The Coastal Star

Boynton Beach: Commissioners by 3-2 vote threaten to end deal with partner in Town Square

By Jane Smith

Boynton Beach City Commissioners narrowly voted on Sept. 1 to direct city staff to see whether JKM Developers can fulfill its contract on Town Square construction or else end it.
John Markey, principal of JKM Developers, wanted until Sept. 15 to present an additional option — using the city’s Community Redevelopment Agency tax dollars to help underwrite the private portion of the project.
That pledged money would be used to finance two parking garages and three residential buildings with retail and restaurant space on the ground floor. In return, JKM promised a community benefits package of workforce housing, a rent-to-own program and a scholarship fund.
“It pains me to be in this position,” Commissioner Justin Katz said about taking a hard line with the city’s development partner. “I implore my colleagues to make a decision tonight and stop us from listing in the sea.”
Commissioner Christina Romelus was equally frustrated: “I’m at my wit’s end. I want to throw in the towel. This makes no sense to me.”
Katz, Romelus and Vice Mayor Ty Penserga felt the city already has given JKM too much.
Commissioner Woodrow Hay and Mayor Steven Grant voted to hear another presentation in two weeks, with Grant saying: “It’s not our money. It belongs to the taxpayers in the CRA and the city. We haven’t had an opportunity to see the final solution.”
For its role in the partnership agreement, the city gave JKM 8.6 acres in the project area, $1.9 million in cash and new water and sewer lines and underground utilities at no cost.
“I walked into the meeting with my position firm,” Penserga said. “The idea of doubling down is not working for me. ... The current contract should be fulfilled or ended.”
Markey said the south garage, closest to the new City Hall/Library building, was not supposed to be finished until 18 months after the City Hall building received its certificate of occupancy. That just happened in July.
Commissioners first learned about the delay in the garages’ construction from Markey at their July 21 meeting.
The six-story south garage received a building permit on Sept. 5, 2019, and was supposed to be finished by June 5, 2021, Colin Groff, assistant city manager, said at the July 21 Town Square update. The south garage will not be finished in June as promised. In fact, the city would be lucky to get it financed early next year, Markey said July 21.
The north garage is estimated to be finished by Dec. 5, 2021.
Town Square is a private-public partnership between the city and its CRA and private developers. The 16.5-acre area, sitting between Boynton Beach Boulevard and Southeast Second Avenue, is supposed to give the city a downtown.
When complete, the $250 million Town Square will have a mix of municipal buildings and privately developed apartment buildings, a hotel, restaurants and shops. The city’s share is slightly more than $118 million.
Markey blamed the souring of the deal on how the bonds were financed.
“Your staff proposed that the bonds be issued by a Community Development District that they would create,” Markey said Sept. 1.
In 2018, city staff decided a nonprofit, based in Wisconsin, could issue the bonds faster than a Community Development District, Markey said Sept. 1.
Then, he said, Mark Hefferin of E2L Real Estate Solutions, Town Square’s lead developer, “comes to me and says we cannot underwrite the garages because a nonprofit issued the bonds.”
Markey’s recently hired attorney, Bonnie Miskel, asked for more time to allow Markey’s staff to prepare a third option. “It’s better for the partners and the city,” she said.
Hay was willing to give that time.
“We are looking at something that will last a long time, decades even,” he said. “I would like to see his plan. Then, if it does not pan out, we can do what Katz suggested.”

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