Millage Memo FY 19 FINALCITY OF SOUTH MIAMI
OFFICE OF THE CITY MANAGER
INTER-OFFICE MEMORANDUM
To: The Honorable Mayor & Members of the City Commission
From: Steven Alexander, City Manager
Copy: Alfredo Riverol, CPA, CRFAC, CGFM, CGMA, Chief Financial Officer
Date: July 17, 2018 Agenda Item: ______
Subject: Tentative Millage Rate for FY 2018-2019
Request: A Resolution of the City of South Miami, Florida, relating to the City’s 2018/2019 fiscal year budget; advising the Miami-Dade County Property Appraiser of its proposed millage
rate of 4.3000 mills; its rolled-back rate of 4.0302 mills and announcing the dates of public hearing to consider the proposed millage rate and tentative budget.
BACKGROUND & ANALYSIS
The procedures and timetables for establishing the taxation rate and the creation of the Budget are governed by the State of Florida. These rules are generally referred to as TRIM (Truth-in-Millage)
. This memo addresses the establishment of the maximum millage rate, rollback millage rate, and scheduling formal budget public hearings as required by the TRIM law.
The Miami-Dade County Property Appraiser certified the Taxable Value within the City of South Miami at $1,918,166,785. This valuation represents a 7% increase from the FY 2017-18 level
of $1,793,210,812 before the effects of inflation are factored into the calculation. When the increase in ad valorem revenues is considered in conjunction with the increase in inflation
or CPI, the net increase in revenues to the City as projected at the current and proposed millage rate is $256,167.
Maximum Millage Rate
A primary source of revenue for municipal government is the property ad valorem tax, which is representative of the property taxes applied to commercial and residential real property
and commercial personal property. The Miami Dade Property Appraiser sets the assessable taxable property valuation, based on many factors including State Law such as Homestead exemptions
not the City of South Miami, and is based on the property valuation calculated and transmitted by the Property Appraiser. The rate at which property is taxed is referred to as the
millage rate. The tax rate, or millage rate, is set by the City of South Miami. The amount of taxes paid by a property owner is
determined by multiplying the millage rate, times each $1,000 of assessable property taxable value.
Local jurisdictions, including municipalities, are required, to establish and publish a maximum millage rate during the budget process as required by Florida Statute 200.065 which requires
that within 35 days of receiving the Certificate of Value, (Certification of Value was made on June 29, 2018) each taxing authority shall advise the property appraiser of its proposed
millage rate, its rolled-back rate computed pursuant to sub-section (1) and of the date, time and place when a public hearing will be held to consider the proposed millage rate and
tentative budget. This rate will be advertised by the City and also reported to the Miami-Dade Property Appraiser. The City Commission can decrease the rate during the budget process,
but it cannot be increased after the above date except under extraordinary circumstances, and at significant expense to the City.
At this point in the budget process the City is simply establishing a maximum millage rate for budget flexibility and advertising purposes. Therefore, the Mayor and Commission may elect
to consider establishing a higher maximum millage rate, for instance, 4.5000, which would generate additional estimated ad valorem revenue of $329,733, above the existing 4.3000 millage
rate.
For every change of one-tenth of the millage rate, the ad valorem revenue generated is increased or decreased by an estimated $164,867. As per Miami-Dade County’s 2018 preliminary average
taxable homestead residential value report, the average taxable homestead residential value for South Miami is $250,927.
During the FY 2019 budget process, newly recommended and discussed budget items such as much needed parks improvements and new acquisitions will require additional funds over last year’s
approved budget and the Mayor and Commission may request special projects, new funding for educational alliances, the purchase and or refurbishment of parks and other publicly owned
properties and facilities, set new policies, and/or adopt newly negotiated labor agreements, which the additional estimated revenue will assist in funding. Securing the funds necessary
for such improvements may be attained by an increase in the millage rate.
