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M • Costs Although new -industrial businesses attracted to the county will have a positive effect on -the county's economy, these businesses will also require county provided services. These services have costs associated with them. Those costs are partially paid from ad valorem taxes. When a business's ad valorem taxes are abated, the cost of services required. by that business must be paid from other sources. Among the services that the county must provide to all new businesses are law enforcement, fire protection, roads, drainage maintenance, access to courts, and others. The costs of these services are variable, changing from business to business and industry to industry. Typically, these services are paid for by businesses through the collection of ad valorem taxes. When the ad valorem taxes on improvements of a new or expanding business are abated, the cost of services for that business must be funded from the county's overall ad valorem property tax revenues. As indicated in the above example, an industry, after tax abatements, could pay up to 14.77 percent less in taxes. Essentially, the county's taxpayers would have to make up the difference. Of course some taxes, such as school taxes, cannot be abated. • Procedures In order to establish a tax abatement program, the Board of County Commissioners must pass a resolution authorizing a tax abatement referendum. The referendum must be advertised in the Press -Journal twice prior to the referendum election. According to the County's Economic Development Strategy Plan, Strategic Action 3.14, the county will, by November 1996, consider holding a referendum to obtain voter approval to establish a tax abatement program for industrial development projects. A referendum may be considered for -the November 5, 1996 election, or it could be done by mail. Upon a majority voting in favor, the Board has the authority to approve the tax abatement program. To do so, the Board of County Commissioners must adopt a resolution that specifies the tax abatement program criteria as they apply to businesses locating to or expanding in Indian River County. • Timincr Once the referendum is approved, the Board of County Commissioners has the discretion to implement the tax abatement program. The program will expire ten years following the date of its approval. At that time, the program may be renewed for another 10 -year period, if approved in a referendum conducted in the same manner as the first. PROPOSED PROGRAM As indicated in this report's analysis, the state imposes minimum criteria for establishing a tax abatement program. Because the county has the opportunity to establish more restrictive criteria than the state's, the county can establish a tax abatement program more appropriate for Indian River County. Two of the most important characteristics of a tax abatement program are length of abatement and eligibility. In order to maximize tax revenue while still producing a viable incentive, it 33 May 14, 1996 " -