Money isn’t everything.
So, what you’re about to read should not in any way give pause to Vero Beach residents and community leaders who are excited about the future of the lagoon-side property that contains the city’s shuttered electric utility and still-operating sewage-treatment plant.
Transforming that 35-acre parcel into Centennial Place – a park-like gathering place for dining, shopping and nightlife – should remain the city’s priority. It would provide a much-needed waterfront destination on the mainland and create, perhaps, a couple of hundred jobs.
Does it matter, really, that such development wouldn’t produce for the city the tax-revenue windfall some might anticipate?
Truth is, no individual privately-owned piece of property in Vero Beach – not the Piper Aircraft complex, not the Vero Beach Hotel & Spa, not Quail Valley’s two lagoon-front campuses – generates enough in ad valorem tax revenue to significantly impact the city’s finances.
For instance, in 2018, the Piper complex had a taxable assessed value of $20.9 million, considerably more than any other property in the city. But that amount was less than 1 percent of the taxable assessed value of all of property in the city – an amount totaling slightly more than $2.7 billion.
With a municipal millage rate of $2.50 per $1,000 of assessed value, Piper paid only $53,000 in property taxes to the city, which had an operating budget of just under $23.4 million.
“When you have $3 billion in taxable assessed property in the city,” Vero Beach Finance Director Cindy Lawson said, looking ahead to 2020 when assessed value is projected to hit $3 billion, “the tax revenue from one property is not going to move the needle.”
In fact, the 10 properties with the highest taxable assessed value in Vero Beach had a combined value of $109 million, which was only 4.1 percent of the total assessed value of property in the city in 2018.
It’s unrealistic, then, to think commercially developing Centennial Park would generate enough tax dollars to offset a meaningful portion of the annual revenue stream lost when the city sold its electric utility to Florida Power & Light for $185 million earlier this year.
“Developing that property on the river would generate some revenue, which is always welcome and certainly would help, but no one should think that’s going to balance our books,” City Councilman Harry Howle said. “It’s not going to happen.
“Remember: Only 12 percent of the tax bill you get from the county goes to the city,” he added. “That’s not a lot of money.”
The largest percentage of our property-tax bills goes to the school district, which receives $7 for every $1,000 of assessed value, while the county gets $3.40 per $1,000.
Vero Beach’s tax rate continues to hover around $2.50 per $1,000.
So, it’s fair to ask: Is the city’s tax rate too low?
Howle warned that, in the coming years, Vero Beach might need to raise its tax rate to continue to provide the services residents want.
“We’re fine for a year or two,” said Howle, who has announced he will not seek re-election. “But I don’t know if it’s going to be sustainable three or four years from now.”
Even raising the property-tax rate, though, wouldn’t bring in as much money as some might think.
As now-retired City Manager Jim O’Connor explained: “The total ad valorem taxes paid to the city last year was about $7 million. If you increase taxes by 10 percent – which isn’t going to happen – you’re only getting an additional $700,000.
“So developing those two pieces of ground on the river,” he added, “won’t have that much of an impact.”
The city could create a special taxing district with a higher rate on the Centennial Place property, but O’Connor said those revenues must be designated for specific purposes related to the site.
“That money can’t go into the general fund,” O’Connor said.
As for any sales tax generated by restaurants, bars, shops and any other commercial ventures that might be built at Centennial Place, the city would see only a small percentage of that money.
The state sales-tax rate is 6 percent. The county adds 1 percent. Florida cities don’t have a sales tax.
“Eventually, we see a little of that state sales-tax money, but only after it takes a circuitous route to Tallahassee and back,” Lawson said. “Any given year, though, the total sales-tax revenue included in our general fund budget averages $3.5 million.”
That’s roughly 14 percent of the city’s budget.
If a hotel is built at Centennial Place, the county would benefit there, too – because, in addition to its 1 percent sales tax, the county also collects a 4 percent tourism tax on all short-term lodging.
Vero Beach continues to receive none of that money, despite a decade-long quest to convince the county to share a percentage of the tourism tax revenues.
“The city brings in a majority of the tourism taxes,” Howle said. “We should be entitled to some of that money.”
From a tax-revenue perspective, it’s possible – if not probable – that developing Centennial Place would benefit the county more than the city.
“That,” Howle said, “is what usually happens.”
The city should do it, anyway.
Thoughtfully developing Centennial Place into a waterfront destination for the entire community would make a Vero Beach better while preserving what makes it special.
So what if it doesn’t fill the city’s coffers with tax dollars?
Money isn’t everything.