IV. Jurisdiction Surveys

D. Florida

In recent years, Florida has witnessed increased redevelopment on both coasts and in cities as well known as Miami, Cocoa Beach, Key West, Daytona Beach and Ft. Lauderdale. Coastal redevelopment in Florida is most commonly achieved pursuant to the state’s Community Redevelopment Plan (Part III, Chap. 163, Fla. Statutes), which provides for tax increment financing. Pursuant to statute (sec. 196.1995) Florida also allows municipalities to grant ad valorem tax exemptions to new business and expansions of existing business. Finally, proposed legislation that enables developers to recapture and use sales tax revenue to finance redevelopment may lead to increased retail development in the future.

1. Florida’s Community Redevelopment Act
(Part III, Chap. 163, Fla. Statutes)

As noted above, the Community Redevelopment Act (CRA) allows for tax increment financing of redevelopment. More specifically, the Act allows an agency dedicated solely to redevelopment to capture and spend annually an amount equal to: 95 percent of the difference between 1) ad valorem taxes levied yearly by the taxing authority on real property within a designated redevelopment area and 2) the amount of ad valorem taxes that was produced in the area prior to creation of the redevelopment agency (See Chap. 163.387 (1)). The agency has broad discretion to use such funds to “finance or refinance” any redevelopment within its jurisdiction. See id. However, getting to the point where tax increment funds actually fund redevelopment is a bit more complicated than suggested above since a “redevelopment area” can only be created pursuant to a rather detailed legal process. That process is briefly described below.

a. Recognition of a Redevelopment Area

A county or municipality has authority under the CRA (163.355) to recognize a “Community Redevelopment Area” which is broadly defined as a “blighted area.” A blighted area itself defined as, among other things, an area where there is “predominance of defective or inadequate street layout” or “Unsanitary or Unsafe conditions” or “Deterioration of site or other improvements.” (163.340).

b. Creation of a “Redevelopment Agency”

Once the governing body has recognized the necessity of a redevelopment area, it may create by resolution a community redevelopment agency or confer upon itself the powers of such an agency (163.356, 357). The agency’s powers are broadly defined as all that “are necessary to carry out the purposes” of the CRA. Thus, when authorized by the governing body, the redevelopment agency may exercise the power of eminent domain to the agency (163.385), carry out the sale and disposal of private property, enter into contracts with private developers (163.380), and issue revenue bonds (163.385). The agency’s powers also include authority to create a community redevelopment plan, the approval of which is a necessary prerequisite to any substantive action (163.360). Once the plan is approved, the governing body is to establish a “redevelopment trust fund” and provide funding for the trust fund according to the tax increment financing scheme described above, for the duration of the plan.

3. Ad Valorem Tax Exemptions

The Florida Constitution grants cities and municipalities the power to grant tax exemptions to new and expanding business provided that such exemptions are approved by a general referendum. (Fla. Const. Art. 7 sec. 3). The specific procedures for granting exemptions and the scope of the exemptions are detailed in Florida Taxation and Finance Statutes sec. 196.1995 entitled “Economic development ad valorem tax exemption.” The statute provides that, after a referendum establishes a municipality’s authority to grant exemptions, the governing body “may exempt from ad valorem taxation up to 100 percent of the assess value of all improvements to real property made by or for the use of a new business and of all tangible personal property of such new business, or up to 100 percent of the assessed value of all added improvements to real property made to facilitate the expansion of an existing business….” (See sec. 196.1995 (5)). Unlike tax increment financing discussed above, ad volume tax exemptions are not limited to a specific geographical area unless the exemptions were approved in a referendum that specifically asked if such exemptions shall be granted in an enterprise zone. Of course, in such a case the exemptions could only be granted in a designated enterprise zone. See id. Moreover, the tax exemptions remain in effect for up to 10 years “regardless of any change in the authority of the county or municipality granting exemptions….” Id.

3. Florida’s Proposed Sales Tax Incentives

Legislation has been proposed in Florida (see attached “SHARE” Act) whereby local developers can partially finance a development project by recapturing a portion of the state sales taxes expected to flow from the completed project. The program would work as follows:

A state agency is created to review applications by developers to share in the state sales tax revenue. The agency certifies a project as eligible to receive state funds upon assurances that a local government has entered into a 10-year redevelopment agreement with the developer, wherein the developer agrees to pay at least one-half of the costs of development and the local government determines that the project will produce a certain amount of retail sales and state sales tax revenue after one full year of operation. Once a project is certified by the state agency, the project is entitled to a set amount of state revenue for the life of the 10-year agreement, as long as the sales tax projections are met, which funds must be used in conjunction with the development.