Palm Coast Redraws Its Stormwater Tax, Benefiting Some Big Landowners

To the pleasure and relief of big landowners, Palm Coast is changing the way it levies its stormwater tax. Those land-owners will see a tax cut. Most home-owners won’t be affected. But property owners with vacant parcels of between five and 25 acres will see a tax increase. The Palm Coast City Council discussed the matter Tuesday morning and appears ready to approve the new structure when it meets next week.

Like many cities and counties in Florida, Palm Coast levies a stormwater tax, one of the steeper taxes on the books next to the property tax. The city calls it a “fee,” because it sounds better than a “tax,” and it masks the true extent of taxes in Palm Coast, where the property tax is kept artificially (or rather deceptively) low on the back of stormwater, garbage, water and sewer “fees,” all of which have risen steeply in recent years, and are levied by the city. Only a fraction of properties in Palm Coast (2,600 out of 49,800 properties in the city, of 5 percent) aren’t in the stormwater service area and don’t pay the tax, enabling the city to stick to the “fee” terminology. But just as some properties are also exempt from taxes, the stormwater fee is, in fact, a property tax based on the size and type of a property.

The typical residential home on a quarter acre in Palm Coast pays a flat $96 stormwater tax per year, in addition to the $350 regular property tax. The city’s stormwater budget in 2010 was $11.8 million. The money helps maintain a stormwater drainage system to prevent flooding, store runoff, and rebuild or maintain swales. The service is indispensable in rain-soaked localities.

Back in April 2008, property owners told the city through their attorney that the city’s 2005 stormwater ordinance was out of step with state law—that it was disproportionately charging larger landowners. They were ready to sue, City Manager Jim Landon said, “to bring us in line, and I said well, we cry uncle up front because our attorney says we’re going to lose, so we need to change the ordinance.” The city commissioned a study through Gainesville-based Jones Edmunds & Associates, an engineering consulting firm, and rewrote its ordinance based on the firm’s analysis.

Here’s how the city’s potential revenue distribution will change, based on the type of properties being taxed for stormwater:

“When you have a Walmart that’s a whole lot larger than a single-family house, we in essence take that property and turn it into how many houses does it equate to,” Landon said. “So there isn’t a flat fee. It’s based on that calculation so everybody is charged based on the service area they have if you will, or the impact on to the system.”

The calculations are not based on exact science. Rather, they’re based on a set of calculations that take ion how much the city spends on stormwater management, how much it needs to charge to make that revenue, and how fairly it can spread it out among property owners whose properties generate run-off. “Because of the complexity of the issue, you’re never going to get mathematical certainty,” Mayor Jon nets said.

The charges are based on “ERUs,” a measuring standard that stands for “equivalent residential unit.” Basically, one ERU is equivalent to $8. An ERU represents an average single-family property with a house on top, which in Palm Coast is the equivalent of 3,682 square feet of construction (that is, impervious land through which water cannot seep) and 7,208 square feet of grass and other “pervious areas,” for a total of a quarter acre.

“At the end of the day,” Landon said, “not everybody is going to be happy but we’re going to try very hard to make it as equitable as possible.”

Under the proposed ordinance, which the council would approve in two steps, beginning next week, vacant, single-family residential properties of less than an acre (the typical vacant lot in Palm Coast) would continue paying a $6-a-month stormwater fee. Vacant lots of one to five acres would pay $7 a month per acre. And Vacant lots of between five and 25 acres would pay $24 per acre per month. Vacant “bulk land,” or properties larger than 25 acres, would pay $7 an acre per month.

Vacant land, the study showed, accounts for 71 percent of the impact on the stormwater system.

Non-residential and commercial properties would pay the steepest tax: $48 per acre for every acre of concrete or other impervious area (that’s your parking lots, big box stores, restaurants, rental or multi-family units of more than four unites, and so on), and $24 for every acre of pervious area. But some properties with retention ponds and other forms of on-site storm-water management will receive stormwater credits, and those credits would be applicable retroactive to 2008, when landowners first raised the issue of unequal charges.

It’s not clear how the change will affect the city’s overall stormwater revenue. It is ostensibly designed to be “revenue-neutral.” At least that’s how the Jones Edmunds analysis had it. That would be based on a 90 percent successful tax-collection rate, though the property-tax collection rate is significantly higher. It’s almost certain that revenue will not drop. It’s more likely that it will rise. More significantly: the city has a more elaborate system in place that it can tweak in the future to raise revenue, should it need or want it, in order once again to keep the traditional property tax static.