This was written on behalf of the Martin County Taxpayers Association:

For Fiscal Year 2020, Martin County will have a budget of $500 million or $3,125 per resident.

Many of us believe that is an extraordinary amount for local government. Roughly 70% of the total budget comes from property taxes. Because of Florida’s system of property tax exemptions and caps, a disproportionate share is paid by business and nonresident property owners. The rest of the income is from grants, fees, shared, and miscellaneous revenue. Can the Board of County Commissioners do much to curtail expenditures in order to reduce taxes?

The County is charged with providing the funds for the constitutional officers. The Sheriff’s Office is the one department that has the largest budget impact. Their budget, at nearly $71 million, is broken down into three subsections. The largest share is law enforcement with a budget of a little over $48 million, corrections and county jail has a budget of $19 million, and providing security at the courthouse is another $3.5 million.

More than $67 million dollars of that department’s budget is from the general fund. The Sheriff’s budget is presented to the Board of County Commissioners (BOCC) for its nominal approval. They can reject the budget and make changes. However, the Sheriff can then appeal to an administrative commission in Tallahassee. This appeal process is hardly ever used. If there is a dispute in a county, the sheriff and the commission usually come to terms before that step is taken. A commissioner does not want to be the politician that cut the number of deputies patrolling our streets.

The other half of the public safety equation is Fire/Rescue. The BOCC has both full operational and budgetary control over this agency. Fire/Rescue has a budget of $47.7 million. Much of that amount comes from the Municipal Service Taxing Unit (MSTU). The MSTU is paid based on property value and is charged in the unincorporated areas. Some of the rest of their budget amount comes from the general fund. This occurs when the Fire/Rescue Department provides services for every county resident including those within Stuart and other municipalities such as a hazardous material response.

While the BOCC has full control over this agency, they have generally been supportive of its budgetary requests. Several Commissioners have stated that they are very unwilling to second guess the needs of these first responders. When combined with the Sheriff’s budget, it represents 23% of the total County budget.

Most of these funds are spent on personnel. Are there too many EMTs, firefighters or deputies? The Taxpayers Association is not qualified to determine that. Which places us in the same position as the BOCC.

We would urge the BOCC to take a harder look at the employment compensation packages for these departments. We are not aware of a recent compensation study being done for positions in these departments that considers both neighboring jurisdictions and jurisdictions demographically and economically similar to Martin County throughout the state. The compensation study would need to look at things such as volume of calls answered and fires responded to—in other words, the workload of an employee.

Compensation rates should not be based on volume of work but, rather, complexity of tasks, education/certifications, etc.  Volume of work should be addressed by headcount unless it is a piecework environment where production is counted by number of widgets produced in a certain amount of time.  Fewer calls equal fewer people or, if a certain number of people are required for each call, then consolidation of fire houses.

Enterprise funds comprise 27% of the total budget. Enterprise funds are fees and charges for direct services. The airport, solid waste, and water are examples of this. The funds are used to pay and improve the operations of those areas. Things such as wastewater management are usually provided by government to the public.

In some cases, such as trash collection, Martin County has decided to outsource that function to a private subcontractor. Since the County collects payments from individual homeowners on behalf of the subcontractor, residents receive more attractive pricing than if each homeowner paid the subcontractor directly. The County has determined that everyone should have garbage collection rather than relegate trash to pits in county backyards.

As taxpayers, we often make the mistake of analyzing the cost of a function instead of the necessity of providing the function itself. As a body, the BOCC has a hard time knowing whether the widget being bought should cost $1 or $5. Because of that they must rely on the expertise of their staffs. The question to be answered, however, is whether the widget should be purchased at all.

What any elective political body seldom discusses is if it should even be providing the service. For example, why does the County provide Fire/Rescue to every resident in unincorporated Martin County? It is the largest department that is under the direct control of the BOCC. It has an enormous cost. To provide that service to the more rural areas of the County on a per capita basis is very expensive. Then, what is the alternative for those people. Should it be a volunteer response?

