50 percent in
FY2022, including new construction and annexations.
The assumptions used in formulating the ten-year forecast, beginning in FY2022, are as
follows:
• Growth from re-evaluations of existing property: average of 2.9 percent per year_
• New construction is projected per estimates from the City's Planning & Zoning
Department for FY2022 through FY2031 and reflects new construction from the
aforementioned developments.
• Operating millage rates are projected flat through FY2031. The debt service
miliage rate was eliminated in FY2020 and is projected to remain at zero through
FY2031.
■ Average growth of other revenues: 2.0 percent per year.
■ Average inflation rate for operating expenditures: 3.0 percent per year_
■ Inflation factors for other services are projected as follows:
a A 5.0 percent average annual increase in health insurance costs has been
projected through FY2031.
A 7.5 percent average annual increase in workers' compensation and
property/liability insurance has been projected through FY2031.
• Capital Outlay consists of items in the ten-year capital projections.
Findings
16
Pon
Generally, the City's Projection Model is well -designed. In fact, many aspects of the
Model align with/resemble the tool PFM regularly uses to assist its local government
clients with budget forecasting. Revenue and expenditure projections are developed at
the line -item level based on a variety of key assumptions that impact on the City's
finances.
For example, as previously stated, a 5.0 percent average annual increase in health
insurance costs has been projected through FY2031. This is because the City maintains
a very sound self -insured health benefit fund that has accumulated significant reserves
since its inception in 2008 (currently around 10 months of medical claims are held in
reserve). This has allowed the City to mitigate the normal increases that fully insured
programs may have experienced over the last several years. The City works closely
with the fund's actuary every year in setting the funding levels for the Plan, considering
current medical cost trends and historical actual claims. The City also prepares
analyses periodically to compare the actual self -insured costs to fully insured cost
projections to determine the most effective means of delivering employee health
coverage. The City considers ail these factors when formulating the Model each year
and is ready to adjust projected increases if needed.
Additionally, the Model considers City initiatives, such as the impacts of Avenir and
other current and planned developments. Further, from an architectural perspective, the
Model is dynamic. outputs and projections can be `rolled up' or summarized in a variety
of ways, which is likely useful in helping the City to discuss its forecast with a variety of
audiences.
Recommendations
While the Projection Model is well -constructed, there may be opportunities to further
increase its flexibility and/or usefulness via technical updates and modifications to
inputs. For example:
■ While the City prepares a comparison of financial actuals to projections each
year, the Model itself is forward -facing only (i.e., it does not allow a user to view
historical actuals, which are a key component in the development of assumptions
related to future trends). The City should consider integrating this review of
historical activity within the Model to streamline its analysis of the key financial
drivers that have or have the potential to impact its finances.
■ While the Projection Model is easily updated to reflect changes in assumptions, it
is not possible to compare the City's baseline financial picture to one reflective of
those changes on a side -by -side basis (a capability of PFM's core financial
model).
17
It is PFM's understanding that (1) the Model was initially constructed by the
Deputy Finance Administrator, and (2) the Model can currently be updated and
managed by the City Finance Administrator and/or Deputy Finance
Administrator. Given the demonstrated value and importance of the Model —
coupled with the need for business continuity — the City should consider training
additional emp#oyees on its use, as well as developing a guide or user manual to
instruct potential additional users regarding its use.
18
MAINTAINING A STABLE MILLAGE RATE
The City, as with nearly all local governments in Florida, is highly dependent on revenue
from property taxes. In fact, for the FY2020-21 budget, property taxes made up over 71
percent of its general fund revenue. The next largest source, charges for services,
made up less than one -tenth of the revenue raised from property taxes. Because of its
importance for funding necessary City services, it is important that the property tax can
continue to grow commensurate with the need for increases in public services. As the
City grows, many service expenditures must scale to accommodate that growth. As
inflation drives cost increases, it is also necessary for revenues to grow to be abie to
pay for wage increases as well as the increased cost of things like equipment, durable
goods, and motor fuel.
There are two primary determinants of property tax revenue — the value of taxable
property and the millage rate that is assessed on the taxable value. The City, because
of its continued growth and the appreciation of the value of property, has seen the total
taxable value of property increase, from $7.50 billion in FY2010-11 to $12.28 billion in
FY2019-2020. The following table details the changes in assessed value of taxable real
property.16
Table 4: Changes in City Assessed Value of Real Property
Year
2011
ResidentialFiscal
Property
$5,848,513,461
Property
$1,449,291,192
Property
$159,894,950
Other
Property
$46,154,142
Total
$7,503,853,745
2012
5,845,989,740
1,356,197,434
148,956,614
46,668,841
7,407,812,629
2013
5,971,301 A86
1,362,505,644
137,804,685
54,067,590
7,525,769,405
2014
6,179.351,874
1,399,487,396
138,859,513
53,618,149
7,771,316,932
2015
6,655,059,315
1,519,351,040
70,050,865
138,572,340
8,383,033,560
2016
7,120,899,821
1,733,042,304
75,316,429
100,964,163
9,030,222,717
2017
7,578,568,351
1,949,533,937
82.092,236
108,638,650
9,718,833,174
2018
8,205,876,033
2,140,701,464
91,118,225
106,370,063
10,544,065,785
2019
8,648,423,475
2,277,266,953
102,974,514
152,169,262
11,180,834,204
2020
9,457,125,507
2,506,801,419
114,807,321
205,391,600
12,284,125,847
This represents a compound annual growth rate (CAGR) of 5.63 percent. This is a
reasonable rate of growth that would exceed the average growth rate in inflation. Of
course, increases in population and economic activity will also require additional
resources.
16 "Comprehensive Annual Financial Report For Fiscal Year Ended September 30, 2020," City of Palm Beach
Gardens, April 30, 2021. p. 141. Accessed electronically at
httos:llwww. PWA-comlDocumentCenterlViewl1501 alComprehensive-Annual-Fi nancial-Report-09302020
19
0
While taxable valuation growth of 5.63 percent is a decent CAGR, the actual property
tax revenue growth rate will be diminished if the millage rate is lowered at the same
time. In fact, that was the case in both 2015 and 2016. The following details the City
operating millage, debt service millage, and total city millage for the last 10 years.17
Table 5: Historic City Millage Rates
Fiscal Year
2011
Operating
5.7404
Debt Service
0.1854
Total City
5.9258
2012
5.7404
0.1821
5.9225
2013
5.7404
0.1790
5.9194
2014
5.7404
0.1733
5.9137
2015
5.6700
0.1615
5.8315
2016
5.5500
0.1371
5.6871
2017
5.5500
0.1281
5,6781
2018
5.5500
0.1178
5.6678
2019
5.5500
0.0503
5.6003
2020
5.5500
0.0000
5.5500
It is notable that from FY2010-11 to FY2013-14, the City operating millage rate was
5.704. It then declined in 2015 to 5.6700 (a reduction of 1.2 percent). it then declined to
5.5500 in 2016 - an additional decline of an additional 2.1 percent. Since 2016, the City
has maintained the operating millage rate at 5.5500.
Of course, the operating millage has been held stable, but the total City millage has
actually declined in each year, because the debt service millage has declined. In this
case, the debt service payments are staying the same from year to year, but the larger
base of taxable value requires a smaller millage rate to raise the necessary revenue to
make the debt service payment.
That bond issuance was fully paid off in 2020, meaning the total City millage will
stabilize at 5.5500 (absent any additional bonded indebtedness or changes in the
operating millage).
Comparisons of property tax millage rates between local governments is usually not an
,apples to apples' comparison. For example, some local governments apply service
charges while others include them as part of general operations supported by property
taxes. Some local government services may also be provided by other taxing entities.
The following details the FY2019-2020 operating and debt service millage rates for
Palm Beach Gardens and the other large villages, towns, or cities in Palm Beach
17 Ibid., P143.
To
IWO
County. The rates come from the local government's Comprehensive Annual Financial
Reports, all of which can be found on the Florida Auditor's website.18
Table 6: Comparable Cities Millage Rates (FY 2019-2020)
Local
Wellington
Population
62,650
Operating
2.4700
Debt Service
0.0000
Combined
2,4700
Jupiter
63,188
2.4633
0A 891
2.6524
Boca Raton
95,139
3.5700
0.1080
3.6790
Palm Springs
23,867
3.5000
0.3381
3.8381
Royal Palm Beach
39,801
5.3800
0.0000
5.3800
_
Palm Beach Gardens
56,709
5.5500
0.0000
5.5500
Greenacres
39,945
6.4000
0,0000
6.4000
Lake Worth
38,875
5.4900
1.1100
6.600019
Delray Beach
67,168
6.6611
0.2034
6.8645
Boynton Beach
78,495
7.9000
0.0000
7.9000
Riviera Beach
36,057
8.4520
0.0000
8.4520
West Palm Beach
116,781
8.3465
0.1201
8,4667
The City of Palm Beach Gardens maintains a spreadsheet that seeks to make an
`apples to apples' comparison of the various taxes and charges for services that are
applied in these neighboring cities. The City combines the following to reach a total cost
for the residential taxpayer (city, school, and other property taxes calculated on a
$350,000 taxable property value with a $50,000 homestead exemption and a $25,000
homestead exemption for school district tax levies):
■ City property tax (combined operating and debt service)
■ School property tax
■ Other property tax
■ Fire rescue and/or fire protection (for those cities with a separate, non -operating
millage, for this service)
■ Utility taxes
■ Telecommunications service tax (calculated by assuming an annual bill of
$3,600)
■ Stormwater/solid waste assessment
Based on the listed taxes, charges for services, and assumptions, the total bill for these
services by City provides a different perspective, with Palm Beach Gardens having the
lowest total combined taxes and charges;
18 Florida Auditor General, Index of Municipalities Comprehensive Annual Financial Reports, accessed electronically
at https:/Iflauditor.goy/pageslmunici;)alities efiles.html
19 The City also has an MTSIJ (Fire and EMS) miliage rate of 3.4600.
21
Table 7: Comparable Cities' Combined Taxes and Charges
city
Palm Beach Gardens
Total Taxes and
Charges
$8,082
Jupiter
$8,167
Boca Raton
$8,378
Royal Palm Beach
$8,573
Delray Beach
$8,654
Wellington
$8,706
Greenacres
$8,965
Palm Springs
$9,103
Boynton Beach
$9,207
Riviera Beach
$9,641
West Palm Beach
$9,795
Lake Worth
$10,356
While property taxes are often considered an unpopular tax, it is the largest source of
local government revenue in nearly every state in the nation. The advantages of the
property tax include-?0
■ Is stable.
Given its broad base, particularly for residential real property, it is relatively easy
to predict and tends to grow from year to year_ Also, once the taxable base is
established, it does not vary during the tax year. Other major sources, such as
sales and income taxes, cannot be so readily estimated for a fiscal year.
• Is difficult to evade.
Real property is fixed and immobile. If real property taxes are not paid, in most
states, an automatic tax lien may be placed on the property, and, eventually, the
property sold to enforce payment of back taxes, penalties and interest. For this
reason, the collection rates on real property taxes are generally the highest
among major focal government tax sources.
Finances property -related services.
A lot of public services support property (such as fire and police protection, street
maintenance). Moreover, in some regions, variation in provided public services
directly impacts on property values.
■ Taxes non-resident property owners.
Non-resident property owners might not otherwise be taxed by sales or income
taxes. In this way, they support services that support their property.
21 see, For example, "A Revenue Guide for Local Government, 211d Edition" Robert L Bland, ICMA, 2010, pp. 84-85,
22
Mom
■ Is transparent.
In nearly every state, local property valuations and the tax applied to the property
are public records. By contrast, exactly how much tax is paid (and by whom) is
generally not public information.
There are various examples of local governments who have moved away from the real
property tax as their primary source of revenue and have encountered financial
challenges as a result. For example, Loudoun County, Virginia is a high -wealth county
in Northern Virginia -- in fact, it had the highest median household income of any county
in the U.S. in 2021. It is also home to the largest concentration of data centers in the
nation.
As a result, its personal property tax revenue on tangible business equipment has
surged in the last several years. As the following chart shows, daring this time, personal
property tax revenue associated with computer equipment grew from 15 to 39 percent
of its tax revenue. Meanwhile, successive reductions in its millage rate reduced real
property tax revenue from 71 to 52 percent of total tax revenue.
Figure 2: Loudoun County, Virginia Proportion of General Fund Tax Revenue
80.0%
70.096 70.9% 69.9°I. 88.7`Ia
66.7% °
50.0°I° 84.41� 63.0%
60.1 % 57.8% °
5s.s �
50.0°k 51.5%
40.0%
38.9%
30.6% 32.7%
�•� 24.5°Ia
28.0% ............
