Incentivize This

In Hollywood, developers profit. You pay.

Say you want to build high-rise luxury condos with some shops downtown. Say the city is planning an $11 million cultural project next door as a draw for your development. Now say the city offers you $2 million to help get it jump-started and $8.1 million for the parking garage you're going to need. Oh, and if the venture fails, you'll get another $1 million just to make sure it was worth your while.

Or how about this: You can put up condos on another prime piece of downtown land and the city promises to waive $500,000 in permit fees and will hand you $6 million in cold cash just for finishing the project.

Get a shovel, you say. Let's break ground.

These deals are just two examples of development plans that the Hollywood City Commission has preliminarily approved for Young Circle. On four projects currently planned for the circle, the charitable city will give away nearly $28 million in incentives to developers. The risk involved in those ventures falls to the taxpayers, of course.

A small cadre of entrepreneurs will benefit, most of them clients of the fellow whom I affectionately think of as the Gordon Gekko of Hollywood, lawyer-lobbyist Alan Koslow. Complete with the dark slicked-back hair, he's a partner of Becker & Poliakoff, a law firm that bankrolls political campaigns and also serves as the paid lobbyist for the city.

But Broward County Administrator Roger Desjarlais is threatening to ruin the fun. A lot of the money to enrich Koslow's clients comes from Hollywood's Community Redevelopment Agency, which is funded primarily with county property-tax dollars (about $2 million a year). Desjarlais apparently doesn't believe greed is good. Or perhaps the administrator is himself driven by Gekko's ghost and just wants more money for the county empire. Desjarlais has long sought more control over development dollars, and it's no secret the county covets the millions in property-tax dollars that the new high-rise Diplomat Hotel on the beach will pay the CRA.

Whatever the motive, Desjarlais has taken aim squarely at Hollywood's CRA. Back in March, the County Commission approved the administrator's plan to audit all nine CRAs in Broward County. Hollywood was number one on the most-wanted list.

In a June 19 report, County Auditor Norman Thabit slammed Hollywood's CRA. He found that the city had broken several rules, including failure to file required paperwork and the hiring of two directors, who make about $262,000 between them.

Thabit, without going into much detail, also criticized the city for giving away too much CRA money to developers. He cited the Florida Constitution, which forbids public entities from benefiting private companies "when the public is only incidentally benefited."

Rather than call for specific sanctions against Hollywood, Thabit urged the County Commission to lobby the legislature to restrict the use of CRA funds to aid private development. Such a law may sound fundamental, but in Florida, where providing outrageous favors to dubious developers has become a time-honored, almost religious tradition, it's radical stuff.

Hollywood is ponying up a posse to attack the audit. Mayor Mara Giulianti promises that the city's lawyers will prove the report is a pile of bunk. "The county has spent hundreds of millions in incentives," Giulianti said. "So for the county to say that to us seems disingenuous to me."

It's an interesting point, but it's also a logical dead end. The mayor seems to have missed a lesson, something about two wrongs.

And there is no denying that Hollywood right now is the incentive king for development. Here are four examples of high-rise projects, all including luxury housing units and retail space, already approved:

Jefferson at Young Circle. Texas developer JPI completed this $70 million project last fall. Hollywood subsidized the project to the tune of about $4 million. The city also borrowed an additional $2.5 million to help pay for a $6.5 million, 645-space parking garage at the site. Hollywood got 210 spaces, which doesn't sound so bad until you consider that the property already had a 221-space city parking lot. So the city, in effect, paid $2.5 million to lose 11 spaces.

La Piazza II. This project, by developer Steve Berman, includes 500 condos in the northwest quadrant of Young Circle. Hollywood has offered to pay Berman $8.1 million to build a parking garage. Of the 670 spaces, the city will get a mere 170 (which means Berman will benefit to the tune of about $6 million). The CRA will also pay Berman $2 million cash. If the project isn't successful, the city agrees to give him $1 million for his trouble. Final approval for the project is expected July 15.

Young Circle Commons. This $50 million project will include luxury condos, retail space, and a parking garage where the historic Great Southern Hotel now stands. Incentives to the developer, Miami-based Southern Facilities Development, include at least $600,000 for land, $1 million in permit fees and utility improvements, and $3.8 million cash upon completion.

Block 55. This Southern Facilities plan on Young Circle where the Greyhound bus station now stands doesn't have a proper name and was approved just two weeks ago by the commission. It includes more upscale condos and retail space. Southern Facilities intends to buy up land for about $10 million, build the development, and then, when it's complete, the city will give $6 million to the company, plus $500,000 in permit exemptions.

