Is Daytona misusing CRA funds?

Filed under DAYTONA BEACH

Volusia Property Appraiser Morgan Gilreath gives data to council members to help them identify blighted areas

BY JAMES HARPER
DAYTONA TIMES

Grass growing through the cracked pavement of Martin Luther King Jr. Boulevard and other arterial roads. Many streets with no sidewalks. No major grocery stores. No hotels. Two gas stations. High crime. No pay phones. Streets that haven’t been paved in years.

Morgan Gilreath

Morgan Gilreath

Abandoned buildings. Parks with outdated or no playground equipment for children. The flooding of homes and streets after a heavy prolonged rainfall.

This is a description of Midtown in Daytona Beach and other predominantly Black inhabited areas in the city that could easily be described as blighted areas neglected by elected officials for decades, according to local Black activists.

There are no major department stores, attractions or businesses to pump tax revenues into the Midtown Community Redevelopment Area Trust Fund that could be used to make a difference in the area.

Some residents are accusing Daytona Beach officials of misusing Community Redevelopment Area (CRA) funds.

Economic development tool
Volusia County Property Appraiser Morgan Gilreath said some cities in the county have used the CRA designation more as an economic development tool than as a fix for blighted areas.

Gilreath told the Daytona Times exclusively this week that CRA funds used as an economic development tool creates an instance where non-CRA cities and those living in unincorprated areas of the county are paying for improvements in areas that are not blighted.

Gilreath said that right now in Volusia County about 57 percent of CRA money coming from outside of the cities with CRAs is going into CRAS. If it’s a blighted area that the funds are going to, he noted, “it is a good thing.’’

However, he remarked that if the funds are being used outside of the blighted areas, city officials with CRAs are “creating an illusion.’’

Midtown residents continue to complain about cracks in roads like these on Martin Luther King Boulevard.(LARRY STEELE/DAYTONA TIMES)

Midtown residents continue to complain about cracks in roads like these on Martin Luther King Boulevard.
(LARRY STEELE/DAYTONA TIMES)

Just the facts
Gilreath said CRAs were not created to give county money to cities.

“City and county monies should be separated. Are they (city leaders) making an argument for consolidation,” asked Gilreath?

“I’m trying to provide data to decision makers so they can make better decisions,” Gilreath said. He was to officially present his analysis on Thursday to the County Council.

“I provided decision makers with factual information that isn’t biased to help identify and help blighted areas,” he said.

County Council Chair Jason Davis sent a letter to Daytona Beach Mayor Derrick Henry to clarify their positions on CRAs.

‘Thoughtful exchange’
Earlier this year, the County Council opened community dialogue on the future of CRAs.

“Proposed changes prompted a thoughtful exchange and evoked many diverse opinions,” wrote Davis.

“There will be no changes made by the county to existing CRA authorizations,” he said.

“The County Council values well conceived, carefully managed CRAs as an important tool to revitalize blighted urban neighborhoods,” Davis concluded.

The taxes generated from Community Redevelopment Areas are supposed to be used to generate growth within blighted areas, according to a Florida Statue that allows cities to create CRAs.

‘Two-sided coin’
In an editorial written by Daytona Beach City Manager Jim Chisholm for the Daytona Beach News-Journal published on April 28, he wrote:
“In Daytona Beach we used CRA funds to incentivize development with the Ocean Walk Shoppes and Hilton Hotel, which are among the top taxpayers in our community. Over 800 new jobs were created with this initiative and it would not have been feasible without our CRA financial support through a public/private partnership.”

More CRA funds are earmarked by city officials to lock down the construction of at least two major hotels along A1A.

Gilreath said he is not a critic of CRAs and believes they offer cities an opportunity to perform noble assistance to blighted areas within their boundaries.

“It is a government example of people helping people who need help.

But it’s a two-sided coin,” Gilreath said.

