Commercial property owners have objected to the 39% increase they will see on their tax bills
Owners of commercial property have complained that their Sarasota County fire assessments will be rising 39%, thanks to a new methodology for those fees that the Sarasota County Commission approved in May.
Nonetheless, the board members voted unanimously during their Sept. 18 budget hearing to adopt the assessments based on that methodology.
County Attorney Stephen DeMarsh cautioned the commissioners that they no longer could rely on the methodology that had been in place since 1996 because of their May 23 vote on the new methodology. “You have now more current data and a methodology that would suggest you cannot go back to the old approach, because the data will not support continuation of the allocation between residential and commercial,” he told the board. If the new assessments were not approved, DeMarsh added, “that would create significant legal risk for the county …”
Still, Commissioner Michael Moran asked what options the board had on Sept. 18.
The assessment methodology has two legal tests, DeMarsh replied: Is there a benefit to property? And is that fairly apportioned? Because the new rates meet those tests, he added, “I honestly don’t think you have a lot of options.”
Among the changes, the new methodology creates a multi-family category instead of continuing to combine all residential dwellings in the same group. That change is one major reason that the expense for commercial properties will rise 39% from the current rates, Richard Collins, director of emergency services for the county, explained to the board.
The current demand percentages are mostly split between single-family homes — 56.84%; and the group combining multi-family homes and non-residential structures — 43.05%. Agricultural properties comprise the remainder.
The revised percentages under the new methodology are as follows:
- Single-family homes: 43.56%.
- Multi-family residences: 16.67%.
- Non-residential: 39.77%.
The rates are based upon equivalent billing units (EBUs) of 100 square feet, with 10 EBUs — or 1,000 square feet — set as the minimum assessment.
For the residential category, the current rate is $6.72 per EBU; that will increase to $6.99.
Multi-family residences are paying $13.29 per EBU; that will decrease to $12.24 per EBU.
The non-residential rate is $13.29 per EBU; it will rise to $18.53 per EBU.
Mobile homes are assessed the residential rate, with the minimum set at 10 EBUs.
The Sept. 18 board vote followed a presentation by Collins in response to questions his office had received in advance of the public hearing.
Collins pointed out that about 76,000 property owners “will see some type of reduction” in their assessments.
When Commissioner Nancy Detert suggested that the multi-family residences essentially have been subsidizing the commercial properties in regard to fire assessments, Collins responded, “I don’t use the word ‘subsidizing.’ I think multi-family being in its own category is much more reflective of the service that we provide and that call volume.”
How did county staff reach this point?
Collins explained that the methodology report prepared over the past year for the county by Government Services Group (GSG) of Tallahassee had focused on data showing calls the county Fire Department handled in 2015. The study also took into consideration the department’s budget, the number of vehicles it has, staff time spent on incidents and changes in the Sarasota County Property Appraiser’s Office database. The latter led to a 2015 dispute over county fire assessments of property owned by the City of Sarasota. (That was resolved in 2016, with the county telling city staff it would not seek the fees after all.)
A May 23 memo Collins prepared for the board prior to its adoption of the new methodology says, “The Fire Assessment Program utilizes a methodology based upon a historical demand study, which allows for the development of costs allocated to property use categories, such as residential homes, based upon the percentage of emergency responses to that category.”
GSG has a long track record in the state with its consulting work, Collins pointed out on Sept. 18; it works with 100 different fire assessment programs.
Collins further noted of the study, “A clear allocation is made between fire and EMS [calls].” Expenses for the latter are not considered in determining the fire assessments, he stressed.
Among questions his office had received, Collins continued, was one about whether false alarms were included in the data. They were not removed, he said. Instead, they were applied to the appropriate category — residential, residential multi-family or commercial.
The only incidents not included in the data used to determine the assessments, Collins added, related to calls to vacant land, such as property used for agricultural purposes, and those involving mutual aid situations to another county or to a municipality.
The methodology also removed outbuildings from the calls/incident data, he said.
After GSG reviewed the data for 2015, he continued, staff asked that the firm also look at the calls for 2014 and 2016 as a means of verifying the data. GSG found consistencies between the 2015 data and the numbers for those other two years, he noted.
