12/22/1992 - Laserfiche WebLink

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M M M ANALYSIS: As indicated in attachment #2, county staff have taken action on each of the previously identified economic development initiatives. While some of these activities have been completed, others are ongoing and warrant continuing action. A few activities are still under consideration and will be completely addressed in the near future. Foremost among those activities under consideration is the property tax abatement issue. • Property Tax Abatement One economic development initiative previously identified by staff involves establishment of a property tax abatement program to encourage economic development in the county. Authorized by Article VII, Section 3 of the Florida Constitution and Chapter 196.1995, Florida Statutes,. property tax abatement may be established only through approval of a referendum. In considering the establishment of a tax abatement program, staff has researched existing laws, identified policy issues, and determined procedural requirements. In so doing, staff has reviewed various materials, including the recently adopted St. Lucie County tax abatement program. Based upon this limited analysis, county staff have identified some of the parameters of a tax abatement strategy. As provided for in the state constitution and the statutes, a property tax abatement program affects only those taxes levied by the local government instituting the tax abatement program. For Indian River County then, the taxes to be abated for eligible businesses would be the county's general fund, MSTU, and emergency services district advalorem taxes. School board, drainage district, water management district, and other taxes would still be payable. In addition, the law provides that the abatement will apply only to the tax chargeable to improvements to real property made after the effective date of the program; advalorem tax on land may not be abated. Based upon the limitations referenced above, staff feels that a property tax abatement program would not reduce revenue sufficiently to cause a budget problem for the county, and such a program may enhance economic development. To illustrate the effect of tax abatement on a hypothetical business receiving the abatement benefit, consider a business which purchases a $1,000,000 (assessed value) parcel in the county and constructs a $1,000,000 (assessed value) building on the property. With a total millage rate of approximately 20 mills, total tax without abatement on the $2,000,000 of assessed value would be approximately $40,000 per year. With property tax abatement, the $1,000,000 land value would be fully taxed at 20 mills, while the $1,000,000 improvement value would have approximately 8 of 20 mills of tax abated. In this example, the $40,000 tax bill would be reduced to $32,000 for each year that abatement applied. According to state law, that cannot exceed 10 years. As indicated by.the example above, tax abatement as an economic development incentive would probably have more of a perception value for the county than a monetary value for the business. Regardless, there are a number of issues that must be addressed in structuring a property tax abatement program for the county. Among those issues are: 25 O 1992 Roof 88'�,,.'