20.1% 22.0%
20.00k 15.2% 17.2% 17.91%
10.0°/° 13.8% 12.9% 13.4% 13.2% 13.7% 12.5% 11.9% 11.6% 10.5% 0.7%
0.0%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(Adapted) (Adopted)
Real Property -Personal Property other Local Taxes
Sources: Loudoun County FY 2022 Adopted Budget Volume 1, Loudoun County General Fund Revenues Only
(FY 2000+)
During FY2020-21, Loudoun County had a significant miss on its personal property tax
revenue estimate, with it coming in about $69 million below its estimate (actual revenue
23
from that source of $344 million).' There were a variety of reasons for this, and the
primary reasons related to it being more difficult to estimate business tangible personal
property tax revenue than it is for real property tax revenue. This relates to issues of
equipment depreciation, mobility, and business cycles. By contrast, the County's real
property tax revenue estimates were remarkably accurate.
The key difference between real property taxes and other types of taxes is that property
tax rates are set after the property tax base is determined. Greater rate flexibility means
that local governments can vary millage rates to make property tax revenues more
stable even if the local property tax base experiences short-term fluctuations. Rate
changes for sales or income taxes are much less frequent and hence those tax
revenues are more likely to experience fluctuations. In fact, an analysis in Georgia of a
plan to replace property tax revenue with sales tax revenue identified significant
potential revenue fluctuation as a likely ❑utcome.22
Of course, there is a valid counterpoint: should circumstances create a situation where
the current millage rate is raising significantly more real property revenue than its typical
or historic share, it may allow for a rate reduction — provided, of course, that in the long
run it does not erode the real property tax share of city revenues.
In fact, the City Budget Oversight Review Board (BORB), in its 2021 report to the City
Council, suggested a scenario where a reduced millage rate could be considered:
"The BORB encourages the Council and City to monitor and compare
the actual financial results to the 10 year financial forecast; if the actual
financial results d❑ not forecast the requirement to use 100% of the budget
stabilization fund and eliminate the need to dip into the unassigned
reserves, then the Council should give consideration to reducing the
millage rate."
From the project team's perspective, this would be an acceptable set of circumstances
for considering a reduction in the real property tax millage rate.
Findings
The following are key findings related to the existing tax rate structure and millage rate:
21 "FY 2022 Business Personal Property Taxes on Computer Equipment Forecast Update," Loudoun County Board of
Supervisors Finance/Government Operations and Economic Development Committee, July 13, 2021, accessed
electronically at https://Ioudoun.granicus.comlMetaViewer.php7view id=77&clip id=6721&meta ld=197263
22 "Tax Revenue Stability of Replacing the Property Tax with a Sales Tax," Fiscal Research Center, Andrew Young
School of Poi icy Studies, Georgia State University, September 2007. Accessed electronically at
https://cslf.gsu.edu/riles/2014/06/tax revenue stability of replacing the property tax with a sales tax brief.pdf
24
• The current City tax structure is heavily dependent on the real property tax, and,
given available municipal taxes in the State of Florida, that dependence is not
likely to diminish.
• The real property tax has several notable advantages, including stability, high
collection rates, exporting some of the burden to non-residents, and
transparency.
■ In recent years, the general operating millage has been held constant, but the
total City millage rate has declined Because of a reduced required millage rate for
debt service. The City has a 0.0000 miliage rate for debt service, so those
reductions will not occur in future tax years.
■ The elimination of general obligation debt is a positive achievement and
advances its overall financial stability.
• The City's overall millage rate falls into about the middle of municipalities within
the County, but it can be difficult to do an 'apples to apples' comparison because
some cities charge fees for services that others build into general operations paid
for with property taxes.
Recommendations
As has already been discussed, a stable tax and revenue structure is valued by the
credit rating agencies and necessary to fund essential services. Because real property
taxes are the primary source of revenue for the City (a situation that is not likely to
change in the near or not -so -near future), the project team recommends that the City
continue to maintain its current 5.5500 general operating millage rate.
However, as noted in the discussion, there are limited circumstances where a rate
reduction would be worthy of consideration. These would include the situation where the
relative share of real property tax revenue of City revenue can be maintained over the
long run. They would also include the situation described by the BORB, where actual
financial results do not forecast the requirement to use 100% of the budget stabilization
fund and eliminates the need to dip into the unassigned reserves.
25
0
USE OF RESERVES
The current City budget uses approximately $2.8 million of budget stabilization reserves
to eliminate the need for a tax increase. Looking to the future, by maintaining the same
operating miIlag e rate of 5.55, the ten-year financial forecast projects a gradual
reduction in reserves through FY2027. Beginning in FY2028, projections indicate this
tread will reverse and surpluses will begin to be added back to reserves as more
development in Avenir comes onto the tax rolls.
These projections will be updated annually to reflect the current financial status of the
City, economic treads, and the status of development projects, along with any
operational changes, such as operating and debt service due to new or expanded
services. The City will be monitoring these issues closely and is committed to providing
the most accurate financial information as possible by constantly monitoring actual
financial results versus Original budget projections, amending the budget accordingly,
and updating our revenue and expenditure assumptions, if necessary, throughout the
coming fiscal year.
In addition to this information, a comprehensive listing of the City's financial and non-
financial management policies is provided in the appendices.
The following table compares the City's ten-year plan approach to GFOA
recommendations regarding regular engagement of long-term financial planning. As
indicated, the City's current process is comprehensive and satisfies each of the GFOA
recommend ations.23
Table 8: GFOA Recommendations, Long -Term Financial Planning
Element
City Approach
Time Horizon: A plan should look at least five to ten years in the
Aligns with
future. Governments may elect to extend their planning horizon
recommendations.
further if conditions warrant.
Scope: A plan should consider all appropriated funds, but
Aligns with
especially those funds that are used to account for the issues of
recommendations -
top concern to elected officials and the community.
Frequency. Governments should update long-term planning
Aligns with
activities as needed to provide direction to the budget process,
recommendations.
though not every element of the long-range plan must be repeated.
Content: A plan should include an analysis of the financial
Aligns with
environment, revenue and expenditures forecasts, debt position
recommendations,
and affordability analysis, strategies for achieving and maintaining
23 GFOA, "Best Practices: Long -Term Financial Planning." Accessed electronically at
https://www.gfoa.ora/materip[glongLterm-fi nancial-Riann ing
26
MP
financial balance, and plan monitoring mechanisms, such as a
scorecard of key indicators of financial health.
Visibility: The public and elected officials should be able to easily Aligns with
learn about the long-term financial prospects of the government recommendations.
and strategies for financial balance. Hence, government should
devise an effective means for communicating this information,
through either separate plan documents or by integrating it with
existing communication devices.
Further, GFGA recommends that all longterm financial plans include the following
phases and steps:24
Mobilization Phase: The mobilization phase prepares the organization for long-term
planning by creating consensus on what the purpose and results of the planning
process should be. The mobilization phase includes the following elements:
Table 9: Description of Mobilization Phase Elements
Element
Alignment of
Description
This step includes determining the composition of the project
Resources
team, identifying the project sponsor, and formulating a
strategy for involving other important stakeholders. This step
also involves the creation of a high-level project plan to serve
as a roadmap for the process.
Preliminary
This step helps raise awareness of special issues among
Analysis
planning participants, such as the board or non -financial
executive staff. A scan of the financial environment is
common at this point.
Identification of
Service policies and priorities have important implications on
Service
how resources will be spent and how revenues will be raised.
Policies and
A strategic plan or a priority setting session with elected
Priorities
officials could be useful in identifying service policies and
priorities.
Validation and
Financial policies set baseline standards for financial
Promulgation
stewardship and perpetuate structural balance, so a planning
of Financial
process must corroborate policies in place (as well as the
Policies
I GFOA, "Best Practices: Long -Term Financial Planning.' Accessed electronically at
h ttgs:llwww.gfo a. o rglm ate dalM on a -term -fin anda I-olann i n q
27
Element Description
❑rganization's compliance with those policies) and identify
new policies that may be needed.
Definition of The purpose and scope of the planning effort will become
Purpose and clear as a result of the foregoing activities, but the process
Scope of should include a forum for developing and recognizing their
Planning explicit purpose and scope.
Source: GFGA, Best Practices: Long -Term Financial Planning
Analysis Phase: The analysis phase is designed to produce information that
supports planning and strategizing and includes the projections and financial
analysis commonly associated with long-term financial planning. The analysis
phase includes the following elements:
Table 10: description of Analysis Phase Elements
Element Description
Information This is where the government analyzes the environment to
Gathering gain a better understanding of the forces that affect financial
stability. Improved understanding of environmental factors
should lead to better forecasting and strategizing.
Trend After the environment has been analyzed, the planners can
Projection project various elements of long-term revenue, expenditure,
and debt trends.
Analysis The forecasts can then be used to identify potential
challenges to fiscal stability. These could be fiscal deficits
(e.g., expenditures outpacing revenues), environmental
challenges (e.g., unfavorable trends in the environment) or
policy weaknesses (e.g., weaknesses in the financial policy
structure). Scenario analysis can be used to present both
optimistic, base, and pessimistic cases.
Source: GFQA, Best Practices: tong -Term Financial Planning
Decision Phase: After the analysis phase is completed, the government must
decide how to use the information provided. Key to the decision phase is a highly
participative process that involves elected officials, staff, and the public. The
decision phase also includes a culminating event where the stakeholders can
assess the planning process to evaluate whether the purposes for the plan
described in the mobilization phase were fulfilled and where a sense of closure
and accomplishment can be generated. Finally, the decision phase should
28
address the processes for executing the plan to ensure tangible results are
realized.
■ Execution Phase: After the plan is officially adopted, strategies must be put into
action (e.g., funding required in achieving goals). The execution phase is where
the strategies become operational through the budget, financial performance
measures and action plans. Regular monitoring should be part of this phase.
The following figure highlights the various long-term financial planning phases
recommended by GFGA.
Figure 3: Summary of Long -Term Financial Planning Phases
Use Recommended Prae.t a and Other Resources to
AUke the Casa Obrftwnchd Planning
Align Resources: Define tltie Piarnning
Process & PaMelpant Roles
Finarvcial Preliminary Service Policies
Motrilfration
Policies Analysis & Frlorltiss
Phase
Derene the
Furpasa &
Fiscal Environrrwrital Analysis
Revenue Expenditure Debt
Analysis
Forecast Foresees[ Analysis
Picas•
Financial Balance Analysis
Financial Strategy Development
- -
Decision
Phase
Plan Canduskm & Teansitkrn to Aetlaa
Budget A Financing Reps erManitar#►Q
Execution
Phase
Source: GFDA, Best Practices: tong -Terra Financial Planning
Findings
Based on the foregoing information and analysis:
29
• The City's Budgeting for and policies around reserves aligns with GFGA's best
practices.
• While the 10-year financial model projects some reduction in reserves in the
short-term, there is a strong likelihood that development already underway will
reverse this trend in a few years.
• There are sufficient conservative budgeting practices in place that the current
projected financial course should be attainable.
Recommendations
While current policies should, under current projections, allow the City to maintain a
structurally sound budget and replenish reserves, the City should be careful to ensure
that future development and budgeted spending for operations remain within current
projections. Should there be material changes to the revenue or expenditure
trajectories, the City should revisit them to allow for the replenishment of reserves within
the timeframe of its 10-year financial plan.
30
PIN
WESTERN GROWTH PROJECTIONS FOR NEEDS AND REVENUE
In 1998, Palm Beach County and the Cities of Palm Beach Gardens and West Palm
Beach conducted a Western Northlake Corridor Land Use Study (WNCLUS) to provide
guidance as to appropriate land uses within the Northlake Boulevard area. The study
made a series of recommendations and resulted in an interiocal agreement between the
Cities and the County. Many of the recommendations have been implemented, and the
study has served as a guide for land use and development decisions in the area.
In 2005, the County and the Cities decided to update the 1998 study due to a
recommendation to reassess the need for commercial uses, substantial changes in
population and amount of potential non-residential development — as well as other
changes within the study area. The update was to ensure that a relevant guide to land
use remained in the Western Northlake Corridor.
In 2008, a team — comprised of staff from the County, municipalities, and the Indian
Trail Improvement District — reinstated efforts to evaluate changed conditions since
1999 and determined the need for and the supply of office and commercial space within
the area of study. The team agreed that the recommendations from the original study
remain valid. Indeed, the current construction of thousands of new homes, stores, and
restaurants -- including the west edge of Palm Beach Gardens — is expected to
transform the rural feel of central -western Palm Beach County.
With the substantial amount of growth expected over the next 10-15 years, the City's
ten-year financial forecast factors in projected development at Avenir, a mixed -use
community an 4,700 acres of land in the western area of the City, adjacent to projected
conservation lands;25 newly annexed western developments, new City facilities and
additional personnel and operating demands associated with this expansion.
There are, understandably, growth issues related to Avenir and other "western growth"
developments. Although multi -year forecasting is not an exact science and is subject to
many uncontrollable factors (such as the COVID-19 economic downturn), it can serve
as a useful tool in trying to chart a financial path for the short- and long-term and
provides an opportunity to monitor actual versus projected results each year so that
proactive measures may be taken to balance future budgets.
