CRA's - Understanding Florida Community Redevlopment Agencies and CRA Problems & Risks
FiscalRangers.com - Vance Jochim - this white paper is in progress, and not complete
You can reach this page with this short URL: http://tinyurl.com/CRAproblems
Added 6/8/2013: Article in Daytona Times about a local CRA and arguments how to spend the funds. However, my reading doesn't indicate any real abuse. Funds were being spent on long term infrastructure for the CRA area.
Update March 7, 2013 - Broward County, FL Inspector General reports that Hallandale Beach CRA investigation shows gross mismanagement of CRA funds with $2.2-million in questionable spending since 2007.
Tavares, FL - May 3, 2012 - This is a white paper that will be periodically updated to describe risks and problems related to CRA's or Community Redevelopment Agencie, especially in Florida. Our focus is on describing what CRA's are, what they do, and fiscal and transparency risks including examples from not only Florida & the other States. There are many instances of abuses of CRA's, and there are plenty of CRA Association websites touting their benefits, while we focus on the risks and problems so taxpayers, watchdogs and activists learn what can "go bad" with a CRA.
Our focus is mostly on CRA's in Florida and in Lake County, including the newly proposed CRA in the Sorrento-Mt. Plymouth area of Lake County, FL.
At this time we have no evidence that any CRA (there are several) in Lake County has any major fiscal or business problem. Some have been operating 30 years or more. The one in Mt. Dora was started in 1987, and was just extended for another 30 years.
A simple description of a CRA is: A legal entity allowed by Florida law to be created usually by a city or county to divert normal future property tax revenue to a separate fund used for renovating older downtown or residential areas. Thus, over 20 years, the Umatilla, FL CRA has diverted about $800,000 from the County General fund and other tax authorities (like a fire district) into a separate fund for money to improve the appearance of downtown Umatilla through grants (which can range from painting storefronts to building parking lots or downtown "promenade" areas.
What are the main issues or risks related to CRAs?
- They divert future property taxes (based upon taxes on increased property values from the current values) from properties within a defined "CRA boundary map" to uses not approved by voters. CRA's are usually approved by a City Council or County Board without taxpayer votes.
- The State of Florida has absolutely NO oversight system on these CRA's or how the funds are spent by the governing committee. Some people believe the spending really benefits downtown Chamber of Commerce objectives and subsidizes property maintenance of building owners.
- Excessive abuses could include use of eminent domain to seize land or buildings belonging to small business owners, then sell them to favored realtors, relatives (it has happened in Florida) or to big box stores like Walmart. However, this might not be legal in Florida - we are researching it.
- Funds could be used to subsidize new businesses like car dealers.
- Long time CRA's in high growth areas divert excessive funds that reduce funding of schools, fire departments, libraries, etc. Again, this may not be the case in Florida but it has happened in California.
- Funds are used to buy land for parking lots, etc. from relatives at prices much higher than market prices.
Proposed CRA in Sorrento-Mount Plymouth area
A proposed CRA is in process as of May, 2012 for the Sorrento-Mount Plymouth area in Lake County, which is unincorporated (not a city), thus the County will run it. This would be the first CRA run by Lake County, and their staff would administer it, and the County Board would act as the CRA Board to make decisions. You can see some early documents related to the Sorrento CRA HERE on the Lake County website.
Conclusion - It is too early to tell if any abuses exist in Lake County CRAs, but they have been reported in other Florida Counties, and we will provide those links here later.
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Nov. 2012 - Hercules, California CRA collapses, city defaults on $30-million in bonds. This page contains many links to articles and problems caused by City Controller who "ran amok" with CRA spending, and transferred CRA land illegally to City before State deadline for oversight programs.