Gilreath said the property appraisal data he gave to the County Council to help them determine if areas qualify as blighted includes: if the median sale prices of land is increasing; the quality and price of construction materials used; and the depreciation or deterioration of the building is also a factor to determine if a “blighted area” deserves CRA funds.

Other uses
Daytona Beach Public Works Director Ron McLemore confirmed to the Daytona Times this week that CRA funds have been used by city for both economic development and blighted areas.

CRA funds are being used to put in water, sewer to entice developers, said McLemore.

Former Midtown Area Redevelopment Board Member Hemis Ivey is upset that almost $1 million of the Midtown CRA funds are on hold for the Orange Avenue Streetscape project. He said the funds are needed now to be invested back in the community to take care of immediate needs.

As of May 7, $982,430.37 in Midtown CRA funds had not been used to make a difference in the predominantly Black Midtown section of the city.

Growing controversy?
According to Daytona Beach Redevelopment Director Reed Berger, for the past three years, the almost $1 million has been set aside to be used for the Orange Avenue project if enough funds are not available from other sources to complete the project estimated to cost $20 million.

Volusia County Councilman Josh Wagner weighed in what is looking more and more like a growing controversy.

“The city of Daytona Beach is apparently manipulating you and the community . . . They should not make the Midtown CRA fund items that the city general fund should pay for. The question should be…What part of the Orange Avenue project is being funded by the CRA and did they make the other CRAs do the same thing. Utilities should not be used,” asked Wagner?

Bids for the Orange Avenue Streetscape project are expected to go out to marketplace July 1.

McLemore said construction is expected to begin on the project around the first of the year.

Midtown input
Orange Avenue also runs through the Downtown CRA. Berger said there is no line item from the Downtown CRA to use their funds for Orange Avenue, but if it becomes necessary it’s possible that money could come from their trust fund if directed by the CRA board. That board is made up of city commissioners and the mayor.

Ivey said the Midtown board should have input in the budget process because he says the board is the voice of the community.

“The board is told you’re only an advisory board and you have nothing to do with the budget, you are not part of the process. The people are part of the government. We are being shut out of the process,” he said.

Ivey said commissioners are not speaking up or budgeting funds for problems disproportionately affecting the city’s blighted areas that qualify for CRA funds.

“If you are doing a budget and you know the projected revenue, they can fund A, B, C. They can look at what the priorities are. If commissioners are not speaking up on problems, items that need to be on budget, then we don’t have a voice,” Ivey continued, boasting that he was proudest that the Midtown board was able to produce a master plan during his watch.

“If the city manager don’t want it, it will not happen. If nobody makes Jim Chisholm do something, it don’t happen,” added Ivey, who has been vocal in the past calling for the removal of Chisholm as city manager.

No budget authority
Redevelopment Director Reed said the Midtown board doesn’t have any budget authority or money to spend.

“They are there specifically  to approve site plans, if there is a development order, special use permits, input on that process and they have other powers. They are able to advise city commission on matters of legislation,” Reed explained.

No ‘endless pot of money’
He said elected officials are responsible for budget expenditures. The funds that come from each CRA must stay in that same geographic area.

Berger said the city does not have “an endless pot of money” to fix up the Midtown area in addition to other areas that need major infrastructure work as well as investments to attract businesses to the area.

For the 2012 budget year, the Midtown CRA was allocated $263,247.

Of the money, $216,000 was used to pay down on a debt owed involving the repaving of streets and construction of sidewalks and other infrastructure needs, Berger said.

That left less them approximately $50,000 of the CRA fund to do “extra things” to improve blight in the area, he continued.

The 2012 budgets for other CRAs in Daytona Beach are: Downtown, $776,260; Main Street, $3,337,083; Ballough Road, $151,319; South Atlantic, $0; and Downtown Development, $216,882.

Six areas in city
Like many cities across the state, Daytona Beach created a Community Redevelopment Agency, which oversees six community redevelopment areas, one of those areas being Midtown.