A significant capital improvement project affecting the FY2022 budget is the recently
approved par-3 18-hole addition to the existing Sandhill Crane municipal golf course. As
a condition of development approval, the developers of Avenir conveyed 115 acres of
land to the City to be used for recreational purposes. Staff researched potential uses for
25 Avenir, a 3,900-home development (including age -restricted residences) with another 2 million square feet of office
and commercial spare, will rise on Northlake Boulevard over the next 30 years.
31
this property and, as part of this analysis, engaged True Club Solutions to prepare a
market analysis and feasibility study on several golf related options for the property.
Based on this analysis, staff recommended the construction of an 18-hole par-3 golf
course, clubhouse, and driving range on this parcel. To finance the construction of this
project, staff recommended issuing non -ad valorem revenue bonds, to be repaid with
impact fees from western development and revenues generated from the project - not
ad valorem taxes.
At the January 14, 2021 Council meeting, Resolution 7, 2021 was approved authorizing
the issuance of the Series 2021 Public Improvement Bond in the amount of $14 million.
Although the course will not be in service in FY2022, the debt service will begin in
October 2021, and it will be paid next fiscal year via a transfer from the Recreation
Impact Fund. After the course is complete and in operation, future years' debt payments
will be paid via recreation impact fees, public facility impact fees, and fees generated by
the facility.
The following table provides a summary of western growth.
Table 81: Western Growth Summary
Location Detail
City -Approved Developments
Bayhill Commons (AKA
SW corner of
Approved through the County for 37,274
Northlake 201Vintage
Northlake Blvd.
SF of commercial retail
Oaks)
and 112th
Site plan shows two medical office
Terrace (in
buildings.
front of Rustic
Prospective buyer has submitted petitions
Lakes)
for land use and zoning amendments with
concurrent site plan petition for 148
townhomes—Staff has advised the
density was too high.
1121h/Northlake Office
SE corner of
Approved through the County for 82,799
(AKA WBW, IX,
Northlake Blvd.
SF of general office and 11,290 sf of
Inc./Vintage Crossing)
and 112th
Medical Office
Terrace (in
The same developer for Vintage Oaks
front of Rustic
has submitted petitions for land use and
Lakes)
rezoning amendments with concurrent
site plan petition for 79 townhomes on
this site. The petition has not been
deemed sufficient at this time.
32
Location
Detail
Northlake CLF
North side of
Approved for 10,500 SF of Medical or
Northlake Blvd.
Dental Office and 125-bed ALF
at the NW
The Star of David Cemetery property
corner of
north of the site has purchased the parcel
Northlake Blvd.
and has a petition in with the City to
and Memorial
convert the currently vacant parcel into
Park Drive.
additional cemetery plats.
Coun!y-Approved Develo ments
Avocado Northlake
SW corner of
Currently under review with the County
Northlake Blvd.
for a charter school.
and Avocado
Blvd,
Coconut Plaza
SE corner of
Approved by the County by R-2021-1761
Northlake Blvd.
conditional use for retail gas and fuel
and Coconut
sales with convenience store
Blvd.
Approved by the County by R-2021-1760
for up to 44,005 SF of retail and 5,000 SF
of Convenience Store with 20-station fuel
center.
Shops at Indian Trail
SW corner of
Approved through the County with R-
Northlake Blvd.
2014-0111
and Coconut
Approved for total of 106,566 SF of
Blvd.
commercial
71,966 SF General Retail
15,600 SF Pharmacy
7,200 SF Financial Institution
3,800 Drive Through Restaurant
4,000 SF Medical Office
3,000 SF Convenience Store with 16
fueling stations and car wash.
No construction has begun on site.
Pierce Hammock
South side of
Elementary School
Northlake Blvd.
between 140th
Ave. and
Grapeview
Blvd.
Source' Palm Beach Gardens
33
While the preceding table summarizes key western growth projects as identified by the
City in the data provided, additional current and planned projects are also contributing to
the growth of the area, including:
• The build -out of commercial corridors
• City annex
■ City's 50-acre ED parcel
■ Proposed fire station
R New developer -funded infrastructure
Findings
It is clear that the City is relying on Western growth for additional city -related revenue
and general growth. The factual nature of that growth is evident: on the project team site
visit, the tour of that area demonstrated significant housing and related construction
activity. The construction of the new municipal golf course is a key part of the overall
development approach, as it will be a magnet for new residents that value that amenity
and likely spur additional services in the area. Given the strong performance of the
existing golf course (which is running surpluses — when many municipal golf courses
struggle to balance their operational budgets), there should be reasonable confidence
that this new course will also perform well.
Western growth, including Avenir and the Northlake corridor, will have a lasting positive
impact on the City revenue structure. An important issue for the City's overall
development is whether additional services for residents (including grocery and related
stores, restaurants, shops, and other recreational outlets) will be drawn to these areas.
Mixed use land use designations and site plan requirements have been put in place to
facilitate provision of urban amenities and services. Related site plan requirements have
been extensive at Avenir, including 2,300 acres of conservation space, school sites, on -
site employment opportunities, and other city services. These will be necessary to
reduce traffic -related congestion between the western portion of the City and other
locations. Ultimately, buildout of the comprehensive livelworklplay design plan will be
the next phase for the City, in terms of development and for future planning.
34
1411::041211i116-3:W*1FiQ44LTki0Y3W4KIN i7
Section 212.055, Florida Statutes, authorizes local governments to impose a
discretionary sales surtax of up to one cent to finance, plan, and construct infrastructure
projects, among other purposes. However, local governments may not impose the
surtax on any sales amount above $5,000 on any item of tangible personal property and
long-distance telephone services. Florida's six percent sales and use tax does not have
the $5,000 cap that is imposed on the surtax. The levy of the surtax must be pursuant to
an ordinance of the county's governing board and approved by a referendum of the
electors of the county. The surtax proceeds may be distributed pursuant to Section
218.62, Florida Statutes.
On November 8, 2016, Palm Beach County voters approved a ballot issue to levy a
one -cent infrastructure sales surtax to pay for the acquisition of or improvements,
renovations, or repairs to public infrastructure. This additional tax, which went into effect
January 1, 2017, is to be in place until December 31, 2026, or when $2.7 billion in
revenue is collected, whichever is earlier. Revenue generated by the surtax is to be
shared by the County (30 percent), its 39 municipalities (20 percent) and the Palm
Beach County School District (50 percent). It was anticipated that Palm Beach County
municipalities would colfectively receive $45.8 million per year, equal to $537.6 million
over the 10-year period (with a 3 percent year -over -year increase). Palm Beach
Gardens estimated annual share of surtax proceeds is $3.0 million, equal to $35.6
million over ten years (again, assuming a 3 percent year -over -year increase).
Staff reviewed current and long-term infrastructure needs of the City to formulate a plan
for the expenditure of the proceeds. This analysis included input from many sources,
including senior staff from all departments, a consultant that had been working on a
long-term space needs analysis, the City's then -current budget and long-range capital
improvements plans and the results of a citizen survey. Based on a thorough analysis
and discussions among staff and with the City's consultant, the plan aimed to address
current and projected shortages of office, meeting and storage space, current and future
parks and recreation needs, and long-term maintenance needs associated with the
expansion of City facilities on land to be dedicated to the City from Avenir.
The following table illustrates the status of the City's one -cent infrastructure sales surtax
projects as of April 30, 2021.
35
Table 12: One -Cent Sales Surtax Infrastructure Projects (as of April 30, 2021)
District Park -- Phases I and II
Development*
Phase 1 elements included several full-size
multi -purpose fields, sports lighting for each
field, a concession building with bathrooms
and a meeting room, a playground, a splash
pad, lighted parking, a freshwater lake, and
a turf maintenance facility
City Hall, Police Department and Fire
Department ExpansioniRenovations
Four story, metal tower that serves as
training site for fire rescue personnel, police
K-9 training area, expansion and renovation
of City Nall, renovations to police station
Operations Center`*
Construct a 40, 000 square foot, Category 5
Operations Center; consolidate Public
Works and Public Services Divisions into
one location; also used during emergency
management response and houses
emergency response staff and equipment
Continaencv
$13,700,000 1 $13,235,144 1 $464,856
$9,305,228 [ $9,285,929 1 $19,299
$6,890,565 1 $6,871,157 1 $19,408
$39,207 1 $0 1 $39,207
Source: City of Palm Beach Gardens FY2021-22 Adopted Budget
* The City held the grand opening of the Gardens North County District Park on June 29, 2019. This project was
completed in one year and under budget. Available balance will be used for additional amenities such as pavilions
and a children's splash playground.
" Staff moved into the new operations building on October 1, 2019, and an open house for the public called 'Trucks
'n' Stuff' was held on February 8, 2020.
To finance the construction of infrastructure projects identified in the plan, City Council
authorized the issuance of a not -to -exceed $30 million Public Improvement Bond,
Series 2017, which is repaid with surtax revenues. This is an allowable use of the surtax
proceeds under Florida Statute, which states that "School districts, counties and
municipalities receiving proceeds under the provision of this subsection may pledge
36
such proceeds for the purpose of servicing new bond indebtedness incurred pursuant to
law."26
As discussed previously, the City's policy is to utilize debt financing only for essential
capital projects, and only when it can be demonstrated that borrowing is more
advantageous than funding capital items on a pay-as-you-go basis (e.g., extremely low
interest rates; impacts to reserves, accelerating projects to take advantage of low
construction costs, etc.)_
Findings
The City's approach — i.e., the issuance of revenue bonds to facilitate and expedite the
construction of the projects, while funding those bonds with the safes surtax proceeds —
is a wise strategy. This strategy enables projects to get underway quickly, rather than
waiting for revenue to be in -hand to complete planned projects. And the City reports that
it has been successful in undertaking projects (the majority of which are largely
complete) via this process.
It is notable that the environment where the decision was made to bond for construction
was a near perfect illustration of the opportune time to borrow, Interest rates were low,
and construction industry inflation was significantly higher than the borrowing costs.
One commonly cited index for inflation in the construction industry notes the following
related to historic construction cast indices:27
• Long-term construction cost inflation is normally about double consumer price
index (CPI).
• Although inflation is affected by labor and material costs, a large part of the
change in inflation is due to change in contractors/supplier margins.
• When construction volume increases rapidly, margins increase rapidly.
• Nonbuilding Infrastructure inflation, from 2013 to 2017 averaged less than one
percent, but then jumped to 5 percent in 2018 and 2019. Inflation fell to -0.2
percent in 2020 but jumped to 9 percent in 2021.
Recommendations
Again, the City's approach is effective and planful. Accordingly, few recommendations
and/or opportunities for improvement have been identified:
25 Florida statutes section 212.055(2)(e)
21 "Category Archives- Inflation Indexing," Construction Analytics, accessed electronically at
htti)s://edzarenski.com/eatego!y/inflation-indexing!
37
■ In its 2020 One -Penny Safes Surtax Annual Update, the Palm Beach County
Office of Inspector General suggested that all municipalities maintain
transparency by publicly publishing, posting; or conducting community outreach
events on surtax program initiatives and project status.28 The City should ensure
its process includes such outreach.
■ Given that this is a period where high inflation is expected to persist for some
time, the City should consider other opportunities for bonding for major projects,
taking into consideration, of course, an also -rising interest rate environment.
28 Palm Beach County Office of Inspector General, "GIG Insights One -Penny Sales Surtax Annual Update — 2020,"
(November 9, 2020). Accessed electronically at
htta://www.obcgov.comfoig/docs/surtax/OIG Insights Update 2020.odf
38
VALUE OF 2024 COUNTY -WIDE 1-CENT SALES TAX FOR
TRANSPORTATION
The value to the City from the use of the current 1-cent County sales tax was discussed
in the prior section. In fact, it has created an outstanding new park and recreational
complex while also providing resources to upgrade existing city government facilities,
including for police, fire, and emergency response functions.
Of course, the County sales tax is time (and revenue) limited, meaning that at its current
collection rate, it will hit its $2.7 billion limit in 2025 or 2026. If collections do not reach
the $2,7 billion level, it will automatically be sunset at the end of 2026.
In the last year, there has been discussion of extension of the sales tax for
transportation projects. There is a strong argument to be made for that extension, First,
from a tax policy perspective, much of the tax is exported to County non-residents
(primarily seasonal `snowbirds' or those attracted by recreation and tourism
opportunities). In this way, non-residents help to pay for the infrastructure and
government operations that are necessitated by those non-residents. Second, the
method for distributing revenue (to both the County and municipalities) provides a
reasonable mix of funding for county -wide and city -specific projects. Finally, an
extended program provides additional bonding capacity should the City determine that it
is cost-effective.
