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Business Observer Friday, Jan. 5, 2018 10 months ago

Pride and Joy

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A local versus state issue — with millions of dollars in development projects at stake — is primed for a major debate in the upcoming legislative session.

By JOHN HAUGHEY | Contributing Writer

Why it matters: Legislators look to restrict the authority of local governments on community redevelopment areas.

Several bills seeking to prohibit local governments from creating new community redevelopment areas and restrict redevelopment agencies' authority were introduced during the 2017 Florida legislative session.

Although none was adopted, expect more CRA scrutiny by legislators in 2018, warns a veteran lobbyist who represents nearly 30 municipalities in Tallahassee.

“CRAs that are not taking this issue seriously are making a terribly bad mistake,” says Ronald Book, a prominent Tallahassee and South Florida lobbyist whose clients include Pinellas County, the cities of Marco Island and Pinellas Park, the village of Palmetto and the Fort Myers Community Redevelopment Agency.

“Members of the House and Senate have been clear in describing big concerns that they have with CRAs,” Book adds. “There are folks who have concerns whether CRAs should continue to exist, and if they are to continue to exist, under what conditions, what changes, what alternatives?”

Among 675 bills prefiled by Oct. 31 for the 2018 legislative session, which begins Jan. 9, is one, sponsored by Rep. Jake Raburn R-Valrico, that would place a moratorium on any new CRAs. Raburn's bill would also require annual audits showing performance data, number of projects started and completed and estimated cost of each project for existing CRAs, among other requirements. 

Raburn's pre-filed proposal is similar to a 2017 bill he introduced that was approved in the House but not presented to the Senate. 

'Pet Projects'

What, exactly, is a CRA?

Under the Community Redevelopment Act of 1969, cities and counties can create agencies to funnel tax incremental funds directly into financing improvements in areas classified as “blighted.” TIF is property tax revenue above that generated by “base” year property values. 

There are 222 CRAs in Florida, with 47 city and county CRAs in the nine counties of the Business Observer's coverage area — Polk (14), Pinellas (11), Manatee (5), Pasco (4), Charlotte (4), Hillsborough (3), Sarasota (2), Lee (2) and Collier (2). These CRAs have spearheaded revitalizations of downtown St. Petersburg, Fort Myers and Lakeland, and paved the way for such projects as the Tampa Convention Center, St. Petersburg's Dali Museum and Mahaffey Theater, and the restoration of historic McCollum Hall in Fort Myers.

Critics, however, say CRAs avoid public scrutiny of tax expenditures and extract millions of dollars in property tax revenue from municipal budgets for projects that may not benefit the public. Proof to that theory? A February 2016 Miami-Dade County grand jury report that claimed local CRAs were “slush funds” for “pet projects,” noting city and county elected officials managed the agencies with little public input. 

Book says a growing number of state representatives see the Miami-Dade grand jury report as an imperative to overhaul redevelopment regulations.

“If you are listening to what is being said, you need to understand there are folks who have those beliefs, and to ignore them would be a bad mistake,” he says, noting he's alerted his municipal clients not to assume their CRAs won't be affected because “that problem happened on the other side of the state, not here.”

Florida Redevelopment Association Executive Director Carol Westmoreland says her group will “look at the bills and see what the impacts will be” before the Legislature convenes. If lawmakers impose more extensive reporting requirements, the FRA would not necessarily object. “We've never been opposed to accountability,” she says.

But Lakeland CRA Manager Nicole Travis says local governments will resist attempts by state lawmakers to restrict all CRA capacities because of the actions of a few.

“We were fighting this during the last session,” she says. “There are problems with some CRAs not doing proper recording and there needs to be accountability, but it is not good to paint with a broad brush across all CRAs.” 

'Not a handout'

Book says local governments cannot defend their redevelopment agencies as an unconstitutional state pre-emption of their “home rule” charters.

CRAs “were created by state statue,” he says. “The Constitution of Florida says if you're going to tax, you must have specific authorization from the state Legislature.”

Adds Book: What the Legislature giveth, the Legislature taketh away.”

