(Jeff Burton) I'm really excited about working with you on that.
I was asked to give just a little – and this was done this morning so if there are any typos, forgive me – because I was rushing out the door trying to get here on time.
But this is just a little bit, a look at what tax increment financing and how it applies to economic development and the decisions that you have to make.
So it's forty thousand feet, so it's like three slides.
So this is what happens when there is no development and you have a CRA.
The blue area is the base year, so in 1985, when you created your CRA, or one of your CRAs, we use that one in particular you have a base number that's what you're receiving and what your partners that provide the increment which would be the County is receiving.
That number is set in stone.
You continue to receive that.
I always liken it to a city when they look at a vacant piece of land in 1985, they will continue to see that vacant piece of land, even when a new development is built on it.
To the City it's always a vacant piece of land because that's the only value you get out of it.
The CRA receives the increment above that amount, and that's what the little yellow area is.
That little area in yellow is the increment that occurs over the years, and if you have no development, natural inflation, just property values going up.
And they go up and they go down and they go up and they go down, as we've learned over the last decade or so.
But on average, they go up.
And that little area is what happens to that property value.
And the CRA, if no development occurred, if none occurred, if everything remains static and equal, that's the kind of growth you would see.
I say it's around 3.
5%, the developers usually say it's around 5%, that's okay, because it's economics and that's a lot of soothsaying, projections into the future.
So, that's what you would see if nothing happened.
You would see just a small amount of money coming in.
It would grow over the lifespan of your CRA – which, by the way, ends in 2044.
That's the last year you can have your CRA.
Once that happens, after the CRA – that green area – all the money goes back to the City and the County so whatever you were receiving in the blue area, and you now can get back what's in the yellow area and you continue on from there, if nothing happens.
If nothing happens.
If no growth occurs.
I just told you that your County Is poised to be one of the top three in the State in Florida in population growth over the next 40 years.
Something is going to happen.
Your job is to pick and choose, you know, who your partners are, so, and how you spend your increment when it does come in.
With development, this is what we see.
Again, the blue is the base year, you, that's always remains static, the same.
But if you have a development come in and they go on to a vacant piece of ground, or they go on to a piece of ground that had something else on it – you know we've talked about churches owning properties in Downtown.
The base year is zero for them because they're paying no taxes in 1985.
But that yellow area all of a sudden shoots up, you know, there to there, because something new occurred.
That's the increment now received by the CRA, and as time goes on, it continues to increase, and the reason I put it in the middle is because not all development happens the first year.
You know, you have been in the business of CRA for a long time.
And you're having these developments come in at different times, so you could see this at different points for different projects.
Each project is that yellow area.
(Commissioner Randall P.
) Can we just pause there for a moment? (Jeff Burton) Yes.
(Commissioner Henderson) Talk about the yellow area? Yes.
The significance of that yellow, because there's a lot of rhetoric and misinformation that's spread about that yellow area.
(Jeff Burton) Yes, sir.
(Commissioner Henderson) It's that yellow area that's used to go back to the developer that helps to mitigate risk associated with runaway construction costs, all the risk that Mr.
Patterson brought before us earlier, it's a threat to getting an improvement to your City, and then beyond, especially on the decade ahead.
And I would remind people that that yellow area there, 12 or 15 years ago, for projects that this Council granted to developers has now expired, and we're in that green area now.
And that's propelling our financial structure in the City forward to help us do things like support expansion of Fort Myers Police Department (inaudible), fire apparatuses, and a host of things.
Discretionary revenue that we would not have had we not used that tool granted us by the State of Florida and beyond, to try to take areas that have been slow to develop in our City and inspire these kinds of projects so we can get beyond that.
It also aids in the broader scope of economic development in the sense of establishing a market place in which you can invest in with confidence.
That's why you're seeing private sector developers, including banks and Rasa, begin to say, "Hey, we can go and take a look at that because the risks are becoming more.
we can calculate them better.
We can measure our risk reward to the $1.
8 million that we're going to put into the project.
" So I think just for those who believe, I think in a misunderstood way, that this yellow portion that goes back to the developer is somehow misguided or creates gentrification, that's simply not true.
It aids us in getting down the road to inspiring a better Fort Myers, and we'll talk more about that as we get down the road.
Is there anything I said about that yellow area that you would disagree with or take issue with? (Jeff Burton) I want to show you.
Thank you , Mayor, for introducing the next slide.
(Commissioner Henderson) Well, I'm trying to make sure I've got it right.
I have never worked with anything as complicated as this.
(CRA Chair Gaile H.
Anthony) That's why I always think it's good to at least go over it again.
(Jeff Burton) So this next slide, for the most part, you've given the introduction to.
This is the same slide as this one, but now, we have a breakdown of the yellow area.
And the breakdown of the yellow area shows when you're doing economic development and you're offering incentives – there are over 270 CRAs in the State of Florida – 48 out of 50 states in the United States use some kind of increment financing for economic development.
The State of Florida, ever since 2012 when California got rid of theirs, is the preeminent state, it is the most advanced state using increment financing for economic development.