That tallies up to about $27.5 million in handouts to four projects, all of them Koslow-orchestrated specials. The lawyer negotiated the deals with the city, presented them to the commission, and is surely being paid handsomely for the service. Koslow won't discuss his fees, but when he talks about deal-making, he often uses his favorite verb, one not found in any dictionary: "incentivize."

"To the extent that the county or anyone else believes the deals are incentivized too much, it's myopic," Koslow tells me. "They should understand that over time, the CRA serves its purpose. The benefits go to the city and the county. People need to look at the long term. These projects are on the tax rolls forever.

"You have to help the developers create a market for luxury housing in Hollywood. Hollywood is not recognized as a market that can survive without some incentives. The critical mass of a downtown area isn't there in Hollywood. The developers are taking tremendous risks to build these projects in an unproven market."

Chip Abele, co-owner of Southern Facilities, parrots his lawyer's explanation. "We're playing by all the rules, and I don't know that anybody would be here but for these incentives," he says. "The CRA generally gives 10 percent of the project cost -- that's Hollywood's standard policy. These incentives are not grotesquely high. These are still pretty tight deals."

But developer Berman, who built the original La Piazza (a much smaller project) on the circle a few years ago, didn't sound as if he was worried about "critical mass" in an interview with South Florida CEO Magazine in March.

"People thought that I was either daring or crazy by trying to do new construction in downtown Hollywood," Berman told the magazine before boasting that the residential portion of La Piazza was full the day it opened. "We've had a waiting list for three years... people are starting to look at Hollywood and see it as the best bargain around."

How's that for "tremendous risks"?

Incentives can work when they involve a few hundred thousand for landscaping, wider sidewalks, and the like. Fort Lauderdale, for instance, generally gives developers cash breaks in the hundreds of thousands rather than the millions. But the Hollywood deals seem to be nothing more than guaranteed profit margin for firms like JPI and Southern Facilities. If those companies really need that much charity, then Hollywood simply isn't ready for the developments. If they don't need all that money, then taxpayers are getting hosed, Tommy.

Plus, the city is planning an $11 million Arts Park on the circle to fuel redevelopment. Add that to about $7 million per project to developers and it's more like insanity than incentive. And it should incense the people.

What people? Sure, there are about 150,000 Hollywood folk, but only a little club of activists -- like Pete Brewer and Howard Sher -- are raging against the Koslow-Giulianti machine.

Becker & Poliakoff, meanwhile, has come dangerously close to running the city. The firm holds fundraisers and assists in running most of the commissioners' campaigns, Giulianti's chief among them. Koslow's partner, Bernie Friedman, is the city's paid lobbyist.

It's quite a little circle of love: Koslow and Co. raise money to elect politicians who then repay the debt by hiring Koslow's firm and giving out ridiculous sums in incentives, a hearty percentage of which winds up in the firm's big pockets.

Now the lawyers and politicians are rallying to squelch the audit.

"The county just wants the [CRA] money," Giulianti said. "The whole audit is incorrect -- Norm Thabit isn't a lawyer."

So let's hear from the lawyer that Giulianti listens to more than any other: "The county is only trying to gain leverage on Hollywood," Koslow says.

Don't expect much backbone from the County Commission. Koslow's law firm has lavished even more money on county campaigns than those in Hollywood. Long-time Commissioner Suzanne Gunzberger has received many thousands of dollars from Becker & Poliakoff. A photo album on the county website includes a shot of her and Koslow standing arm in arm at a gala.

Broward Vice Mayor Ilene Lieberman sounds as if she's part of the Becker & Poliakoff program as well. At last week's commission meeting, with Giulianti and other Hollywood backers in the audience, Lieberman, in a rather chilling echo of the mayor, told Thabit, "I'm sorry, but you're not a lawyer."

So it's no wonder the County Commission refused to officially file the audit until Hollywood is given a chance to make its case at next week's County Commission meeting, on July 8. Presiding will be county Commissioner Diana Wasserman-Rubin, whose 2000 campaign was run by none other than Becker & Poliakoff's Friedman.

Oh, and if you'd like to see a copy of the audit, you can't find it on the county website anymore. Giulianti complained to Commissioner John Rodstrom about it last week and poof, it was gone.

"The County Commission is just wonderful," Giulianti gushes.

If the commission caves on the audit, it will prove that Koslow's brand of incentivizing can work on more than just developers. Politicians can be bought too.

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