2010-27449 ResoRESOLUTION NO.; 2010-27449
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, SETTING THE
PROPOSED MILEAGE RATES FOR FISCAL YEAR (FY)
2010/11, THE CALCULATED "ROLLED-BACK" RATE, AND
THE DATE, TIME, AND PLACE OF THE FIRST PUBLIC
HEARING; FURTHER AUTHORIZING THE CITY MANAGER
TO TRANSMIT THIS INFORMATION TO THE MIAMI-DADE
COUNTY PROPERTY APPRAISER IN THE FORM
REQUIRED BY SECTION 200.065, FLORIDA STATUTES
WHEREAS, Section 200.065, Florida Statutes, has specified the method by which
municipalities may fix the millage rate and adopt an annual budget; and
WHEREAS, development of the FY 2010/11 budget began early with a discussion at
the January retreat that included a review of priorities, historical analysis of revenues and
expenditures, taxable values and millage rates, etc. In the following months, and still
ongoing, the City has conducted outreach on budget issues with the community through a
series of Mayor on the Move meetings; and
WHEREAS, in May, the Commission held a two day retreat and began to consider
the economic projection and their impacts on the budget, major economic revenue and
expenditure drivers were discussed and alternatives for long term solutions were debated;
and
WHEREAS, the Commission directed Administration to generally preserve recently
enacted City initiatives in support of community priorities; and
WHEREAS, the Commission directed Administration to negotiate employee "give-
backs" sufficient to generate approximately $15.3 million over the two years FY 2009/10
and 2010/11 across all employee groups; and
WHEREAS, the City has undergone extensive negotiations with its various
employee groups to reduce employee costs which represent approximately 70 percent of
the City's General Fund budget; and
WHEREAS, as a result of these negotiations, six of the seven employee groups in
the City have reached tentative agreements (AFSCME, GSA, FOP, IAFF, Unclassifieds
and "Others") that will reduce approximately $13 million in salary and benefits through FY
2010/11 and $21 million through FY 2011/12; and
WHEREAS, should the City be successful in negotiating a contract with CWA
similar to other general employee groups (i.e., AFSCME, GSA, FOP, IAFF, Unclassifieds
and "Others") the "givebacks" are estimated to generate $15 million in salary and benefits
reductions through FY 2010/11 and $25 million through FY 2011 /12, unprecedented in the
City's recent history;.and
WHEREAS, a series of budget briefings were held with the Finance and Citywide
Projects Committee (FCWPC) beginning in June, including a discussion of capital project
priorities, review of various department budgets, potential revenue enhancements and
impacts of potential service level alternatives. These meetings were also attended by our
unions, interested stakeholders, and the general public. At these meetings various
strategies to address the $32 million gap were discussed; and
WHEREAS, at the July 7~', 2010 FCWPC meeting, the Committee recommended
setting the proposed operating millage in July at the rate of 6.4143, an increase 0.7588
from the current year to address the 11.8 percent decline in property values outside the
City Center RDA; and
WHEREAS, the City of Miami Beach is required to advise the Miami-Dade County
Property Appraiser of the Proposed Millage Rates, the "Rolled-Back" Rate, and the date,
time, and place of the first public hearing.
NOW THEREFORE, BE IT DULY RESOLVED BY THE MAYOR AND THE CITY
COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA, that the following
recommendations of the Administration be and are hereby ratified for transmittal to the
Miami- Dade County Property Appraiser, as specified in Section 200.065, Florida Statutes:
1) Proposed Millage Rates for FY 2010/11
General Operating 6.3060 mills
Capital Renewal & Replacement 0.1083 mills
Total Operating Millage 6.4143 mills
Debt Service 0.2870 mills
Total Combined Millage 6.7013 mills
2) "Rolled-Back" Rate 6.2030 mills
3) The first public hearing on the proposed millage rate and the tentative budget for FY
2010/11 shall be held on Wednesday, September 15, 2010 at 5:01 P.M., in the City
Commission Chambers, City Hall, 1700 Convention Center Drive, Miami Beach,
Florida.
PASSED and ADOPTED, this 14th day of Jam, 2010.
