Auburn gets $1 million write-off for Southwest redevelopment project

By DAVID SEDORE, Palm Beach Business.com Staff

DELRAY BEACH — Auburn Development didn’t quite get what it originally wanted. But company executives didn’t leave Wednesday’s meeting with the Delray City Commission empty handed either.

Auburn wanted the commission to write off  $1.5 million of a $4.3 million loan from the city, a move that it said is necessary to finance the long-awaited, massive redevelopment of the city’s blighted Southwest Neighborhoods.

Instead, after a day of talks with Finance Director Joseph Safford and other city staff members, Auburn got $1 million off the loan balance.

Auburn now will apply to the state for a $5 million grant to finance “work force” housing planned for the project.

“You and your staff have gone above and beyond to help us,” Mayor Rita Ellis said. “Thank you for doing the right thing to help make this happen.

“This is a monumental night. We are eternally grateful. This will be on of the things when we’re long out office that we can look back on and say ‘we were part of something great.”

The loan doesn’t involve city dollars but rather a federal grant for the project that Delray received.

Auburn Executive Vice President Cito Beguiristain Tuesday evening said the loan “forgiveness” was necessary because of the tight financial margins for the project that the company was working with.

In exchange for the help, Auburn said it would repay the balance of the loan early, a move that Beguiristain could make up for the $1.5 million if the city held and invested the money. He said the city also would benefit from the property taxes the project would generate — even though the money would flow not to the city coffers but rather to the Delray Beach Community Redevelopment Agency.

And the city would be getting 414 badly needed low-income and affordable apartments, condos and townhouses.

“This $1.5 million is an investment,” Beguiristain said, “an investment in the Southwest Neighborhoods, an investment in the working families of Delray Beach, and long term, an investment in the city of Delray Beach.”

Safford, however, recommended that the commission reject Auburn’s request. If the city wrote off the loan, it would have to show a loss on its books. Safford also cited the city’s contributions to the project and questioned Auburn’s profit margin.

The commission suggested that Safford and Auburn execs meet Wednesday to review the numbers and find a compromise.