Will Property Tax Cuts Hinder Economic Redevelopment?
A popular, yet controversial tool that cities and counties across the South Florida housing market to battle blight and neighborhood decline may be in jeopardy because of proposed property tax cuts.
The economic development tool’s results are visible everywhere: The beach in Fort Lauderdale. Mizner Park in Boca Raton. Atlantic Avenue in Delray Beach. Downtown Hollywood. South Beach.
Projects in those areas, and more, were funded by a municipality’s gamble on a subsequent rise in real estate values and, hence, the new property taxes the real estate would generate.
Technically, that gamble is called tax increment financing and how it works is simple, Jeff Oris, president of the Florida Redevelopment Association, which helps local officials establish such districts, said.
An area is selected for redevelopment. The taxable value in the area is identified, and each year’s subsequent growth in tax value is given to a redevelopment agency that spends the money on predetermined projects.
The money might go to building wider streets or repairing sidewalks. Or it might be given to a company to help in the cost of building new apartment buildings for affordable Florida mortgage seekers.
Limiting how much revenue can be derived from self-financed redevelopment could cripple this financial tool.
Risks to local cities and towns that use such districts would increase, specialists say, if the Legislature approves property tax cuts when it meets in mid-June.
“You have some really blighted communities with opportunities ahead of them that could be devastated, depending on what door is picked or what action the Legislature takes,” said James Carras, of Fort Lauderdale, a visiting professor in the Department of Urban and Regional Planning at Florida Atlantic University.
“It’s going to be an interesting few weeks to see what’s decided.”
The result will impact commercial development and the future housing stock in Broward and Palm Beach County, Carras said.
“This is an explosive problem and we [legislators] haven’t even begun looking for the powder keg,” said Rep. Julio Robaina, a Miami Republican.
Robaina and supporters of the districts say they aren’t yet certain what steps the Legislature should take to protect their projects from the sharp blade of property tax cuts.
They say they hope to have some answers by Monday when a special committee of state House and Florida Senate members meets in Tallahassee to prepare for the special session.
What the districts can do is remarkable, their supporters say. They now exist in more than 180 Florida municipalities. As a result, dilapidated shopping centers have morphed into “outdoor lifestyle centers.”
Once rundown city blocks throb with nightlife. Out of grimy cityscapes, “mixed-use” developments have arisen where trendy shops are mixed with condominiums.
Continue reading in the South Florida Sun-Sentinel …
June 7th, 2007 at 10:58 am
The level of services provided in 2002 should be adequate today and the funds necessary to stay at that level should be what the taxes were in 2002 plus about 3% per year since then (15% in the last five years). A sharp rise in property values should not provide an excuse to raise taxes higher than the cost of living each year and cetainly not to the 80% to over 100% level increase by some local governments. We need to keep services where they are and reduce the property taxes. Waist, fraud and abuse needs to be handled. No essential services need to be reduced unless we have overfunded them in the last five years. Cut the abuses. The polls should ask “who thinks we need to cut essential services if we cut property taxes”, not “who is willing to cut essential services in order to cut the property taxes”. May we be protected from our govts abuses. Thanks.