Palm Beach County leaders have begun discussions related to County -wide projects
that might benefit from the extended sales tax. These include a coastal commuter rail
line, dedicated bus lanes on major roads, and other projects that have been delayed or
derailed because of gas tax receipts that are less than current forecasts.29
Throughout the discussion in other sections of the report, the need to focus on issues of
mobility are critical for continued growth and development within the City. While
enacting a one cent sales tax for transportation projects would not be a panacea for the
City, it could, if the revenue is appropriately managed, be one component part of a long-
range funding plan.
It is notable that the revenue currently received by the City from the 1 cent sales tax
saw reductions from forecasts in 2020, related to the COVI❑-19 Pandemic. In FY2020-
2021 it was budgeted for $3.84 million. Given that Florida passed an economic nexus
law (meaning governments can compel out of state e-commerce businesses with
39 See for example, "Traffic Sensitive Fled Lights? PBC May Float Transportation Tax,' The Palm Beach Post, March
23. 2021. accessed electronically at httos'Ilwww.palmbeachpost.com/stony/news/locall2021103/23ltraffic-sensitive-
red-liq hts- lac -ma -float-trans ortation-tax14768373001/ and "floes One Cent Make Sense? Transportation Planners
Eye Sales Tax to Help Residents Get 'from Point A to Point S to Point C' Wthout a Car," OnGardens.org, March 18,
2021, accessed electronically at https://ongardens.org/2021/03/18/does-one-cent-make-sense-transportation-
lanner" y e-sales-tax-to-hel -residents et-f ro m-12oint-a-to pint-b-to- oint-c-without-a-Carl
9K
significant sales into the state to collect sales tax from their Florida customers] effective
July 1, 2021, it is likely that sales tax collection rates will increase in coming years
based on this development alone.
Findings and Recommendations
■ The current 1 cent sales tax for infrastructure projects will sunset sometime in
2025 or 2026.
■ There has been interest expressed at the County level in putting a sales tax
question on the general election ballot in 2024 (as local option sales tax ballot
questions must be held via a general, rather than special election).
■ There is an opportunity for the City to gain a new revenue source that can be
dedicated to transportation -related projects.
■ Given the importance of these projects for many current and planned initiatives —
and the need for funding in most of them -- it would make sense for the City to
identify the projects that would be funded via this revenue source and advocate
for them.
• Based on the success of the 2017 bond issuance, the City should also consider
issuing a revenue bond (or bonds) for those projects via this revenue source (if
enacted) as well.
40
NOR
MOBILITY PLAN TO MOVE PEOPLE, NOT JUST VEHICLES
The City Council approved and adopted the City Mobility Plan and Fee in September of
2019. Accordingly, the Mobility Fee Land Development Regulations Amendment was
also approved and adopted by the City Council in September of 2019, with an effective
date of January 1, 2020.
In September of 2020, the City Council approved and adopted Mobility -related
Comprehensive Plan Text Amendments to various elements of the Comprehensive
Plan, as well as a Land Development Regulations Amendment to provide consistency
with the adopted Mobility Plan and Mobility Fee.
The amount of the fee varies, based on residential or non-residential land use types.
For example, a single-family home, based on square footage, may vary from $4,991 to
$6,655. An office building may vary from $3,978 to $9,250, while retail establishments
(by type) may vary from $2,981 to $59,651.30 According to the City's Comprehensive
Annual Financial Report, at the end of FY2019-2020, the mobility fee fund totaled
$2,375,230 for transportation -related uses.
The Mobility Fee Assessment Area encompasses the eastern portions of the City. The
Mobility Plan integrates multi -modal oriented land uses, people -focused complete and
living streets. Because the Mobility concept is people -centric rather than car -centric, it
aids in creating vibrant destinations and innovative parking strategies that encourage
walking, bicycling and other multi -modal transport and reduces overall dependence on
automobile travel. Mobility fees are used to fund infrastructure necessary to facilitate the
movement of people through all means, not just automobiles. Mobility fees allow for the
funding of bikeways, pedestrian access routes, sidewalks, dedicated mass transit
routes, multi -modal and other facilities. Mobility fees can also fund roadways and
roadway improvements but is more inclusive as to the types of transportation projects
which can be funded.
Funding mobility and mobility related projects is becoming more and more necessary as
cities and towns develop, build out, and become increasingly urbanized. Dependency
on automobiles as the exclusive means for transportation is inefficient, environmentally
costly, as well as being costly to develop new roadways in places like Palm Beach
Gardens where land and roadway corridor rights of way are scarce and real estate
prices are high.
Numerous communities facing continued urbanization throughout Florida have
undertaken implementation of a mobility fee program designed to replace roadway
impact fee programs. Examples of locations in Florida with a mobility fee program
30 "REVISED IMPACT/MOBILITY FEES - EFFECTIVE JANUARY 1, 2020," City of Palm Beach Gardens, accessed
electronically at httos Ilwww.obotl.com1792llmpact-Fees
41
include (among others) Alachua County, City of Altamonte Springs, City of Maitland,
Sarasota County, and Osceola County.
Importantly, Mobility Fees help set the stage to accommodate and encourage innovative
land use and development policy decision making. Mixed -use projects, urban infill and
innovative redevelopment initiatives are all supported and facilitated in design concept
when supported with a mobility fee program.
In this regard, Palm Beach Gardens has embarked on a multi -faceted growth and
development approach. Taken individually each initiative has merit and value for the
City. However, each initiative also integrates with the other development programs and
initiatives and in so doing created a synergy within the City that is greater than the sum
of the individual planning and development components. In this way, urban
redevelopment, TOD projects, Mobility fees, comprehensive planning, economic
development, and many of the other planning policies of the City all represent different
supporting "spokes on the wheel" helping to enhance the quality of life and make the
City more livable. These initiatives should be viewed both on their individual merits as
well as on the comprehensive effect for an integrated approach to City quality of life.
The map below illustrates the Mobility Fee Assessment Area. To the degree future
development and potential annex areas are not included in the Mobility Fee
Assessment area, the City may consider expanding the Mobifity fee area to help bring
mobility advantages to all areas of the City.
42
Figure 4: Mobility Fee Assessment Area
Source: Palm Beach Gardens Mobility Fee Report
(Vote: Mobility Fee Area: east of Bee Line Highway; Roadway Impact Fee Area: West of Bee Line Highway
Findings and Recommendations
• With the 2019 completion of the Mobility Plan report, the City instituted the
Mobility Fee Plan and Assessment Area, replacing the County administered
impact fee program in portions of the City.
• In May 2021, Palm Beach County fled suit against the City over concerns
regarding impact fee remittances to the County. This legal issue has not been
resolved as of this date.
■ The lawsuit may create uncertainty for the City as well as developer owned
properties located in and subject to the PBG Mobility Fee Assessment Area.
■ Resolving the legal question is important regarding whether or how roadway
impact fees are paid in the city and eliminating the concern over unpaid impact
fees. Generating mobility fee revenue is critical for assuring that redevelopment
programs and TOD projects can be successfully undertaken.
43
99
■ Through passage of the Mobility Plan and TOD areas, Palm Beach Gardens has
demonstrated commitment to funding mobility needs.
■ Uncertainty regarding mobility plan revenue generation may impact the economic
development momentum within the City. There is financial risk to the City if
repayment of impact fees to the County is required. However, the potential
repayment amounts are not expected to create financial/budget concern and the
City's commitment to fund mobility projects is both strong and clearly
demonstrated,
■ To date, the City has received $2.2 million in funding commitments for several
mobility projects through TPA grant revenues. These include pedestrian
crossing facilities; Kyoto Gardens Drive sidewalks and bike lane and Burns Road
two-way bicycle track. These suggest that even without the mobility fee, the City
can maintain its pipeline of mobility projects and identify alternate funding
sources.
44
TRANSIT ORIENTED DEVELOPMENT DISTRICT IN THE
DOWNTOWN AREA
The genesis of the Palm Beach Gardens TOD program was funded through federal
grants acquired by the South Florida Regional Transportation Authority (SFRTA), the
operating authority of the Tri-Rail commuter train service. Development of TOD policies
took place approximately from 2917-2019.
The TOD directive is created to work in conjunction with the adopted Mobility Plan, The
Palm Beach Gardens Mobility Plan was adopted in 2019. Both the Mobility Plan and
TOD efforts are comparatively newly adopted within the City and represent forward -
thinking approaches. It will take time to fully implement these policies and programs.
Implementation is underway and it is important to continue to work toward effective
implementation in order not to lose the momentum being generated.
Significant momentum, development flexibility, and development density has been
created within a one-half mile radius of the proposed PGA Tri-Rail train station.
Projects benefitted and approved under the TOD planning guidelines include, but are
not limited to Loehmann's Plaza, sections of PGA Station, FPL Phases I and 11,
Downtown Palm Beach Gardens, Gardens Mall, and Legacy Place redevelopment.
However, much of these lands have existing development and will require significant
investment for redevelopment purposes. Most redevelopment efforts will likely result in
increased development density on these sites.
Minimum density standards and P3lfiscal/TIF funding agreements may be necessary to
begin to attain the needed density to support a Tri-Rait commuter train station. Density
allowances have been increased to gain critical mass within the TOD core area.
Additional density increases may be necessary to compete with population densities of
locations competing for train station stops and to gain full advantages of mobility
opportunities in TOC core and TOD supporting core areas.
Expanding the TOD may help and benefit gaining the Tri-Rail train stop. To maintain
the economic development momentum that has been created, careful consideration
should be given to expand the TOD district to the entire central business district of the
City. There may be other areas within the Mobility Fee District which could be
designated for higher density or TOD designations, taking care to identify and preserve
traditional neighborhoods or areas, which for a variety of reasons, may not be
appropriate locations for TOD/Mixed Use or redevelopment efforts, at this time.
Support and community consensus to expand these areas will be required. Increasing
predictabilitylcertainty in the planning, site plan and development process can contribute
to consensus building. Public benefits include expanded tax base and municipal fiscal
strength and increases local job opportunities. Through the Mobility Plan the City has
45
strengthened commitments to mobility projects. Continued communication ❑f public
advantages of TOD/Mobility planning such as bikeways, pedestrian access and
associated linear parks may help build public support. Such projects can be readily
identified in the capital improvements plan and highlighted in public facing venues to
increase awareness and support.
The link to the Tri-Rail transit -oriented development planning process is shown below.
Palm Beach Gardens was one of seven cities throughout the tri-county region to benefit
from the SFRTA federal grants to undertake this planning process. Renderings for the
Palm Beach Gardens rail station from the Tri-Rail website are shown below.
46
Figure 5: Tri-Rail Coastal Link Station Master Plan
Source: City of Palm Beach Gardens
47
Findings
The TOD is an important land use overlay to help achieve mobility goals. Its
continued implementation is an important component of several related planning
and economic development initiatives — current and planned.
The County legal challenge to the mobility fee, which is part of the TOD funding
mechanism, may impact mobility funding sources, potentially requiring alternate
funding sources to be identified and implemented. Regardless of the funding
sources for the Mobility Fee: the City's Mobility Plan is adopted and remains in
place.
Attaining sufficient density within this area will be important to attain development
and density levels for other planned projects to be successful.
■ Expanding the TOD could be considered in the future to include properties such
as the Gardens Mall or other areas which may support walkability and mobility
alternatives in the urban core.
Recommendations
The benefits of the TOD can be substantial and to date have resulted in some initial
supporting development in the TOD area. As noted, we believe that expanding the
district will help achieve Mobility Plan goals. We believe highlighting mobility projects
recently undertaken or programmed, in public facing formats and forums, help illustrate
the City's the commitments to Mobility Plan goals, and this will build community support
for the TOD, the Mobility Plan and Mobility Fees.
The TOD emphasizes land use patterns with a focus on pedestrian connectivity and
mobility. These are important elements for environmentally sustainable growth patterns
in the City's Central Business District. The TOD emphasizes workforce housing and
employment, both of which are critics; to economic and fiscal sustainability in the City.
48
While estimates vary, state and local governments provide Billions of dollars each year
to spur business activity within their borders. There have been literally hundreds of
studies conducted to seek to determine the efficacy of these incentives, and supporters
and opponents of incentives can each point to research and practice that supports their
perspective.
It is likely that economic development incentives will continue to be provided throughout
the U.S. and continue to be controversial in some places but not in others. In Palm
Beach Gardens, its voters approved the use of tax abatement for its economic
development program and there have been notable successes associated with its use.
As a result, the benefits of economic development incentives. will depend an specific
facts and circumstances and will vary from time to time and place to place.
In Florida, there are a variety of incentives that are provided at the state, county, and
municipal levels of government. For this discussion, benefits offered by the State of
Florida are available to the City and the other jurisdictions with whom it regularly
competes, s❑ they are something of a moot point. Likewise, many (if not most) of the
local governments Palm Beach Gardens competes with for residents and commerce are
within Palm Beach County, so incentives offered at the County level will also tend to
balance out.
