Friday, January 28, 2022

More on CRAs

by Vip Grover,  Marco Island Chamber of Commerce President.

The concept of a Community Redevelopment Area is not new, yet   there seem to be many questions about a CRA.  I would like to try to answer some of them, so that everyone has an understanding of what a CRA is and how the process works.

First of all, a CRA is an alternative FUNDING mechanism – A funding mechanism that has been implemented by 144 communities in the State of Florida. Through this mechanism, the CRA is able to “freeze,” at a benchmark value, the tax base for the district. For example, if the taxable value of an improved property is $500,000, when the CRA is established, this is the value used as the “benchmark” for tax purposes. As the property values in the district increase, the ad valorem taxes generated obviously increase. The way to maximize the value of this mechanism is to establish the benchmark at it’s lowest possible level, so that the increases in the values have the greatest positive affect.

It is this increase that is the focal point of any discussion of a CRA. The incremental change in the tax base creates an incremental change in the total ad valorem taxes paid by the members of the district – same as any other part of our or any community.

In Florida, the difference between the ad valorem taxes generated in the benchmark year and the subsequent years (regardless of the lifespan of the CRA which can be as long as 40 years) is funneled into special funding for the CRA – the taxes generated by the benchmark tax base value continue to go, in their original amounts, to the City, County, School District and Specialty Districts.

Also, the monies generated through the CRA are to be used for infrastructure improvements within the district.  The way the monies are to be and may be spent can be controlled, to some degree, by the “by-laws” of the CRA. So, if, for example, the CRA Board, with the help of it’s advisory board, decided that condemnations, or enforcement of eminent domain, would not be allowed within the district, the CRA Board can set up the CRA in that manner.

The way the CRA is funded, is as follows:

  • 100% of the incremental increase in ad valorem taxes that the CITY garners within the CRA is kept within the CRA. The benchmark ad valorem taxes still go to the city’s general fund.
  • The COUNTY matches the funds that the CITY pays to the CRA, less 5% or at 95% matching.
  • These combined funds are the foundation of the monies focused directly on improving the infrastructure of the CRA District. The CRA is not a spending mechanism. The CRA gives a designated area within the city the ability to garner funds that would otherwise go to the County. These additional funds may be used to expedite infrastructure improvements that, in all likelihood, need to be completed anyway and allow us to do it with “someone else’s” money.

Granted, this is a simplification of the process, however, no matter how you cut it, the CRA is a win-win for the people and business in the CRA and for Marco Island. We should support the continued development of a re-development plan and financial analysis. This will allow us to help the council make a responsible decision about whether to and how to move the process forward.

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