“Service delivery costs have changed,” he told the board. “We’ve had a tremendous amount of growth in the county.”
The fire assessment methodology the county was using was based on 1996 data, he pointed out. Typically, the data should be updated every three to five years to make assessments fair, he added.
Commissioner Alan Maio asked, “How did this happen, the 21-year gap?”
“I can’t answer that,” Collins replied, saying he did not know.
Collins joined the county staff in August 2014.
In his former position, Collins told Maio, fire assessments were updated every four to five years.
Moving forward, Collins told the board, he and his staff will keep the county on a schedule of updates every three to five years.
Collins also explained that staff worked with GSG to determine how much money the Fire Department needed from the assessments to operate without using too high a percentage of its reserves. Based on the new methodology, Collins told the board, the assessments legally could bring in a total of $49.3 million. However, staff settled on $36.5 million, which was 95% of the total, minus the amount of proceeds linked to government-owned property, which is exempt.
Using the old methodology, he said, the Fire Department would see a $4.3-million shortfall in the 2020 fiscal year. With the new assessments in place, he added, the first shortfall would come in the 2022 fiscal year: an estimated $1,383,045.
“Each year [the budget] continues to use fund balance,” he pointed out. However, given the number of new properties anticipated to come onto the tax rolls, he added, the need for reserve funds to balance the department’s budget should decrease.
Collins also pointed out that the Fire Department reduced its emergency operating reserve from a 60-day level to a 30-day level.
Additionally, the new assessments will enable the department to build three more fire stations, he said, replacing metal structures.
After the May 23 public hearing, during which the commission adopted the new methodology, Collins continued, staff held several more meetings as part of its outreach to make the public aware of the changes in assessments.
Nonetheless, Chair Paul Caragiulo pointed out on Sept. 18, “For the most part, the commercial property owners didn’t realize what this meant until they got a TRIM [Truth in Millage] notice.”
“Is there anything in this material where it said … what the existing rates were?” Caragiulo asked, referring to the backup agenda documents for the Sept. 18 public hearing.
Collins replied that he showed the board a slide on May 23 that featured the existing rates and the proposed new rates. However, he said he was not certain the materials for the Sept. 18 hearing included that chart.
Pro and cons
Three members of the public addressed the board during the public hearing prior to the vote.
Robert Waechter of Siesta Key, who told the board he is a retired firefighter, protested the increase for commercial property owners. The bill for his warehouse would go up $8,000, he said, if the commission approved the new assessments that evening. “That’s incredible.”
“To make a poor pun,” he told the board: “You’re drinking from a fire hose here. You’re getting a deluge of information.”
The most common call fire departments receive, he continued, is what his crew called a “food on the stove” incident. “That’s what the wheels are rolling for most times.”
On the other hand, commercial establishments have sprinkler systems and fire alarms that enable the owners to limit damage, Peter Straw, executive director of the Sarasota-Manatee Manufacturers Association, pointed out, also urging the board not to implement the higher assessments.
Waechter took issue, too, with County Attorney DeMarsh’s assertion that the board had no recourse but to implement the new assessments.
Conversely, Philip Vets — who told the board he also is a retired firefighter — said he supports best practices in regard to fire assessments. Taking exception to Waechter’s comment about Waechter’s $8,000 increase, Vets added, “I looked at it like he had a savings for the last 20 years.”
Vets’ business would realize an increase, too, Vets said. Nonetheless, Vets continued, “It’s up to you guys to make some tough decisions, but I know that you’ll make the right choice.”
Attorney Dan Lobeck, president of Control Growth Now, told the board he supports the county’s homeowners. “They have been over-assessed for fire and rescue for 21 years.”
Following the discussion and the public comments, Commissioner Detert made the motion to approve the new fire assessments. Commissioner Charles Hines seconded it.
“This will begin the funding for three new replacement fire houses,” Commissioner Maio said. One of those, on Apex Road, has a mobile unit for the fire/medics and a Quonset hut-type of structure for the equipment, he pointed out. Those buildings “would not withstand [a] hurricane,” he added, noting that the county experienced only tropical storm force winds during Irma.
The motion then passed unanimously.