Hypothetical Millage Rate Increase
Under the hypothetical millage rate example of 4.5000, using the Miami-Dade County’s average taxable value, the average homesteaded residential taxpayer would incur an additional $155.47
annually, which equals .43 cents a day, on their 2018 annual tax bill when compared to their 2017 annual tax bill. Therefore, at the hypothetical millage rate example of 4.5000, an
increase of $784,611 to City revenues only costs the average homeowner 43 cents a day more than what the homeowner paid for FY 2018.
TAXING AGENCY
FY 2018 MILLAGE
FY 2019
MILLAGE
City of South Miami
4.3000
4.5000
FY 2018
FY 2019
Average Taxable Amount
$226,443
$250,927
FY 2018
FY 2019
Diff
City of South Miami
$974
$1,129
$155.47
PROJECTED REVENUE CONCERNS
Parking Revenues
Currently, Parking Revenues are the second largest revenue source (behind property tax) in our City budget. Currently the Parking Franchise Revenue is budgeted amount at $1,840,000.
That amount represents a reduction of approximately 15% less than what was budgeted in the previous year. The reduction of the projected revenue from parking ($2,167,200) was due
to several factors.
The City believes that the primary reasons for the reduction and continuous downward trend in parking revenue can be attributed to several factors including;
Ride-sharing programs (i.e. Uber, Lyft).
On May of 2016, Miami-Dade County approved the use of Ride Sharing Services, which has increased the public’s use of Uber and Lyft. The rising popularity of ride-hail companies like
Uber and Lyft in South Miami is causing fewer drivers to park in South Miami, Miami-Dade County, and around the entire Country. Not only has parking been affected, but all public transit
has been impacted. As stated in the New Times article on August 18, 2017, “People have begun to switch to Uber and Lyft, preferring the comparably priced, comfortable options to public
transit.” Parking systems, such as South Miami’s, are beginning to see the major impacts on Parking Revenues from ride sharing programs. We project that there is going to be continued
negative impacts related to parking revenues as ride-hailing services and self-driving cars gain popularity around the country.
The closing of key businesses, and more importantly, the delay in reopening of previously existing major commercial entities.
Although many shopping areas nationally are experiencing significant retail closures due to the increasing competition of the internet and new efforts from companies such as Amazon,
South Miami is undergoing an exaggerated difficult period as it awaits the anticipated reincarnation of the Shops at Sunset.
Reductions in overall consumer traffic in the downtown area, which are in part due to the delayed metamorphosis that the Shops at Sunset, the “heart” of the commercial ecosystem in the
downtown area, has amplified.
As mentioned previously, businesses periodically close in the normal retail environment and is to be expected, however, when commercial locations remain vacant for a long period, then
there is heightened concern and cause for developing and implementing alternative strategies.
It is important that the City prepare for future reductions in parking revenues generated by its retail facilities and look for other ways to generate revenues.
Florida Homestead Exemption Increase Amendment
The Florida Homestead Exemption Increase Amendment is on the ballot November 6, 2018 as a legislatively referred constitutional amendment. A "yes" vote supporting this amendment will
exempt the portion of home values between $100,000 and $125,000 from property taxes other than school taxes. The measure would provide for a homestead exemption on the portion of home
values between $100,000 and $125,000, meaning the $25,000 between $100,000 and $125,000 of a home's value would be exempted from property taxes other than school district taxes. As
of 2017, Section 6(a) of Article VII of the Florida Constitution provides for a homestead exemption on the portion of home values between (a) $0 and $25,000 and (b) $50,000 and $75,000.
Should this amendment pass, which is expected to pass, the City estimates that we will experience an initial revenue loss amount of approximately $222,513, which would take effect in
Fiscal Year 2019-20.
The continuing loss of parking revenues and the expected continuous loss of the Homestead Exemption revenues project a mounting and continuing revenue concern for the City, which needs
to be planned for now so that unexpected and unfortunate actions need to occur in the near future.
