Tavares, FL - Monday, March 25,2013
Commentary by Vance Jochim, www.FiscalRangers.com
- Updates are added, mostly at the bottom, as we get them.
This is written from the standpoint of being a taxpayer advocate, and also questioning why a city should be allowed to divert County property tax revenue to their own projects.
Lake County, FL property owners and City of Minneola property owners better hold on to their wallet because in my opinion, a tax grab is being planned to subsidize four major real estate developers in the Minneola area. Basically, they are pushing through a Community Redevelopment Agency (CRA) which siphons property taxes from the development area future property taxes to re-pay the State of Florida $15-million of a $30-million Florida Turnpike Interchange in Minneola. The Interchange is expected to increase the ability of land owners and developers to sell 8,000 homes in Minneola with 23,000 residents. However, ALL County taxpayers will be expected to provide normal County services like Animal Services, Libraries etc. to those new homeowners while 5-mills of County property taxes are used to pay their bonds instead of going to the Lake County General Fund for normal government services to County (not City) residents. Additionally, I was told that 15 mills of property taxes for new homes and projects in the CRA development area will be also used to pay for bonds rather than go to the City Of Minneola General Fund. SO, Minneola residents outside of the CRA area will have to pick up some of the cost burdens for CRA residents since some of their taxes will be diverted to the CRA. (Read on if that is not clear).
See if you agree:
- Minneola is the city that voted for debt to build a huge waste water plant for planned residential developments that never were built. Thus they are hurting for tax dollars.
- Developers and land owners for an area planned to include 8,000 homes and lots of commercial space want a $30-million interchange constructed on the Florida turnpike in Minneola to allow future residents to exit near their planned communities.
- The State of Florida said it will put up the $30-million and build the interchange if the local developers repay the State $15-million.
- At several planning and government meetings, I have always heard the developers were expected to kick in the $15-million, which seems fair since they will reap huge profits from the easy access for their future residents.
- Then, all of a sudden, the City Council of Minneola approved on Mar. 16, 2013 the first reading of a Minneola Mountain Properties CRA (Community Redevelopment Agency) for the development area. A CRA is a legal method that siphons off future property tax revenues for specific purposes, taking it from normal "general fund" uses. There are 16 CRA's in Lake County, and most use their funds to renovate older, declined downtown areas. For instance, this year, the downtown Mt. Dora CRA will take $355,077 from funds normally for County "general fund" services and instead will be spent on the downtown area instead of going to the County general fund for countywide services like Animal Services, Ambulance services, etc. Think of it as an elected official tax grab to subsidize property owners. I reviewed CRA's when the County Board created one for the Sorrento area, and you can find some of my research here. There are many ways to abuse CRA's, and Florida has had two major shakeups due to corruption with CRA's. (Hallandale Beach in Broward County, and Daytona Beach ) www.myflorida.com/audgen/pages/pdf_files/2008-036.pdf - http://www.browardbulldog.org/tag/broward-inspector-general/ This watchdog source indicates the County Inspector General also has reported mis-management (I call it corruption) that has taken place in the Broward County communities of Lauderdale Lakes and also Hollywood, FL.
- The result is that when the new residents of the 8,000 homes and other Minneola and County residents need county or city services, less funds are available since they will be siphoned off to pay for the interchange and connecting roads. This will then put pressure on officials to RAISE YOUR PROPERTY TAXES while the CRA runs for 30+ years subsidizing the developers and paying for the interchange which is NOT voted on by voters.
- I could not find anywhere that the developers and landowners are expected to pay any of the costs. If they do, the CRA allows them to "apply" for full reimbursement, thus eliminating many costs that I believe they should pay.
- The Lake County Board has voted to waive all transportation and impact fees for the last three years, and impact fees were the normal method to pay for new infrastructure like roads or schools for new developments. So, the Board made the choice to reduce funding for roads and infrastructure (including new schools) in order to "help the economy" by reducing costs of new construction. Now the City of Minneola, not having funds even for County roads, is making an end run and creating the CRA to not only provide the interchange and connecting roads, but even salaries for new City employees hired to provide services to the CRA area.
- The CRA Plan allocates CRA funds of $2.5-million to $13-million per YEAR for City staff to be paid from CRA proceeds. That is like paying for food on a credit card, and not a good practice.
- The CRA plan describes two bond scenarios. One for $26.5-million, a second "optional" plan for another $15-million. In both cases, they use 25% (TWENTY FIVE PERCENT) of the proceeds to pay for issuance fees, prepaid interest and other charges not related to the actual projects planned. Would you buy a car where 25% of your loan was eaten up in fees at the front end, before also paying interest and principal payments every year exceeding $1.7-million for the first bond issuance, and $1.2-million in payments for the second bond?
- The 85 page Community Development Plan bases future property valuations on a two page, un-documented (i.e. no facts to back up the data) letter from Frank Royce, a prior employee of the prior Property Appraiser. Royce didn't substantiate his method but used assumptions he was given to develop an estimated future property taxable valuation in the CRA area of $886-million in 2027. He issued it in September, 2012 after he knew his boss had lost the elections. I called the new Property Appraiser Carey Baker, and he said he did NOT stand by the letter from Frank Royce, and they would not be in the business of doing valuation studies for private firms. He recommended they use a credible, advanced skilled independent property appraiser to provide a professional appraisal. Thus the estimated valuation of $886-million is questionable and should not be accepted by the County or City of Minneola to justify the CRA bonds.
I have more, but time is running out and so I will add more below this line as I get it.
- The CRA Plan describes estimates of CRA tax diversions, but doesn’t explain the millage rates used or which tax authorities the funds are taken from. I was told that School property taxes would not be diverted, and that about 5 mills will be taken from the County General fund and perhaps 15 mills from the Minneola General Fund, but there is nothing in writing explaining the true cost impact of diverting funds from future tax collections.
Be sure to watch the Lake County Board meeting tomorrow (Tuesday) at 9am (tab 21) by the City of Minneola on the CRA, and if you don't think all the County should be taxed to cover Minneola CRA costs, then let your Board members know.
I will be writing more on this, and will attach the CRA plan and "Finding of Necessity" here since the City of Minneola has NOT provided them on their website.
Note: Here is a LINK to the 85 page Community Redevelopment Plan, followed by the "Findings of Necessity" Report for the CRA. Neither are on the City of Minneola website (yet). Minneola is also processing a SECOND CRA for downtown Minneola, which I will look at later:
The following link is to the Minneola Mountain CRA (aka Turnpike CRA) Redevelopment Plan
https://www.box.com/s/cace01fbeezmvxijpss6
The following link is to the Minneola Mountain CRA(aka Turnpike CRA) Findings of Necessity Report.
https://www.box.com/s/15kpynlngbkixoeb79n5
Here is a worksheet prepared by the County Budget Department showing the diversion of property taxes from the County General fund to several CRA's in Lake County. Right now the County is projecting a 6% budget cut, while they are paying out $1.1-million to 15 local CRA's (Sorrento is not setup yet).
Download CRA Spreadsheet FY 2013
Vance Jochim
FiscalRangers.com