At the Florida municipal government level, economic development incentives can take
many forms. The Florida Legislature's Office of Economic and Demographic Research
annually collects data from Florida county and municipal governments related to
economic development incentives. For reporting purposes, the Office classifies local
government economic development incentives into four general types :31
■ Direct financial incentives to businesses.
■ Indirect financial incentives benefitting businesses.
■ Tax -based and fee -based incentives to businesses.
■ Below -market rate leases or deeds for real property given to businesses.
The Office's March 2022 report includes data from several Palm Beach County
municipalities (listed in the following table in population ranked order) It is notable that
there was no response from the cities of West Palm Beach, Delray Beach, and Riviera
Beach. The following reflects the dollar amounts within the four broad categories for
those Palm Beach County reporting municipal governments:
31 "Florida County & Municipal Economic Development Incentives: Local Fiscal Year 2019-2020 Report Based on
2021 Survey Responses," Florida Legislature's Office of Economic and Demographic Research, March 2022,
accessed electronically at http:/Yedr.state.fl.us/ContenUlocai-government/reports/econincentives2O.odf
49
Table 13: Comparable Cities Use of Economic Development Incentives
(FY2019-2020)
Municipality
Population
Direct
Indirect
Fee and
Below
Total
(2020)
Incentives
Incentives
Tax
Market
Based
Incentives
leases
or Deeds
GardensPalm Beach
Greenacres
i
Royal Palm
Beach
Palm Springs:.
Of the municipalities that responded to the survey, Palm Beach Gardens had the
greatest dollar value associated with incentives far FY2019-2020. While the incentive
amount in 2019-2020 was substantially greater than in the prior 10 years, this was
primarily due to $1.0 million being added to the City's 5ma11 Business Relief Fund.
These funds were used to provide emergency grant funding for local small businesses
during the COVID-19 pandemic to assist with operating costs, payroll, rent, etc.
This report also summarizes past use of incentives, from FY2010-2011 through
FY2019-2020. In some of those years, other Palm Beach County municipalities are
included. For example, West Palm Beach reported $692,073 as the total value of
economic development incentives in FY2016-2017 (but did not report a value in any
other year of those years). Likewise, Delray Beach reported the use of incentives in four
years and Lake Worth Beach in three years.
As noted, last year's $2,012,874 was an outlier for Palm Beach Gardens. The following
table provides the reported information for the Palm Beach County municipalities that
reported the use of incentives in the fiscal years 2011-2012 through 2019-2020.
50
Table 14: Total Value of Reported Economic Development Incentives
(for the fiscal year ended September 301h)
Boca Raton
$111,250
$164,600
$127,875 297,738
F
$242,194
$80,500
$100,000
$238,000
-Boynton Beach
$313,500
$36,000
$99,000
Delray Beach
$70,000
$40,000
$6 749
$11,276
Jupiter
$896,090
$597,590
$259,539
$229,390
$187,827
$17,990
$523,000
$449,512
Lake Park
$98,532
$43,458
$100,000
Lake Worth Beach
$146,536
$36,275
$18,668
Palm Beach
Gardens
$50,000
$264,700
$26,250
$340,024
$2,012,8
74
Riviera Beach
$127,800
West Palm Beach
$692,073
Source: Florida County and Municipal Economic Development Incentives- LFY 2019-2020 Report, Florida Legislature's Office of Economic and Demographic
Research
51
Another Florida local government approach to providing economic development
incentives is through Community Development Agencies (CRAB). These special districts
can, under Florida law, carry out the redevelopment of designated slum or blighted
areas, with funding generated through tax increment financing (TiF). In this approach,
the taxable value of property within the designated area is fixed at a certain date, and
the subsequent annual incremental increase in property tax revenue to the county and
municipality (but not the school district) is deposited into a special fund to be used to
fund redevelopment projects. In some cases, revenue bonds are also used by the
county or municipality on behalf of the CRA.
There are a variety of eligible uses for CRA funds, including administrative expenses of
redevelopment, to acquire property, to pay for public infrastructure improvements, to
develop affordable housing, to develop community policing innovations, and to
subsidize festivals and other community recreation events.
There are 221 CRAs within the State of Florida. Of those, 11 are in Palm Beach County.
Cities and towns with a CRA are Belle Glade, Boca Raton, Boynton Beach, Delray
Beach, Lake Worth Beach, Riviera Beach, West Palm Beach, Jupiter, Lake Clark
Shores, Lake Park, and Palm Springs. Palm Beach County also administers a CRA for
Westgate/Belvedere Homes. Palm Beach Gardens does not have a CRA at this time.
In reviewing Palm Beach Gardens' economic development offerings, there are sufficient
tools available to the City to be competitive with other locations within the region.
Further, the City is an 'in demand' location where incentives do not generally need to be
offered (or offered in large quantities) to attract suitable economic development projects.
For very large projects, it is likely that State (or county) incentives will have the greatest
opportunity for impact, and many of the other measures the City undertakes to be an
attractive location may well outweigh financial inducements in any event.
During discussions and tours of the City, available affordable housing is a major
concern — as it is in nearly every growing city in the U.S. There are tools, particularly
targeted at improvements to existing residential housing stock, that could prove useful
in rehabilitating existing housing.
One type of program that has been put to good redevelopment use in other cities are
tax abatement programs targeted at improvements to existing residential real property.
In these programs, the property taxes on improvements to real property are abated for
some period of time, often 5 to 10 years. In some cases, the percentage of the
abatement may also vary, depending on the improved property or the number of years
of the abatement,
The following identifies some residential abatement programs and their key
characteristics:
52
■ St. Louis, Missouri
Offers abatements of 5-10 years. Housing conditions determine the length and
percentage of abatement. Abatement is offered for specific block groups
identified by housing market conditions.
• Cincinnati, Ohio
Provides abatements for 10-15 years, with the length varying by the types of
improvement. To be eligible, the property must be in a community reinvestment
area, and there is an investment threshold of $2,500 to $5,000, depending on the
type of residential property.
■ Atlanta, Georgia
Offers abatements for 10 years. Properties must be in an Urban Enterprise zone
to he eligible, The value of the abatement is reduced in the final five years of the
abatement (stair -steps down by a percentage each year).
■ Richmond, Virginia
Provides abatements for qualifying properties. Qualified single-family properties
must be at least 20 years old, and the proposed work must improve the
property's assessment value by at least 20 percent. Multi -family properties must
be at least 20 years old, and improvements should increase the property value
by at least 40 percent. They must also be in the city's enterprise zones. The
abatement is 100 percent of the improvements for the first 7 years, which then
decreases by 25 percent each year for years 8 through 10.
Abatement programs have proven to be popular and successful. As an example, a 2019
evaluation of Richmond's program by the Center for Urban and Regional Analysis at
Virginia Commonwealth University found that most of the rehabilitated properties using
the tax abatement program had declining assessed values prior to rehabilitation and
substantial increases in value afterwards — and these values increased at a higher rate
than the average citywide growth rate for each property category. Further, for most
property types, the revenues foregone in abatement were estimated to be recouped
within two to three years after the abatement expires.
Density bonuses for new projects that include work -force housing are widely used
throughout Florida. These programs have had some success. However, their range
and scope has been limited.
To significantly increase the supply of affordable housing will require stronger
measures. These include: (a) establishing minimum densities in targeted areas; (b)
allowing smaller unit sizes; and (c) waiving impact fees and utility connection charges.
53
Combining these policies with transit -oriented design in designated and appropriate
areas of the City will be effective in stimulating the supply of affordable housing.
Findings
Based on the previous discussion and the project team's research;
The City has made frequent (but not substantially different) use of economic
development incentives compared to other Palm Beach County municipalities.
The City maintains most of the same types of economic incentive offerings and
tools as its peer municipalities, with the possible exception of a CRA.
The City is an `in demand' location, and other tools that it might offer (such as by -
right zoning) are probably more important to prospective developers or
companies as are economic incentives.
Recommendations
Because of the need for affordable and/or workforce housing, the City should
investigate other tools that might be useful. One such tool would be tax abatements on
rehabilitation or other improvements of existing housing. This should include limitations
on its use that might include identifying zones within the City for its use. In addition, the
City should consider establishing transit -oriented design zones coupled with provisions
to encourage affordable housing using density bonuses, minimum density requirements,
smaller unit sizes, and waivers of impact fees and connection charges.
Given its importance, the City should continue its focus on timely review and approval of
development plans as a key growth incentive to reduce developer costs. To facilitate
timely review, the City may wish to consider minimum development plan submittal
requirements. Minimum submittal requirements will help keep consistency and integrity
of the character of development throughout the City. This may also allow the City
review to be more focused and not spent on issues that should have been dealt with by
the submitter earlier in the process,
54
psm,
WORKFORCE HOUSING
In municipalities across the country, elected officials and their staff are being pressed to
address housing affordability. Local context is critically important to designing a policy
solution, and Palm Beach County is no exception. According to American Community
Survey (ACS) data from 2019 (the most recent year available), the median value of
owner -occupied housing units in Palm Beach Gardens was $378,500. This figure is
more than 1.5 times the Florida statewide figure of $215,300.12 Given recent trends in
the housing market, it is not inconceivable to put the current figures at 10-20 percent
higher than the 2019 level.33 For example, a more recent report found the median home
price in Palm Beach County to be $466,000. Rents have followed a similar trend. Based
on 5-year estimates provided by the 2018 ACS, more than 50 percent of households in
Palm Beach Gardens were rent burdened (paying more than 30 percent of income on
housing).
Throughout conversations with stakeholders in the community, workforce and affordable
housing were raised as an opportunity for Palm Beach Gardens to ensure its growth is
sustainable and to share its exceptional quality of life with residents who wish to live,
work, and play locally. PFM sees potential to improve in this area through a combination
of incentives and policy implementation. In 2020, the City of Palm Beach Gardens
approved and adopted its workforce housing program and commissioned a study, which
was conducted by the Strategic Planning Group (SPG). A further study conducted in
2020, in collaboration with SPG, presented several solutions to increase development of
workforce housing which were then prioritized according to City needs. Top priorities
were:
■ Non-residential Square Footage Intensity Bonus
■ Residential Density Bonuses (expand to citywide)
■ Establishing a Housing Trust Fund
■ Impact Fee Waivers (or Credits)
■ Building Permit Application Fee Waivers
■ Expedited Permitting
■ Develop Accessory Dwelling Unit Regulations
■ Community Contribution Tax Credit Program
In alignment with this study, Palm Beach Gardens has initiated policies to further
incentivize the creation of workforce and affordable housing, This includes density
bonuses as part of both the City's Comprehensive Plan (three dwelling units per acre),
encouraging the development auxiliary 1 accessory dwelling units in new residential
32 U.S. Census Bureau (2019). American Community Survey 5-year estimates. Retrieved from Census Reporter
Profile page for Palm Beach Gardens, FL <http:/lcensusreporter.org/profiles/16000US1254075-palm-beach-gardens-
fi/>
33 https:llwww.zillow.com/research/zillow-2022-housing-predictions-30394/
55
MID
areas. and an additional Transit Oriented Development policy to grant a six dwelling unit
per acre incentive for workforce housing, specifically. The City is also leveraging its
workforce housing program to generate funding that can directly support building new
housing units. For example, the Avenir development committed a one-time payment of
$5 million for workforce housing and Arcadia Gardens contributed an additional
$550,000. In all, Palm Beach Gardens has incentivized or constructed approximately 32
workforce housing units, with another 55 units funded and awaiting completion.34
As an example of another local program aimed at this issue, Pafm Beach County
implemented a Workforce Housing Program through the Office of Housing & Economic
Development that does not apply to Palm Beach Gardens.
The Program, which was launched in 2004, applies to all developments with a
residential component of 10 or more units in the urbanlsuburban tier of unincorporated
Palm Beach County. Developers have the option to build the units at the stated sale or
rent prices (determined based on AMI) or pay an in -lieu fee to the Office of Housing &
Economic Development. Given the voluntary nature of the program, many developers
elect to pay the in -lieu fee, which places the onus on the County to develop most of the
units." After a very slow start, and recent program improvements, the County has now
produced 485 workforce housing units for rent and 92 units for sale in approximately 18
years.313 The experience of the County program should serve as a learning opportunity
for Palm Beach Gardens, which, despite early success in its program, still needs
thousands of units of workforce and affordable housing to meet its needs.
Findings and Recommendations
These recommendations are appropriate based on PFM's review of the
supporting study and associated reports. In particular, the density and intensity
bonuses that are applicable to the downtown development zones and TOD
district should be maximized to the degree possible. The project team
discussed the existing minimum densities in the downtown and TOD areas and
would recommend Palm Beach Gardens consider increasing those minimums to
the degree it is feasible. This should include consideration of a "tapering" of the
densities that allows for increasing the core of the TOD, and layering in lower
maximum heights and densities as the overlay approaches low-rise residential
neighborhoods.
