PANAMA CITY BEACH — By the end of this fiscal year, more than $81 million in county tax revenues will have been paid out to the Front Beach Road Community Redevelopment Area (CRA).
It’s a sore spot with some county officials, who say the CRA is siphoning county property tax dollars to an 8-mile stretch along Front Beach Road that could have been spent all over the county or used to help keep taxes down for all county taxpayers.
The CRA allocation, which will continue until at least 2033, has become a particular point of contention with some this year, as the Bay County Commission recently raised property taxes a mill, which in turn increases the county’s payment to the CRA.
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Bay County is planning to write a $7.8 million check to the Front Beach Road CRA in fiscal year 2014-2015, compared to the $6.1 payment in fiscal year 2013-2014.
“It is overkill,” Bay County Commissioner George Gainer said. “It is way too much money. We never expected it to be that much, and they didn’t. It is something I inherited when I got in on the tail end of it. I fought it as hard as I could, but it was too late.”
But proponents of the CRA, as well as another CRA that led to the development of Pier Park, say the improvements to the Beach are working to help to raise property taxes all over the Island, which is adding to county coffers.
They also said a first-class transportation corridor, complete with trolley lanes and walking paths, is being developed along Front Beach Road and should greatly improve traffic flow and safety.
Front Beach Road CRA projects are funded by tax increment financing (TIF) funds, which are payments made to the CRA from property tax increases that occur after the district is formed. Only the taxes on increased values go the CRA; the rest still goes to the county.
Gainer said the justification for forming the Front Beach Road CRA — that it would generate funds for transportation improvements to help “traffic blight” — is not panning out.
“They bought some right of way and (developed) maybe a few sidewalks,” he said. “In my opinion very little of that money has been spent to curb the traffic blight, and very little effort has been made other than we keep putting more and more stuff out there, and to me that just creates more traffic blight.”
He said the city of Panama City Beach continues to approve more development in the district and more people are moving to the area. The county has to pay more for services for those new residents, but it is locked into the property tax revenues from the district that were paid in 2002, when the CRA was formed.
If the county had not been making the payments to the Front Beach Road CRA, it could have lowered taxes for all county residents instead of having to increase the property tax rate this year, Gainer said.
“We could roll back the ad valorem,” he said. “There is so much that could have been done all over this county with that kind money.”
Gainer said when the CRA was approved in 2002, the property was lined with mom-and-pop motels.
“The mom-and-pop motels went away and these big 500-unit condos took their place,” he said. “Since then, all that [extra tax] money goes back to the CRA.”
Thomas: CRA good for everyone
Bay County Commissioner Mike Thomas said the CRAs on the Beach have made it a much more appealing place to live, which is good for everyone, and it is helping fund transportation improvements. The Front Beach Road and Pier Park CRAs also have caused property values outside of the CRAs to increase, adding property taxes to county coffers.
“It’s huge county revenue,” he said. “I understand it takes tax revenue away, but the county never would have spent that money back in that district that is being spent there. That is why the Beach fought to try and get it. The county wasn’t spending very much out there.”
Thomas said Pier Park would not even be here if it weren’t for the CRA that was formed to create it.
“It’s creating business for the entire county, and it’s creating tax revenue for the entire county,” Thomas said.
Thomas said it is important to note that the CRAs are only using money collected from those districts.
“That way you’re not taking money from other areas. I’m not taking money from Callaway or Lynn Haven to fix things on the Beach,” he said.
CRA Director John Alaghemand said the Front Beach Road improvements do benefit everyone in the county, including people who live off the Island who come to enjoy the beach. He said the improvements also draw in visitors, who bolster the county’s tax base.
“Who brings the revenue” to the county? “Our visitors,” he said. “We will make Front Beach road safer for everybody, not just visitors, but local residents.”
Alaghemand also said there is an economic stimulus associated with the Front Beach Road work, with 208 construction jobs lasting several years being created through the life of the project.
He said additional funding will come to the CRA from the county’s increased millage rate in the coming years, which could speed up the work.
“With additional funding, we may be able to do a project every three years. Before, it was every five years,” he said.
