- October 5, 2026
The Palm Coast City Council’s $17 million Town Center land purchase generated significant discussion during its Sept. 9 budget hearing, as council members debated how much of the city’s reserves should be used to pay for the property and how much should be borrowed.
The proposed fiscal year 2027 budget assumes the city will reduce its general fund reserves to 20% to help finance the purchase. Under that scenario, the city would take out an $11 million line of credit with estimated annual interest of about $550,000, leaving approximately $13.8 million in reserves. Staff estimated that amount would cover about two and a half months of city expenses.
Vice Mayor Theresa Pontieri said she was uncomfortable drawing down the city’s reserves that far, particularly while the city faces other financial uncertainties and priorities.
“I have a problem going down to only two and a half months of expenses,” Pontieri said. “I've heard on this dais a lot over the past few months that we're worried about Amendment 3. That was one excuse why we couldn't fund the sheriff's deputies. Yet here we are borrowing $11 million, not funding other SAP priorities that we had discussed, and also bringing our reserve balance down to less than three months of expenses.”
“I voted no for a reason,” she added. “This is exactly why.”
Council Member David Sullivan argued that using more of the city’s reserves would reduce the amount Palm Coast needs to borrow and save money on interest.
“One of the reasons you have reserves is for one-time expenses that we didn't know were going to happen,” Sullivan said. “This is that kind of thing.”
Sullivan said the land purchase resulted from the city’s legal situation and described it as the better of two bad choices. He said he wanted to keep the city's interest payments and carrying costs “to a minimum.”
Staff gave the council three options for paying for the Town Center property, with the tradeoff being how much the city would borrow versus how much it would take from reserves. Keeping reserves at 25% would mean borrowing about $14 million and paying an estimated $700,000 a year in interest. Dropping reserves to 20% would reduce the borrowing to $11 million, while going down to 15% would cut the loan to $7.5 million and the estimated annual interest to $390,000. Under the 15% option, the city would have about $10.3 million left in reserves.
The discussion also highlighted the effect the purchase could have on other city priorities. Pontieri noted that the budget did not initially account for the $250,000 the council had committed toward the joint city-county animal shelter initiative. Staff said the money could be added but would affect how much fund balance was available for the Town Center purchase.
Pontieri also questioned the impact on road funding. Staff confirmed that without additional money from appropriated fund balance, the city would not provide the additional funding for microsurfacing and road infrastructure that it had in previous years.
The council ultimately approved a tentative fiscal year 2027 budget of $533,947,885. The amount was adjusted during the hearing to include $250,000 for the animal shelter initiative and $15,000 for the arts.
Council members voted 4-1 to set the tentative property tax rate at the rolled-back rate of 4.1387 mills, slightly higher than the current 4.0893 mills. The rolled-back rate is the rate designed to generate roughly the same property tax revenue as the previous year from existing properties, after accounting for changes in property values. New construction is excluded from that calculation. The rate is expected to generate about $45.5 million in property tax revenue.
Pontieri made the motion but conditioned her support on providing up to $330,000 for two additional deputies through the city's contract with the Flagler County Sheriff's Office.
“I'll make a motion to approve the adopted millage rate as stated with the caveat that we fund $330,000 to the sheriff's budget for two additional deputies,” Pontieri said. “Otherwise I would not be voting for this millage.”
When council members questioned where the money would come from, Pontieri said she believed the city could find it within the general fund.
“I think out of a $45 million budget, $330,000 can be found to fund two deputies,” she said.
Mayor Mike Norris supported adding the deputies but said the money would have to come from reductions elsewhere unless City Manager Mike McGlothlin identifies another funding source.
“If we're gonna fund two new deputies, you're gonna have to cut other staff unless you can find it somewhere else,” Norris said. “I'll leave that up to you. But I'm not gonna sit here and bicker about we need to cut this job.”
Council members Charles Gambaro and Ty Miller joined Pontieri and Norris in supporting the millage motion. Sullivan voted no.
The council also discussed $1.5 million previously budgeted for a proposed YMCA project involving an Olympic-sized swimming pool. Because an agreement will not be completed before the current fiscal year ends Sept. 30, council members agreed to move the funding into fiscal year 2027.
Pontieri said the city needs a larger swimming facility, noting that some local families travel long distances for competitive swimming.
“We desperately need an Olympic sized pool,” Pontieri said. “I think this is really our only opportunity to fund something like this in the most fiscally responsible way we can.”
Gambaro said the city's financial commitment should send a clear message to the Flagler County School District that Palm Coast is prepared to move forward.
“There's $3 million here that we're putting in a variety of different forms,” Gambaro said. “I don't know what other signal they need.”
The budget and millage rate are still tentative. The council will hold its final budget hearing at 5:15 p.m. Sept. 23 at Palm Coast City Hall's Jon Netts Community Wing.