A ., ST:
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CITY CLERK
MA O
APPROVED AS TO
FORM & LANGUAGE
& FflN EXECUTION
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Condensed Title:
RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA SETTING 1)
HE PROPOSED OPERATING MILEAGE RATE; 2) THE REQUIRED DEBT SERVICE MILEAGE RATE; 3) THE
ALCULATED "ROLLED-BACK" RATE; AND, 4) THE DATE, TIME, AND PLACE OF THE FIRST PUBLIC HEARING
O CONSIDER THE MILEAGE RATES AND BUDGETS FOR FISCAL YEAR (FY) 2010/11; FURTHER AUTHORIZING
HE CITY MANAGER TO TRANSMIT THIS INFORMATION TO THE MIAMI-DADE COUNTY PROPERTY
PPRAISER IN THE FORM REQUIRED BY SECTION 200.065, FLORIDA STATUTES
Intenaea outcome Su
Ensure expenditure trends are sustainable over the long term; Improve the City's overall financial health and maintain
overall bond rating; Control costs of payroll including salary and fringes; Increase community satisfaction with city
services
Supporting Data (Surveys, Environmental Scan, etc.):
• In the 2009 survey, 65% of residents and 55% of businesses rated the value of city services for tax dollars paid as
excellent or good, and higher (73.5% excellent or good) among those residents understanding that only a portion of
their property tax bill goes to fund city services. Resident ratings improved 19% when compared to 2007 and 15%
when compared to 2005. Business ratings remain steady when compared to 2007, but improved by 14% when
compared to 2005.
Over the last several years, the City of Miami Beach has adopted budgets that provided tax and fee relief while at
the same time providing improving services that address community priorities (e.g. public safety, cleanliness,
landscaping and beautification, recreation and cultural arts programming, renewal and replacementfunding forour
facilities, and building/development functions). However, these objectives have become increasingly challenging -
in the last three years alone, the General Fund has absorbed almost $43 million in reductions (and almost $50
million and 245 positions across all funds) in a General Fund budget that is $226 million in FY 2009/10. Between
FY 1999/00 & FY 2008/09 City of Miami Beach Total Combined Millage decreased by 2.8 mills (11.8%) to 5.8930.
In FY 2007/08 alone, the property tax rate declined by approximately 1.8 mills, with savings to the average
homesteaded property of over $400.
The July 1, 2010 Certification of Taxable Value from the Miami-Dade County Property Appraiser reflects a 10.5
percent decline in Citywide property tax values from the July 1, 2009 tax roll certification to the July 1, 2010 tax roll
certification. Values of existing properties declined even further (12.7 percent), but this decline was offset by a 2.2
percent in new construction ($556 million). Given that the City Center RDA decline was only 1.2 percent, the decline
outside the City Center RDA, which impacts the City's General Fund revenues, was greater, at 11.8 percent.
Issue:
Shall the Mayor and City Commission adopt the resolution?
Item Summa /Recommendation:
he total proposed operating millage is 6.4143 mills, including a general operating millage rate of 6.3060 and a
eneral Fund Capital Renewal and Replacement millage of 0.1083. The proposed voted debt service millage rate is
ncreased from 0.2568 to 0.2870, however, the combined millage rate overall remains approximately 2 mills lowerthan
t was in FY 1999/00. In addition, the millage rate is almost 1 mill lowerthan it was in FY 2006/07, when property values
ere similar to the July 1, 2010 certified values.
Advisory Board Recommendation:
i
Financial Information:
Source of Funds: I ~ Amount Account
OBPI
'.1
Financial Impact Summary: The proposed millage rate for FY 2010/11 offsets property tax revenue declines
in the General Fund that have occurred since the adoption of the FY 2009/10. The adjustment to the millage rate
provides approximately $13.7 million towards an initial General Fund operating budget gap of $32 million. Employee
givebacks targeted at $15.3 million over 2 years are critical to addressing the gap. Other approaches include
efficiencies, and tweaking service levels to achieve reductions with minimal service impacts, as well as evaluating
potential new revenue sources.
Clerk's Office Legislative Tracking:
Sign-Offs:
De a ment Dire r Assistant Cit Mana er it Mana er
m MIAMIBEACH
AG ND ITEM rat
DATE ~ "al Y ~~
m MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, voww.miamibeachN.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manage
DATE: July 14, 2010
SUBJECT: A RESOLUTION OF THE MAY AND CI MISSION OF THE CITY OF
MIAMI BEACH, FLORIDA SETTING 1) THE PROPOSED OPERATING MILEAGE
RATE; 2) THE REQUIRED DEBT SERVICE MILEAGE RATE; 3) THE
CALCULATED "ROLLED-BACK" RATE; AND, 4) THE DATE, TIME, AND PLACE
OF THE FIRST PUBLIC HEARING TO CONSIDER THE MILEAGE RATES AND
BUDGETS FOR FISCAL YEAR (FY) 2010/11; FURTHER AUTHORIZING THE CITY
MANAGER TO TRANSMIT THIS INFORMATION TO THE MIAMI-DARE COUNTY
PROPERTY APPRAISER IN THE FORM REQUIRED BY SECTION 200.065,
FLORIDA STATUTES.