State law changed
The Front Beach Road and Pier Park CRAs could not be created today, said Doug Sale, Panama City Beach City attorney who drew up CRA agreements. That’s because state law was changed to only allow CRAs in cities with property taxes, and there is none in Panama City Beach, Sale said.
The Front Beach Road CRA was not challenged, but the Pier Park CRA was, and ended up being the subject of a Florida Supreme Court decision in October of 2002.
In 1998, the city of Panama City Beach approached the St. Joe Co. regarding possible plans for redevelopment of city land into what would eventually become Pier Park. In September 2001, the city, Pier Park Community Redevelopment District and the CRA entered into an agreement for the redevelopment of the area.
The agreement called for issuing revenue bonds to pay for infrastructure for development, but a trial judge declared that invalid. The Panama City Beach Community Redevelopment Agency, which is comprised of the City Council, appealed the decision.
The Supreme Court reversed the trial court, stating “there was competent, substantial evidence before the City Council supporting its determination of blight” to justify forming the CRA.
The formation of the Front Beach Road CRA was never contested after that ruling. Traditionally, the argument for forming a CRA is that an area is blighted, but the primary argument to justify the Front Beach Road CRA was “transportation blight.”
Before the Front Beach Road CRA was formed, then-Mayor Lee Sullivan talked about charging a parking fee to pay for improvements to Front Beach Road, Sale said.
Sale said he advocated to city officials that they instead create the Front Beach Road CRA.
“I said, ‘Mayor, you’re not going to raise enough money [from the fee] to make any difference to do anything,’ “ Sale said. “ ‘But you’ve got this Community Redevelopment Agency we set up for Pier Park. You can create a redevelopment area for Front Beach Road and actually do something.’ “
He said the mayor recognized that with development coming to Front Beach Road, there would be deficiencies in the road.
“And so the essence of Front Beach Road redevelopment plan is to take the public space in that road and recognize that it is not purely a transportation corridor,” Sale said. “It is more of a driveway and sidewalk to the tourists, accommodations, recreation, restaurants.”
‘That’s criminal’
But former Bay County Commissioner Cornel Brock said during the formation of the Front Beach Road CRA in 2002 that Panama City Beach officials could see there was about to be a real estate boom along the beach and wanted to snatch up the tax revenues from it.
“They could see the development coming,” he said. “And they said, ‘What we need to do is hurry up and declare this whole area as being a CRA, and then we’ll get all the money when it is rebuilt.’ To me, that’s criminal, and as a county commissioner that was obvious to me.”
But he said he could not convince his fellow commissioners at the time to challenge the formation of the Front Beach Road CRA in court.
“Unfortunately, the commission that I served on was extremely divided,” he said. “The reason we didn’t challenge it was because I could never get rest of the County Commission to agree to do that.”
He said he appeared before the Panama City Beach City Council when they were about to vote on forming the CRA to express his displeasure.
“I told them when they voted on it that this was criminal what they were going to do, that they had grossly underestimated the impact of that CRA, and it was going to be eventually catastrophic to Bay County, which it is,” he said.
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Brock said Bay County taxpayers need to be aware that as much as a half-billion dollars of tax revenues will be going to the Front Beach Road CRA over the life of it.
“The reason for the millage rate increase that you have today that (Bay Commissioners) just implemented is because of that CRA,” he said.
THE NUMBERS
This list, provided by Bay County, shows what local CRAs have brought in in TIF funds since they were formed dating back to 2002. Panama City’s CRA has been around longer but the other CRAs started up in that time frame.
- Since 2002, the Panama City CRA has brought in $8.53 million.
- Since 2003, the Front Beach Road CRA has brought in $81.1 million.
- Since 2005, the Lynn Haven CRA has brought in $1.59 million.
- Since 2005, the Pier Park CRA has brought in $2.56 million.
- Since 2005, the Millville CRA has brought in $1.74 million.
- Since 2008, the Cedar Grove CRA has brought in $159,498.
- Since 2008, the Springfield CRA has brought in $119,057.
- Since 2008, the Parker CRA has brought in $63,536.
- Since 2008, the Callaway CRA has brought in $532,158.