Miami Rushes Approval Of Corporate Tax Rebates Over Holiday
Miami city commissioners approved a multi-million dollar tax rebate deal on Monday, but critics complain the plan was rushed through over the holidays to limit public input.
According to the Miami Herald, commissioners voted unanimously in favor of the plan to rebate more than half the property taxes for the $1.5 billion Miami Worldcenter project back to developers, despite “complaints from a score of Overtown residents, labor officials, and activists that the plan was rushed through.”
The project’s developers claim that, “pressing contractual and financial deadlines” necessitated the hurried vote, but opponents charge that the plan “was insufficiently vetted publicly,” having only been finalized over the Christmas holiday.
Over a 12-year period, the deal is expected to cost the city about $88 million in foregone property taxes, all of it coming from the Southeast Overtown/Park West Community Redevelopment Agency (CRA), which uses property taxes from new developments to combat blight and offer financial incentives for new developments.
However, city officials made little attempt to make a case for why the Miami Worldcenter development, which has been planned for over a decade and has the financial backing of “deep pocketed investors,” requires such generous incentives. (RELATED: States May Have to Disclose Business Subsidy Costs)
A portion of the subsidies, the Herald says, “would go toward the financing of some $57 million in public infrastructure improvements necessary to build the project, like roadways, utilities, and parks.” The rest remains subject to further discussion, but could be used to build a parking garage.
In exchange for the rebates, Miami World Center Holdings, LLC, and shopping center developer the Forbes Company will ensure that at least one-third of the unskilled workers hired for the project come from the Miami area, and will also commit to paying higher wages for all employees.
The rebates are scheduled to last from 2018 to 2030, and while the standard rebate is set at 57 percent of the development’s property tax bill, “the agreement is set up so that the return could be as high as 75 percent through 2022.” (RELATED: GAO: Investors Double-Dipping on Tax Credits)
However, the tax subsidies decrease in value if specific phases of the Worldcenter are delayed. Based on a “typical time frame,” developers would be penalized 10 percent for a two-year delay, and could lose the rebates entirely if the first phase of the project is not completed by January 2024.
Before the agreement was even finalized, according to the South Florida Business Journal, one company filed suit to prevent its implementation, alleging that the deal “violates the Florida Local Government Development Act and includes unlawful entitlements authorized by the city.”
The suit, filed on behalf of a business called Grand Central Lounge, also claims that the city did not give proper public notice of the proposed agreement, and improperly modified it after it was originally submitted. (RELATED: McAuliffe Sets Record for Business Incentive Deals)
“I think that this is the kind of thing that they’ve been doing a certain way for a long time, that perhaps no one noticed that they were violating the statute,” said Paul Savage, the lead attorney on the lawsuit. “I would just hope that they track their local ordinances to the letter and, as well, the state of Florida statutes,” he added, according to the South Florida Business Journal.
If successful, the lawsuit would prevent the city from awarding any tax subsidies until the agreement complies with all state and municipal laws.
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