Tallahassee discouraging downtown investment

[Tallahassee.S]

I applaud Tallahassee for tiring to develop its downtown, but I disagree with one of the methods currently being deployed.

Currently, an office or condo tower pays a higher property tax rate in the downtown area than anywhere else in the city. Downtown properties already have a much higher assessed value than suburban properties - which is acceptable - but applying a higher property tax rate is just too much.

Property taxes on a office building are passed onto the tenant in the form of more expensive leases. If a office is considering expanding, it's awfully hard to justify taking the downtown location with a much higher cost per sq foot than say a suburban campus off Capital Circle.

The taxes paid on downtown office space could be four or five dollars higher per sqft than a suburban campus.

Simple economics comes into play: companies looking for the prestige of being downtown will choose downtown locations. Everyone else is off to suburban locations were cost is minimized. But even prestige has its cost limits.

Sonny Granger's Tennyson is a condominium. Property taxes do not directly effect condominium development since once the units are sold, it's now the purchasers responsibility to pay the property taxes. Once a developer builds a condo, they're out the door. I believe this is why Tallahassee is seeing a number of condominiums under construction and in the planning stage. However, office development downtown is almost non-existent.

One has to wonder if the special taxation area downtown is doing more harm than good.

[monsoon]

While I am not familiar with Tallahassee, I am familiar with the problem that you have brought up as many cities are seeing the same thing in their cores, i.e. Lots of high priced condo develoments, little new job creation.

[Florida]

I applaud Tallahassee for tiring to develop its downtown, but I disagree with one of the methods currently being deployed.

Currently, an office or condo tower pays a higher property tax rate in the downtown area than anywhere else in the city. Downtown properties already have a much higher assessed value than suburban properties - which is acceptable - but applying a higher property tax rate is just too much.

Property taxes on a office building are passed onto the tenant in the form of more expensive leases. If a office is considering expanding, it's awfully hard to justify taking the downtown location with a much higher cost per sq foot than say a suburban campus off Capital Circle.

The taxes paid on downtown office space could be four or five dollars higher per sqft than a suburban campus.

Simple economics comes into play: companies looking for the prestige of being downtown will choose downtown locations. Everyone else is off to suburban locations were cost is minimized. But even prestige has its cost limits.

Sonny Granger's Tennyson is a condominium. Property taxes do not directly effect condominium development since once the units are sold, it's now the purchasers responsibility to pay the property taxes. Once a developer builds a condo, they're out the door. I believe this is why Tallahassee is seeing a number of condominiums under construction and in the planning stage. However, office development downtown is almost non-existent.

One has to wonder if the special taxation area downtown is doing more harm than good.

Wow. You've hit the ground running and you make some valid points. Its true, the DIA imposes 1.00 additional millage on downtown properties... this is for a number of reasons, one, the funds generated go to help build up downtown infrastructure, another is there isn't enough taxable property downtown because of the presence of so much state owned property.

But you bring up a good point... if we were to cut that tax... I wonder what type of office development we might see.

[Tallahassee.S]

Thanks.

Why is it that downtown needs a special assessment for infrastructure improvements when far more money is spent upgrading roads like Capital Circle? I'm not 100% sure about Tallahassee but in most cities the downtown district generates more tax revenue than is needed to service the area, the excess subsidizes the suburbs and keeps their taxes artificially low.

I have a hard time believing this extra tax is truly needed for the downtown district. High Point Center alone pays just over $200,000 a year in property taxes. How much money is truly needed to service that small plot of land?

Eliminating the tax won't guarantee office development, but at least it will remove the handicap downtown currently has when competing with the suburbs for office development.

[stjoe]

Tallahassee.S,

Great points. Well thought out...I can't argue with you.

[poonther]

When was this special taxation district created and what are the boundaries? Was this part of the downtown CRA that was created a few years ago? I see that T.J.says the difference is 1 millage rate.

If they are getting more money, could they please use it to upgrade Monroe Street between Apalachee and Tennessee. That street's paving is a mess and all rutted. It's kinda embarassing for our downtown. I try and avoid that street when driving downtown because it's bumpy.

[jpl02]

The downtown CRA is an extension of the Frenchtown CRA. We had a BIG discussion about it in class, regarding the feud between COT and Leon County. It was the main reason Leon became a charter county in 2003.

To think that downtown needs to be a CRA is just laughable. As an urban planning student, we've discussed CRAs in classes, and the "requirements" to become one are so lax.....anyone can basically become a CRA. The requirments need to be changed.

Then here comes the fun part. CRAs are financed through "tax-incremental financing" or TIF. Here's how TIF works. A place (like downtown) becomes a CRA. The length of a CRA can last up to 30 years. What happens is, the city gets the same amount of property taxes each year starting from the date the CRA is established. But.....property values increase each year.....so how can this be so? The increase in property taxes is put in a fund to be used by the CRA for further investment.

Here's an example. In 2004, a building in a CRA has $5000 in assesable property taxes a year. That year, a CRA is established. In 2005, the building's assesable property taxes increase to $6700. Under TIF, the city can only take $5000 of that. The extra $1700 goes to the CRA fund.

Interesting, isn't it.

[Tallaman]

Seems like what the city is trying acccomplish (apparently ready to succeed at) is provide the infrastructure for offices and the environment for residents. It gets back to the debate over low tax/ promote business growth vs. high tax/ provide more gov't services. Some tax is necessary to establish and maintain certain standards (cleanliness, security), but I'll vote "low tax/ let people and businesses decide how money should be spent" anyday.

