SEBRING — County commissioners have approved a $45 million bond issue for the rehabilitation of Harder Hall.
The Tax Equity Fiscal Responsibility Act (TEFRA) resolution county commissioners approved Tuesday will authorize the Highlands County Industrial Development Authority (IDA) to issue industrial revenue bonds on behalf of South Florida Senior Living (SFSL) LP, which will convert the 1920s-era hotel into a combination of independent-, assisted- and memory-care living units.
Highlands County Business Development Manager Meghan DiGiacomo said SFSL LP is a stand-alone entity created for the project by Paul Ruby and his partners with American Investor Immigration Funds (AII Funds) LLC.
Ruby said the building, which served as a hotel until the 1980s, would cost too much to rehabilitate as a hotel, as many developers have tried to do.
Last year, his company purchased the property from the city of Sebring for $2.4 million, and plans to use revenue from the bonds to begin construction by August this year, and reopen the senior living facility by January or February of 2020.
DiGiacomo said the IDA will serve as a conduit for the bonds, but will not actually hold them or manage them, as is the way with any other TEFRA bond issue.
The type of bonds being issued have to have a government entity as a conduit, Ruby said, with no financial commitment or obligation to that entity. He also said his company would pay any legal fees associated with issuing the bonds.
The last time the county did such a bond issue was in 2004 for Amerikan LLC, which manufactures blow-molded plastic nursery and horticultural containers and is still based in Sebring.
Ruby said the facility should employ 60 people upon opening, adding more employees each year. Sebring Mayor John Shoop praised the project for getting Harder Hall back on the tax rolls for creating jobs. Ruby said he was excited to do so.
“We don’t often hear of people saying they’re excited to pay taxes,” said Commissioner Don Elwell, grinning. “We are excited to access you taxes.”
Commissioner Ron Handley said he was “excited and apprehensive.”
Tuesday’s vote was 4-1 at the first hearing on the matter, with Handley dissenting. He wanted assurances from Ruby that his company would fund IDA costs in this matter, that they or any future owner would pay property taxes for the next 30 years and that they would sell no bonds for less than $100,000.
Ruby and his partners plan to offer the bonds in $25,00 increments. The high price, Handley said, would weed out inexperienced investors and was the price recommended by Grace Dunlap with Frank Miller Olive, bond counsel in the matter.
Handley said he was concerned about the bond market crashing again as it did in 2008 and considered the opportunity for foreign investors to “buy their way into this country” to be “a bit of a scam.”
If the bond issue or the project were to fail, he said, the county could have a “black eye” in the bond market, which would hurt future development.
Ruby said he’s happy to compensate the IDA, and has talked to the city about risks, but he said he couldn’t agree to making a tax covenant or setting bond prices high.
“At the end of the day, we don’t have a crystal ball,” Ruby said.
A new recession, if it happens, could affect the ability to pay taxes, but he said adding such a legal requirement to the property would “hamstring us, somewhat,” when it comes time to selling.
Ruby said the bonds would be sold to accredited investors, those who deal with securities not registered with financial authorities by satisfying requirements regarding income, net worth, asset size, governance status or professional experience.
Outside of that, the best he could do is promise to pay the taxes for the next seven years, the tax credit compliance period on a project of this size. Handley said he would prefer 15-20 years.
Shoop, a local banker, said people who buy such bonds have to know the market and show they are knowledgeable about what they’re doing. As for getting taxes, he said the city and county can put a lien on any property if the taxpayer is delinquent.
Putting a clause into the paperwork demanding tax payment will confuse buyers.
“The buyer will look at this and say, ‘Why the hell is this...’ Excuse me: ‘Why is this in there?’” Shoop said. “This is a whole different ball game.”
Commissioner Jack Richie pointed out that the county has no real financial risk. Ray Royce, IDA board member, said the IDA looked over it and saw it as a “plus for Highlands County and a plus for the city of Sebring.”
Commission Vice Chair Jim Brooks, also on the IDA board, said he was OK with the seven-year tax commitment and the $25,000 bond amounts.
“We’ve got ways to collect the taxes not paid,” Brooks said, before making the motion to approve the TEFRA resolution. “It wouldn’t be the first time.”