HomeMy WebLinkAboutBackground FR/SRCity of Miami Ad Valorem Tax Abatement Ordinance
Background:
A referendum was held on November 6, 2001 authorizing the City Commission,
to grant by ordinance, Ad Valorem Tax Exemptions. The first reading was on
November 19, 2002 and the second reading passed & adopted the ordinance on
December 12, 2002. The ordinance became effective 30 days later. The City
Commission recognized the need to stimulate economic development and
encourage growth within the EZ. In addition, the program was developed to
alleviate conditions of unemployment and economic disinvestments in property
by creating new construction, new jobs, and an enhanced business climate. The
establishment of this program stems from Florida Statues §196.1995.
Unfortunately, there have been some problems with the ordinance since its
inception and we are working diligently to correct the ordinance. One of the
major issues with the ordinance was the eligibility requirement dealing with
square footage being tied to a job creation number. Based on the type of
business, a certain amount of square footage was tied to a specific number of
jobs that had to be created by the new or expanding business. The following
section outlines the square footage requirement:
Sec. 56-113. Eligibility requirements.
(a) To be eligible for an ad valorem tax exemption, a new business or
expanding business must increase its employment roll, at the location
receiving the exemption, the year in which the exemption is granted as
follows:
(1) Office. One full-time job for every 400 sq. ft. of space utilized by a new
business or expanding business;
(2) Retail. One full-time job for every 500 sq. ft. of space utilized by a new
business or expanding business;
(3) Residential (market rate rental/lease only). One full-time job for every
100 contiguous units developed or rehabilitated by a New business or
expanding business and placed in market;
(4) Industrial. One full-time job per 1,000 sq. ft. of space utilized by a new
business or expanding business; and
(5) Other commercial. One full-time job per 1,000 sq. ft. of space utilized
by a new business or expanding business.
(b) it shall be a condition precedent to the granting of each annual renewal
of the exemption that the applicable job creation requirement be
maintained throughout the entire term of the exemption.
(c) To be eligible for the exemption it is not required that the new business
or expanding business be the fee simple owner of the property subject to
the ad valorem tax, so long as the new business or expanding business is
legally or contractually responsible for the payment of the ad valorem tax
on the property nor is it necessary for the property owner to also own the
new business or expanding business.
(Ord. No. 12308, § 2, 12-12-02)
The County Appraiser's Office had difficulty with the square footage requirement.
Due to this problem, no exemptions have been granted for applying businesses
by the City. After having several meetings with the County Property Appraiser's
Office, Legal Council, and Office of Community & Economic Development, we've
attempted to make the changes necessary to simplify the entire process and
parallel most of the County's Tax Abatement ordinance. The difficulty with our
ordinance has hampered our ability as a department to promote this valuable
incentive in areas that are in great need of investment.
Proposed Changes:
• The square footage requirement will be completely removed from the
eligibility requirements and a flat number of full-time jobs will be required
to be created for applying businesses.
• The maximum number of years a new or expanding business can qualify
for tax abatement will continue to be 10 years. However, the percentage
of the abatement will be outlined as follows:
o Years 1 through 5: fifty percent (50%); provided, however, that if
twenty (20) percent or more of the permanent full-time employees
of the new or expanded business are residents of the enterprise
zone, then the exemption will be one hundred percent (100%).
o Year 6: forty percent (40%).
o Year 7: thirty percent (30%).
o Year 8: twenty percent (20%).
o Year 9: ten percent (10%).
o Year 10: ten percent (10%).
• The original ordinance required the City of Miami Economic Development
Finance Authority, which no longer exists, to recommend
approval/disapproval of the abatement after information is received from
the county property appraiser. The City of Miami Department of Economic
Development will assume that requirement.
• If all requirements are met by the new or expanding business, the
applicant will receive the abatement retroactively from the original date of
application.