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ANALYSIS AND ALTERNATIVES - <br />As provided for in the state constitution and statutes, a property <br />tax abatement program affects only those taxes levied by the local <br />government instituting the tax abatement program. For Indian River <br />County, then, the taxes to be abated for eligible businesses would <br />be the county's general ,fund, MSTU, and the -emergency services <br />district ad valorem taxes. School board, drainage district, water <br />management district, and other taxes would still be payable. •In <br />addition, the law provides that the abatement will apply only to <br />the tax chargeable to improvements to real property made after the <br />effective date of the program; ad valorem tax on land may not be <br />abated. <br />• Example <br />The following example provides an indication of the effect of <br />applying tax abatement to a hypothetical project. <br />If a computer manufacturer is considering the construction of a new <br />$1 million dollar plant employing 100 highly paid workers on land <br />that is worth $1 million dollars, and if the County can offer a 10 <br />year tax abatement program, with a tax exemption of 100% for the <br />first five year period, and then a 20 percentage point per year <br />reduction over the next five year period, the effect on taxes is <br />shown in the tables below. <br />Assumptions: <br />• Property size: 40 acres <br />• Assessed value with agriculture exemption: $100,000 <br />• Constant 1996 dollars <br />• County Millage Rates <br />- General Fund: 4.2999 <br />- MSTU: 1.6236 <br />- EMS District: 2.3128 <br />- Misc. Taxing Authority: 11.2793 <br />Existing Conditions <br />Although industrially designated property within the county may be <br />worth $25,000 per acre and could sell for that amount, most the <br />county's industrially designated land is presently in citrus <br />production or used for pasture. Consequently, those lands have an <br />agricultural exemption and pay minimum taxes. With an agricultural <br />exemption, citrus land is assessed at an average of $2,500 per <br />acre, while pasture land is assessed at less than $500 per acre on <br />average. To adequately assess the effects of implementing a <br />property tax abatement economic development incentive, the current <br />tax yield of land having an agricultural exemption must be <br />considered and compared to the tax yield of comparable property <br />developed with industrial uses and receiving a property tax <br />abatement. <br />29 <br />May 14, 1996 BOOS( 98 FACE ' <br />