The proposed budget for the City Center Redevelopment Area (RDA) for Fiscal Year 2016/17 has been prepared to coincide with the overall City budget process, and is being presented today to assist in providing a comprehensive overview of the district. Please refer to the attached Exhibit A for the proposed budget details.
Revenues
Based on the 2016 Certificate of Taxable Value from the Property Appraiser’s Office, the preliminary value of property in City Center is $5,612,744,843; an increase of 16% over 2015, marking the sixth year in a row values have increased following two years of decline. However, as in previous years, the City has received correspondence from the County, advising of the finalization of the tax roll for the prior year, which in the case of FY 2014/15, reflects a decrease from the preliminary valuation for the same year and will result in a corresponding adjustment/reduction in TIF revenues totaling $3,111,000 for FY 2016/17.
Additional sources of revenue include a ½ mill levy in the amount of $2.5 million, to be set aside for the Children’s Trust pursuant to an Interlocal Agreement, dated August 16, 2004 between the RDA, the City of Miami Beach and Miami-Dade County; and an estimated $60,000 in interest income.
Expenditures
Project-related expenses account for approximately $10.9 million which includes $4.5 million to be allocated for community policing initiatives in City Center to continue to provide enhanced levels of staffing and services throughout the area, and $6.2 million for maintenance of RDA capital projects. There is no additional funding for on-going and planned capital projects in City Center in the FY 2016/17 Budget due to the RDA extension for the renovation and expansion of the convention center.
Administrative Expenses total $1.1 million, which includes a management fee of $984,000 which is allocated to the General Fund to pay for direct and indirect staff support for the RDA; $23,000 for audit fees; and $92,000 for capital renewal and replacement projects under $25,000.
The budget includes $21.6 million in debt service payments to cover debt service costs related to the Convention Center bonds, which were issued in 2015. $14.9 million is budgeted in Reserve for Contingency/Debt Service. Funds in the reserve over and above the annual debt payment can be used to finance any potential shortfalls in the RDA fund or pay down the Convention Center bonds early, but not prior to FY 2023/24.
Reserve line item expenditures include those items that, pursuant to the existing Bond Covenants, may only be expended once the annual debt service obligations have been met. These include the County’s administrative fees, equivalent to 1.5% of its respective TIF payment; and the corresponding contribution to the City’s General Fund, equivalent to 1.5% of the City’s share of its TIF payment; and the remittance of the ½ mill tax levy back to the Children’s Trust.
The revenues and expenses associated with operations of the City Center area Shops and Garages are presented as separate schedules in order to eliminate any perception that proceeds from the facilities’ operations are pooled with TIF and other Trust Fund revenues:
Anchor Shops and Parking Garage
Garage revenues at the Anchor Garage are projected at approximately $3.8 million, with operating expenses, (including contractual revenue-sharing obligations with Loews and general fund administrative fees) of approximately $3.8 million. The Anchor retail operation is expected to generate approximately $1.3 million in revenues, with operating expenses totaling approximately $639,000, resulting in a projected reserve of $256,000, after accounting for a $389,000 budgeted transfer to the Pennsylvania Avenue Garage/Retail to offset the RDA’s estimated costs associated with the retail and parking operations.
Pennsylvania Avenue Shops and Garage
In consideration of the fact that the Pennsylvania Avenue Shops and Garage was built by the RDA on City-owned property, the operation of the facility has been structured in the form of a ground lease between the City and the RDA, providing terms for both the Garage and Retail operations. The garage operations include base rent and an administrative fee, consistent with that of the Anchor Garage, Parking’s operational fee, and revenue sharing between the City and the RDA. The Retail operations also include base rent and an administrative fee, as well as a retail lease rate based on 2010 retail market cap rates. The retail operations also include revenue sharing between the City and the RDA.
The facility is anticipated to generate $1,219,000 in revenues in FY 2016/17, comprising totally of parking revenues. In light of the fact that the retail space is currently not rented, we have taken the conservative approach of not projecting retail rental income. The facility is still anticipated to operate at a loss during FY 2016/17, so the Anchor Garage/Retail plans to subsidize its operations through a transfer of $389,000 to the Pennsylvania operations. Expenses for the facility are budgeted at $1.2 Million, comprising $830,000 in direct operating costs for the garage and $389,000 in lease term-related obligations.