During Monday night’s City Council meeting, the council voted 6-1 to move forward with an interlocal agreement between the City of Destin and Okaloosa County to purchase nearly 340-feet of beachfront property at Tarpon Beach.

• If this sounds familiar, that’s because it has been done before for the Shore at Crystal Beach expansion project.

On Tuesday morning, the Okaloosa Board of County Commissioners also approved the new agreement.

Here’s how we got here…

In October 2020, Okaloosa County & the City of Destin entered into an interlocal agreement to improve beach access in Destin by acquiring and developing three gulf-front parcels adjacent to the Shore of Crystal Beach Park.

• In the original agreement, the parties agreed the County would bear 59% of the cost, and the City would provide 41%.
• This would expand Shore at Crystal Beach Park from 67’ to 251’ of waterfront access.

The Trust for Public Land originally entered into a negotiated purchase agreement with all three parcel owners in the Shore of Crystal Beach park area. Two of those parcels were purchased on the original closing date, while the owner of the short-term rental property at 2968 Scenic Highway 98 unexpectedly terminated the purchase agreement shortly before the closing date, according to the city.

This center parcel is critical to the future plans for the Shore at Crystal Beach, according to the city of Destin. The two other parcels purchased by the city have since been cleared of structures for public use.

• The city has moved forward with the eminent domain process.

The final cost of the Shore of Crystal Beach Project from acquisition to operation of a full park is estimated to be $15,750,000.

Expansion of the Tourist Taxing District

In September 2021, Okaloosa County executed a new interlocal agreement with all nine municipalities as part of the expansion of the Tourist Taxing District. As part of the expansion agreement, the County now sets aside 12.5% of its total revenue generated by the first five pennies of the TDT for use by the municipalities for the 20-year period beginning March 2022 and ending February 2042.

• In a separate interlocal agreement, the municipalities agreed that the City of Destin would receive 48.5% of the 12.5% set-aside.

Based upon the trend reports from 2019-current, the City and the TDD conservatively estimate the City of Destin’s share to amount to approximately $1.6 million per year.

• By statute, expenditures must increase tourism or improve tourist experience in our locality.
• Beach acquisition is specifically recognized by statute as an authorized use.

Traditional waterfront park maintenance money provided to Destin (~$450K annually) is no longer prioritized by the TDD out of the County’s allocated budget, per city documents. Per Okaloosa County, that is due to the municipal set-aside funding mechanism.

For the draft FY23 budget, the TDD has budgeted $258K for Destin park maintenance funds, above the City’s 12.5% municipal share of revenue. There is no guarantee the park maintenance funding will be included in the final FY23 budget. City representatives have been told that it will not continue into the future.

To the future…with Tarpon Beach

The City of Destin & Okaloosa County have a new opportunity to acquire 336 linear feet of gulf-front property in Tarpon Beach through the City’s partnership with the Trust for Public Land.

• The purchase price of the Tarpon Beach parcels would be $14,050,000 with an option to purchase in October (Closing in November).
• The total cost to begin operation of a park would be $16,750,000.

This parcel is centrally located in the Crystal Beach area between James Lee Park and the Shore of Crystal Beach. The Tarpon Beach parcels have one owner, as opposed to the three owners involved with the Shore at Crystal Beach project.

• Address: 3310/3320/3324 Scenic Highway 98.

According to the city, a park in this location would provide a geographically balanced set of public beach parks throughout the Crystal Beach area. It would also provide walkability as well as increased accessibility of waterfront amenities throughout Crystal Beach.

A new Interlocal Agreement

To assist with the potential acquisition of Tarpon Beach as well as to finish the Shore at Crystal Beach Park project, Okaloosa County and the city proposed a new interlocal agreement for $32,500,000.

• Beach Purchase #1: Shore at Crystal Beach has been revised to include park construction, design, demolition and the final middle parcel acquisition to an estimated $15,750,000 (increased from the original estimate of $10.6 million) to be completed with the original agreed-upon 41% City and 59% County (TDD) funding allocation.

• Beach Purchase #2: Tarpon Beach acquisition and development is estimated to be $16,750,000 and is to be completed with a 50/50 split of expenditures between the City and the TDD.

In addition, the County will front nearly $10 million to the City from the TDD’s beach renourishment reserves, to be repaid to the TDD in the amount of $1 million per year until fully repaid. The loan will be interest-free, unless the county has to get a loan in the event of a major storm, in which the city would pay for the interest on their portion of the land acquisition.

One potential source of funding for waterfront park maintenance could be a portion of the $1.6 million from the annual municipal share of the TDD funding. If that funding source is used for maintenance, then the municipal share of the TDD revenue stream will be almost fully encumbered for the next 10 years by these expenditures, according to the city.

Destin Council-member Kevin Schmidt brought up concerns about what the city would no be able to spend their TDD allocation funding on should they move forward with the 10-year payback agreement. Schmidt was the lone no vote cast on Monday night.

• “I’m not going to talk about a baseball field, or what exactly we could use those funds for” he said. “What I’m going to talk about is what we won’t be able to use those funds for over the next 10 year because they are going to be gone.”

Schmidt went on to say that he didn’t feel like this agreement would be the best use of the TDD allocation funds for tourists and residents, alike. He said he doesn’t want to lose the ability to use the funds for another potential tourism-related project down that road that could also benefit residents.

What’s next

After much discussion from the council, that also included a presentation from Deputy City Manager Webb Warren and Okaloosa Commissioner Chairman Mel Ponder, the council voted 6-1 to move forward with an interlocal agreement between the City of Destin and Okaloosa County to purchase the nearly 340-feet of beachfront property at Tarpon Beach.

• On Tuesday, August 16, 2022, the Okaloosa Commissioners also approved the agreement.

Overall, beach and water related activities continue to remain the county’s top tourism assets, including the Destin area which is estimated to generate over 60% of the county’s tourism revenues.

“Beach access continues to be a major tourism issue for the County and the City of Destin,” said Craig Coffey, Deputy County Administrator for Okaloosa. “As tourism has grown and the demand on these water/beach resources has likewise increased, our visitor feedback indicates this can often be a source of friction during their visit.  This insight has highlighted the need to address public beach access capacity and visitor experiences related to this tourism asset.”

Moving forward, the city and county are hopeful that the Phase II project design and permitting can catch up with the Phase I Project, with both projects being bid out together to gain some economies of scale.

They hope to have a contract in October and close in November 2022.