■ As has been shown in the County example, the City should strongly consider
its role in the development process for workforce housing units. Having a
"a Figures include HUD CDBG, Sclera, and planned PGA Station units; all data on Workforce Housing units via City
of Palm Beach Gardens project team
15 https://discover.pbcgov.org/pzblpIanningIProjects-Programs/VVorkfarceHousingProgram.aspx
36 http://metropolitan.fiu.edu/research/periodic-publicatlonslrecent-reports/palm-beach-county-affordable-housing-
needs-assessment-02262021-final. pdf
56
robust Housing Trust Fund via in -lieu payments is a positive factor, however
fundraising is only part of the equation. There must be a practical approach to
building additional units of housing that are appropriately priced for all levels of
median income, whether available to rent or to buy. PFM recommends setting a
multi -year plan for creating the required housing units, including potential areas
for development, funding sources, and available incentive funding (as is needed
and appropriate for the project),
• In fact, the velocity of building new housing may be the number one factor
to consider when looking to enhance the current program. According to the
Housing Leadership Council of Palm Beach County, the County is currently
lacking about 78,000 units of affordable and workforce housing to meet market
demand. When using the City's own methodology, an estimated 27 percent of
Palm Beach Garden households are in need of a more affordable home —
translating to more than 5,000 units. Clearly there cannot be one solution to
generate this volume of housing, and not all the burden can be placed on one
stakeholder or organization. Given that Palm Beach Gardens already intends to
leverage its TOD to produce these units, solutions that take advantage of the
near -term opportunities created by significant redevelopment projects should be
prioritized. Currently, the residential capacity of three major downtown
developments in Palm Beach Gardens is 1,095 units trough that has potential to
increase via the aforementioned incentives in the TC0,37
■ PFM concurs workforce housing should be a major consideration in long-
term, strategic projects and proposals such as the potential Tri-Rail and/or
Brightline Stations and any areas that are candidates for annexation, as
described in the Workforce Housing Study. Workforce housing is likely to be
more prevalent when it is treated as a necessary component of large
development strategies rather than siloed as a separate and discrete
consideration.
• As PFM has recommended in related sections of this review, the TOD area
must be considered as a central tenet of any workforce housing strategy.
The City already anticipates and has incentivized an increase in density and
should consider additional programs or incentives that layer workforce housing
into the strategy. The Center for Neighborhood Technology tracks a Housing plus
Transportation Costs Index (H+T) which measures a municipality's median
monthly housing costs combined with transportation costs. An H+T of 45 percent
of household monthly income is considered affordable — Palm Beach Gardens'
H+T currently measures at 73 percent, where housing accounts for 47 percent,
and transportation for 26 percent.38 By including both figures, it allows for the City
17 Includes PGA station, Legacy Place, Downtown PGA and Loehmann's Plaza
38 hops:!/htaindex.cnt.org[fact-sheets/?Iat=26.8396096&ing=-80.1019144&focus=place&gid=4523#fs
6YA
to consider location as a critical factor in total affordability as well as quality of fife
for residents. It can also serve as an edification of the mobility plan and
arguments for continuation of taxes or fees related to transportation spending_
■ An additional area of consideration should be the Gardens Mall and its
potential for long-term mixed -Use re -development. CoStar data shows the
Mall as "healthy" occupancy is very high which is a positive indicator when
considering the overall state of the retail market. This takes it mostly off the table
as a near -term solution, though the situation is worth monitoring as the loss of
one or two anchor tenants could quickly change the trajectory.
An additional hurdle to Gardens Mall redevelopment is the ownership structure.
Anchor stores, such as Sears, each own their own store sites and parking areas.
Forbes / Taubman owns and leases the core mall spaces. There are existing
covenants between Forbes / Taubman and the anchor tenants requiring the core
mall and anchor stores to continue operating while occupying mall space. Any
proposal to make use of the substantial surface parking areas would be complex
and potentially contentious, requiring resource -intensive negotiations to assure
continued operations during periods of construction/demolition.
• Given all of this, PFM believes additional study is needed to outline the
potential uses and benefits to the community from densification on
Gardens Mall property. It is possible that a creative developer, armed with the
results of such a study, could demonstrate significant increases in foot traffic
resulting from residential and potentially hotel activity that is built above parking
areas and/or garages. Preliminary renderings of densification on portions of the
mall site have been prepared. These should be revisited with a specific
focus on providing workforce housing meeting the 60 to 120 percent AMI
income level.
■ The City adopted the Workforce Housing Ordinance in late 2020, during the heart
of the Covid pandemic. New policy implementation has been greatly challenged
during the period immediately following adoption as a result. Nonetheless, as
Palm Beach Gardens significantly expands workforce employment opportunities,
the city becomes increasingly vulnerable to a loss of momentum in development
and economic expansion, if complementary workforce housing cannot be located
in the city or within close proximity to new employment opportunities.
Implementation of the roadmap provided in the workforce housing ordinance
should be emphasized to reduce the city's vulnerability in this area.
58
DOWNTOWN DEVELOPMENTS/PGA STATION, FPL SITE, SALE
OF LEGACY PLACE, AND LOEHMANN'S PLAZA
The one-half mile TOD area surrounding the proposed Tri-Rail station contains these
four development/redevelopment projects: PGA Station, Downtown PBG, FPL Site,
Legacy Place, and Loehmann's Plaza. The combined development potential for these
projects is expected to include approximately 1,100 residential units, 1.5 million square
feet of office space, 425,000 square feet of retaillrestaurant space, and 400 hotel
rooms. These are characteristic of Urban densities. There is a considerable amount of
additional proposed and under construction mixed use and residential development
within one to three miles of the PGA station site.
The employment generated by these four TOD developments could range from 8,500 to
10,000 new jobs. This could potentially generate demand for an additional 7,500 to
9,000 new residential units. Much of this additional residential capacity will be met in a
one -to -three-mile radius. If the Tri-Rail or Brightline station stop is finalized, the rail
access alone will generate need for approximately 1,000 additional residential units,
pushing the TOD residential demand to as high as 10,000 units needed. This suggests
the immediate TOD area could be expanded to one mile and generate a need for
substantial additional residential development within an expanded TOD area. These
metrics are important to understand, recognizing while the existing TOD area is
approved for higher density, market forces will support even higher residential densities
than have been approved to date. Accommodating portions of this additional demand
within the TOD area can occur with additional redevelopment, which is allowable at 32
units per acre in the TOD area.
As well, a combined service rail stop that allows direct transfer from Tri-Rail to Brightline
could be transformational for the City, further enhancing demand in the TOD area. The
City should be encouraged to think expansively and consider significant upside potential
to the downtown TOD/Mobility area, beyond what is currently envisioned as a maximum
potentia I.
Legacy Place is immediately adjacent and to the east of PGA Station, on the east side
of the railroad tracks. The site is a retail center and includes more than 400,000 square
feet of retail space, constructed in 2007. Legacy Place consists of 42 acres, of which
more than 30 acres is surface parking area. Legacy place was sold to new owners in
Q4, 2021. Because the site is one of the core areas of the TOD and because of the
recent ownership change, there is expectation development/redevelopment plans will
be forthcoming for the site. This is a cornerstone of the TOD area and appears to be in
the preliminary stages of redevelopment planning. TOD related market opportunity at
this site includes walkability, existing retail, and significant density enhancements.
59
The Palm Beach Gardens downtown urban core is fast becoming the preferred modern
suburban office node in Palm Beach County. Office tenants throughout Palm Beach
Gardens appear to be concentrating in medical services, high-technology, and business
office service and finance. By contrast, the central business district in downtown West
Palm Beach has focused more lately on financial and legal tenancy, driving per square
foot office rental prices higher in the West Palm central business district (CBD).
The price point shift in the West Palm CBD and tenant concentration there has created
a suburban office market opportunity in Palm Beach County. Palm Beach Gardens
appears well positioned to capitalize on this emerging opportunity. Average central
business district office space rent in West Palm Beach is almost 46 percent higher than
the average central business district rent in Palm Beach Gardens. This translates into
rental rates that are $16 per square foot higher in West Palm CBD ($58) than rents in
Palm Beach Gardens CBD ($42), among the newer office buildings. This is a dramatic
price differential which places Palm Beach Gardens at a significant competitive
advantage for certain types of office tenants. As a result, office vacancy is currently
considerably higher in the West Palm CBD than in the Palm Beach Gardens CBD.
In the coming few years as office occupancy finds a new normal in the post CGVI❑
pandemic era, we can expect to see some cyclical softening in West Palm CBD office
rental rates. Short term historic office rental data from Costar indicates this is already in
evidence. However, longer term structural changes in demand may allow West Palm
CBD rates to continue to escalate, keeping the wide gap in office rental rates between
Palm Beach Gardens and West Palm Beach. To the degree development costs or
permitting costs rise and transportation access and other quality of life measures fail to
maintain the strong momentum in gains being made in Palm Beach Gardens, the
competitive office market positioning could become at risk in Palm Beach Gardens.
Rental rate erosion has not taken hold in Palm Beach Gardens at present. There is a
clear advantage in Palm Beach Gardens for some office users.
Maintaining the competitive positioning for office occupancy and employment gains in
the Palm Beach Gardens CBD, plus increasing residential densification in the TOD and
Mobility Fee areas will be paramount to supporting transit, meeting and maintaining the
economic diversification momentum, and supporting workforce housing demand with
appropriately priced residential development.
.N
. rri_ ��`. - �.. - _ may. ~ � • ��S -
Figure T: PGA Station Site — Looking West with Densification Rendering
V
Source, Treasure Coast Regional Planning Council
Findings
■ The current potential of these four development projects is very large, in terms of
residential units, office space, retail/restaurant space, and hotel rooms.
■ There is also the potential for significant new employment from these
developments.
■ Palm Beach Gardens has some competitive advantages regionally. This includes
but is not limited to competitively priced office space cost per square foot that can
be a catalyst for some of this development; and close proximity to 1-95 which
reduces transportation and commute times, all things being equal
■ This development will also be important for related projects, such as the rail
station.
Recommendations
In light of anticipated increased residential demand coupled with a strategic competitive
suburban office advantage, Palm Beach Gardens should consider expanding the TO❑
area and sharply increasing allowable densities, beyond current limits, within the TOD
62
area. Existing density within the TOD can accommodate some of the expected
residential workforce housing demand if maximum redevelopment densities are
achieved. Minimum density thresholds within the TOD can be considered as part of
this.
63
THE TRANSFORMATIONAL VALUE OF A PALM BEACH
GARDENS CENTRAL RAIL STATION
Significant infrastructure investments help communities and places accommodate future
growth and development. As such, bridges, highways, and rail lines traditionally have
been the catalysts allowing communities to expand and diversify. Palm Beach Gardens
has a transformational opportunity to develop central rail stations serving both Tri-Rail
and Brightline; or serving a third future commuter rail service on the FLCIBrightline
track.
The development of a Palm Beach Gardens Central Station ("PBGCS") creates a
compelling business and residential location with either direct or transfer station access
to the higher speed: Brightline service. PBGCS may provide direct or transfer link
access to Brightiine high-speed rail to Orlando International Airport's station in less than
two hours and to Miami's central station in one hour. Tri-Rail connects PBGCS
throughout South Florida.
Development of PBGCS will create strong demand for the surrounding and near -by
properties, which will stimulate development and redevelopment. With proper planning
and the embrace of public -private partnerships, the City could foster a model for transit -
oriented design. Furthermore, PBGCS will provide City residents with unparalleled
transportation convenience while enhancing property values.
There are very few transformational opportunities of the scale of a PBGCS to foster
economic development. While the cost and difficulty of its development are substantial,
the rewards could be even greater.
The following map identifies the location of the proposed train station and other key
components of the City:
64
Figure S: Location: of Palm Beach Gardens Central Station
Currently, the tri-rail line terminates 3.5 miles north of West Palm Beach at Mangonia
Park, near 45th Street. The Mangonia Park station is approximately 1 mile from the
medical complex which includes the 280-bed HCA Florida JFK North Hospital, 124-bed
adjoining psychiatric facility and medical office space. Beyond this point to the north a
rail crossover is needed to bring the CSx Tri-Rail line onto the eastern -most Florida
East Coast (FEC) rail line to serve the PBGCS. The FEC line runs adjacent to Dixie
Highway (FL 811) in this area and is the rail line adjoining the PGA Station site in Palm
Beach Gardens. The crossover, known as the Northwood Crossover, is located just 1
mile north of the West Palm Station. The Northwood Crossover located at 25th street is
now completed. With proper permission and a user lease rental agreement between
Tri-Rail and the FEC line owners, Tri-rail trains can run north of West Palm Beach to
Palm Beach Gardens and beyond on the FEC line. A funding commitment for the user
lease agreement is needed for Tri-rail to access the FEC line. This funding commitment
may require state and county participation in addition to a city share of the commitment.