Good governance should not only examine the cost but the mission. For every department, a comprehensive review of the need for providing services should be undertaken. Taxpayers would be better served by the BOCC doing that one thing than by trying to determine the cost of the widget.

A third in an occasional series on Florida taxes for the Martin County Taxpayers Assoc. 

How many exemptions are in the Florida property tax system?

According to the Martin County Property Appraiser’s website, there are 16. They encompass reasons as varied as being a Florida resident to a limited-income Florida senior or a disabled vet. Government largess at its finest but is it to the detriment of a fair and equitable system of taxation.

In the past few years, the number of exemptions has increased exponentially as the legislature has tried to curry favor with the voters. For Tallahassee, this is a way to gain political points as tax cutters but not have to suffer any pain with the loss of tax dollars to state coffers. Real estate taxes are local taxes that are levied by local governments for local needs.

The oldest exemption is the “Homestead Exemption,” which dates to 1934. It was meant to shield individuals from losing their property during the Great Depression. It was initially on the first $5000 of property value. It was increased by statute in the 1960s to $10,000 and then, in 1980, was raised to $25,000 by a voter-approved Constitutional Amendment. That amount was increased to $50,000 in 2008 for non-school property taxes.

These exemptions are not to be confused with the “Save Our Homes” Amendment that was passed by the voters in 1992 and went into effect in 1995. That amendment states that the year after you receive your Homestead Exemption, your property assessment can only be raised by the lesser amount of 3% per year or the rate of inflation. As an example, if your home was assessed at $100,000 in year one, the most it can increase would be to $103,000 in year two.

In 2008 voters approved a Constitutional Amendment that allowed for portability of the “Save Our Homes Amendment” caps to a new home bought anywhere within the state. This allows you to bring an assessment of up to $500,000 with you and have it part of the calculation in figuring the valuation for your new home.

Using the Martin County Appraiser’s estimator, I ran several scenarios. One was a Market Value of $100,00 in the old home with an Assessed Value of $90,000. The new property’s sale price was $200,000. After applying the Portability benefits and Homestead Exemptions, the new Taxable Value was $140,000. This is $60,000 less value than a first-time non resident buyer would have for the same property.

Real Estate property taxes were not conceived as a progressive tax. They were to be based purely on the value of the property. This concept goes back to antiquity. Real estate tax is known as an “ad valorem” (Latin for as to value) tax. Just as the “wealth tax” now being touted by presidential candidate Elizabeth Warren, the taxable value is to be based on the totality of the asset.

Many states, but most significantly Florida, have bastardized that original concept. By allowing for a proliferation of tax exemptions, artificial capping of assessments and, most recently, portability, real estate taxes have now entered the realm of government choosing tax beneficiaries like our chaotic federal income tax system.

Florida has a politically complicated real estate tax system that has resulted in an unfair playing field for classes of property owners and local governments that rely on those taxes. A rent control analogy is applicable to the “Florida System” of real estate taxation. Much of the taxes that residential owners will pay are based in how long they have been Florida residents.

If you bought a home in 2000 and became a Florida resident, your assessed value is capped using the 2000 market price. Your home may have climbed in value to triple what you paid for it 20 years ago, but that is immaterial to what you will pay because of “Save Our Homes.” The tax you pay is not based on anything more than when you happened to have moved into the home and had declared a homestead. The 2000 value could be a million dollars and your neighbor, who just purchased an exact replica yesterday for 3 million dollars, will pay substantially more in property taxes.

The reason given when “Save our Homes” was instituted was for the poor widow who could no longer afford to live in the family home. This, of course, was a similar excuse used when rent control was being instituted. The unintended consequences of this policy are the perversion of the real estate market. Billions of dollars of real estate value are prevented from being taxed because of illiquidity. Governments must compensate these individuals by relying on business and non-homestead properties to pay a greater share of the tax burden than is equitable.

The cocooned homesteaded owner has an incentive to demand greater and greater services from local government but not pay his/her fair share for those demanded services. This further increases the expectations on localities with non-taxed or insufficiently taxed voters calling the shots with businesses and non-homestead owners picking up the costs.

