COUNCIL AGENDA ITEM
SUBJECT:
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1st Reading - Ordinance 2024-O-18 Calling for Referendum to be held November 5, 2024 on the question to renew the Economic Development Ad Valorem Tax Exemptions
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DEPARTMENT:
Economic Development
SUMMARY:
Background:
In November 2014, the citizens of Edgewater elected to grant the City the authority to grant economic development ad valorem tax exemptions for those new businesses or expanding businesses that met the criteria for number of jobs, wages, investment and type of industry. The program term is ten (10) years. The program is renewable by voter referendum.
To date, the Northwest Lineman Center was awarded the tax abatement as an incentive to locate in Edgewater in 2017 for adding 22 jobs guaranteed with a cumulative payroll of $4.25 million over four years and an initial investment of $4.85 million dollars on their site. (NLC only received one year of the abatement in the amount of $5,931 due to the fact that the company was acquired by Quanta Services).
Boston Whaler was awarded the program for their second expansion in 2017, an investment of approximately $44 million and adding 125 jobs guaranteed totaling a cumulative payroll of $139.4 million over four years. The actual number of jobs created was 1,000. To date, Boston Whaler received a total of $85,000 tax abatement on city taxes over the last four years.
F.S. Chapter 196, s 196.1995 provides for economic development ad valorem tax exemptions. The law gives the governing authority of any municipality the authority to call a referendum within its jurisdiction to determine whether the city may continue to grant economic development ad valorem tax exemptions under s. 3, Article VII of the State Constitution. The City Council must vote to hold such referendum and the ballot question for the referendum must be in substantially the following form:
Shall the Edgewater City Council be authorized to grant, pursuant to s. 3, Art. VII of the State Constitution, property tax exemptions to new businesses and expansions of existing businesses that are expected to create new, full-time jobs in the municipality?
Yes - For authority to grant exemptions
No - Against authority to grant exemptions
If the referendum passes (simple majority vote in favor), the City Council, at its discretion, by ordinance may exempt qualified businesses from ad valorem taxation up to 100 percent of the assessed value of all improvements to real property made by or for the use of a new qualified business adding jobs and of all tangible personal property of such new qualified business, or up to 100 percent of the assessed value of all added improvements to real property made to facilitate the expansion of an existing qualified business adding jobs and of the net increase in all tangible personal property acquired to facilitate such expansion of an existing business, provided that the improvements to real property are made or the tangible personal property is added or increased on or after the day the ordinance is adopted. Property acquired to replace existing property would not be considered to facilitate a business expansion. Tax exemptions under this tax abatement referendum may be for a maximum of 10 years.
The tax exemption only applies to the taxes levied by the City. As well, the tax exemption would not apply to any taxes levied/collected by the City for the repayment of bonds issued for specific projects.
At that point, if the City Council wishes to continue with the program, it would need to place the issue on the ballot again for subsequent 10-year periods.
Under the tax exemption program, businesses would need to complete written applications with the City and meet specific requirements as outlined in state statutes with regards to being classified as a qualified new or expanding business as well as creating a specific number of jobs (at a specific rate of pay) over a defined timeframe. Agreements under this program are approved by ordinance.
The attached Ordinance No. 2024-O-18 would approve the referendum language and give formal approval to place the issue on the November ballot.
BUDGETED ITEM: ☐ Yes ☐ No ☒ Not Applicable
BUDGET AMENDMENT REQUIRED: ☐ Yes ☐ No ☒ Not Applicable
RECOMMENDED ACTION:
Council discussion and decision to approve or deny.