65
The FEC line is the same track as the Brightline intercity rail. Having Tri-Rail commuter
train service with direct access to Brightline rail station service is a key regional
infrastructure component. This would allow for increased ridership for both tines,
effectively completing important regional linkages for both systems. The Northwood
Crossover also allows for more efficient short haul train travel within Palm Beach
County.
Figure 9: Potential Rail Plan
arM# �CSX rcU
-n 32nd St
31st 5t
m 30th Ct 1�T1 ` 0 31st St
30th St � C7 �
- r 7
Q 7Rth At
Service 5t 29th
w T.Chn�Pt `o
st
28 ft
v
t
�
7
j�
1
Source: Florida DOT, District Four
2�h
23rd St
d St
27th St
r 2ft
r
25th St
rn
m $
' a [ 24th St
p c - Northwood Rd
CD ED
22nd St
Linco PHASE 2
21 New Northwood Connection
2nth St
22nd St
s 21s! 5t
4
N FF=odaliYard
B
wx„ int
66
Two important funding steps are needed to make the service to Palm Beach Gardens
feasible. First, there is the need to fund operational costs. This includes track use
lease costs and annual operations to run the trains themselves. Second, there is the
need for capital construction funding for the PGA train station.
It is estimated that combined lease and operational costs may reach $35 million
annually. These costs would not all be borne by Palm Beach Gardens, but most likely a
not insubstantial portion would. Negotiation with operating parties is needed to
determine the share of City costs. Funds might be generated by an additional sales tax
(likely not until 2026 if a referendum is passed) or other local funding sources_ A
proposed share and funding mechanism needs to be identified.
Capital construction costs for the station are estimated to reach near $fib million for five
stations along the northern Palm Beach County route; this suggests that on average
each station cost could reach $12 million. These funds could be generated using
mobility fees; however, it is unlikely the PGA Station project alone and the remaining
undeveloped areas within it could generate sufficient mobility fee or other tax increment
finance (TIF) funds.
Findings
The PBGCS has the potential to be a transformational project for the City and region.
There are several potential mechanisms to generate sufficient funds to help fund the
train station. These include but are not limited to:
■ Increase the geography covered by the mobility fee district (including future
annexed western growth areas).
■ Expand TOD district to one mile from PGA Tri-Rail Station.
■ Substantially increase the allowable development density within the district above
existing high density (32 du ac) allowance.
■ Consider minimum density thresholds as a means to assure needed density.
■ Resolve lingering issues between City and County regarding mobility fees in an
effort to expand mobility fee concept countywide to help support the northern
sector of the County_
■ Institute a TIF funding mechanism potentially within 3-miles of the train station.
■ Ensure the Palm Beach Gardens Mail is included within the new TIF district in
coordination with existing Mall ownership, in conjunction with a phased approach.
[:ri
MID
Dramatically expedite permit review time within this district through reduced
allowable review times and increased form and function predictability for site
plans and additional staff to support policy implementation and development
review.
• Expedited permit review can take place provided minimum application submittal
standards are met.
There are trade-offs in instituting these mechanisms. Foremost among them is allowing
less government control over the process in exchange for maintaining and accelerating
the good trajectory the city is on today. Losing momentum in the acquisition and
development of regional infrastructure components can have permanent long-term
consequences for the fiscal and economic health of the city.
Recommendation
From the project team's perspective, this project is a good example of an opportunity to
develop a public -private partnership (P3) for development and operation of a PBGCS. It
is notable that infrastructure project funding has been a fast-growing segment of Pas in
the U.S. and around the world. There is an opportunity to tap into needed additional
capital and development expertise that can get this project off the ground (and onto
rails).
P3 projects require strong support throughout the impacted government and business
communities. As a recent review of successful P3 projects notes, each party must be as
committed to achieving the others' goals as they are to their own goals.39 One of the
important characteristics of the current City administration is a strong working
relationship with community business and civic organizations. It is likely that that
partnership can be put to good use for this project. The project team believes that the
necessary interest exists to identify the financial resources necessary to undertake this
project in the near future.
39 "What Successful Public -Private Partnerships Do," Dlyse Maltin, Harvard Business Review, January 9, 2019,
accessed electronically at htt s://hbr.or l2019l01lwhat-successful- ublic- mate- artnershi s-do
MIXED -USE DEVELOPMENTS
Careful planning and consideration have gone into the creation of a distinct mixed use
land use category and designation of mixed -use locations. In general, mixed
developments promote horizontal and vertical integration of diverse land uses,
enhanced densities and generate fewer roadway vehicle trips due to internal capture of
automobile trips due to the synergies between mixed land uses.
There are nearly 6,000 acres of lands within the City designated as mixed use. Of
these lands, 80 percent are comprised of the Avenir mixed use development. Avenir is
a large-scale development project in the western areas of the city. It's development
entitlements include a complement of uses designed to integrate the live/learn/work/play
community design.
Another 12 percent of mixed -use lands, some 700 acres, are located east and west of I-
95, south of Donald Ross Road on the northern perimeter of the City, anchored by the
planned Alton Commercial Industrial site. This leaves just under 500 acres designated
elsewhere throughout the City in mixed use lands on a dozen or so separate smaller
parcels ranging in size from 4 to 100 acres.
Most of the mixed -use land designations in the City are planned with approved
development entitlements or are built out and represent redevelopment opportunities.
Significantly, these lands represent some 17 percent of the municipal land area and
define the current extent of mixed -use development opportunity.
In the case of future redevelopment, conversion of existing parcels to mixed -use
designations should be encouraged, to the degree there is supportable demand for on -
site non-residential Uses and to the degree those uses will enhance residential
development. The higher density obtainable in the mixed -use designation can provide
opportunities for more moderately priced workforce housing.
Mixed use areas are also locations where innovative and alternative development types
should be encouraged, Building product types are not static and in the wake of the
pandemic and accompanying technological changes it can be expected there will be
new forms of hybrid live/work homes and buildings. For example, the home -office
concept may become more prominent and may expand into a wider array of business
types, beyond the need for a desk and computer for some home -office workers. This
may require larger units or units with a higher percentage of office/workspace within the
unit than currently allowed. Mixed -use areas can be appropriate locations to consider
increased flexibility for new and innovative building types. Zoning code flexibility is
important to consider to allow the newest most efficient forms of live -work alternatives to
take hold.
69
Figure 1 0: Map of Mixed -Use Lands in Palm Beach Gardens
Findings and Recommendations
■ Mixed use land use and development is a means to bring to fruition and
operationalize several City initiatives. These can include workforce housing
development, TOD and mobility principles and enhanced livelworklplay
opportunities which decrease automobile trips.
■ Most of the mixed -use land within the City is contained within the Avenir mixed
use development.
■ Most of the remainder are anchored by the planned Alton Commercial industrial
site.
■ Conversion of existing parcels to mixed use designations should be encouraged.
■ Mixed used areas can be locations to consider new and innovative building
types.
■ As a result, zoning code flexibility is important to consider.
70
■ Annexation of additional western area lands should be considered for mixed use
land use categories and considered for inclusion in the mobility fee area
71
PIN
RECREATIONAL AMENITIES EXPANDED AND UPGRADED
Palm Beach Gardens has become a highly successful statewide sports event venue,
with some national exposure and event activity. The combined effects of PGA golf,
MLB spring training and baseball grapefruit league play, natural coastal/ocean amenity,
and excellent weather have combined to position Palm Beach Gardens as a highly
favored and successful sports venue. The Palm Beach County Sports Commission has
been structured to support these efforts and is successfully doing so.
Recreational amenities in Palm Beach Gardens reflect two components: enhanced
quality of life for residents with indoor and outdoor national class facilities; and sports
tourism, and attraction of regional, statewide, national, and international sports and
cultural events. These events drive and supplement the tourist and visitor industry in
Palm Beach County. The visitor industry in the County includes seasonal second
homes, attractive beaches, business conventions, equestrian events, major league
baseball spring training and farm team play and other scenic and outdoor recreation
activities including boating and scuba diving. Sports events contribute substantially to
the visitor industry supporting local hotels and restaurants.
The City works closely with the county Sports Commission such that sporting events
and related tourism does not limit access, enjoyment or monopolize capacity utilization
for residents of extensive recreational amenities in the City.
Key facilities in the City contribute to a highly successful sports and recreation
infrastructure which serves city residents as well as tourist related businesses. These
facilities include the Gardens North County District Park, Palm Beach Gardens Tennis
and Pickleball Center, Gardens Park, Burns Road Community and Aquatic Center, PGA
National Park, and Mirasol Park.
Recommendations
To further the potential success of these facilities and position the City to take better
advantage of national and international level events, additional facility infrastructure
development should take place. The additional facilities infrastructure needs include
development of a state of the art multipurpose community center and an increased
number of rectangular multi -purpose fields. These fields can accommodate soccer,
lacrosse, and field hockey events. An indoor sports plex arena is needed to create a
facility for indoor mat sports such as wrestling and gymnastics, and martial arts plus
basketball. Finally, to allow the potential events and venues to accommodate multi -day
collegiate or national level events, indoor locker room space is needed. Locker room
space is key to the expansion of all mentioned events to the advanced national and
international or collegiate level.
72
73
ANNEXATION INITIATIVES
Annexation is important for consistency, efficiency, and continuity of government service
delivery. Having irregular municipal boundaries can cause confusion as to jurisdiction
and delay important service response times. There are also instances where County
services are not easily delivered to these areas, making municipal services the
preferred option for maintaining service standards in the county. Annexation is also a
way to bring important planning concerns and land use management and control to
areas bordering the city. Such planning and land use management helps maintain the
quality of fife within the City. For these and other reasons annexation is an important
tool.
In the western areas of there are four areas the city is considering for annexation.
These include areas known as Mecca Farms (Areal 8), Caloosa (Area 19), North Palm
Beach County General Aviation Airport (Area 20), and Palm Beach Park of Commerce
(Area 25). These are generally areas which are, at present, undeveloped or have low
density/minimal development. The City has prepared a preliminary Annexation Report
for each of these areas detailing the current fiscal conditions associated with taxation
and service delivery to these sites.
Mecca Farms is owned by South Florida water management District. Mecca farms is
undeveloped at present and expected to be used for water or environmental
conservation purposes.
To better understand fiscal implications of annexation, fiscal analysis of buildout
scenarios should be examined. This would include alternative development scenarios
for higher density and lower density, to bracket the range of potential future fiscal
conditions.
Caloosa is largely developed with residential housing at very low densities,
approximately 1 unit per 5 acres, with average property value in excess of $300,000 per
unit. Annexation of this area is fiscally positive for the City under present conditions.
These conditions include private roads not maintained by the City and utilities available
through well and septic tank. It is important to consider whether road maintenance and
water/wastewater utilities will continue to be delivered in the future according to current
conditions. If road maintenance or water/wastewater utilities will be delivered by the city
in the future, fiscal costs to the city could be significantly higher than currently
estimated.
Preliminary fiscal analyses at the Airport and Park of Commerce should consider
service requirements for existing non-residential uses. There are known calls for
service at each location. Much of the Airport lands are in public ownership limiting
74
future ad valorem tax generation potential. Should annexation take place, a transfer of
ownership or disposition/private sale of some airport lands should be considered.
The airport is located on the Bee Line highway, with rail frontage making this a potential
future multi -modal warehouse distribution site with air, rail, and truck access.
The Palm Beach Park of Commerce appears to be roughly 30 percent built out. It has
rail access and rail sidings serving the existing warehouse facilities.
Figure 11: Map of Future Annexation Locations
Findings and Recommendations
There are some logical places that could benefit both the City and annexed residents. In
some areas, the City (because of mutual aid agreements) is already providing services
to these areas.
The 10-year financial plan already takes into consideration the costs to the City to
provide services to annexed areas and how that would impact the annexed taxpayers.
In some instances, this can be both a `win -win' for residents and the City. Those
identified areas should be considered opportune locations for conversations about
annexation.
Wl
MR -
Of course, prior to annexation initiatives, even more rigorous fiscal analysis should be
conducted based on the build out scenarios for both the Airport and the Park of
Commerce. Buildout scenarios should consider future land use designations,
development opportunities/alternative and future anticipated tax base and service
requirements, based on the build out conditions in each location. This will inform the
City as to the long-term fiscal implications of the annexation prior to annexation taking
place.
Similar fiscal analyses of remaining eastern annexation areas should also take place
prior to annexation. These analyses should consider existing development conditions
both residential and non-residential uses as well as alternative buiidout scenarios
including status quo conditions, redevelopment alternatives and impact on surrounding
uses whether positive or negative. Annexation of lower value areas can create a fiscal
drag and can be considered in conjunction with higher value annexations. This may
offset annexation costs or revenue needs helping to maintain fiscal balance, while
making delivery of urban services more efficient. Annexation helps eliminate pockets or
Isiands" which are underserved, not currently served, or inefficiently served by
municipal City services. This can significantly improve quality of life throughout the City.
