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HomeMy WebLinkAboutMEMO BACKUP DOCUMENTCITY OF MIAMI, FLORIDA INTER -OFFICE MEMORANDUM TO: Honorable Mayor and Members of DATE: FILE: the City Commission FROM: Carlos A. Migoya City Manager/Chief Administrator SUBJECT: Ordinance Granting Enterprise Zone Ad Valorem Tax Exemption Under Ordinance 12308 Casablanca Fish Market REFERENCES: ENCLOSURES: RECOMMENDATION: It is recommended that the City Commission approve the attached ordinance granting an Enterprise Zone Ad Valorem Tax Exemption to Casablanca Fish Market, hereinafter referred to as "Business," pursuant to the provision of Section 196.1995, Florida Statutes, and City of Miami Ordinance 12308. BACKGROUND: On 7 March 2002, the City Commission passed Ordinance 12308, Ad Valorem Tax Abatement on its first reading. This ordinance authorizes the City Commission to grant Ad Valorem Tax Exemptions to new and/or expanding business located in the Enterprise Zone (EZ). This exemption is meant to stimulate economic development and growth, while alleviating conditions of unemployment and the lack of investments in economically depressed areas within the EZ. Chapter 56 ("Taxation"), Code of the City of Miami was amended to include Article V, entitled Ad Valorem Tax Exemption for Enterprise Zone Businesses. Although the City Commission has the discretion to grant the exemption, it is contingent upon the new or expanding business fulfilling their proposed improvements in the same way it was presented at application. A new business is defined as a business, located within the EZ, that begins operations on a site clearly separate from any other commercial or industrial operation owned by the same business and which creates the required number of jobs outlined in Section 56-113 of the above mentioned Ordinance. An expanded business is defined as a business, located within the EZ that increases operations on a site co -located by the same business and creates the number of jobs required in Section 56-113. To be eligible for this exemption, new or expanded businesses shall create a minimum of five new full-time jobs. If in any given year of the first 5-years of the exemption, 20% or more of a business' permanent full-time employees are residents of the Enterprise Zone, the exemption for that year will be 100% of the assessed value of all improvements to real property and 100% of the assessed value of all tangible personal property. In case the business cannot comply with the 20% residency requirement of their employees living within the Enterprise Zone, then the exemption for that year will be 50% of the assessed value of the improvements to real estate and improvements to tangible personal property. The Honorable Mayor and Members of the City Commission Page 2... This exemption is for the City's municipal millage and does not apply to taxes levied for payment of bonds or taxes authorized by vote of the electors or the Constitution of the State of Florida. This exemption will not be available in areas where its application would cause undue hardship to the City's debt or pledged revenues. Since all Community Redevelopment Areas (CRA) are located within EZs, this also applies to businesses located within CRAs. The granting and the term of the exemption shall be determined by the City Commission, in its sole discretion. If the term of the extension is granted for more than one year, then the tax exemptions are granted in 1 year increments, for up to 10 years, but must be renewed annually by March 1st. The business must file a renewal application with City of Miami, who is responsible for auditing the business to ensure the requirements for the exemption are still being met. Failure to file a renewal application will constitute a waiver for the exemption for that year. If the business is found not to be in compliance with the eligibility requirements, it will be required to pay the tax exemption along with any interest that accrued at the maximum rate allowed by law. The authority of the City Commission to grant tax exemptions will expire 10 years from the date of the referendum granting the authority. The expiration will not affect the business' unexpired term of any exemption remaining in effect as of the expiration date of the referendum. Detailed information regarding the business is provided below. This exemption is based on the City's Fiscal Year 2007 municipal millage rate of 7.2999, which is the year the business became eligible for the tax exemption. Due to procedural errors with the original ordinance 12308, the City has been unable to approve any ad valorem tax exemptions to date. However, ordinance 12308 has been amended to correct the procedural errors. The Honorable Mayor and Members of the City Commission Page 3... Casablanca Fish Market Address: 404 N.W. North River Drive Miami, Florida 33128 Community Redevelopment Area (CRA): No Business: Retail (Seafood Market) Contact Person: Jorge/Lazaro Sanchez: 305.371.4107 Employment: Eight (8) Full-time Jobs Basis of Application: Expanded Business Assessed Value of Improvements: $53,632 Exemption Eligibility: $0 (real property) $1,188 (tangible personal property) Estimated City: $0 (real property) Tax Exemption Per Year $63 (tangible personal property) Period: 1 Year ECONOMIC IMPACT ANALYSIS If the full exemption is granted, the impact on the City budget would reduce revenues for FY '10 by $63 based on the FY 2007 City millage rate, since such amount would be applied as a credit to the FY 2010 taxes levied on the business. The impact of the exemption on the private sector is to reduce the applicant's operating costs by these amounts, which is intended as an incentive to invest and create jobs in the most distressed areas of the City. The business created nine (8) new jobs, which include a total of 4 held by residents of the Enterprise Zone. Exemption recipients are monitored for compliance with maintaining at least five new full-time jobs as required by ordinance. Businesses found not to be in compliance with maintaining five new full-time employees will lose their tax exemption. Company Exemption Term Total Jobs Created EZ residents Employed Total Taxes Levied on Improvements Casablanca Fish Market $63 1 Year 8 4 (50%) $1,188 The inital cost of processing this application was $100 and the public benefits of this project are the investment and job creation in the City's most economically distressed areas. The additional payroll and economic activity generates other taxable activity, while assisting businesses in becoming successful and prosperous. This generates more revenues for the City and provides an opportunity to increase services and programs for residents and business owners.