If this is not corrected at some point, the inequalities will have an adverse effect on the state’s economy. Taxes must be shouldered as equally as possible by all property owners to be fair. The state should not try to place societal goals that are better left to other governmental means on the property tax system. There needs to be a restoration between value of the property and the amount paid by the owner.

From the June 29th Friends & Neighbors Newsletter. To receive your free subscription send your email to thomasfcampenni@gmail.com

The City will purchase the “Wells Fargo” building on East Ocean across from Memorial Park for $7 million. The City will give a $200,000 deposit that is refundable if the seller cannot provide 18,000 square feet on the first and second floor by June of 2021. The seller has until July 2020 to fulfill this requirement and closing will happen within 90 days of that fulfillment date. With the vacant 18,000 square feet, the City will then have a place to move City Hall.

Is it a good deal? It depends. The City is certainly paying top price and the price is based on a cap rate that considers the rents being paid currently. If 18,000 square feet are now vacant or occupied by the City, then that amount of income is no longer available to pay for debt service. If the market tanks due to a recession (overdue at this point), then the price is too high. The City has a handshake agreement with someone to sell the strip center for townhomes. If there is a recession that will probably go away.

Commissioners Meier and Matheson stated that they were committed to moving City Hall to that building. There was no ambiguity or hesitation. Commissioner Leighton must agree since it was her motion to go ahead with the purchase that was seconded by Meier. Mayor Bruner was silent on the question though she voted yes. Commissioner Clarke hemmed and hawed and said she wasn’t there for the earlier discussions. Consistency is not her forte. She was recorded as the only no vote.

The idea of a New City Hall is the Moby Dick of Stuart and Commissioners, City Managers, and Main Street become the obsessive Captain Ahab in going through this exercise every few years. I don’t quite understand why. Some believe that a new hotel will be built on the current site. Others that the land will be part of the park. There is a possibility that if this moving miracle were to happen, a few parcels could be carved out with a new street between the expanded park and the tracks. Development would occur there.

It will be a momentous battle because there are many residents who will be in opposition. Will any benefit be worth the political fallout? This is the same Commission that backed out of the ballfields being redeveloped and, in that case, most of the people were non-residents. I believe there still needs to be a referendum that is passed by the voters.

If I were still on the Commission, I would go ahead with buying the building. While the price may be higher than what could have been negotiated, Stuart can pay more since the investment horizon is longer than the typical buyer. I would then want to see it financed in the most cost-effective way be it bonds, mortgage, or another investment vehicle. The building should continue to be fully leased to tenants until the financing is paid off. At that point a decision can be made whether to continue it as a source of revenue or whether City Hall should be relocated.

The Wells Fargo building was built in 1972, which makes it only a few years younger than the current City Hall. Does it make sense to move from one obsolete building to a rapidly approaching other? Both will require renovation in the near future. What is painfully obvious to anyone with commercial real estate experience is the lack of critical thinking in this area. There needs to be a more thoughtful and businesslike approach to the City and its real estate investments and properties. I believe the City is leaping forward without having analyzed the investment sufficiently.

Last Sunday, I was driving on Kanner Highway from Federal Highway to I-95. Anyone who regularly makes that drive can see that change has occurred in the past few years. Once undeveloped lands have morphed into gas stations, single-story buildings and fast-food outlets.

Kanner is a main road and that is where development should happen. Yet, I can’t help but think that what is being built there is not in the best interest of the County and its residents. If we are going to build new buildings in a formerly undeveloped area, that development should provide enough real estate taxes, jobs, and new homes to make it worth the loss of the green-space.

What the governments of Martin County allow seems to be mired in a 1960s development pattern that encourages sprawl and the use of cars. Don’t get me wrong…I love having Popeye’s Louisiana Kitchen, but did it have to take up over an acre of land to sell chicken?

Cleveland Clinic has built a 4-story surgical center on Kanner and Willoughby. When it was approved by the Stuart City Commission under the Martin Memorial banner, it was supposed to pay real estate taxes. If that remains true and the project will result in many high paying jobs, then it was a good trade off for a valuable commodity (i.e., vacant land). Popeye’s or Taco Bell are nice additions to the County, but the few jobs created are low-skill, minimally paid, and the real estate taxes are insignificant.

