County assistant administrator disputes that, but city staff members point to their research
Last fall, with the passage of its 2016 fiscal year budget, the Sarasota County Commission removed one enduring item from its debit list: payment of ad valorem tax revenue to the trust fund for the Downtown Sarasota Community Redevelopment Agency (CRA).
Forged in 1986, the 30-year agreement between the City of Sarasota and the county provided funds for major improvements to the City of Sarasota’s downtown area. However, as the end of the three decades approached, county commissioners began eyeing other uses for the money, especially as they had been drawing funds from their “rainy day” reserve to cover gaps in their budgets created by the decline in property values as a result of the Great Recession.
This week, however, City Attorney Robert Fournier posed a legal question about when the county’s payments to the trust fund actually end. By his and City Finance Director John Lege’s calculations, Sarasota County should provide one more transfer of money, which would come in the 2017 fiscal year.
Fournier won unanimous City Commission approval on April 4 to send a letter to County Administrator Tom Harmer, making his argument.
For the 2017 fiscal year, based on city staff’s math, the total of county ad valorem tax revenue for the Downtown Sarasota CRA trust fund could amount to about $4.5 million.
Fournier’s presentation to the City Commission on Monday afternoon, April 4, was scheduled as an update on how the city might go it alone in keeping the Downtown CRA alive. As part of his and Lege’s research, he explained to the board, one facet of the city-county agreement became clear to them.
With any tax-increment financing district, he told the commissioners, a base year is set. Then the difference between the total property value for the defined area during the base year and the value in each subsequent year of the life of the CRA is calculated, and the resulting increase in ad valorem tax revenue —pegged to a specific millage rate — is deposited into the fund for the district.
“You’re unable to collect any tax increment for the tax year 1986” in the case of the Downtown CRA, he pointed out, because that is the base year. Therefore, the first year for which revenue could be collected was 1987, Fournier said. Lege verified that the first tax bill to which the CRA payment applied was in 1987, so the county put its initial money into the CRA account in early 1988.
That means that 2015 was the 29th year the county made a payment, Fournier added, and 2016 would be the last calendar year for which a payment is due.
“That may be an issue that requires clarification,” he noted. “We’re just not sure.”
He pointed out that no city staff member had been able to find anything in writing that says, “The last payment [from the county] has already been made.”
His recommendation, Fournier continued, was to have city staff prepare a letter — signed by Mayor Willie Shaw — to be sent to County Administrator Harmer, asking for clarification of the payment schedule.
City Manager Tom Barwin told the board he had made Harmer aware of city staff’s findings.
“So [the letter] should not come as a surprise [to county staff],” Fournier said.
In response to a question for comments from county staff, spokeswoman Jamie Carson provided The Sarasota News Leader with the following statement on April 5 from Assistant County Administrator Mark Cunningham: “The Downtown CRA sunsets in Fiscal Year 2016, which ends Sept. 30. This has been stated in several previous resolutions approved by both the county and the City of Sarasota and in the CRA Extension Committee Final Report.” [That extension committee, with members appointed by both the city and county boards, worked for months on proposals related to keeping the Downtown Sarasota CRA in existence after the 30-year agreement ended.)
Cunningham continued, “It’s also been mentioned repeatedly at public, televised budget workshops and at a joint meeting between the city and county. Further, the city’s adopted financial plan shows city and county contributions to the CRA in FY16 but none in FY17.”
Lege told the News Leader on April 5 that the county’s payment to the Downtown CRA fund in October 2015 was $4,305,340, while the city’s contribution was $4,234,033. Each fiscal year begins Oct. 1.
With county property values expected to increase again this year, Lege added, he expects the city and county each would owe about $4.5 million to the trust fund.
Lege also prepared a chart illustrating Fournier’s point to the City Commission on April 4. It shows the starting tax year for the Downtown CRA as 1987 and the first payment period as Fiscal Year 1988. The chart, which city staff provided to the News Leader, also lists 2016 as the 30th tax year, with the last payments due in the 2017 fiscal year.
On Monday afternoon, Mayor Shaw expressed the City Commission’s appreciation to Fournier: “We want to thank you and staff for the due diligence.”
In a telephone interview on April 5, Barwin told the News Leader that staff was working on a draft of the letter, indicating he was not certain when a copy would be available.
The county shift in philosophy
Even as the Downtown Sarasota CRA Extension Study Committee was meeting in 2013 and 2014, county commissioners were making it clear that, with tightened budgets necessitated by the recession, they envisioned other purposes for the millions of dollars that had been going to the CRA.
On Sept. 22, 2015, former City Commissioner Paul Caragiulo — who was elected to the County Commission in 2014 — made the motion to approve the county resolution ending the Downtown CRA. He acknowledged that the agreement “has been very effective” in helping pay for such projects as Five Points Park and Bayfront Park. However, he added that he felt the county board members “know so much more about what to do and what not to do” with a CRA, as the downtown agency was coming to an end.
As part of a Feb. 20, 2015 County Commission workshop that included discussion of CRAs, Commissioner Charles Hines voiced his objection to the overhead of managing such an agency, even when no project was pending.
(Among the extension study committee’s recommendations was the proposal for a new board to oversee the Downtown CRA, so the county would have more say in how the tax-increment financing was used. The City Commission has served as that governing body during the life of the agreement.)
Commissioner Christine Robinson also pointed out during the September 2015 budget hearing that other areas of the county need help to eliminate blight, which is one major goal of a CRA, under state law.
Instead of continuing the Downtown CRA, the County Commission revised a county ordinance governing its Community Reinvestment Program (CRP) and approving $500,000 as seed money for it in the 2016 fiscal year budget. During the county board’s March 30 budget workshop, County Administrator Harmer affirmed that the $500,000 seed money remains available. He added that staff hopes to add $250,000 to the fund in the 2017 fiscal year.
According to the revised CRP ordinance, municipalities and the county itself could apply for money for certain purposes, including redevelopment planning, surveys and financial analysis of projects; and the design, preparation and construction of public improvements. “It’s project-oriented, and we probably would like to see [the funds] distributed evenly throughout the county,” Hines said during the Feb. 20, 2015 workshop.
As for the city going it alone …
During the April 4 City Commission meeting, City Attorney Fournier also explained the results of research he had undertaken into whether the city should continue funding the Downtown CRA on its own.
He discussed the two Florida State Statutes that govern CRAs, noting a lack of clarity in the agreement that created the Downtown CRA in 1986. Although the special counsel the city employed at the time that measure was approved has asserted his belief that the delegation of powers for the CRA from the county to the city would allow the city to continue on its own, Fournier questioned whether the Office of the County Attorney would agree.
The primary focus of his concern, Fournier pointed out, was whether the city would have to end up essentially asking county permission to take certain steps along the way.
“I don’t think the issue’s ever been adjudicated,” Fournier added. “I don’t think that puts you in a very good position,” he told the city commissioners.
The city will still have the Downtown CRA Trust Fund, he continued. “You can annually appropriate whatever amount you see fit” for community redevelopment, he said, and then deposit the money in that trust fund. “I think that’s the best way, probably, for you to go, moving forward.”
In response to a question from City Commissioner Shelli Freeland Eddie, Fournier said, “It’s surprising there hasn’t been a whole lot of litigation rise up to the appellate level” in regard to delegation of authority from charter counties — such as Sarasota — to cities with CRAs. “I guess [disputes get] worked out one way or another.”