The Flagler County Commission is looking to step up its incentive programs for economic development, focusing on certain approaches more than others, as it looks to diversify the local tax base and expand on the availability of local jobs in a county where nearly half the working population of 51,000 people commutes out of county.
“Every budget session it weighs on our conscience the fact that we rely on our residential property tax base so heavily,” Commission Chairman Andy Dance said. “This commission is dedicated to working to create options to bring in that option for increasing our commercial industrial tax base and taking the reliance off of the homeowners.”
Tourism Director Amy Lukasik outlined eight possibilities at a workshop earlier this week, some of them requiring county tax subsidies, some not, some requiring approval by popular referendum, most not, and some more easy to implement than others. Commissioners were more immediately attracted to measures that could be immediately implemented, such as fast-tracking permitting. Other approaches may take longer, since they require voter approval and a more formal county structure.
He and the rest of the commission were more interested in exploring the possibility of an industrial development authority that would be positioned to offer tax-free bonds to private companies looking to expand operations locally. There was also strong interest in using interest revenue from impact fees to provide rebates on impact fee costs, and allowing expanding companies to benefit from property tax rebates over a set period of years.
Lukasik outlined the incentive possibilities as follows:
Fast-track permitting: It accelerates the planning, zoning and building permitting process with no effect on the general fund. It is taking place for affordable housing. The county wants to expand fast-tracking to other types of permits, making it available to companies expanding operations or moving to the county and proposing to add to the county’s employment base.
Property tax rebates or abatements: that incentive would reduce a company’s property taxes in the first years of expansion or operation in Flagler County. But for the county to approve that incentive, it would have to place it on the ballot for voter approval. If approved, the allowance would be in effect for 10 years. The County Commission would then have to approve each individual abatement proposal by ordinance, and limit it to five years. “It could be viewed as as a pretty heavy lift” for the 2024 ballot, Lukasik said, “because it requires a lot of education and public awareness to the community. So if the board wanted to take some time to do that sort of initiative, then we could possibly wait.”
Tangible personal property tax abatement: It’s a slight variation on the property tax incentive. An eligible company could have some of its tangible personal property tax reduced, to offset the cost of new machinery. The tax abatement would be a reimbursement by the county, after proof of purchase. That program would also have to be approved by voters in a referendum. It would apply for five years per eligible company. Each such incentive would have to be approved by the County Commission by ordinance. As with property tax rebates, tangible tax rebates would obviously reduce general fund revenue.
Wage incentive grants: The county would provide a grant of $5,000 per job, for up to 25 jobs ($125,000), for one year, to a company that would either relocate to Flagler County or expand full-time employment in Flagler County with wages set at least at 125 percent of the county’s average wage, currently $19.60 an hour, or $40,760 a year (compared to $28.93 an hour in the state, and $60,176 a year). The Flagler County incentive would require wages to be at least $25.50 an hour. There’s often been an unverified loophole with such incentives: the grant is awarded based on average wages, not median wages. Average wages are skewed by executive salaries, which artificially and deceptively push up the average wage. That issue weas not addressed at the workshop.
Recaptured enhanced value grant program, also known as the “Rev” program for short: That approach would be used instead of a tax abatement program, though it would similarly reduce general fund revenue. It would work this way: say the Acme Widget Company wanted to build a plant in Flagler. It pays $50,000 a year in property taxes in its first year. That year would be considered a “base” year. In subsequent years, as the property is built up and property taxes on the property increase, say, by $10,000 a year or more, a portion of those incremental increases would be returned to the company in the form of a grant, or what amounts to a rebate. The program would be set up in such a way that for the first five years, 75 percent of the incremental tax increase is rebated. In the next five years, 50 percent of the incremental tax increase would be paid back. The company would then pay the full amount starting at year 11.
Impact fee grant program: Impact fees are the one-time fees builders or developers pay on new construction to offset the “impact” of new residents on roads, parks, police, schools and so on. The fee is passed on to home buyers. It applies only to new construction. Local governments collect impact fees and don’t immediately use the revenue. Those fees can accumulate to the tune of several million dollars. With an impact fee grant program, a government may use the interest generated from that revenue to offset the cost of a given impact fee. In other words, interest earned from road impact fees may only be used to offset the cost of a road project. The program would not affect the general fund, since impact fees are collected and spent from accounts separate from the general fund.
Public-private partnership to develop a light industrial park: The county would buy a large tract of land, of up to 200 acres, for a light industrial park. The county would partner with a private company, a private builder, to build the infrastructure and the buildings on the land. As the buildings lease or sell, the government would recover the cost it invested in the land. That would of course affect the general revenue, since the government’s initial investment would be drawn from it. The county and local cities have considered such possibilities in the past, but with little appetite for it due to the risks and the uncertainty of leasing or selling those properties.