Smaller eastern annexation areas should be examined for ownership patterns. Public
outreach is important in areas where high levels of parcelization and large numbers of
property owners exist in a comparatively small area. The city conducts public outreach
to help build public support in annex areas where high parcelizationlownership exists,
and this is important to a successful annexation process.
76
AILTIU►_ILVA
Throughout the analysis, several recurring themes have presented themselves, even in
what are sometimes disparate topic areas. These include:
City `curbside' appeal.
The City has a broad array of attractive residential neighborhoods, commercial
amenities, and city services. It provides abundant recreational, cultural, and other
city -sponsored activities, and there are still many opportunities for continued
opportunistic growth. City surveys and other benchmarks are strongly positive,
and residents continue to 'vote with their feet,' as evidenced by continued strong
population growth.
■ Strong commitment to excellence in City government.
Palm Beach Gardens has earned and maintained the highest possible municipal
credit rating from all the major credit rating agencies. its budget document and
annual financial reports have also been noted for their excellence in government
reporting. The City leadership has instilled a team -oriented approach to
managing the city, and this hands-on commitment was noted and evident
throughout the project on -site meetings and discussions. The City's leadership is
committed to forward -looking planning and implementation, and past results are
indicative of their success.
■ Significant new development that presents both great promise and
challenges.
There is significant private and public development currently underway that will
significantly impact the City's commercial, residential, and recreational fabric for
years to come. The FPL headquarters are an example of new commercial
construction that will bring high paying jobs into the City, while the Avenir
residential development is an example of City outer expansion that will provide
housing and related amenities to a broader part of Palm Beach Gardens. The
Jack Nicklaus Group designed 18-hole municipal golf course in that area
exemplifies the continued growth in city -provided recreational services.
Of course, this continued growth will present challenges, including transportation
and other infrastructure. Demand for City services will also require a continually
growing tax base. In this respect, the City's focus on maintaining a stable millage
rate is important, as are maintaining cost effective methods to pay for and
provide services. The City has shown foresight in several areas in the past,
including identifying and implementing strategies to diversify the City tax base.
Going forward, other strategies, such as selective annexation initiatives and
continued Western growth, will likely be important for continuing tax base growth.
77
■ Interconnected nature of community and economic development projects.
The City presented an interesting mix of community and economic development
topics for the project team to consider. While each was examined on its own, the
discussion has often pointed out the interconnected nature of initiatives the City
is either considering or in the process of implementing. While it is generally
necessary for any organization to triage projects — as there are nearly always
initiatives that exceed the available staff hours in the day — it is also the case that
in Palm Beach Gardens, many of the issue areas discussed are reliant on
advances in other initiatives. Very few of the efforts previously discussed can be
siloed and exist solely on their own merits.
That is the challenge with new development underway. It helps to explain why,
as examples, the TOD district is closely connected to efforts to increase urban
density, and why a train station in the City would be important for those efforts as
well as supporting major projects like the FPL campus and redesign of urban
shopping centers that feature acres of prime space currently devoted to parking
lots. Each of these creates synergy, and they have the potential to build upon
one another.
The City has already demonstrated this integrated approach to community
development and growth. While the importance of Western growth has been
discussed, the projected "growth pipeline" within the TGD, downtown, at
Loehmann's Plaza, the FPL site, and PGA Station are also notable. The ability to
focus its resources on multiple different opportunities ties back to the City's
stable financial position, which further underscores the need to maintain financial
stability to help ensure sustained and successful growth strategies.
• Willingness and ability to be opportunistic.
The City has done an excellent job of attracting activities and events, as well as
new residents and commerce. It has seized on opportunities, and this has served
the City well. In discussions with City leadership, they express great confidence
that current initiatives will reach fruition, even if some of the required resources
have not been identified. From the project team's perspective, the strong
financial planning systems and processes that are in place give the City a certain
amount of latitude and the ability to `think big' in its current economic and
community development efforts.
APPENDIX A: FINANCIAL MANAGEMENT POLICIES
Operating Budget
• The City will present the City Council and the residents of Palm Beach Gardens
with a balanced budget, a budget in which planned funds available equal planned
expenditures, for each fiscal year beginning October 1 st.
■ The City will pay for all current expenditures with current revenues and fund
balance. The City will avoid budgetary procedures that balance current
expenditures at the expense of future years, such as postponing expenditures,
underestimating expenditures, overestimating revenues, or utilizing short-term
borrowing to balance the budget.
• The budget will provide for adequate maintenance and repair of capital assets
and for their orderly replacement.
• The budget will provide for funding of the Police, Fire, and General Employees'
defined benefit retirement plans based on the annual actuarial reports.
■ The City will maintain a budgetary control system to help it adhere to the budget.
• The Finance Department will prepare monthly reports of revenues and
expenditures for management purposes. In addition, quarterly financial reports
will be prepared for the Council.
• The City will update expenditure projections for each fiscal year. Projections will
include estimated operating costs of future capital improvements.
• Where possible, the City will integrate performance measurement, service level,
and productivity indicators within the budget.
• The City will aggressively seek state and federal funds that are available for
capital projects.
Capital Improvement Program (CIP) Policies
■ The City will develop ten-year capital projections and update them annually.
■ The City will enact an annual capital improvement budget based on the multi-
year CIP.
• The City will make all capital improvements in accordance with the adopted CIP.
■ The City will coordinate development of the CIP with development of the
operating budget. Future operating costs associated with capital improvements
will be projected and reported in the CiP and operating budget.
■ The City will use intergovernmental assistance to finance only those capital
improvements that are consistent with the CIP and City priorities.
• The City will identify the estimated acquisition and operating costs and potential
funding sources for each capital improvement project proposal before submittal
to the City Council for approval.
Debt Policies
• The City will confine long-term borrowing to capital improvement projects.
• When the City finances capital projects by issuing debt, it will repay the debt
within a period not to exceed the expected useful life of the project.
■ Where possible, the City will use revenue bonds instead of general obligation
bonds.
79
■ The City will follow a policy of full disclosure on every financial report and bond
prospectus.
■ The City will utilize the form of borrowing that is most cost effective, including not
just interest expense but all costs, including upfront costs, administrative and
legal expenses, and reserve requirements.
Revenue Policies
• The City will maintain, as permitted by state law, a diversified revenue base to
mitigate the effects of short-term fluctuations in any one revenue source.
■ The City will estimate its annual revenues by a conservative, objective, and
analytical process.
• The City will project and update annually revenues for the next ten fiscal years,
as part of the CIP preparation process.
■ Annually, the City will calculate the full direct costs of activities supported by user
fees and consider such information when establishing user charges.
• Non -recurring revenues will be used only to fund non -recurring expenditures.
Investment Policies
• Disbursement, collection, and deposit of all funds will be appropriately scheduled
to ensure the timely payment of expenditures and investment of funds.
■ The accounting system will provide regular information concerning cash positions
and investment performance.
• Governmental accounting principles distinguishes Fund Balance classified based
on the relative strength of the constraints that control the purposes for which
specified amounts can be spent. Beginning with the most restrictive constraints,
Fund Balance amounts will be reported in the following categories:
o Non -spendable Fund Balance: Amounts that are not in a spendable form
(e.g., inventory), or are legally or contractually required to be maintained
intact (e.g., principal of an endowment fund).
o Restricted Fund Balance: Amounts that can be spent only for the specific
purposes stipulated by external parties either constitutionally or through
enabling legislation (e.g., grants or debt covenants).
a Committed Fund Balance: Amounts that can be used only for the specific
purposes determined by a formal action of the City Council. Commitments
may be changed or lifted only by referring to the formal action that
imposed the constraint originally.
o Assigned Fund Balance: Amounts intended to be used by the City for
specific purposes. Intent can be expressed by the City Council or by a
designee to whom the governing body delegates the authority. In
governmental funds, other than the General Fund, assigned balance
represents the amount that is not restricted or committed. This indicates
that resources in other governmental funds are, at a minimum, intended to
be used for that fund (e.g., Impact Funds).
a Unassigned Fund Balance: Includes all amounts not contained in other
classifications and is the residual classification of the General Fund only.
Unassigned amounts are the portion of Fund Balance which is not
obligated or specifically designated and is available for any purpose.
■ Minimum Unassigned Fund Balance: It is the goal of the City to
achieve and maintain an Unassigned Fund Balance in the General
Fund at fiscal year-end of not less than 17 percent of expenditures,
which represents approximately two months' operating
expenditures. If the Unassigned Fund Balance at fiscal year-end
falls below the goal, the City shall develop a restoration plan to
achieve and maintain the minimum fund balance.
■ Use of Unassigned Fund Balance: Disbursement of funds from
Unassigned Fund Balance in excess of the 17 percent target shall
be authorized by an ordinance of the City Council and may be
approved by inclusion in the approved annual budget (and
amendments thereto). These funds shall be used only for non-
recurring expenditures such as capital, grants, one-time programs,
or for emergency and disaster relief, or as a budget stabilization
reserve in the case of revenue declines, unanticipated
expenditures, or unfunded mandates.
However, should a projected budget surplus exist in any given year,
such surplus may be used to offset operating expenses in the
subsequent year, provided that such usage does not reduce
Unassigned Fund Balance below the 17 percent target. Such use of
Unassigned Fund Balance shall represent an Assignment of Fund
Balance and be at the discretion of the City Manager when
preparing the annual budget, subject to approval of the budget
adoption ordinance by Council. After completion of the annual
audit, the projected budget surplus will be compared to the actual
surplus, and appropriate budget amendments made to adjust the
budgeted Unassigned Fund Balance to actual. if the budgeted use
of Unassigned Fund Balance causes the balance to fall below the
17 percent target, the Finance Administrator will so advise the City
Manager and City Council for the necessary action to be taken to
restore the Unassigned Fund Balance to the target level.
Disbursement of funds from Unassigned Fund Balance below the
17 percent target are to be used only for emergency and disaster
relief or as a budget stabilization reserve in the case of revenue
declines, unanticipated expenditures, or unfunded mandates. The
City shall develop a restoration plan and attempt to replenish these
funds over a period not to exceed five years.
The responsibility for designating funds to specific classifications shall be as follows:
■ Committed Fund Balance: The Council is the City's highest level of decision -
making authority, and the formal action that is required to be taken to establish,
81
modify, or rescind a Fund Balance commitment is a resolution or ordinance, as
appropriate and approved by the Council.
Assigned Fund Balance: The City Council has authorized the City Manager as
the official authorized to assign Fund Balance to a specific purpose as approved
by this Fund Balance Policy.
■ Order of Expenditure of Funds: When multiple categories of Fund Balance are
available for expenditure (e.g., a project is being funded partly by a grant, funds
set aside by the Council, and Unassigned Fund Balance), the City will start with
the most restricted category and spend those funds first before moving down to
the next category with available funds.
82
APPENDIX B: NON -FINANCIAL MANAGEMENT POLICIES
Comprehensive Plan Policies
• Continue to ensure a high quality living environment through a mixture of land
uses that will maximize Palm Beach Gardens' natural and manmade resources
while minimizing any threat to the health, safety, and welfare of the City's citizens
that is caused by incompatible land uses and environmental degradation, by
maintaining compatible land uses which consider the intensities and densities of
land use activities, their relationship to surrounding properties and the proper
transition of land uses.
• Maintain level of service standards which shall accommodate sustainable growth
through financially feasible improvements to develop a convenient, safe, and
energy efficient multi -modal transportation system for all persons living in and
traveling through the City.
• Provide sustainable, safe, and sanitary housing which meets the needs of all
existing and future Palm Beach Gardens residents.
• Provide adequate central sanitary sewage facilities for residential and non-
residential development and redevelopment in the City.
■ Ensure the social, economic, and environmental resources of the Palm Beach
Gardens coastal planning area are protected, maintained, and enhanced through
the regulation of development activities that would damage or destroy such
resources.
■ Preserve, manage, or restore the natural resources in the City to ensure their
sustainability, high quality, and critical value to the quality of life in the City of
Palm Beach Gardens.
■ Provide adequate sustainable park, recreation and open space facilities and
areas offering a broad range of activities, convenient access, appropriate
improvements, and sound management to all current and future citizens of Palm
Beach Gardens with active and passive recreation opportunities in the interests
of personal health, entertainment, and constructive use of leisure time.
■ Establish effective coordination measures among all pertinent public and quasi -
public entities s❑ to best maintain Palm Beach Gardens' quality of life and
sustainable use of resources.
• Provide adequate facilities to ensure the provision of an effective and sustainable
public safety program.
■ Assist in providing for future availability of public -school facilities consistent with
the adopted level of service standards. This goal shall be accomplished
recognizing the constitutional obligation of the School District to provide a
uniform system of free public schools on a countywide basis.
■ Achieve sustainable economic development through a balanced and diversified
economy which is compatible with the City's quality -built environment and
protects important natural resources.
83