By Jane Smith, Dan Moffett and Rich Pollack
Coastal towns in south Palm Beach County are flush with cash thanks to their shares of the voter-approved penny sales tax increase that started in January.
The money began flowing into municipal coffers in March and will continue for 10 years. Population determines how the cash is doled out, giving the three largest South County cities the most money in the area. The county receives about 30 percent of the money from the extra 1-cent sales tax and the Palm Beach County School District gets the largest share at 50 percent.
The cities can spend the money only on infrastructure needs such as repairing or building roads, sewers, water lines and fire stations or making park improvements.
Delray Beach issued a $31.5 million bond to immediately proceed with its capital improvement needs at its own pace, instead of waiting for the annual allotment. The bond amount is below the city’s estimated allocation of $38 million. The city plans to use the $3.8 million annual incremental sales tax payments for repayment of the bond — both principal and interest.
“We wanted an adequate cushion between the anticipated penny tax revenues and our repayment obligations for debt service and total principal repayment,” Mayor Cary Glickstein said in an email.
Instead of waiting for incremental payments over 10 years where project costs would escalate and limit what the city could do, the city sought bond proposals from lending institutions, he said. The city received eight responses.
City Attorney Max Lohman, who serves in the same capacity for Palm Beach Gardens, suggested the bond and the outside attorney to act as the bond counsel, Morris “Skip” Miller of the Greenspoon Marder law firm.
Miller told Delray Beach commissioners in late June that the interest rate was 1.96 percent from Bank of America. Commissioners liked that low rate, especially when they heard the rate secured by Palm Beach Gardens was slightly more at 2.1 percent.
“That’s the benefit of having a city attorney who works with other cities,” interim City Manager Neal de Jesus said at the late June meeting.
The mayor called the bond “innovative financing; most notable being the bond costs taxpayers nothing.”
The city will complete projects now rather than later when both construction costs and interest rates may be much higher, the mayor said.
Delray Beach has a long list of improvements and replacements that were delayed during the recession.
It includes a new fire station on Linton Boulevard, sidewalk improvements outside of the downtown, park improvements, public sea walls along the Intracoastal Waterway and the second phase of the beach master plan.
The city will allow Palm Beach County’s League of Cities’ Infrastructure Surtax Citizen Oversight Committee to determine how the sales tax dollars are spent.
Cities participating in the committee submit project names, justification for using sales tax money and the amount to be spent to the league’s executive director by June 30, prior to the start of each financial year.
By Feb. 28 following the end of each budget year, each participating city will submit independent auditor management letter comments related to the spending of the sales tax dollars.
Boca Raton, estimated to receive $5.3 million annually, has created an Infrastructure Surtax Fund to accept and spend the money, according to the city’s website. Its Financial Advisory Board will oversee how the money is spent.
Throughout the recession, Boca Raton maintained its roads, water lines, parks and beaches. It does not have a backlog, Mayor Susan Haynie has said.
Among the potential projects listed on the city website are road resurfacing, pedestrian pathways, sidewalk renovation and repair, park improvements, and bridge and sea wall repairs.
Palm Beach County plans to spend $6.8 million of its sales tax share in Boca Raton, according to a list provided by County Commissioner Steven Abrams. The amount includes $1.85 million to resurface Crawford Boulevard between Palmetto Park and Glades roads.
Boynton Beach plans to spend its share of the sales tax money this year, about $4.4 million, on city sidewalks, Public Works Director Jeff Livergood said at the city’s budget hearings in July.
For next year, Boynton Beach will spend the penny tax dollars in its parks, Livergood said. The list includes upgrades at the Intracoastal Park and Clubhouse, improvements at Oceanfront Park, repairing the Coast Guard building and its restrooms at Harvey Oyer Jr. Park, and making the pathway handicap-accessible at Mangrove Walk at the city’s marina.
The following year, the proceeds will go to the city’s Town Square improvements, Livergood said.
“We have sufficient dollars for the next nine years to maintain the park structures,” he said. “But after the penny sales tax is gone, the question will be: How will we maintain them? We will have that discussion next year.”
Boynton Beach has established its own oversight board, Livergood said.
In the smaller coastal towns, leaders have a mix of ideas for the penny sales tax proceeds.
• Lantana, projected to receive about $739,352 annually, will dedicate the money to sidewalk improvements, repaving roads and parking lots, and beach improvements during the next year.
• Highland Beach, which initially didn’t expect to receive any money because its leaders didn’t think the voter referendum would pass, now hopes to use the approximately $200,000 a year to pay for improvements to its walking path, according to a proposal of the mayor as head of the town’s Ad Hoc Citizen Streetscape Committee.
• Ocean Ridge, which will receive about $107,000 annually, has talked about installing traffic calming devices on side streets.
• South Palm Beach wants to use its annual allocation of $82,300 to help defray the cost of concrete groins on the beach. The money can’t be used to replace beach sand between the groins.
• Gulf Stream, one of 15 Palm Beach County cities that will use the League of Cities to monitor the sales tax program, will use its $60,000 annually to offset the cost of burying utility lines, Town Manager Greg Dunham said. “We have a line item for the penny sales tax in next year’s budget to do that,” he said.
Or the town could let it accrue, which it is allowed to do, Dunham said.
• Manalapan may use its annual allocation of $25,000 to help rebuild swales on Point Manalapan.
• Briny Breezes will let its $25,000 annual amount accumulate for a few years. Its leaders eventually want to do something meaningful, such as build wider sidewalks for golf carts to use.
Mary Thurwachter contributed to this report.