Members of the Fort Myers City Council took a first look this week at the city’s finances as it gets closer to the budget year that begins in October in the glow of a development boom that sees taxable real estate values increasing 7%.
During the discussion, two council members initiated discussions about three possible ways to raise money for city coffers that extend beyond the traditional property tax bills.
Councilman Fred Burson said the city could create a fee to pay some of the cost of police protection outside of property tax bills.
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Councilman Liston Bochette suggested looking into a new tax on rental units.
The third revenue generation source under consideration is upgrading the quality of boats kept in the city yacht basin so the city can pocket the profits.
No formal action is taken on items discussed at workshop sessions and the police fee and renters tax, as well as luring owners of high-end boats to the yacht basin, were part of a general discussion.
The council will hold additional workshop sessions before bringing the proposed tax rate to a vote and holding required public hearings.
Caution urged on tax rate
A longtime commercial real estate broker, Burson urged the council to commit to a lower tax rate and continue to make the city attractive for new construction, which he said yields a lot more tax revenue than vacant land or properties in decline.
Property taxes are calculated in a formula that considers two factors, the money that the city needs to balance its budget and the total taxable value of property in the city.
The result is the tax or millage rate, which is now $7.96 per $1,000 of a property’s assessed value. Burson suggested the tax rate could be reined in if the city is friendly toward development that increases property values.
“It is wrong for us to emphasize the millage. It is just half of the equation,” Burson said. “If we emphasize increasing value, which is what our departments do by encouraging growth and encouraging appreciation, that’s unlimited.”
Burson argued that lowering the tax rate and getting approvals to developers relatively quickly make the city attractive for new construction.
He urged council members not to get caught in the idea that the only way local government revenue can be increased is by raising the property tax rate.
“We have been reducing the (tax rate). The more we’ve reduced it, the more the city has grown value-wise,” Burson said. “It will continue to go that way if we maintain that type of discipline and not get greedy and try to create revenue through tax increases.”
Police protection fee
Burson also suggested that levying a police fee, similar to the fee that helps pay for fire protection, would take pressure off the tax rate.
“I’d like to see it where the police department and the fire department are both 100% supported by an assessment fee,” he said. “Just move both of those agencies out of the millage.”
Councilwoman Teresa Watkins Brown was skeptical.
“You still have to be careful, whether you call it a fee, whether we call it taxes, the people are going to look at it as such,” Brown said. “Some people may end up paying more and other people are not paying anything.”
The fire assessment fee is currently about $78 per unit for residential property. Commercial property is charged under a different scale.
The fire fee pays only a fraction of the cost of fire protection. State law and regulations are potential roadblocks to a police fee.
Tax on rental units studied
During the tax and budget discussion, Bochette suggested looking at using a direct tax on rental units to raise more money without raising the tax rate.
“I am hearing from other cities that they are trying to impose a rental impact fee to make up for some homeowners who are carrying the brunt of it,” Bochette said. “More and more every city is getting more rentals, and they are trying to find some equity between homeowners and rentals.”
Bochette called for looking into the renters fee as a potential source of revenue to keep homeowners and condominium owners for carrying too much of the tax burden.
Councilman Johnny Streets Jr. referred to the idea as “double-dipping” because property owners already shift the burden of property taxes back on to renters.
Wanted: Fancier boats
Burson urged consideration of making the city yacht basin more attractive to bigger boats that could be charged more, increasing the city’s financial take from the 85-year-old landmark.
Burson complained of driving across the bridges spanning the Caloosahatchee River and seeing “a sailboat up its mast.”
He has also been critical of boaters docked at the city basin sailing away while owing basin fees.
Gearing the yacht basin to attract large yachts instead of smaller sailboats or motorboats could mean more money in fees.
“Why wouldn’t we want to attract wealth to the yacht basin?” said Burson, who has been critical of proposals to privatize the facility. “We could turn the yacht basin into a revenue source.”
Bochette agreed that bringing boaters who would pay higher fees would be good for the city.
“We are missing an opportunity,” Bochette said.