— Steve’s Marketplace —
Editor’s note: Contributing columnist, Steve Nicklas, expresses his views and insight on various topics in Marketplace.
While the U.S. government freely spends trillions of almighty dollars, Fernandina Beach city officials casually throw around millions – as predictably as a pitcher with a baseball.
These are days of roaring excesses at the White House and its microcosm, Fernandina Beach City Hall. It is amid a tireless search for new ways to spend – most of it with borrowed money.
On the federal level, trillions are poured into rescue packages and a soon-to-be bloated annual budget. Locally, the amounts might be less, but nonetheless noteworthy.
Take the latest borrowing spree – a tidy package of $11 million of refinanced debt from rebuilding the city marina following Hurricane Matthew. Of the $11 million, more than half is tied to a botched application for Federal Emergency Management Agency funds.
When the expected FEMA funds never arrived, the city established a $6.2 million line of credit to cover repairs to the attenuator docks. The credit line was supposed to be paid down quickly by the FEMA money. However, the money has not been refunded amid a quagmire of back-and-forth accusations and administrative actions.
Now the city has hired an expert in arbitration to enhance its fight with FEMA. So far FEMA has reneged on even setting an arbitration date. The line of credit was maturing at the end of the month, so city officials rolled the balance into the 20-year loan.
Even though the interest rate is extraordinarily low (in the 2 percent range), this is still debt that must be repaid. Meanwhile, city officials throw around figures for an additional $20 million for a sea wall and a park at the marina. Again, this would be more debt, but it is as difficult to track as a tornado because of the political spin. At that price, maybe the sea wall would be fanciful, with dancing fountains and colorful lights.
These numbers are smaller than our federal brethren, but are not insignificant. Let’s consider some other excessive city projects, with their approximate price tags:
–A new park on Simmons Road that few wanted or felt was needed. Cost: $500,000.
–A high-tech Top Tracer project at the city golf course. Few people are apparently playing this game at $40 per person per hour, the same price of an 18-hole round of golf at the same course. This project has been fraught with delays and miscalculations and now limitations on hours of usage. The lights at the new facility interfere with flight paths at the airport. Cost: $600,000.
–A revamped airport terminal designed to look like a vintage airplane. Instead, it looks like something from an old Iron Butterfly album cover. Apparently, the hyped-up building hasn’t delivered on promises of more tax/fee revenues. The initial costs of $2 million were covered by federal and state grants, but the city added to this for the enhanced architectural design. Cost: $2.2 million.
–Reopening Alachua Street at the waterfront has reappeared. This project is costly, and would be cramped with a crossing gate and lights, with few benefits. But what does that matter to city officials? Estimated cost: $1 million.
And the borrowing and spending goes on and on and on, as the lyrics go. But the logic is as difficult to understand as Iron Butterfly’s “In-A-Gadda-Da-Vida” legendary hit song. Where are the city commissioners who campaigned on promises of fiscal frugality?
City officials rejoiced over refinancing the line of credit and other debts into the lower-interest loan. This is actually a sound financial move, covering for a variety of bad moves, especially the botched FEMA application.
In contrast, the absent FEMA funds are hardly mentioned during commission meetings. Only city commissioner Len Kreger and city manager Dale Martin were around when the initial application was made to FEMA.
Kreger contends that Martin promised him and other commissioners that the FEMA funds were coming, and not to worry. Hopefully more people will soon become worried. It’s been almost five years since Hurricane Matthew inflicted its damage. Meanwhile, interest accrues on all the borrowed funds. But community interest seems to be waning.
“Personally, I think they are slow-walking things,” says a former city official about current officials, regarding the FEMA process. Maybe people will get confused and forget these millions, among the other millions. It can be an effective political ploy.
City officials are instead concentrating “on the really unimportant stuff,” the former city official says. So maybe $6 million is unimportant now?
Steve Nicklas is a financial adviser with a regional brokerage firm who lives and works on Amelia Island. He is also an award-winning columnist. His columns also regularly appear in weekly newspapers in North Florida and in South Georgia, and on his website at SteveNicklasMarketplace.com. He has published a book, “All About Money,” of his favorite columns from the past 20 years. The book is available on Amazon. He can be reached at 904-753-0236 or at [email protected]