ADMINISTRATION RECOMMENDATION
The Administration recommends that the Mayor and City Commission adopt the attached
resolution which authorizes the City Manager to transmit the following information to the Miami-
Dade County Property Appraiser:
1) Proposed Millage Rates for FY 2010/11:
General Operating
Capital Renewal & Replacement
Sub-Total Operating Millage
Voted Debt Service
Total
6.3060 mills
0.1083 mills
6.4143mills (5.6555 last year, 0.7588 increase)
0.2870 mills (0.2568 last year, 0.0302 increasel
6.7013 mills (5.9123 last year,0.7890 increase)
2) "Rolled-Back" Rate (Truth in Millage)
6.2030 mills
3) The first public hearing to consider the proposed millage rates and tentative budgets for FY
2010/11 shall be Wednesday September 15, 2010 at 5:01 p.m., in the City Commission
Chambers, City Hall, 1700 Convention Center Drive, Miami Beach, Florida
The proposed millage rate for FY 2010/11 is the millage rate required to produce the same
level of property tax revenues in the General Fund in FY 2010/11 as budgeted in FY 2009/10.
Further, pursuant to recently enacted State legislation, the City may elect to approve millage
rates above the roll-back rate up to the constitutional cap of 10 mills subject to the following
votes by the Commission or referendum:
• Option 1: Millage up to 7.9137 (equivalent to 98.11 % of prior year maximum ad valorem
proceeds allowed by a majority vote, net of the impact of the Tax Increment Districts)
requires majority of the approval of the Commission. The adjustment of 98.11 % reflects the
statewide per capital personal income decline for the prior year
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 2
• Option II: Millage up to 8.7051 (equivalent to a 10% increase in the ad valorem revenues
above Option I) requires atwo-thirds approval (5 of 7 votes) of the Commission
• Option III: Millage above 8.7051 requires unanimous approval of the Commission or
referendum up to the 10 mill cap
SUMMARY
The Administration is recommending a total combined millage rate for the City of Miami Beach
of 6.7013. The total proposed operating millage is 6.4143 mills, including a general operating
millage rate of 6.3060 and a General Fund Capital Renewal and Replacement millage of
0.1083. The proposed voted debt service millage rate is increased from 0.2568 to 0.2870, an
increase of 0.0302 mills. Further, the combined millage rate overall remains approximately 2
mills lower than it was in FY 1999/00. In addition, the millage rate is almost 1 mill lower than it
was in FY 2006/07, when property values were similar to the July 1, 2010 certified values.
The proposed millage rate reflects an increase to offset property tax revenue declines in the
General Fund that have occurred since the adoption of the FY 2009/10 budget, both through
continued declines in the market, as well as the continued impacts of appeals and adjustments
to the tax roll by the Property Appraiser. Increasing the millage to offset property tax declines
ensures that service levels will not decline as a result of the decline in property values.
While impacts to homesteaded versus non-homesteaded properties are not available from the
Property Appraiser at this time, overall single family and condominium values declined by 13.7
percent, and existing single family and condominium properties (net of new construction)
declined by almost 17 percent. The median value of homesteaded property in Miami Beach for
2009 was $133,110, and the average $288,709. If homesteaded properties similarly declined
by 17 percent, the impact of the millage increase would be an annual savings of $47 for the
median value property, and $101 for the average value property.
Further, it is estimated that almost 90 percent of homesteaded properties will have less than a
$300 per year ($25 per month) impact, and 40 percent could either have no impact or could
actually experience a savings, due to offsetting declines in property values.
It is important to remember that in prior years, the City of Miami Beach significantly reduced tax
rates as property values declined. Between FY 1999/00 and FY 2009/10, property tax rates
declined approximately 2.8 mills. In FY 2007/08 alone, the property tax rate declined by
approximately 1.8 mills, with savings to the average homesteaded property of over $400.
Further, Miami Beach continues to provide more tangible value for tax dollars paid than many
other taxing jurisdictions. For example, in FY 2009/10, the homesteaded property owner of a
average value homesteaded propertywould have paid approximately $1,700 in propertytaxes
to the City; as compared to approximately $4,000 to the County, the school board and other
local taxing jurisdictions; approximately $2,400 in sales taxes to the state; and approximately
$7,000 in income taxes to the Federal government.
The adjustment to the millage rate provides approximately $13.7 million towards addressing an
initial General Fund operating budget gap of $32 million resulting from declines in property
values and increases in pension costs, primarily due to declines in pension investment returns.
Early in the budget development process, it was discussed that such a significant gap could not
be addressed through one means alone. Rather a combination of approaches would be
needed. Critical to the approaches were employee givebacks, and the Commission identified a
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 3
target of $15.3 million in employee givebacks to be achieved between FY 2009/10 and FY
2010/11. Other approaches, in addition to tax rate adjustments, included looking, once again,
for efficiencies, and tweaking service levels to achieve reductions with minimal service impacts,
as well as evaluating potential new revenue sources. These are shown in the following chart.