This shows you what happens when you have a developer come in at the pinnacle of the start of the yellow on the blue is when the developer comes in and says, "I want to build something, but I need your help.
" Then the yellow gets broken into two pieces.
It gets broken into the incentive to help the developer, and when I said there are 270 CRAs in the State of Florida, not all of them are doing incentives, but the majority of them are.
So you're competing with other cities that have other areas like you have that, you know, over on the west – on the east coast, where I work, we have incentives.
I met with Wachula, they want to do incentives, okay, so you're competing, so you just can't say, "Come on in.
We'd be happy to have you.
" You have to compete, so the golden area is the incentive for the developer.
And it usually follows the same trend as what the yellow area follows because as the development occurs, the property values continue to increase over time.
And as you see, at some point, that golden area inside the yellow area stops.
That's when your agreement with the developer ends.
And that can be based on a dollar amount that you finally reach, it could be on, "We'll pay you a percentage over a number of years.
" Now the yellow area, as it grows, the CRA still earns money off of development.
That's why you see that yellow area at the top and it continues – that's what you continue to receive every year as the County and the City receive taxes and convert it to increment to the CRA, and it should on average grow that same way.
At some point, you pay off the development and you receive the bulk amount for a period of years until your CRA ends in 2044.
Those are the really good years.
Those are the years where you get the most amount of money, that's the years where you're talking, a lot of increment revenue coming back into the CRA.
Mayor: At that point, in 2044, the County and the City as you see that green area got a whole lot bigger.
And that's when all those funds go back into your general funds, and you can use them specifically for the things the City needs, 'cause you know as well as I do that increment – CRA increment – is very specific how you can use it.
It has to be in the plan, you know, it can't be used for general fund expenses per se, there are ways you can be creative with it, you know, that's always been one of the issues with it is it's allowed in Florida to be used creatively.
So this is what happens when you have development.
And I will go back to the original.
This is what happens when you don't have the development and the most important thing, the most important sentence, the most important statement I can make to you is, "It's that old 'If you build it, they will come'.
" If you have development, you will see this – and look at the yellow area: it's big, it's healthy.
If you do not have development, if nothing occurs, you have that.
and there are a lot of CRAs out there that when they were designed, they weren't designed for growth potential – they were mostly like residential, no commercial, and they don't grow the way they need to grow in order for you to get the really powerful bang for your buck.
So, without the developer, that's what you will see.
With a developer coming in, the question is, you know – and these are the questions that we've tried to help you with – is, "By sh-" – as the Mayor said – "We're now starting to to actually look at real numbers.
We're showing you, like projections into the future.
How much the balance – how much does the CRA get and how much does.
you know, what are you going to do with your money when you get (inaudible) by the developer.
So, without the development, there is no major growth.
So it has to happen, it's a partnership.
It's up to the Board, it's your decision, it's your authority to determine what that is.
And anything we can do to help you with that, we're here to do – you know, whatever questions you might have, if we can answer them, which we will definitely try and do that.
So, hopefully, this gives you what you were looking for and it helps all of us.
Believe me, all of us understand TIF is a.
I study it for school.
Everywhere it's different.
It is something that is.
it's still theoretical in a lot of ways.
In Florida we're really defining it much better than a lot of other places.
But man, oh, man, you know, you've got this growth coming in, you've got this engine, and this engine can empower the rest of the community.
The word "gentrification" was used, I will tell you under Bloomberg in New York, he answered the gentrification question by making sure that certain criteria.
if you develop, you had to have a certain amount for low- and moderate-income in the same development to make sure that the community stayed intact as the development occurred.
If you don't have those things in place, if you don't have a CRA, that most likely will not happen, and you will see some type of gentrification.
So, gentrification is extremely important that we need to make sure that we protect ourselves and mitigate against it.
(Commissioner Henderson) On that note, I just remind the Council and those who are visiting either by TV or here, that this Council got ahead of that question in the early 2000s when we built $120 million of subsidized housing just a mile and a half down the street from this location or so on Michigan, so we did that first so.
and it's brand new.
well, it's getting a little age on that because we did that so we're in the neighborhood of the late 2000s.
But it's in place – $120 million in partnership with the federal government and HUD.
It's outstanding housing, it's within a bicycle drive of this location, so the combination of two, I think, is what we want to aim.
And that's called the Renaissance, and there's I think, three phases that total about $120 million.
I'm not sure what the value of the Seaboard site is, we'll find out more about that.
(Jeff Burton) Yes, you will.
(Commissioner Henderson) How much? (Jeff Burton) You'll find out.
(Commissioner Henderson) But, the point is, we've been assertive when addressing that and there's more to do.
And so we're talking about that balance that you just mentioned.
(Jeff Burton) And I'm working myself.
I'm working on remaining on task with the slides that I have, so I think this is the last slide and I know we need to move on.
so if that answers, if that helps you, it was my pleasure to do it.
(CRA Chair Gaile H.
Anthony) Yeah, make sure we have those slides, because I think that's good.
And I think that's something we'd like to keep with us.
(Jeff Burton) Okay, no problem.