April 14, 2017
Taxpayers fund Fort Myers CRA development welfare
By Gene Gibson
Some Fort Myers developers use a little understood financial mechanism, tax increment rebates, to finance the construction of luxury high-rise condominium towers along the Fort Myers riverfront.
Basically, this entails taxpayers subsidizing the condominium construction costs. Here is a hypothetical example of how this works:
A developer buys a parcel of riverfront property for $1 million. This now represents the assessed value of the property for tax purposes. The developer then builds tall condominium towers on the property that increase the property value to $80 million. The tax increment increase based on the improved property is $79 million. Ninety percent of the annual property tax on the improved value of the property (the $79 million increment) that the condominium residents pay goes to the Fort Myers Community Redevelopment Agency — CRA (the actual % of the tax rebate can vary from 80-95%). The CRA then uses this tax revenue to pay the developer’s construction loan. This tax increment rebate will run for 10 to 20 years.
When you get your property tax bill this year, tell the tax collector that you want the same deal that the high rise developers get and that you will apply your property tax payment to your mortgage payments. Let me know how this works out for you.
Tax increment financing can prove a useful tool to attract investment to blighted areas, where development would otherwise prove unlikely. Funding luxury condominiums on the Fort Myers riverfront, however, represents a clear abuse. You should visit the sales office for the Allure Condominium on the pier at the City Marina and see what the new face of subsidized housing looks like.
The Fort Myers City Council has fast-tracked its plan to increase the number of new condominium units in Fort Myers — possibly up to 23,000 new units. The council says it needs the property tax revenue these units will provide. But how will the City pay for the municipal services that the people who live in these high-rises will need if their property taxes goes to pay off developer loans? In particular, how will the city pay for the sorely needed police department reforms? The city council members comprise the CRA board. They say they foster public/private partnerships. But, this looks and smells like crony capitalism.
Maybe a case for tax increment rebates can be made for Beau Rivage, the first high rise condominium built in east Fort Myers. But, subsequent luxury high rise developers came in and asked, “how can you expect me to compete in this market when you subsidize the costs of the development next to mine?”
The CRA, a/k/a city council, has repeatedly demonstrated its inability to break its addiction to tax increment rebates. CRAs, such as the Fort Myers CRA, that serve as a piggy bank for wealthy developers give CRAs a bad name and need reform.
The city council will meet at 5 p.m. Monday at City Hall to discuss its proposed plan to allow developers to build condo towers with near unlimited height and density. Please plan to attend and ask the council why they support using tax dollars for welfare for riverfront developers.