Big jump this year in property values the reason for much higher tax-increment financing district funds for The Bay Park
On June 24 — the second and final day of their annual, intensive budget workshops — the Sarasota County commissioners unanimously approved a motion directing county staff to begin an earlier analysis than originally called for in regard to the amount of property tax revenue the county will generate for The Bay Park in downtown Sarasota.
Commissioner Christian Ziegler was not present for that workshop.
In November 2020, the commissioners voted 3-2 to approve a 30-year, tax-increment financing district (TIF) for the 53-acre Bay Park on the City of Sarasota’s waterfront. They also approved an agreement with the City Commission that established the governing board that will oversee the spending of that revenue, plus the protocols for approval of any expenditures for park amenities.
The tax-increment financing district encompasses land beyond just the park itself. Every year the value of the property in that district increases, both the city and the county will apply their millage rates as of that year to the value to determine how much money will be set aside in a trust fund for the park.
In January 2020, county staff estimated that, over 30 years, close to $200 million could be raised by the city and the county.
Commissioners Michael Moran and Ziegler opposed the TIF plan, contending that the 30-year commitment would tie the hands of future commissioners in terms of how county revenue could be used. Moran, especially, voiced worries about the potential need for the money to serve the public, given the anticipation that residential growth would continue in coming decades.
Ziegler expressed concern about approving the diversion of close to $100 million in county revenue at the same time the COVID-19 pandemic was costing people their jobs and businesses were struggling.
On June 23, as county financial management staff and County Administrator Jonathan Lewis were reviewing information related to the county budget for the 2023 fiscal year, one slide showed that the projected TIF revenue from the county for The Bay Park trust fund would be $1,668,342 in the 2023 fiscal year, which will begin Oct. 1. The amount is 163.1% higher than the revenue generated for the current fiscal year: $633,989.
The jump is a result of the preliminary, June 1 Sarasota County Property Appraiser’s Office estimate that county property values had jumped 16.6% this year. (The final values, necessary for the annual Truth in Millage Notices, which go out in August, were released this week, as required by state law. See the related article in this issue.)
“Wow!” was Commissioner Ron Cutsinger’s response after looking at that slide. “That’s astonishing,” he added.
Then Cutsinger said, “We need to think that through as we go forward.”
“How does this play out?” Commissioner Ziegler asked, if the amount continues to climb well above projections in subsequent years.
“Every year,” thanks to the agreement with the City Commission, County Administrator Lewis explained, “the projects [for the park] come before you all.” The County Commission has to approve any requested appropriations, Lewis added.
Chief Deputy County Attorney Karl A. Senkow confirmed Lewis’ statement, as Senkow was the member of the Office of the County Attorney who handled the TIF district negotiations with city staff.
Senkow reminded the commissioners that two of them sit on the district governing board, along with two city commissioners and former County Commissioner Jon Thaxton, a senior vice president for the Gulf Coast Community Foundation in Venice, which has advocated for The Bay Park.
“But there’s no cap in [the agreement]?” Ziegler asked Senkow.
Senkow replied that that is correct.
“We pushed very deliberately that, at the 15-year mark … there is a review of this,” Chair Alan Maio pointed out. His request to the county commissioners seated 12 years from now, plus staff at that time, is to ensure that that review takes place, Maio continued.
Before the county commissioners approved the TIF agreement, Maio talked about the fact that it might not need to stay in place for the full 30 years. He suggested that an analysis take place at the 15-year mark. If the money raised by then added up to the amount projected for the full 30 years, Maio suggested that the county could end its participation in the fundraising.
Section 3.a. of the interlocal agreement with the City of Sarasota says, “If all Approved Projects have been completed and the financing of the Approved Projects has been fully paid, then this Agreement can be terminated with 60 days written notice by either party delivered to other party …”
Further, Section 4 points out, “Beginning in the fifteenth year of this Agreement and every five years thereafter, the City and the County agree to work in good faith to evaluate the performance of this Agreement. Factors that may be considered during such an evaluation include … the amount of Tax Increment Revenue being produced each year [and] the total amount of Tax Increment Revenue contributed to the Trust Fund under the Agreement …”
As a result of the June 23 discussion, Lewis promised to provide the board members updated TIF revenue projections, based on the latest information from the Sarasota County Property Appraiser’s Office and state economists, who routinely update their estimates for property tax changes for local governments statewide for the coming years.
The second discussion
At the start of the June 24 County Commission budget workshop, Deputy County Administrator and Chief Financial Management Officer Steve Botelho presented the January 2020 slide to the commissioners that showed the projected TIF district revenue for The Bay Park over 30 years from the city and the county. He also had slides showing updated revenue projections in March 2022 and then in June of this year.
The January 2020 slide said that, in the fourth year of the TIF agreement — which is Fiscal Year 2023 — the county’s revenue from the district was estimated at $623,193. By March 2022, that had climbed to $807,087. Finally, in June — based on the Property Appraiser’s Office preliminary property value report — the amount was put at $1,668,342. Thus, the figure was more than $1 million above the January 2020 projection, as County Administrator Lewis pointed out.
Having spoken with Chief Deputy County Attorney Senkow the previous day, Lewis told the commissioners, he had learned, “It’s up to you in terms of how much of that [revenue] … you apply to the projects [proposed for the park].” In the 15th year, Lewis added, the commissioners will have the discretion to consider whether the terms of the interlocal agreement have been satisfied and, therefore, they could call for termination of the agreement.
Before Maio offered further comments, Commissioner Nancy Detert reminded her colleagues of the dispute that erupted with city leaders years ago over the Downtown Sarasota Community Redevelopment Area Trust Fund. City staff contended that the county owed one more payment, but staff of the Office of the County Attorney presented facts to assert that the county had fulfilled its obligation.
As she has in past discussions of the TIF agreement for The Bay park, Detert pointed out that, with a TIF, no revenue is collected in the first year. Referring to city leaders, she added, “We need to emphasize that year after year, so we don’t get to the end and owe them another year [of money].”
Lewis responded, “I think [Senkow] has taken great lengths to make sure the county and the city are adequately informed on that issue.”
Maio then asked whether the board members could make a motion during a budget workshop.
Senkow replied that that would be appropriate.
That was when Maio made the motion calling for county staff to start planning in Year 14 to make certain the funding analysis would be complete in Year 15. Detert seconded the motion.
Detert did ask for emphasis that the 15-year mark “is not a sunset date; it’s a review date. “Did the amount end up being double what we projected?” If so, she continued, the county commissioners might want to reduce the amount of money they would turn over to the trust fund after that 15th year.
“That’s a great point,” Maio told her.
Further, Maio affirmed, “This has nothing to do [with the people involved in The Bay Park,” referencing the Bay Park Conservancy, the nonprofit organization that manages the park and is raising private funding for amenities.
The chief operating officer of the Conservancy is Bill Waddill, Maio’s long-time associate at the Kimley-Horn consulting firm in Sarasota. Maio has talked many times in the past of the fact that he and Waddill worked together for about 30 years at Kimley-Horn.
The motion passed 4-0.