FY2008/09 /~ Other
Surplus
Resort Tax
Revisions
Efficiencies
Reductions
Revenue
~la» ~~
"Give-backs"
The budget development process is still underway, and the City's Proposed Operating Budget
and Work Plan will be released later this summer. However, at this point in time, it is
anticipated that the $32 million gap will be addressed through the following means:
® $7.8 million Employee "Give-backs"
This is in addition to $2.1 million in reductions already included
in the General Fund CSL expenditures from employee merit
"givebacks" by the Unclassified/"Others" employees and
Governmental Supervisors Association (GSA), and in addition to
$2 million in "givebacks" in the Internal Service and Enterprise
Funds - a total of almost $12 million in savings in FY 2010/11
o $1.0 million Revenue Enhancements
o $1.2 million Efficiencies and Reductions
® $2.0 million Increased transfers from Resort Tax to the General Fund
to cover tourism eligible expenses in the General Fund
® $3.6 million FY 2008/09 Year-end Surplus
This was set aside to address potential shortfalls in FY 2010/11
® $2.7 million Other
This includes potential refinements to FY 2010/11 CSL
expenditure and revenue projections, additional potential
revenue enhancements, and further potential service reductions
to be developed over the summer
m $13.7 million Millage Roll-up
Operating millage increase of 0.7588 needed to recapture $13.7
million revenue loss due to decline in propertyvalues outside of
the City Center RDA
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 4
BACKGROUND
Over the last several years, the City of Miami Beach has adopted budgets that provided tax and
fee relief while at the same time providing improving services that address needs and priorities
identified by the community (primarily in public safety, cleanliness, landscaping and
beautification, recreation and cultural arts programming, renewal and replacement funding for
our facilities, and building/development functions); and providing structural changes that
enhance capital funding and reserves.
However, these objectives have become increasingly more challenging in the last four years:
first through property tax reform where tax rates were dramatically reduced to offset increases
in property values; and subsequently with the decline in property values without revisions to the
property tax rate as well as increasing pension costs. In the last three years alone, the General
Fund has absorbed almost $43 million in reductions (and almost $50 million and 245 positions
across all funds) in a General Fund budget that is $226 million in FY 2009/10, almost 20
percent.
INITIAL BUDGET GAP
On the expenditure side, Current Service Level expenditures (i.e. the cost of providing the
same level of service as in the prior fiscal year - CSL expenditures) typically have increased
between 6% and 8% annually due to salary and benefit increases and other normal cost of
living adjustments. In FY 2010/11, increases were estimated to result in an approximately $19
million (8%) increase in expenditures, the majority of which is due to the following:
• A $12.2 million increase in the General Fund portion of the City's annual required
contributions to the Fire and Police ($11.6 million) and General Employees ($0.6 million)
pension plans, primarily due to the downturn in the market and updated assumptions in the
Fire and Police Pension Plan
• A $1 million increase in health insurance costs based on an 11 percent increase over the
current Fiscal Year
• A $2 million Increase in Internal Service Fund charge-backs to Department primarily due to
increases in the Risk Management Fund for claims incurred but not reported, as well as
increased costs of legal services
• $2.7 million impact from those bargaining units that had not yet reached agreement with the
City as of May, 2010 (American Federation of State, County and Municipal Employees -
AFSCME, Communications Workers Union - CWA, Fraternal Order of Police -FOP, and
International Association of Fire Fighters - IAFF), due to salary increases from merits and
steps received in the current Fiscal Year that had not been budgeted and further increases
for FY 2010/11, as well as increased pension costs to reflect the fact that the budgeted 2
percent give-back had not yet been achieved
It is important to note, that all other costs are similar to prior year levels, reflecting various cost
savings initiatives by the City such as re-bidding contracts, careful review of department line
item expenditures, etc.
On the revenue side, based on the July 1, 2010 Certification of Taxable Value from the Miami-
Dade County Property Appraiser, from the July 1, 2009 tax roll certification to the July 1, 2010
tax roll certification, values of existing properties declined by 12.7 percent. This decline was
somewhat mitigated by $556 million in new construction for 10.5 percent decline in Citywide
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 5
property tax values. However, because the City Center Redevelopment Area decline was only
1.2 percent, the decline outside the City Center RDA, which impacts the City's General Fund
revenues, was greater, at 11.8 percent.
This decrease compares to changes in taxable value of at least an 8 percent increase per year
from July 1, 2001 through July 1, 2007. However, other revenues such as utilityfranchises and
sales taxes have started to rebound, although golf and interest earnings, continue to decrease.
The gap between General Fund Current Service Level expenditures and Current Service Level
revenues as of the July 1, 2010 Certified values was in the range of $32 million. This gap
includes the impact of $13.7 million reduced property tax revenues as well as the $20 million
growth in current service level expenditures described previously, offset by a slight growth in
revenues.