Industrial development revenue bonds: The bonds may be issued to a company with solid credit, with the approval of the County Commission. The tax-exempt bonds would be provided at low interest. The principal and interest would be paid entirely by the company purchasing the bonds. The commission would approve the measure by resolution. It would not affect the general fund. An industrial development authority may or may not have to be established, according to Irvin Weinstein, a bond attorney who addressed the County Commission. “There are benefits to having a separate industrial development authority, that authority develops some level of expertise in dealing with this, but if you have your own economic development people, you could handle it through the county commission,” he said. “So it’s not absolutely clear that you have to have an industrial development authority.”
Typically, non-profit hospitals or nursing homes benefit from those types of bonds, which are often bought by banks and underwritten by underwriting firms. The bonds are limited by law to $10 million, with other restrictions and timeline limits.
Mike McCabe, a former town attorney in Hastings who represents St. Johns County in various capacities, said AdventHealth, being the county’s leading employer, would be the county’s most likely “target” for an issuance of industrial revenue bonds. Unlike Weinstein, he favored setting up an authority first. “The key component is the tax exempt status that that these borrowers are looking for,” McCabe said, noting that as far as the commission would be concerned, “they are relieved from any liability or obligations associated with the debt.”
Lukasik said Palm Coast and Bunnell have shown interest in using the industrial revenue bond approach. The commission did not take any decision. “The next steps are going back on on these items and coming back with some additional clarifications or next steps to push these forward,” Dance said of the four favored approaches–fast-tracking, the “rev” program, using impact fee interest revenue as incentives, and industrial revenue bonds.
Jim says
This would increase and diversify the tax base which helps all of us. Instead of just voting to spend more tax dollars, they are looking at how to expand the tax base! Thank you!
This is one of the few times I’ve seen a government entity in this county pursue anything that might actually benefit county residents in a positive way. I want to commend Mr. Dance for his leadership on this. I hope we’ll see more of this type thinking by the county.
The Sour Kraut says
“If we build it, they will come” is no way spend taxpayers money as there is no guarantee the investment will pay off. We could end up with a light industrial park that remains empty (or mostly so) while we pay upkeep and insurance on it. Only if you get signed guarantees ahead of time from tenants would this make sense.
Greg says
Oh yea. Talk is cheap. It seems like every other day the city or county changes property zoning to build more housing.
Jane Gentile-Youd says
How about knocking down the Old Dixie pig sty on over 6 acres that could be replaced with a nice shopping center,or medical offices which would bring business and TAXES to the county. The Pig pen hotel taxes were only $4,000 for 6 acres and our taxes for a single family home on under an acre were $3,700. Let’s start from there! How about raising the tax basis on land zoned agricultural which don’t even cover cost of the county mowing the swales. 19 ‘agriculturally zoned’ acres near us taxed a total of $91 – ($41 to the county) is where you all need to start now! County needs to reapportion how it taxes, The taxes collected on the 19 acres next to us didn’t even cover the county cost of mowing the swale.
Flagler Countian says
Where would they possibly build? If you look at unincorporated Flagler County, it doesn’t seem like there are any ideal locations for commercial businesses. Possibly industrial, but not commercial. Add to this, there is a super low residential tax base population, residential as it is, in all of Flagler County.
Flagler Countian says
There is a saying, “Rooftops equals commercial.” Depending on what industry you’re trying to attract, they’re not coming unless there’s 1. a viable and ready workforce, and/or 2. Potential local consumers.
Looking at County vs. City of Palm Coast, there’s a lot of agriculture. What could be re-zoned as commercial? Some could be rezoned as industrial without impact on residents.
When looking at the City of Palm Coast, there’s acres and acres and acres of sprawling suburbs–not walkable, and so density is quite low. Each household is taking up much of the greenspace and taking up space that would attract more commerical industries if there were more heads per unit.
DecicatedAmerican says
This should be brought to the tax payers to vote on. People this is Agenda 21 at its finest. The county commissioners have no idea what our government is doing to the tax payers, which are and were the glue to our Republic. Agenda 21 is when our government takes our homes, our cars, and anything else that We Tax Payers own. It started with our government in Washington and has trickled down into our counties. And the representatives, senators, assemblymen, commissioners etc. that are voted into office are not protecting our Constitution which protects All legal Americans. NOT THE ILLEGALS. Wake up people.
Mark says
One big asset the county has, that is overlooked, is the FEC runs right through it still. Partner with someone that wants an industrial park for warehousing and manufacturing, a rail spur could be built for those business’s that need access to rail shipments in and out. While they’re looking at that they should be planning for when Brightline follows those same tracks to Jacksonville someday, now’s the time to plan for a station location.
Benny de Luna says
Jane, the owners of the hotel finally removed the sign you have been complaining about for years. If the county pressures the owners of the hotel enough they will see they have no choice other than to tear that down as well.
I just cannot believe the county allows this eyesore at the base of county line to be the first sight potential tourists will see.
I guess Palm Coast is all they seem to care about these days.