Lilly Zhong’s SAD Situation
In our last installment we told you how the County stands to make 18% interest. Not on actual money, but on an accounting entry. You can read it here. Today we’ll dig deeper in to what’s going on. The sale or transfer of the land surrounding the Civic Center, also known as City Center, to Lilly Zhong happened behind closed doors. Almost in the dead of night, as one might say. The City of Port St Lucie was unaware that it happened. At least that’s what they claim. Taxes were owed on the numerous parcels of land that make up City Center, and under normal circumstances those taxes would have had to be paid for clear title to pass. Many questions remain with few answers. Yet for most residents of Port St Lucie there is only one important question. When will it be developed? The answer might be never. It’s a SAD situation. Not emotionally but financially. In November 2006 the City of Port St Lucie issued $25 Million in bonds to pay for the City Center project infrastructure. It was to be an area of bustling business, non-stop conventions, the jewel of the Treasure Coast. The bond’s principal and interest to be paid off through special taxes levied on the owners of the land surrounding the Civic Center, the area known as City Center. These special taxes are levied to anyone owning property in that designated area or Special Assessment District (SAD). [By the way, in 2008 before the paint was dry on that bond the City refinanced it. Not to lower the interest rate but to take out more cash. Now the City Center debt is $31 Million and the interest rate went up about 2%. This increases the interest that will be paid over the life of the bonds from $12.8 million to $34.4 million an increase of 268% per the estimated debt schedules provided in each bond document.] The problem is the City has made the property too expensive to develop and every year it will get worse. While the ad-valorum tax will fluctuate with the property value, the SAD will not. Back in 2006 the City never dreamed that property values would fall. The City never considered that the bubble would burst. The City never considered that developers desire to profit from their work. Values fell, the bubble burst and the truth is developers like to turn a profit. The current $13 million tax liability will continue to increase at over $3 million per year on the 21 acres owned by Lilly Zhong. Most of the $3 million yearly taxes comes from the SAD charges. Here is a link to one of the parcels. (US Investment, LLC is Lilly Zhong’s company.) The assessed value of the property is $210,000. The ad-valorum tax is $5,151 the non-ad-valorum tax is $587. Total tax is $5738 but the SAD on this parcel is $42,700. The SAD is 740% higher than the tax on the property, and the total due for one year is over $48,400. Is it any wonder the property remains undeveloped? The City of Port St Lucie will not issue any permits for construction until the back taxes are paid. Then of course there will be the usual impact fees and other fees charged to build. Then you get to the cost of the actual project and the cost to make improvements to land you don’t even own but the City wants improved. With each tax year the unpaid tax amount will increase and the likelihood of development will decrease. It’s too expensive to make lemonade out of this lemon as the cost gets more expensive with each passing year. At least for now you can enjoy parking in what might just be the most expensive parking lot in the state if not the nation. I know, you were hoping for a happy ending. Me too, but this is not the end. There’s more to the story. So sign up – up there in the right hand corner so you don’t miss the next exciting episode.