DECISION-MAKING PROCESS
The budget development process has included participation from within and from outside City
Hall. In 2009, the City of Miami Beach conducted its third set of statistically-valid community
surveys. The Community Survey was designed to provide resident input on quality of life, city
services, and taxes; and to identify key drivers for improvement. Impressively, 31 of the
residential tracking questions from 2007 experienced increases in each of the areas measured
by an overall average of approximately 7.0%; and 28 of 32 business tracking questions
experienced increases measured by an overall average of approximately 8.8% with decreases
in only 4 of 32 questions and an average of only 0.63%. Further the 2009 Community surveys,
sought input from residents as to which services were most important to retain, which areas
were most important to improving public safety, and which services were key drivers of overall
satisfaction.
• Residents selected the following services as those the city should strive not to reduce:
• Cleanliness (64.1 %)
• Code enforcement (28.7%)
• Arts and Culture (24.2%)
• Both residents and businesses reported the following areas for the City to address in
an effort to improve public safety:
• Preventing crime (Residents: 44.9%, Business: 43.9%)
• Increasing police visibility (Residents: 32.4%, Business: 33.1%)
• Other areas that were "negative drivers" of overall perception which the City is working
to address included:
• Code enforcement for residents and businesses
• Consistency of inspections for businesses
• Availability of parking for businesses
Development of the FY 2010/11 budget began early with a discussion at the January retreat
that included a review of priorities, historical analysis of revenues and expenditures, taxable
values and millage rates, etc. In the following months, and still ongoing, the City has conducted
outreach on budget issues with the community through a series of Mayor on the Move
meetings.
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 6
In May, the Commission held a two day retreat and began to consider the economic projection
and their impacts on the budget. Major economic revenue and expenditure drivers were
discussed and alternatives for long-term solutions were debated.
To reduce the gap, as with the preparation of budgets for the last three years, departments
were directed to analyze and present their budget from two perspectives:
The first was to once again review for potential efficiencies, reorganizations to reduce cost,
etc. without impacting services.
The second was to again perForm a modified zero-based analysis of each department
budget, identifying potential service reduction alternatives versus core functions. For each
of the potential service reductions, departments provided the type of impact and the
magnitude of the impact. Core functions were defined as those functions which, if cut,
render it impossible for the department to provide basic service at a reasonable level.
At the same time, the City has undergone extensive negotiations with its various employee
groups to reduce employee costs which represent approximately 70 percent of the City's
General Fund budget. As a result of these negotiations, the six employee groups that have
reached tentative agreements (AFSCME, GSA, FOP, IAFF, Unclassifieds and "Others") will
give up approximately $13 million in salary and benefits through FY 2010/11 and $21 million
through FY 2011 /12. Should the City be successful in negotiating a contract with CWA similar
to other general employee groups (i.e., AFSCME, GSA, FOP, IAFF, Unclassifieds and "Others")
the total will be a $15 million in salary and benefits through FY 2010/11 and $25 million through
FY 2011/12, unprecedented in the City's recent history. Many of the employee "give-backs"
negotiated with the unions are recurring into the future, and additional impacts from pension
changes made for new employees are anticipated to begin generating savings in FY 2011 /12.
A series of budget briefings were held with the Finance and Citywide Projects Committee
(FCWPC) beginning in June, including a discussion of capital project priorities, review of
various department budgets, potential revenue enhancements and impacts of potential service
level alternatives. These meetings were also attended by our unions, interested stakeholders,
and the general public. At these meetings various strategies to address the $32 million gap
were discussed.
Although the economy has steadily improved, the impact of the recent recession has impacted
both property tax revenues as well as pension costs for FY 2010/11 and likely further into the
future. Therefore, the City's strategy continues to consider the long term financial sustainability
of the City. Beginning with the development of the FY 2009/10 budget, a strategy was
developed to address short-term, mid-term and long-term financial needs.
• Strategies to address short-term financial needs included ongoing efficiencies and
wage concessions by employees.
• Mid-term financial sustainability was addressed by pension concessions from current
employees
• Longer term financial sustainability is enhanced by the pension plan restructures that
are being put in place for new employees. For example, for General Employees, the
plan restructure proposed for new employees are anticipated to reduce the City's
annual required contribution by almost $1 million and increasing annually thereafter.
It is anticipated that the proposed budget that will be published later this summer will continue
our focus on providing "value of services for tax dollars paid" by continuing to provide services
to the community free of charge or at significantly reduced fees, including free arts and movies
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 7
in the parks, free access for children to pools and youth centers, reduced fee recreation
programming, etc.
