Boca’s Government Campus project is touted as a financial boon for Boca Raton. City council members describe the Government Campus proposal as a way to “activate” our downtown, attract new residents and businesses, and keep property taxes low.
As a CPA for over 30 years specializing in governmental auditing and accounting and business valuation, and now a candidate for Boca Raton City Council, Seat A, I respectfully disagree. Here are ten financial issues for why this project is not in Boca’s best interest.
- The City Is Funding Its Own Improvements
- The City Bears Too Much Excessive Risk…
- …For Not Enough Reward
- We Lose Control Over Our Public Land
- Boca Can Finance Improvements Independently
- The Government Campus Proposal’s 99-Year Projections are a Fantasy
- The Discount Rate Used Inflates The Benefits
- We have limited resources to negotiate complex Public-Private Partnerships (P3)
- P3 Arrangements Have a Bad Financial Track Record
- Lack of Land Valuation
1. In The Government Campus Proposal, The City Is Funding Its Own Improvements
Simply put: taxpayers are footing an estimated $200 million bill for city hall, the community center, and other municipal upgrades. In exchange, the city has agreed to a 99-year arrangement in which we receive the promise of ground lease rent payments tied to the private components. When I asked how much the developer is committing to spend on these public facilities, the city confirmed this arrangement:
“Our financial projections to date have anticipated the developer paying for the private components of the project, the City paying for the public components of the project, and common elements shared between both parties.” — City of Boca Raton
2. The City Bears Too Much Excessive Risk…
This project piles risk onto the city while the developer enjoys most of the benefits. Key elements haven’t been assessed. For example, one of the chosen developers was sued in one of the biggest lawsuits in history: the Surfside Collapse.
- What if other lawsuits hit them and they are financially strained?
- What if construction costs spiral?
- What if promised features aren’t delivered and their buildings become a skyline of new Mandarin Orientals?
- What if the financial forecast never materializes?
In the end, in all these scenarios, the city, and the taxpayers, will be left holding the bag.
3. …For Not Enough Reward
We are giving up prime public land in the heart of our city and receiving far less in return than it is truly worth. The projected tax benefits don’t justify the deal, after all, any private developer can build on private property and generate tax revenue, and even if they argue that those taxes would offset the costs of upgrading public features, the numbers simply don’t add up.
Even if we accepted their discount rate, the net present value of the proposed ground lease payments paid by the developer, doesn’t come close to reflecting the actual value of our prime piece of land. Boca isn’t in need of money to justify turning over our land for a private developer to profit from. And, it’s not worth allowing our quality of life to suffer, traffic to increase and the character and charm of our city to be lost.
How can we call this a win for the community?
4. We Lose Control Over Our Public Land
The original Government Campus proposal handed over 31 acres of public land—including a WWII Memorial Park—to developers so they could bulldoze it and build high-rise condos, office buildings, and a hotel the public would not even be able to access. Our public land should be used to enhance the lives of Boca residents, our children, and all future generations. Once signed, the developer controls this land for 99 years. They’ll have the legal right to shape it as they see fit, and Boca will have minimal influence over how the land is used—a century-long surrender of public control. Our public land should serve generations of Boca residents, not lock them into a developer’s vision.
5. Boca Can Finance Improvements Independently
Boca is in an extremely strong financial position. We are the 4th wealthiest city in South Florida, with a AAA bond rating, a $34.6 billion tax base, growing revenues, and nearly no debt. Also, in the last 10 years, our cash and investments have grown from $348M to $678M. And, our property tax revenue has doubled from $65M to $136M. With smart, creative planning, including re-evaluating the use of funds, we can finance improvements to the campus ourselves without giving up land for 99 years, even if it is done over time.
6. The Government Campus Proposal’s 99-Year Projections are a Fantasy
Financial forecasts lose credibility after 5 years. Stretching them 99 years is nothing short of speculative. This projection is not a plan—it’s a guess, dressed up as certainty to assure taxpayers that this development will reap dividends for us. Our community’s future should be guided by reliable data, not wishful projections.
7. The Discount Rate Applied to the Projections Inflates the Proposed Benefits to the City
The discount rate used in these projections exaggerates the benefits to the city because a higher rate should be applied when future payments are risker and payments from a private developer over 99 years are far riskier than payments from the U.S. Treasury who won’t default on those payments. The current yield on a 30-year U.S. Treasury Bond is approximately 4.74%. Using a 5% rate treats Terra Frisbie, the developer, almost like a risk-free borrower, which is unrealistic. Risk increases with time, so the discount rate should be higher to reflect the true uncertainty of these future payments over 99 years.
Furthermore, CBRE, the financial advisor to Terra Frisbie and whom the city engaged for the financial analysis of the benefits to the city, is a not an independent party. They stand to make $2.8 Million in financial incentives if the development agreement gets approved, giving them a clear conflict of interest. Naturally, their projections are going to look as rosy as possible.
8. We have limited resources to negotiate complex Public-Private Partnerships (P3)
Public-Private Partnership (P3) agreements demand highly sophisticated negotiation and legal expertise. They involve complex financial structuring, statutory compliance, and detailed risk management. Boca Raton’s current resources and legal counsel are not equipped to manage this level of complexity. This is especially true when compared to a developer with far greater financial and legal firepower. That imbalance dramatically increases the risk of the city ending up with unfavorable terms.
9. P3 Arrangements Have a Bad Financial Track Record
P3s frequently fall short financially for the residents due to poor risk allocation, overly optimistic projections, and misaligned incentives. Take, for example, Mizner Park. While the area became vibrant, the public return on investment was far lower than originally projected. The public took on the debt and the risk, while the private developer walked away with most of the profits. Long-term leases tied the city’s hands. Once the land was gone, we lost control of it. Mizner Park is a reminder that when we enter a bad P3, the public pays the price while private interests benefit. We can’t afford to repeat that mistake with our Municipal Campus.
10. Lack of Land Valuation
The city appraisal was not completed until the last week of November. Up until then, the City was unable to assess the market value of the land being committed. No appraisal had been conducted prior to negotiations. We had no starting point to negotiate. The City was unable to assess the market value of the land being committed. For a centrally located parcel in the heart of our city, this omission undermines any claim of fiscal responsibility.
Summary
Finally, I believe Boca Raton is in a very strong financial position to have thoughtful, sustainable development of the government campus. We, the people of Boca Raton, deserve a city that is a great place to live, to work, and to play. Change can strengthen that vision—but reckless change will undermine it. In my opinion, the Government Campus proposal trades irreplaceable city assets for uncertain benefits. Once public land is developed, it cannot be recovered. We should pursue change that strengthens our community, not gamble with its future. Here is a 3 minute video explaining when it’s useful for a city to use a P3 and when it’s not. For the government campus, it is not. It doesn’t save taxpayers. It costs them.
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