Print

Email story

Comment

Email editor

Money tied up in tax districts

The districts might make tax reform even tougher on cities.

By AARON SHAROCKMAN AND JANET ZINK
Published April 22, 2007

TAMPA - If tax reform slashes city budgets, officials won't be able to turn to their fastest developing neighborhoods as a source of extra income.

While property values in such booming areas as downtown Tampa and the Channel District have soared since 2000, only a fraction of that growth actually goes back to the city's property tax pool, which pays for such things as police and fire protection and recreation centers.

Instead, more than $42-million in city and county taxes has been redirected to redevelop rundown Tampa neighborhoods, from building a police district headquarters and installing sidewalks in east Tampa to promoting Ybor City.

Those areas are special taxing districts that funnel increases in property tax revenue back into the neighborhoods where they were collected to promote development.

Created by the Legislature in the 1970s to kick-start economically depressed neighborhoods, the areas, known as tax increment financing districts, are becoming the economic development tool of choice among Florida's cities.

Tampa has nine, more than any other city in the state. St. Petersburg has three.

The money they generate has fueled hundreds of millions of dollars worth of improvements in Hillsborough and Pinellas counties alone, including resurgences in Ybor City and along the waterfront of downtown St. Petersburg, officials say.

In east Tampa, the money is being used for environmental cleanup, summer jobs for teens, and home improvement loans for low-income families. In Ybor City, the money has gone to drainage improvements, landscaping and decorative signs.

But the districts, which typically exist for 30 years, also tie up huge sums of city and county tax dollars, grabbing money that otherwise would have been available to spend on police officers or recreation centers, or to lower tax rates.

That reality prompted Tampa and Hillsborough County officials to agree to stop approving tax increment financing districts.

The final one okayed last year is intended to fuel redevelopment of Central Park Village, a decaying public housing complex on the edge of downtown.

But the fate of the districts, like most local government spending, is now tied to the tax debate raging in Tallahassee.

While critics say someplace like downtown St. Petersburg doesn't need a boost for redevelopment, others say incentives to remake neighborhoods are essential.

"You cannot just look at today and make a judgment on redevelopment," said Carole Westmoreland, director of the Florida Redevelopment Association. "You're looking at the last two minutes of a basketball game and forgetting the first half. There has been nothing happening downtown for years. We're playing catchup."

Numbers grow, fueling growth across state

The concept of tax increment financing is becoming prolific across Florida. More than 180 municipalities now operate with tax increment financing.

Many cities, like Tampa and St. Petersburg, also borrow on potential future taxes to infuse money into an area.

Successes are apparent. St. Petersburg's BayWalk complex and downtown parking garages were financed in part by money from the special taxing districts, as was the Tampa Convention Center.

Those public contributions have driven even more private investment, said Rick Mussett, St. Petersburg's senior development administrator, pointing to new restaurants and shops opening along Central Avenue and Beach Drive in his city.

"It's working," Mussett said. "It's creating investment that otherwise would not be there."

Of Tampa's nine districts, six were created in the past three years. They dot the city: downtown, Ybor City, Drew Park and over 7.5 square miles of east Tampa.

The tax base in Ybor City's main tax increment district, for example, has grown 793 percent since it was established in 1988.

Revenue across all city districts is up $9.5-million since 2000.

Tax increment financing districts perform a vital function, said Tampa Mayor Pam Iorio. "They eliminate blight, and that is priceless, as the commercial would say," she said.

Are they still needed?

In Pinellas County, local governments will pour close to $16-million into tax increment financing in nine cities this year.

The county and St. Petersburg agreed in 2005 to extend the city's main development area an additional 30 years, pledging another $97.4-million in property taxes to pay largely for massive repairs to the Mahaffey Theater and the Pier.

Critics say the renewal strays from the intent of tax increment financing, which was to buoy blighted communities.

"When you look at the success of St. Pete today, you cannot make the argument that an ongoing TIF is necessary to spark development," said Tom Oberhofer, an Eckerd College economics professor.

Since the reforms proposed in Tallahassee target property taxes, such districts are now squarely in legislators' sights.

Tax rollbacks could reduce projected income in the districts, and many cities may be forced to find another way to pay off millions of dollars of debt.

Tampa officials plan to finance a $40-million loan using income from the downtown district. The money could be used to pay for renovation of Curtis Hixon Park, the Riverwalk and expansions of a parking garage.

Westmoreland, of the Florida Redevelopment Association, said reducing the effects of tax increment financing would be crippling to many Florida cities.

It wasn't long ago, she said, that St. Petersburg's downtown looked much different.

Though St. Petersburg may now be booming, other cities like Clearwater are just now starting to see results downtown, she said.

And if the Legislature eliminates taxes on homesteaded property, as is being considered, it could kill some major projects in Tampa, where developers are counting on money from the special districts to finance their plans, Iorio said.

These include the Central Park Village project, and the Heights, a 48-acre project on the Hillsborough River.

"If those rules change dramatically ... areas will not get redeveloped as promised," Iorio said. "And that will be terrible for us when we're right on the cusp of this tremendous change."

Janet Zink can be reached at 813 226-3401 or jzink@sptimes.com.

Where the money's going

Tax increment financing diverts millions of dollars each year from city budgets in Hillsborough and Pinellas counties.

Source: City budgets

. Q&A

What is tax increment financing?

Tax increment financing, or TIF, allows cities to use future property tax revenue in a specific area to pay for infrastructure improvements now. There are currently 182 municipalities in Florida using TIF financing.

What property tax revenues are involved?

TIF includes city and county property tax dollars. It does not include tax dollars for schools.

What won't tax increment financing pay for?

Most personnel costs and general government costs; improvements outside the TIF area.

PLEASE PICK UP INFO BOX FROM TIF042207 FROM AARON SHAROCKMAN"S STORY

[Last modified April 22, 2007, 00:18:33]