STATUTORY REQUIREMENTS
FS 200.065, entitled "Method of Fixing Millage" establishes specific guidelines that must be
used by all local government entities in setting millage (property tax) rates. Under the statute,
the City is required, within 35 days of receipt of the "Certification of Taxable Value" (received
July 1, 2010), to advise the Miami-Dade County Property Appraiser of the proposed general
operating millage rate, the calculated "rolled-back" rate and the date, time, and place of the first
public hearing to consider the proposed millage rates and tentative budgets for FY 2010/11.
The required Debt Service millage rate must also be set at the same time.
After setting the proposed operating millage rate, the Commission may, at any time prior
to the final adoption, lower the rates by adjusting priorities. Increasing the millage rate
may only be accomplished by an expensive mailing and advertising process to every
property owner on Miami Beach.
ANALYSIS OF PROPERTY VALUES IN MIAMI BEACH
On July 1, 2010, the City received the "2010 Certification of Taxable Value" from the Property
Appraiser's Office stating that the taxable value for the City of Miami Beach is $22,104,742,947
including $556,626,578 in new construction. The preliminary 2010 value represents a
decrease of $2.59 billion or 10.5 percent less than the 2009's July 1 Certification of Taxable
Value of $24.695 billion, and a decline of 12.7 percent, excluding new construction.
The comparative assessed values for the Miami Beach Redevelopment Agency City Center
redevelopment district decreased from $3,446,724,524, to $3,404,963,718, adecrease of
$0.0418, billion or a 1.2 percent decrease in values over 2009 certified values. In addition,
assessed values within the geographic area formerly known as the South Pointe
redevelopment district decreased from $3,559,454,762, to $3,324,165,654, adecrease of
$0.2353 billion, or a 6.6 percent decrease in values over 2009 certified values. As a result,
taxable values in the areas outside the City Center RDA/South Pointe area decreased by 13.1
percent, from $17.6887 billion to 15.3756 billion, a decrease of $2.3 billion.
COMPARATIVE ASSESSED VALUES (in billionsl
an.
Value (in Change From 2009
Jan. 1 2009 Value in billions) billions) Value Bud et)
so uy ewse so uy
2009 Value (For 2010
(For FY FY Change in (For % Change
2009/10 2009/10 2009 2010/1 1 $ from final
Bud et) Pro'ection) Values Bud et) (in billions) % Value
RDA -City Center $ 3.4467 $ 3.4461 $ (0.0007) $ 3.4050 $ (0.0418) _1.2% -1.2%
South Pointe Area 3.5595 3.5499 (0.0095) 3.3242 $ (0.2353) -6.6% -6.4%
General Fund 17.6887 16.1064 (1.5824) 15.3756 $ (2.3131) -13.1 % -4.5%
Total Citywide $24.6949 $ 23.1024 $ (1.5925) $ 22.1047 $ (2.5902) -10.5% .4.3%
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 8
DETERMINING THE OPERATING MILEAGE LEVY
The first building block in developing a municipal budget is the establishment of the value of
one mill of taxation, wherein the mill is defined as $1.00 of ad valorem tax for each $1,000 of
property value. For the City of Miami Beach, this value for each mill is determined by the 2010
Certification of Taxable Value and has been set at $22,104,743. Florida Statutes permit a
discount of up to five percent for early payment discounts, delinquencies, etc. Therefore, the
95 percent value of the mill is $20,999,506. The 95 percent value of 1 mill outside the City
Center RDA/South Pointe area is $14,941,432.
Impacts of Decline in Property Values
In FY 2009/10, the operating millage rate for general City operations was adopted at 5.6555.
Based on the July 1, 2010 Certification of Taxable Value, 5.6555 mills would generate
approximately $118,762,706 million in tax revenues, a decrease of $13,916,286 over current
year budgeted property tax revenues Citywide (General Fund, City Center RDA and the South
Pointe area). The General Fund property tax revenues will decrease by $13.7 million, unless
the millage rate is adjusted to offset the decline in property values. An increase millage of
0.7588 is required to recapture this revenue loss.
It is important to note, that the January 1 2009 tax roll declined by almost $1.6 billion between
the July 1, 2009 valuation and the July 1, 2010 valuation, almost all of which occurred outside
of the City Center and South Pointe areas. The area outside of City Center RDA and the South
Pointe area declined by $1.58 billion, or almost 9% due to appeals, adjustments, etc. which are
still ongoing.
DETERMINING THE VOTED DEBT SERVICE MILEAGE LEVY
The general obligation debt service payment for FY 2010/11 is approximately $6.03 million.
Based on the July 1, 2010 Certified Taxable Value from the Property Appraiser, these bonds
would require the levy of a voted debt service millage of 0.2870 mills. This represents an
increase of 0.0302 mills.