A Florida statue allows a CRA to annually capture and spend a portion of the incremental increase in ad valorem tax revenues resulting from redevelopment. The tax increment — the increase in real property taxes from the difference between the taxes generated before and after the investment in real property — is used to fund a portion of the costs for improvements.

Florida law defines a “blighted area” as one in which there are deteriorated and deteriorating structures where economic distress or endangerment to life or property exists.

CRAs’ goals focus on eliminating the physical, social, and economic problems related to slum and blight by improvement of the physical environment (buildings, streets, utilities, parks) by rehabilitation, conservation, clearance, and redevelopment.

More goals
Additional goals include acquiring blighted property, enhancing tax bases with private reinvestment, eliminating poor housing conditions, and providing affordable housing to residents of low and moderate income.

Daytona Beach’s CRA board is made up of the city’s six commissioners and mayor and they ultimately decide what to do with funds generated for CRAs.

A redevelopment trust fund is the depository for tax increment revenues. Funds allocated to this trust fund can only be used by the CRA to finance community redevelopment activity undertaken pursuant to an approved redevelopment plan.

Redevelopment Director Berger said city officials are hoping bids come under the $20 million they expect the Orange Avenue Streetscape project will cost so they don’t have to touch the almost $1 million in CRA funds.

Berger said if the $1 million is not used for  Orange Avenue, it will go toward streetscaping a portion of Martin Luther King Jr. Boulevard, from International Speedway Boulevard to Orange Avenue.

The rest of the arterial road from Orange Avenue to Fremont will likely be repaved, said McLemore.

“It is not our intent to use CRA funds (for Orange Avenue),” Berger said.

Number of issues
Ivey said since the city is borrowing money to complete the Orange Avenue Streetscape project it should borrow enough guaranteeing it does not have to touch the million dollars on hold, which he says should be used now for improvements.

The city has applied for a $13,143,000 loan from Florida’s Revolving Funds to do the project. In addition, a $4,697,000 Florida Department of Transportation grant and a $1,660,000 Volusia County grant will go toward the project.

McLemore said it is yet to be determined which end the city will be starting constructions due to a number of issues that will have to be addressed by engineers and designers of the project.

He said reconstruction of the road is scheduled to start in December and is projected to last two years.

“It is a very complex project. That is why it will take two years,” said McLemore, noting that all the utilities underneath the street are aged and collapsing, and have to be addressed.

He added that the roadway surface will be improved, guaranteeing a smoother ride for residents and no potholes or flooding.

Other improvements
Amenities that will be improved include enhanced walk ability, wider sidewalks, replacement of underground utilities, elimination of pole conflicts in sidewalks, decorative lighting poles and fixtures along with decorative crosswalks and decorative traffic signal masts.

McLemore said street and sidewalk lighting will be enhanced along with improved signalization with ADA (Americans with Disabilities Act) compliant sidewalks and crosswalks, audible signal controls for visually impaired, and touch signal controls for the hearing impaired.

Thomas Huger, Daytona Beach’s Facilities Construction and Maintenance Manager, is the citizen liaison and contact person for community. He can be reached by calling the Public Works Department at 386-671-8600.

One Response to Is Daytona misusing CRA funds?

  1. vj

    I write a blog on local government fiscal issues in Lake County, FL and this is a good overview of how your CRA’s work. There are many abuses and risks from CRA’s, and it was so bad in California the Governor took all the CRA funds to balance their budget. In that case, California also shifted funds from School property taxes to the CRA fund, which is not done in Florida. The result is that school districts in populated areas were losing $20-million or more. One hidden aspect of CRA’s that is rarely clarified is that in Florida, when a city creates a CRA, it also siphons off a chunk of County general fund money, depleting funds usually used for County services. Thus, all residents outside the CRA’s are taxed MORE to pay for County services like animal services etc that those funds would go for. Keep watching the CRA’s since they can be abused in many ways, including procurement decisions not run through normal government procedures, hiring of contractors related to officials, etc. I list some issues at the website address provided. Vance Jochim http://www.FiscalRangers.com

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