Adopting the current FY 2018 millage rate of 4.3000 as the FY 2019 millage rate would provide the City an estimated Ad Valorem revenue increase of $454,878, based on the increase in
taxable value of property in the City before the effects of inflation are factored into the calculation.
Rolled-back Millage Rate
Cities are also required by State Law to calculate what is known as the "Rolled-back Millage Rate.” This is the calculated tax rate at which the City would receive the same ad valorem
revenue as in the previous year, excluding current year new taxable values (New Construction, additions, etc.). The rolled-back millage rate for the City of South Miami is 4.0302.
The City’s current millage rate of 4.3000 represents a 6.69% increase over the rolled-back rate. If the City were to adopt the rolled-back rate of 4.0302, the City’s estimated Ad
Valorem revenue would decrease by an estimated $444,810 when compared to the City’s proposed FY 2018 Ad Valorem revenue estimate.
For 2017, the annual average Consumer Price Index (CPI) was 2.8%, hence, when taken into account with the annual average CPI from last year of 2.8%, the effective decrease in revenues
is approximately $198,711 ($7,096,822 x 2.8%) which jumps the City to a total decrease of $643,521 ($444,810 + $198,711).
Please find the Millage Calculation table below.
MILLAGE CALCULATION COMPARISON (PROPOSED)
ACCOUNT CLASSIFICATION
ADOPTED
MILLAGE
FY 2017-2018
PROPOSED
MILLAGE
FY 2018-2019
EST.
DIFF
MILLAGE RATE
4.3000
4.3000
0.00%
REAL PROPERTY TAXABLE VALUE
1,727,378,539
1,843,032,750
6.70%
PERSONAL PROPERTY TAXABLE VALUE
65,832,273
75,134,035
14.13%
TOTAL TAXABLE VALUE (REAL AND PERSONAL PROPERTY)
1,793,210,812
1,918,166,785
6.97%
AD VALOREM REVENUE
7,710,806
8,248,117
537,311
95% OF TAXABLE VALUE (TO ALLOW FOR DELETIONS & DELINQUENCIES)
7,325,266
7,835,711
510,445
DEDICATED TAX INCREMENT AMOUNT
-683,322
-738,889
55,567
AD VALOREM BUDGET ESTIMATE
6,641,944
7,096,822
454,878
MILLAGE CALCULATION (ROLLED-BACK)
ACCOUNT CLASSIFICATION
ROLLED-BACK
MILLAGE
FY 2017-2018
ROLLED-BACK
MILLAGE
FY 2017-2018
EST.
DIFF
MILLAGE RATE
4.3000
4.0302
-6.69%
REAL PROPERTY TAXABLE VALUE
1,727,378,539
1,843,032,750
6.70%
PERSONAL PROPERTY TAXABLE VALUE
65,832,273
75,134,035
14.13%
TOTAL TAXABLE VALUE (REAL AND PERSONAL PROPERTY)
1,793,210,812
1,918,166,785
6.97%
AD VALOREM REVENUE
7,710,806
7,730,596
19,789
95% OF TAXABLE VALUE (TO ALLOW FOR DELETIONS & DELINQUENCIES)
7,325,266
7,344,066
$18,800
DEDICATED TAX INCREMENT AMOUNT
-683,322
-692,054
8,732
AD VALOREM BUDGET ESTIMATE
6,641,944
6,652,012
10,068
DIFFERENCE
-444,810
Below please find a detail breakdown of the City’s 2018 taxable values and 2017 taxable values by property type.