COMBINING THE OPERATING AND VOTED DEBT SERVICE MILEAGE LEVIES
Illustrated below is a comparison of the combined millage rates and ad valorem revenues to the
City of Miami Beach for FY 2009/10 (final) and FY 2010/11 (preliminary) including RDA. It is
recommended that in the General Fund, 0.1083 mills of the total operating millage continue to
be dedicated to renewal and replacement, resulting in approximately $1.7 million in renewal
and replacement funding.
City of Miami Beach Millage Rates FY 09110 ! FY 10111 ' Inc/(Dec) ' % Incl(Dec)
_._ _._..
... .
_„Operating
._ e ~ _. _. ... .. _.
5.5472- ..µ
6.3060
_....
0.7588
~ ..
Capital Renewal & Replacement _~ _ ~..._.
0.1083 _.
0.1083 _ ~ _ ~ _ . ~ .__ ~ ..__._,.
0.0000
Debt Service ~
..._... __._..... ....__..... 0.2568 0.2870_ 0.03
02
TOtal'' 5.9123; 6.7013: 0.7890! 13.3%
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 9
If these recommended millage rates are tentatively adopted, then the City of Miami Beach's
total operating millage will increase by 0.7588 as compared to the current year, and the voted
debt service millage will increase by 0.0320 mills.
MiLLAGE LEVY IMPACT ON_PROPERTY OWNERS
iiornesteadecl Properties
The impact of the millage change to homesteaded properties will vary significantly based on
how much below market value the property is assessed and the taxable value of the property.
In addition for those properties significantly below market value will like be impacted by the CPI
adjustment to assessed values.
Amendment 10 to the State Constitution took effect on January 1, 1995 and limited the
increase in assessed value of homesteaded property to the percentage increase in the
consumer price index (CPI) or three percent (3%), whichever is less. For 2009, the CPI has
been determined to be 2.7 percent and therefore, the increase is capped at 2.7% for increased
values as of January 1, 2010.
Overall, based on an analysis of the homesteaded properties in the 2009 tax roll, approximately
one-third of homesteaded properties in Miami Beach were assessed at market value for 2009,
and therefore will likely decline in taxable value similar to the overall decline. Further, an
additional 16 percent of properties were assessed between 0 and 20 percent of market value,
and may decline to offset the increased millage rate.
As importantly, based on information from the Miami-Dade County Property Appraiser, the
median value of homesteaded property in Miami Beach for 2009 was $133,110, and the
average $288,709. The following chart shows the distribution of 2009 property values as of
February, 2010.
2009 Taxable Value of Homesteaded Properties
0 ov2%o M 1 M to >2M
6% 3%
500K to >1 M
8%
300K to >500K
~ 11%
1K to >130K
43%
130K to >300K
27%
While impacts to homesteaded versus non-homesteaded properties are not available from the
Property Appraiser at this time, overall single family and condominium values declined by 13.7
percent, and existing single family and condominium properties (net of new construction)
declined by almost 17 percent. If homesteaded properties similarly declined by 17 percent, the
impact of the millage increase would be an annual savings of $47 for the median value
property, and $101 for the average value property. However, 50 percent of properties are likely
to have an annual impact of less than $105, or $8.75 per month (the impact of 0.7890 mill
increase on a $133,110 taxable value property).
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 10
Even with no decline or with the 2.7 percent CPI adjustment, these properties would experience
annual increases between $105 and $280.
Homesteaded Properties
FY 2009110 (as of ~ 20 10/li (as of January 12 010)
January 12009)* with 17% Decline with no change with 2.7% CPI
Median Average Median Average Median Average Median Average
Taxable Value $ 133,110 $ 288,709 $ 110,481 $ 239,628 $ 133,110 $ 288,709 $ 136,704 $ 296,504
o ~ami eac
Taxes
Operating
Voted Debt
$ 753 $ 1,633
34 74
$ 709 $ 1,537
32 69
$ 854 $ 1,852
38 83
$ 877 $ 1,902
39 85
Total Miami Beach $ 787 $ 1,707 $ 740 $ 1,606 $ 892 $ 1,935 $ 916 $ 1,987
$ Change in Taxes
Operating
Voted Debt
$ (44) $ (96)
(2) (5)
$ 101 $ 219
4 9
$ 124 $ 269
5 11
Total Miami Beach $ (47) $ (101) $ 105 $ 228 $ 129 $ 280
* Source: Miami-Dade County Property Appraiser Fil e as of 2/17/10
Applying the decline to the market value of all existing homesteaded properties from the 2009
tax roll, and the 2.7 percent CPI adjustment, the impact of the millage rate adjustment to
homesteaded properties would be as shown in the following table. It is estimated that almost
90 percent of homesteaded properties will have less than a $300 per year ($25 per month)
impact, and approximately 40 percent will either have no impact or will actually experience a
savings, due to offsetting declines in property values.
