Independent review shows multi‑million funding gap, sparking public concern ahead of Boca Raton vote

Boca Raton — An independent financial review presented to the City Council on Dec. 1 found that the proposed downtown government campus could generate meaningful net operating revenue at full build‑out but still leave a sizable funding gap for upfront public construction costs, prompting sharp questions from council members and residents.

Kevin Plensler of PFM Group Consulting said the firm’s preferred scenario (scenario 4) projects an annual net fiscal impact "just under $10,000,000" at full stabilization and a 99‑year net present value framework calculated with a 5% discount rate. Plensler also told the council PFM excluded non‑scheduled revenue sources — specifically the developer’s proposed transfer fee and upside profit sharing — from its bond‑support analysis because those revenues are uncertain.

The analysis highlighted a 10‑year snapshot showing net new revenues of about $14,800,000 against estimated operating expenditures of $6,300,000, yielding a net fiscal benefit of roughly $8,500,000 in that window, and modeled an upfront developer payment of $7,800,000. At the same time, PFM and staff identified total construction costs for the city’s public facilities at just over $201,000,000 and a modeled funding gap in the range of $87,340,000 for the package as presented.

"We applied the 5%," Plensler said in explaining PFM’s discount‑rate choice, noting that discount rates for government revenue streams typically range from about 3% to 7% and that PFM selected 5% as a conservative assumption tied to current long‑term Treasury yields and municipal borrowing considerations.

Deputy City Manager and CFO Jim Zervis said the city and PFM modeled a financing structure that assumed the project itself could conservatively support about $114,000,000 of bonds, and staff outlined other potential resources — including CRA borrowing capacity, $49,500,000 of modeled CRA cash, and roughly $34,800,000 the city has available from the previously sold golf course — while noting legal and timing constraints (for example, the CRA schedule and bond maturity limits).

Council members pressed the consultants on differences with earlier CBRE/developer projections. PFM officials said CBRE and developer materials included transfer‑fee and upside profit‑sharing items that are not scheduled revenues and therefore less reliable for underwriting bond repayment; PFM instead incorporated a broader set of smaller recurring revenue streams and operating expenditure estimates to arrive at its fiscal projections.

Residents at the public hearing urged caution. John Perlman said the deal "is not providing the capital" to fund promised Memorial Park enhancements and asked for independent review of the appraisal and why PFM relied on some developer materials. "We're giving this land," Perlman said, "we're entering into this deal, and we're at a negative in terms of being able to fund what we need." Joe Majes called the omission of full capital accounting in promotional materials a potential "breach of the fiduciary duty."

Michelle Grau, a certified public accountant, told council the CBRE presentation relied heavily on speculative categories and argued that the base‑rent component in the CBRE analysis was too small to protect the city if market or tax rules change. "In the end, this agreement shifts too much risk onto the city," she said.

Legal context surfaced in public testimony and during council discussion. City Attorney Mr. Kohler told the council the court hearing on citizen petitions was initiated by a private resident and that the judge had found the petition language unconstitutional and "removed the measures from the January ballot." Kohler said the city followed the charter process and lacked authority to rewrite the petition language drafted by sponsors; he also confirmed the city relies on the Palm Beach County Supervisor of Elections for municipal ballot scheduling.

Councilmember Wigger and others pressed staff on the implications when the CRA sunsets around 2042–2043: PFM and staff explained the current CRA pass‑through will stop at termination, shifting tax receipts back to taxing agencies and producing a visible reduction in CRA receipts (with a smaller net increase in city ad valorem receipts), a structural effect the consultants modeled for later years.

The council did not take formal action on the project at the workshop; staff and consultants said they will provide an updated presentation and additional materials at a special meeting the following evening, and the council will consider appointments and other agenda items tomorrow night.

What’s next: Council members asked staff to post materials online (the presentation was received just before Thanksgiving), PFM said it would supply clarified slides, and the city attorney confirmed the court ruling affects the timing and substance of any ballot measures. The council adjourned and scheduled further discussion for the next meeting.