I challenge our governments to rethink their Land Development and Zoning Codes to allow for much greater density on these major thoroughfares. The Wawa being built now in Stuart on Federal Highway is not the best use for that property. You could call it redevelopment since the old bank building was bulldozed to make way for a newer bank branch and gas station. But, has the taxpayer received a maximum benefit?  Remember the 7-11 property, which is owned by the City of Stuart, situated across from the Kanner Highway Wawa?  It went out of business. I suspect that at least one or maybe two gas stations will close near the new Wawa within a year or so, resulting in a difficult re-use of those properties.

Governments need to encourage denser infill development and redevelopment along these major transportation corridors. If we are to preserve western Martin County as open land, then sprawl should be the last thing we want to see. Smart development needs to consider the cost of land, not only to the developer for his proposal but also to the community.

Single-story fast-food restaurants or standalone strip malls are a sea of unused parking lots for most of the day, surrounded by unattractive buildings. Martin County has probably 30% too much retail space and some of that space is functionally and physically obsolete. Shopping centers and malls that are not attached to offices and homes waste valuable real estate. Our future development should not have the characteristics of the mid-20^th century as we enter the third decade of the 21st.

If we cluster development to have small villages instead of suburban sprawl beginning now, we will not have to spend resources later correcting these inefficiencies. For government, it is more cost effective to provide services vertically than horizontally. Government will also collect more real estate tax per buildable foot, as well as save a valuable commodity…undeveloped land.

FROM THIS WEEK’S FRIENDS & NEIGHBORS. TO SUBSCRIBE TO YOUR FREE COPY SEND YOUR EMAIL ADDRESS TO TOM@TOMCAMPENNIFORSTUART.COM

All the above is vividly on display with the illogical fear of Treasure Coast Classical Academy’s (TCCA) temporary home on 34^th Street in Palm City. Ms. Defenthaler’s resolution regarding that location came back after a few changes. Once again, it appeared that the sky was falling and that terrible, terrible things could happen.

We live in Florida where every year we can have a devastating hurricane that could kill thousands. Our roads are completely inadequate for evacuation. Many of our homes could not withstand a major hurricane’s direct hit. There would be massive property losses. Yet, 850 people a day move to the Sunshine State.

TCCA temporarily being housed on what was once a private school that is on the same road as Palm City Elementary (PCE) is creating what has been described as something akin to the apocalypse. PCE Principal Robyn Monte even brought up the spectrum of dead children because of delays in first responders getting to the schools. Both the Sheriff and Fire/Rescue have signed off on the TCCA plan.

Will there be more traffic…absolutely! But this is temporary and, according to the TCCA plans, they should move to their permanent location over the Christmas break. Even if the new TCCA building is not ready until spring which is probable, it is not the end of Martin County as we know it.

Defenthaler stated that this resolution is to document the Board’s concerns in case something happens. Anderson was quite correct to assert that these concerns are already part of the record. Anderson did add that the County should have changed the zoning on the private school site when it originally closed. That would be very hard since I can see a “Bert Harris” claim being made to restrict that facility’s existing property rights.

DiTerlizzi had it right when he said the County does not do things precipitously. If the various departments that looked at the plans signed off, then the codes were complied with. Powers thought the resolution was more opinion than fact.

Roberts had several changes to make the resolution more concise and cogent. Ms Defenthaler accepted the changes. Roberts passed the gavel and seconded the motion. It passed 3-2 with Powers and DiTerlizzi voting no. What happens to the resolution now? What does it mean? The vote reflects the differences in the Board’s ideologies.

The staff and parents from TCCA didn’t even bother to attend the meeting. I was later told that they considered this meaningless. I tend to agree. This is one more reason why the school choice movement will grow, and Tallahassee will continue to tighten control on local school boards and bureaucracies.

The final resolution can be found at:

https://documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3A385f9ecb-6ff3-48d0-b6e0-61580995c156