PROPERTY TYPE
2018
COUNT
2018
TAXABLE VALUE
2017
COUNT
2017
TAXABLE VALUE
SINGLE FAMILY
2,855
869,649,486
2,849
795,402,785
CONDOMINIUM
781
119,166,685
781
109,974,035
MULTI FAMILY
92
163,371,127
91
147,833,436
COMMERCIAL
640
613,482,777
638
596,737,867
INDUSTRIAL
27
11,771,665
27
10,866,991
AGRICULTURE
1
628,229
1
614,356
VACANT LAND
224
54,981,660
233
55,076,842
INSTITUTIONAL
35
9,183,745
36
10,074,759
GOVERNMENTAL
51
0
51
0
OTHER PROPERTIES
11
797,376
11
797,468
REAL ESTATE PARCELS
4,717
1,843,032,750
4,718
1,727,378,539
PERS PROP & CENT ASSD
75,134,035
65,823,326
ALL ASSESSED PROPERTY
1,918,166,785
1,793,201,865
This increase is attributable to continued signs of the economy stabilizing. The City experienced an overall assessed real property value increase of $115,654,211 or 6.70%. This total
is the actual assessed taxable value for 2018.
Tangible Personal Property (TPP) consists of all property that is not real estate (land, buildings and improvements). It includes furniture, fixtures, tools, computer equipment, machinery,
office equipment, supplies, leasehold improvements, leased equipment, signage, and any other equipment used in a business. Furniture and fixtures used in a rental unit (condo, apt,
house) are also taxable in this category. Tangible Personal Property assessed values increased by $9,310,709 or 14.14% when comparing the assessed value of FY 2018-19 and FY 2017-18.
The increase in property valuations specifically from construction within the current 2018 year is $2,393,5936 , which represents an increase from the previous year of $9,172,225 or
160.96%.
RECOMMENDATION
The Administration is proposing a millage rate of 4.3000 mills for FY 2018-19, which is equivalent to the City’s FY 2017-18 existing millage rate.
When the increase in ad valorem revenues is considered in conjunction with the increase in inflation or CPI, the net increase in revenues to the City as projected at the current and
proposed millage rate is $256,167. Additionally, the possible continuation of revenue slippage from parking revenues, and the Communications tax (land telephone lines) will add to
the reduction in revenues projected for this year. Therefore, we believe maintaining the current millage rate is very conservative.
This millage rate continuation will allow the City to proceed with regular necessary services, operations and on-going projects without an increase in tax rate.
Whatever rate the Commission sets at this time will be the highest possible rate for this coming fiscal year. The Commission will be able to re-consider the rate during the FY 18-19
budget hearings in September of 2018 only for rates lower than what is set tonight by the attached Resolution.
Budget Hearing Schedule
The City is required to hold two formal Budget Public Hearings. There are guidelines on when these hearings must be held. Additionally, a local municipality cannot hold a budget hearing
on the same date as either the County or the School Board budget hearings. There are also special advertising requirements for these hearings.
It is recommended that the Budget Workshop be scheduled as follows:
Budget Workshop
Monday, August 13, 2018
9:00 AM
City of South Miami City Hall
Commission Chambers
6130 Sunset Drive
South Miami, FL 33143
Additionally, the required budget hearings are proposed for the following dates:
First Budget Hearing
Thursday, September 13, 2018
7:00 PM
City of South Miami City Hall
Commission Chambers
6130 Sunset Drive
South Miami, FL 33143
Second Budget Hearing
Wednesday, September 26, 2018
7:00 PM
City of South Miami City Hall
Commission Chambers
6130 Sunset Drive
South Miami, FL 33143
NOTE:
Pertinent meetings scheduled as of this date include:
Miami-Dade County Budget Hearings: 9-06-18 and 9-12-18
and
Miami-Dade County School Board Budget Hearings: 7-25-18 and 9-05-18
Attachments
Proposed Resolution
DR-420, 420TIF, & 420MM-P (DRAFTS)
2018 Tax Roll by Property Type
2018 Year-to-Year-Comparison
2018 Preliminary Tax Roll by Taxing Authority
2018 Preliminary Senior Exemption
Miami-Dade County Preliminary Average Taxable Homestead Residential Value
2016 Fiscal Impact of Extending Homestead Banding Between 100k and 125k