Book says some state legislators believe elected officials with little constituent input exclusively manage CRAs. While city and county commissions are the ultimate CRA decision-makers, the majority have advisory boards that determine priorities. “They're not completely run by elected officials but by a mix” of public-private interests, he says. Municipalities “need to make that point to state legislators.”

Travis says it is “not just the government” managing CRAs. Residents and business owners sit on the advisory boards. “The CRA board is the one to call when they are having an issue,” she says. “They are responsive to whatever that need may be. People appreciate it.” 

Lakeland's CRAs — Downtown, Midtown, Dixieland — “create a sense of community, especially in Dixieland,” Travis says. “Having an area declared a redevelopment area is recognizing the local government cares enough to reinvest in the neighborhood — it creates a sense of pride and ownership.” 

Travis says disparaging CRAs for siphoning general fund tax revenue to finance specific projects misses the larger point. “One of the most important things to know about CRAs is why they became CRAs in the first place,” she says. “These are blighted areas and the funding we get is going into areas where the private sector would not go.”

The feeling is mutual south of Lakeland, in Fort Myers. “There are so many things competing for general fund dollars, I don't know if these areas would get the dollars and resources they need,” says Leigh Scrabis, deputy director of the Fort Myers CRA, which manages 14 redevelopment areas. “It's a valuable option.”

And CRA money does not come from the general fund, but from the CRA itself, said Dunedin Director of CRA Economic Development Robert Ironsmith. For instance, when Dunedin created its 217-acre downtown CRA in 1988, its 551 parcels had a composite $35.4 million taxable value. The city's share of property tax revenue amounted to $146,000 a year. The city still receives that $146,000, he says, while anything more goes to the CRA.

CRA revenues are “direct investments in the area generating the revenue,” Ironsmith says. “This public investment gets rewarded as performance approves — it is not a handout. It is a concentrated approach in turning areas around.”

Travis says CRAs can often accrue value slowly.

“It doesn't happen overnight,” she says. “This is an investment where the financials of the project don't look like they make sense, but when you slowly chip away at the blight, property values turn the corner and you start to bring in people who see an opportunity” to invest.

Value add

Book cites the Fort Myers CRA, which he represents, as an example of how the concept works. “The city has operated CRAs as they were intended and made smart and judicious decisions in what they do to redevelop segments of the community and provide economic revitalization,” he says.

Scrabis says that happens because regulations over CRAs encourage innovation and partnering between private investors and various public entities. That, in turn, gives taxpayers more value.

For instance, says Scrabis, the Fort Myers CRA awarded $1.2 million in landscape facade grants to businesses along downtown's Cleveland Avenue and Dr. Martin Luther King Jr. Boulevard. The CRA paid “up to 50%” of landscaping costs while projects were “in construction and the remaining after,” Scrabis says. The $1.2 million stimulated an estimated $24 million in private investment and created 545 jobs, she adds.

Also, at the behest of the CRA, the Fort Myers City Council adopted a land development code in several redevelopment districts to increase residential densities. With the CRA issuing $27.3 million in tax rebates, more than 1,200 housing units with a value of more than $550 million have been built.

Partnering with the city, the Southwest Florida Water Management District and a local golf course, Scrabis says the CRA created a “stormwater bank. It then offered $1.3 million in tax rebates to spur investment along Cleveland Avenue, including a $50 million, 282-unit housing complex.

“One of the main tools we use is the tax reimbursements, and what state legislators really like is the rebate is paid in arrears only after it is generated by the project,” she says. “It is not taxpayers footing the bill.”

Like Scrabis, Dunedin's Ironsmith worries a one-size-fits-all bill could stomp out a significant tool communities use for redevelopment.

“If we didn't have a CRA's targeted, performance-based approach, we wouldn't be able to revitalize downtowns,” Ironsmith says. “I've been here for 21 years and have seen the tremendous impacts redevelopment districts have. We have enhanced the streetscape, the walkability, created pocket parks, installed bike racks, you name it. They all add value and it has led to a renaissance for downtown Dunedin.”

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