Fort Walton Beach Council agenda — 08-10-2007 special agenda - Landmark — reading text

square feet ( GSF) of office and mixed use ( retail/restaurant) development the land controlled on by Emerald Coast Partners LLC. Fort Walton Beach faces a number of challenges in maintaining both millage rates and service levels unchanged, while continuing to make infrastructure necessary improvements. The city is largely built out and is geographically constrained in terms of further expansion. The low assessed value of many residential properties, particularly in the CRA, along with the homestead exemption, means that revenue flows from these properties are low relative to public services demanded. The State of Florida' s Save Our Homes constitutional cap on growth in assessed value of homesteaded property severely constrains potential revenue increases from ad valorem taxes on residences. However, the cost of providing services continues to rise. Thus, the City must focus on higher value redevelopment activities, such as the one described here, to increase the tax base and fund necessary public services and infrastructure. The Florida Redevelopment Association ( notes that the tax increment financing FRA) TIF) tool is available to promote private sector activity in CRA areas. Under the TIF scheme, the dollar value of all real property in the CRA area is determined as of a fixed date, with this value known as the " frozen value." The property tax revenues flowing from the frozen value of a property are available to meet general government needs. However, 95 percent of the incremental tax revenues resulting from the increases in real property value above the frozen value are deposited into the CRA Trust Fund and are dedicated to improvements in the redevelopment area. The FRA also notes that property tax revenue collected by the School Board and any special district are not affected under the tax increment financing process. The duration of a CRA in Florida can be to 60 up years after the expiration of which tax revenues again are available for use by the taxing authority. It is our understanding that the City of Fort Walton Beach CRA TIF financing mechanism authority will expire on December 31, 2026. For purposes of this report, the respective millage rates in 2007 ( and relevant taxing authorities) that will likely be available to the CRA were . 003650 ( Okaloosa County), 0041634 ( City of Fort Walton Beach). To the extent that these millage rates are either decreased or increased, then the estimates of incremental revenues here will be presented too low or too high, respectively. The Landmark project incorporate existing parcels, each of which has an existing tax assessment and an existing " frozen value" to be used in calculating tax increment financing ( TIF) impacts. The earliest available value from the property appraiser for these parcels is the 1982 value of $117, 120, which would generate an annual tax flow of 972 at current millage rates. The total current assessed value of the parcels is $ 798, 153 and we take the frozen value of the parcels to be the 1982 value $ 117, 120. The equal to estimated total construction costs for the several phases of the project are $ 23, 052, 700. At buildout, an appropriate market value based on the cost of construction and the current assessed value of the land would be $ 23, 850, 853. In order to estimate assessed value, and thus ad valorem taxes, we subtract 15 percent of the market value to represent possible selling expenses, as is commonly done when adjusting likely sale price to reflect assessed value. It is important to note that while the City of Fort Walton Beach and Okaloosa County might normally undertake infrastructure improvements in the City similar to those that could be made using ad valorem property tax revenues and other sources of funds, these Okaloosa County taxing entities would typically not contribute to this type of project. They are effectively being made financial partners in CRA redevelopment efforts by the CRNTIF process. These assessed values ( for non- homestead properties) are able to grow at a rate greater than that permitted for residential properties under the Save Our Homes constitutional amendment. However, while millage for the City of Fort Walton Beach is 4. 1634 mills, the nature of the TIP means that the new development will gent:rate revenues including not only the 4.1634 mills for the City of Fort Walton Beach but also an additional 3. 65 mills. The incremental tax revenues presented here flow only from the increase in values associa.ted with the Landmark project itself (the " direct" However, the indirect impacts). and induced spending ( i.e., the " ripple" or " multiplier" effect) associated with this project, both in the construction phase, and then in ongoing economic activity, will be an important addition to the economic base of the region. The calculations presented here do not include the tax revenues that will flow from additional development spurred by the Landmark project (the " indirect" and " induced" impacts). This is because these impacts will be spread geographically across the local economy, so that the increase in commercial real estate valuation associated with these ripple effects may occur in other parts of the City of Fort Walton Beach, Okaloosa or neighboring counties that lie outside the CRA. Upon expiration of the CRA, these revenues will flow to the respective taxing authorities. A secondary source of fiscal impact will be from the taxes paid on the additional spending that occurs when employees in these new businesses spend their income in the local economy. These include positive valuation effects on adjacent properties, some of which will flow to the City of Fort Walton Beach in additional ad valorem property tax revenues. In addition, the improvement of the subject acreage would likely induce additional investment in both Fort Walton Beach and the CRA. This additional investment will correspondingly increase ad valorem general and Tax Increment revenues. The increased sales resulting from the presence of the new retail properties assumed to be part ofthe development will generate additional taxable sales and thus sales tax revenues. The bulk of these monies go to the state, while Okaloosa County will see additional revenues from any current or future local option sales tax. The Okaloosa County school system will see increases in funding via the local discretion component of their ad valorem revenue. The larger part of Okaloosa School District millage rate is effectively set by the State of Florida under the Florida Education Finance and Program (FEFP), millage rates reflecting " required local effort" must be reduced downward when taxable values in the County increase. Because of this feature of the FEFP, construction of high- value dwelling units and mixed-use space in the downtown area reduces school taxes for all other property tax-paying households in the County. Because other revenue sharing distributions from the state to counties and municipalities depend on population and not on the magnitude of local sales, there will not be a large direct tax revenue impact to the City of Fort Walton Beach, or to Okaloosa County of these increased local tax collections, except as described for the school system. Because there is no local option sales tax in place, additional retail sales will not generate additional local government sales tax revenue. REVISED AUGUST 6, 2007 NARRA TIVE DESCRIPTION LANDMARK CENTER Fort Walton Beach, Florida Project T earn Developer: Fort Walton Beach Development Partners, LLC 4958 Paradise Isles Destin, Florida 32541 Civil Engineer: Moore Bass Consulting of Oestin. Inc. 1221 Airport Road, Suite 205 Oestin, Florida 32541 Architect: OAG Architects, Inc. 1223 Airport Road Destin, Florida 32541  LANDMARK CENTER NARRATIVE DESCRIPTION OF PROJECT INTRODUCTION The project site for Landmark Center is situated within the City of Fort Walton Beach Downtown Redevelopment Project Area. Chapter 12.45 of the City' s Code of Ordinances establishes regulations for the purpose of 1. Rejuvenating the blighted area within and around