[Florida]

The downtown CRA is an extension of the Frenchtown CRA. We had a BIG discussion about it in class, regarding the feud between COT and Leon County. It was the main reason Leon became a charter county in 2003.

To think that downtown needs to be a CRA is just laughable. As an urban planning student, we've discussed CRAs in classes, and the "requirements" to become one are so lax.....anyone can basically become a CRA. The requirments need to be changed.

Then here comes the fun part. CRAs are financed through "tax-incremental financing" or TIF. Here's how TIF works. A place (like downtown) becomes a CRA. The length of a CRA can last up to 30 years. What happens is, the city gets the same amount of property taxes each year starting from the date the CRA is established. But.....property values increase each year.....so how can this be so? The increase in property taxes is put in a fund to be used by the CRA for further investment.

Here's an example. In 2004, a building in a CRA has $5000 in assesable property taxes a year. That year, a CRA is established. In 2005, the building's assesable property taxes increase to $6700. Under TIF, the city can only take $5000 of that. The extra $1700 goes to the CRA fund.

Interesting, isn't it.

You are right on with regard to the way the TIF for the CIA works... but you stated the CRA is the reason Leon became a Charter. I don't agree.

The whole major issue surrounding the CRA issue wether or not they would consider Downtown Tallahassee "blighted". The city commissioned a major study, over 200 pages of which I do still have a copy, that highlighted all of the blight in the downtown area, in addition to outlining areas considered Brownfields. Some believe this was an extension of the Frenchtown CRA, I disagree... Frenchtown was only awarded CRA status because the area's blight was quite obvious. Much less so in downtown Tallahassee.

In a Mayor-Chair meeting the City and County were able to come to a compromise on the issue. Extra revenues will be used by the governments to boost infrastructre in the downtown area.

Yes the Highpoint Center is a property that pays a substantial property tax in the downtown area, but it is unique in that it is currently the largest privately owned building in our downtown area, of which there aren't many... so imagine if $200,000 is the largest amount being paid in Taxes of any building downtown, and all others are paying less, and there aren't many others that aren't government buildings, just imagine how little money is being collected. Its a problem common to many Capital Cities.

[Tallahassee.S]

How much money is actually spent downtown verses what is collected?

[jpl02]

You are right on with regard to the way the TIF for the CIA works... but you stated the CRA is the reason Leon became a Charter. I don't agree.

That was the reason given to me by the assistant County Administrator, who happens to be one of my professors. Of course, you have to take it with a grain of salt, since he has his slant on things. Everything he says boils down to the COT being a blood-sucking leach

[Florida]

That was the reason given to me by the assistant County Administrator, who happens to be one of my professors. Of course, you have to take it with a grain of salt, since he has his slant on things. Everything he says boils down to the COT being a blood-sucking leach

I wonder how an assistant to P.A. can also hold a job as a professor. I know Ms. Favor's assistant City Managers, Michael Wright, Tom Coe, Rick Fernandez have tight schedules, and hardly enough time to spend with their families, yet alone teaching a course to bash the other government. If the county's only issue for being a charter was to fight the CRA, there would be no need for a charter.

I viewed the charter as a mesure to give the county some added strength in light of threats to consolidate. They feared, and probably still do, the thought of the City of Tallahassee taking over if Consolidation were ever approved (which it may not since no one cares to talk about it).

[jpl02]

I wonder how an assistant to P.A. can also hold a job as a professor. I know Ms. Favor's assistant City Managers, Michael Wright, Tom Coe, Rick Fernandez have tight schedules, and hardly enough time to spend with their families, yet alone teaching a course to bash the other government. If the county's only issue for being a charter was to fight the CRA, there would be no need for a charter.

I viewed the charter as a mesure to give the county some added strength in light of threats to consolidate. They feared, and probably still do, the thought of the City of Tallahassee taking over if Consolidation were ever approved (which it may not since no one cares to talk about it).

I haven't the slightest idea how he can. He's an adjunct and only teaches one class (ours) which meets once a week from 5:15-8:00.

Sadly, it's people and others at county hall with that attitude are the reason why little gets done. It's like....damn. The city and county really hate each other, and for what? I'd like to see a change in county structure.......elect our county administrator. Prior to this class, I had no idea who PA was, and quite frankly, I don't hold much of an opinion to the county heads and leaders (especially Bill Proctor, don't get me started on that ass). We need to be able to elect and recall these people and put in prudent leaders who will attempt to make peace with the city. I'm not expecting them to get in a circle and sing kumbaya, but at least not bash each other and make efforts to have things work.

Ironically, PA's assistant always talks about professionality in government. Well, being able to cooperate with other governments is a part of that, don't you think?

[Florida]

Your opinions are reminders of what I've felt for so long. How can we as a county succeed in cooperating with our regional partners in building a stonger region, if we can't manage a profressional working relationship with Leon County's only city.

I think the stupid game they play is ridiculous. I'd love to be able to recall a few people on the county commission. I hate to take sides, but observe the behavior of the two boards, look at how professional the city operates and look at the county... there is an old way of thinking on the county commission that I'd like that to change.

[poonther]

Two words for this problem:

Consolidate Now!

[Florida]

One City - One County = I agree!