Tallahassee Reports has learned that the $1.4 million in public funds provided to the owners of the Gateway Building, home to Walgreens until February 21st, will not be completely recovered through property taxes until approximately 2040.
This finding is based on financial information provided to TR by officials at the Community Redevelopment Agency (CRA).
To date, approximately $980, 576 has been given to the owner of the building. This amount includes $537,600 in a construction grant, $328,364 in vacancy guarantees, and $114,612 in scheduled refunds of property taxes for 2016 and 2017.
However, CRA officials told TR that the owner is still owed refunds of property taxes through 2022. This means the owner of the building will not pay any property taxes until 2022.
After 2022, assuming a $60,000 property tax bill and a 2% annual increase in property taxes, the $1.4 million of tax funds allocated to the project will not be collected by the CRA until approximately 2040, about 23 years from now.
CRA Executive Director Roxanne Manning told the Tallahassee Democrat that despite the loss of Walgreens the CRA investment was a good deal.
Ms. Manning did not cite any financials as support for her conclusion. Instead, she said it was previously an eyesore and the CRA board, governed by city and county commissioners, wanted a viable downtown building.
In addition, County Commissioner Mary Ann Lindley at a recent Village Square forum, when asked about the project, said “it’s an investment in increased property tax receipts.”
However, it appears the benefit of any increased tax receipts will not occur until 2040.
The financial information provided by the CRA to Tallahassee Reports raises significant policy questions about public officials spending $1.4 million that will not be recovered for approximately 25 years.
Did elected officials understand the financial model?
Was there a more efficient way to spend the $1.4 million so benefits would be realized by the current generation of taxpayers?
Would increased tax receipts have been realized before 2040 without CRA intervention?
TR will continue to investigate.
Gateway Building Will Not Repay Public Dollar Investment Until 2040 added by Staff on
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I’m no math scientist, but this is how it looks to me: The developer makes all or most of their portion of the investment up front and the citizens and city “hope” to get theirs on the back end, assuming their is even a business existing to pay the taxes in 23 years…If the developers are recouping their money on the front end and getting tenants in the same fashion as the “buy here, pay here” car dealers, two things occur,
1. They profit quickly so there’s never really any “skin in the game”
2. The building and offices stay vacant or mostly vacant for the majority of the time, which apparently gets subsidized any way since there exists no real incentive for the developers to be concerned with vacancies and tenants for the first 23 years of business.
Maybe I’m just not understanding something here
This is why so many questions are raised, because so few can truly understand the math, the investment formulas, or the accounting principles. An accountant, like a mechanic, can tell The customer any thing, and the customer doesn’t really know if he needs a new transmission or not.
The city leaders can tell us they made a good investment, and then make the books verify it. We have to rely on other experts outside the city government for meaningful verification.
Exactly why I read this column as much as possible. I cannot understand everything, especially with these brief little news snippets and political spin on everything on tv and online. TR is the lone wolf out here giving out back stories and making the connections we all know are there.
Voting to voluntarily increase one’s own taxes has consequences. Mind boggling, really.
A bad deal for the taxpayers from beginning; another example of the City of Tallahassee’s failed attempt to legislate a downtown residential community. One downtown residential condominium and two downtown hotels cannot provide the business necessary to support a chain drug store.
Wonder who in this deal is connected to someone at the City or rather has ties to someone at the City – sure doesn’t seem like a good deal for taxpayers AGAIN….
Another wonderful investment like the Challenger Center IMAX theater. NOT!
Steve:
The property tax before Gateway was $42,409.68 per year the property tax is now $134,349.86 per year a net increase of $91,940.18.
CRA Investment of $1,400,000 / $91,940.18 = 15.23 year
Property taxes increased in Tax Year 2015 + 15 years = year 2030 not year 2040 in your headline.
This investment by the CRA will save taxpayers $91,940.18+ ( tax increase) for the next 100+ years $91,940.18 per year x 100 years = $9,194,018.
So the CRA made a $1,400,000 investment and will save taxpayers over $9,194,018 and this is a bad thing?
If the CRA did not invest $1,400,000 it would have cost tax payers $9,194,018 and the prime corner in Tallahasee would still be a closed gas station.
The great thing about your readers they are great at math and the number don’t lie. It’s only when you add too many words it becomes hard to understand. Please check my math.
Let’s see what happens on the NorthWest corner, time will tell. For now it’s just a eyesore dragging down property values.
I’d rather my earnings be in my hands.
$91,000+- savings per year over 100 years is tenuous at best and unrealistic to assume all is the same for that 100 years…even this, assumes your figures are accurate. Right now we have $1,400,000 that cannot be recovered by property taxes (increased or otherwise)until the start of 2022 and beyond. The CRA Cash giveaway was not wise with Tallahassee’s downtown area being comprised mostly of lobbying associations and attorneys and the restaurants and bars to service each. Retail longevity is dead in downtown with the lone exception of Nic’s Toggery. Problem in our town is government thinks $$$ is the solution. It helps but not in the hands of those who don’t understand its purpose.
Wrong…If the CRA had not invested $1,400,000 of taxpayer money it would have saved taxpayers $1,400,000 plus the lost property taxes that would have been collected through 2022. If it is viable to develop private property, developers will take the risk. The city has no business getting in bed with these developers when there is no accountability. If they make a bad deal what recourse do the citizens of Tallahassee have to recoup the money? Who approved the deal…Who do we fire?
When will local officials realize they do not have a moral authority to spend taxpayer money on these kind of “deals” that do not really benefit normal citizens?
Vernon….I have to agree with your logic. It seems as though our leaders (?) look at only one end of the spectrum. “Oh, so the city will earn this much $$ over this much time.” What is err apparent is that they continue to fail at looking at the overall. The “what ifs?”
My thought is how much property would look more appealing to developers if old, dilapidated properties were made to be taken down or resold with new development within a specific time period. We have way too many old properties that are eyesores just like the northeast corner used to be. How about before we make decisions with taxpayer money, we first look at all the sides of the box and make sure the taxpayers interest are what’s best at hand.
JT some of your analysis is correct but you also must factor the property would have been re-invented at some point on its own with a much greater tax base going forward.
JT, aren’t you one of the people being investigated?
Why not multiply it by 1000 years instead of 100? Probably because that would be even more misleading than you’re already being.
Why don’t they ask Morgan and Morgan and Morgan to pay the bill since their commercials tout the billions of dollars won for their clients?
Nice report! At best, officials are clueless. At worst, officials are clueless and deceptive.