Carolyn Mason is the newest Sarasota County commissioner. A former mayor of the City of Sarasota, she joins another former mayor – Nora Patterson – on the county’s dais.
On April 7, Mason asked to squeeze millions from future county tax receipts through a subtle expansion of terms for the Newtown Tax Increment Financing district.
She joins several other community leaders from around the county who would like to do the same thing for their areas, but getting the votes on the county commission may be impossible. At stake are millions, either for special purposes or general use – but not for both.
Tax Increment Financing (TIF) is an accounting trick for property taxes. When a TIF district is formed, taxes on the property in the district are unchanged. But as the property becomes more valuable over time (the "increment"), tax revenue resulting from the difference in value between the starting appraisals and the newer, higher appraisals go to a "Community Redevelopment Agency," or CRA, for use in the special area.
By definition, during the first year of a TIF district, no money is raised because the starting property values are identical. But as time goes on and the property is reappraised at a higher value, the difference can turn into taxable millions. By law, the money fights "slum and blight."
Sarasota County agreed in 1986 to participate in the city’s TIF district for downtown. The county commissioners agreed the county’s share of the "incremental difference" would be pooled along with the city’s share of the property tax revenue.
In the base year of 1986, downtown property was appraised for tax purposes at $411 million. Last year, it was valued at $2.3 billion. In other words, the downtown TIF district reaped city and county taxes from property assessed at about $2 billion, with the funds to be used exclusively for improving downtown.
The county’s share going into the CRA’s coffers last year was $5 million.That money, therefore, is not available for general county government purposes; it can be likened to a subsidy by county taxpayers to Sarasota’s downtown.
In 2007 another TIF district was created for Newtown on the city’s north side, an area arguably suffering from more "slum and blight" than downtown ever did. However, the county commission this time refused to contribute their fraction of the property tax revenue to the effort. Thus, the "increment" reaps only the difference in city property tax revenue. The "subsidy" here is subtly different. The money comes from taxes the city would have levied anyway, but the city instead promises to devote those funds to Newtown improvements.
The city and county commissioners agreed in 2007 that the money from the downtown TIF and the Newtown TIF could be "commingled" between the two. It was said at the time that $11 million would flow to Newtown.
Since by definition there will be no Newtown "increment" this year, the city is devoting $400,000 from the downtown TIF to the Newtown TIF to jump-start the program. However, problems are already showing up.
Because Newtown has among the lowest property values in the city, the taxable value for many homes is effectively zero because of homestead exemptions. The legislature raised the homestead exemption last year to $50,000; earlier the Sarasota City Commission had agreed that seniors who passed a "means test" would get another $25,000 exemption.
Thus, a 65-year-old Newtown resident living on Social Security in a $75,000 home quite possibly pays no property tax.
The plunging real estate market is expected to drive down further the taxable values all over the county. One city official familiar with the TIF scheme speculated that the Newtown TIF taxable value next year might actually be less than the 2009 value. "Then what happens," that person asked. "Does the TIF district give back money? I don’t think so."
And because the Newtown TIF district receives only city tax dollars (that would be collected anyway), but it has to pay a small amount of overhead for staff to manage the money, less tax revenue actually is available for tangible projects. Without county participation, there is no "windfall" now or in the future.
In reality, the $11 million promised Newtown will come from the downtown TIF, with its estimated $5 million per year in county taxes.
Since the county commissioners see the downtown TIF district reaping millions of "their" tax dollars, some commissioners are wary of participating in other TIF districts. They fear that if they agree with Mason’s request to contribute the county’s share to Newtown, some or all of the other potential TIF districts will demand the same treatment.
"We have pretty much said, ‘No,’ to expanding TIFs and CRAs across the county," Chairman Jon Thaxton told Mason at the April 7 meeting. "Our ad valorem budget is assaulted across the board, and it’s leaking at the seams."
TIF districts are not open-ended. The downtown TIF expires in 2016. Then, the county will go back to keeping all the property taxes on the vastly more valuable land. Fundamentally, that is the idea behind a TIF – make improvements and watch the property values soar.
However, the Newtown TIF has a 40-year term. Not a single county commissioner will likely be alive to reap the rewards when that TIF expires. By not participating in the Newtown TIF, they will continue to reap what little tax revenue does come from that community.
Meanwhile, the city taxes will be collected anyway, and all the Newtown TIF will do is insure the "increment," plus whatever can be diverted from the downtown zone, will be spent in Newtown.
Still, Mason suggested the TIF tiff be on the agenda when the county commissioners meet with their city counterparts on June 4.