IMPACTS OF MILEAGE INCREASE TO HOMESTEADED PROPERTIES
Impact of Change in Millage PERCENT OF
PROPERTIES CUMULATIVE
PERCENT
$1,001- $2,000 savings 0.2% 0.3%
$501- $1,000 savings 0.5% 0.8%
$301- $500 savings 1.2% 2.0%
$251- $300 savings 0.9% 2.9%
$201- $250 savings 1.4% 4.3%
$101- $200 savings 11.4% 15.7%
$1- $100 savings 20.1% 35.8%
$0 impact 5.5% 41.4%
$1- $100 increase 27.6% 69.0%
$101- $200 increase 12.8% 81.8%
$201- $250 increase 3.9% 85.7%
$251- $300 increase 2.4% 88.1%
$301- $500 increase 5.8% 93.99'0
$501- $1,000 increase 3.9% 97.8%
$1,001- $2,000 increase 1.6% 99.4%
$2,001- $3,000 increase 0.3% 99.7%
$3,001- $5,000 increase 0.2% 99.9%
Greater than $5,000 increase 0.1% 100.0%
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 11
Non-Homesteaded Properties
It is anticipated that, the increased millage rate for commercial properties, would, on average be
offset by the decline in property values, although individual properties could vary significantly.
Historical Perspective
It is important to remember that in prior years, the City of Miami Beach significantly reduced tax
rates as property values declined. Between FY 1999/00 and FY 2009/10, property tax rates
declined approximately 2.8 mills. In FY 2007/08 alone, the property tax rate declined by
approximately 1.8 mills, with annual savings to the average homesteaded property of over
$400. In addition, in FY 2005/06 and FY 2006/07, the City funded $200 and $300 homeowner
dividends paid to homesteaded property owners in the City.
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 12
Millage Rates Tax Le (in millions)
udget
Year
Taxable
Property
Values
(billions)
otal
Ci wide
General
Fund/RDA
Milla a
Total
including
Debt General Fund
Total (including
S. Pointe, and
Renewal &
Re lacement
Change in
CMB Taxes
from Prior
Year
FY1997/98 $ 6.46 9.2100 7.4990 $ 57.45 $ 46.78
FY1998/99 $ 6.97 8.9830 7.4990 $ 60.37 $ 44.66
FY1999/00 $ 7.66 8.6980 7.4990 $ 64.29 $ 47.36
FY2000/01 $ 8.37 8.5550 7.3990 $ 69.08 $ 49.75
FY2001/02 $ 9.40 8.3760 7.2990 $ 75.97 $ 54.37
FY2002/03 $ 10.56 8.3220 7.2990 $ 84.81 $ 61.05
FY2003/04 $ 12.09 8.1730 7.2990 $ 95.39 $ 68.17 $13.15
FY2004/05 $ 14.04 8.1730 7.4250 $ 110.74 $ 79.38 $31.05
FY2005/06 $ 17.45 8.0730 7.4810 $ 135.91 $ 111.69 $35.63
FY2006/07 $ 22.74 7.6730 7.3740 $ 168.38 $ 140.31 $30.75
FY2007/08 $ 26.85 5.8970 5.6555 $ 150.42 $ 125.33 ($436.00)
FY2008/09 $ 26.90 5.8930 5.6555 $ 150.59 $ 125.94 $86.00)
FY2009/10 $ 24.70 5.9123 5.6555 $ 138.70 $ 115.73 ($80.00)
* FY2003/04 has an assumend average homesteaded taxable value of $200,000.
Further, Miami Beach continues to provide more tangible value for tax dollars paid than many
other taxing jurisdictions. For example, in FY 2009/10, it is estimated that the homesteaded
property owner of an average value homesteaded property would have paid approximately
$1,700 in property taxes to the City as compared to over $4,000 to the County, the school
board and other local taxing jurisdictions, approximately $2,400 in sales taxes to the state, and
approximately $7,000 in income taxes to the Federal government.
FIRST PUBLIC HEARING
The first public hearing on the proposed millage rates and tentative budgets for FY 2010/11
must be held no later than 80 days (September 18th) or earlier than 65 days (September 3rd)
from the start of the TRIM ("Truth In Millage") calendar (July 1st). Other guidelines are: 1) the
public hearing cannot be scheduled on a Sunday or on those days utilized by Miami-Dade
County or the Miami-Dade County School Board for their public hearings; and 2) if on a day
other than Saturday, the public hearing must be after 5:00 P.M.
Based on these guidelines, the first hearing must be held between September 3rd and
September 18th. These dates are unavailable for the following reasons:
September 5 and 12 Sundays
September 13 and 23 Proposed dates for Miami-Dade County Public
Hearings
September 7 Miami-Dade County School Board Public
Hearing
FY 2010/11 Proposed Millage Rate
July 14, 2010
Page 13
Of the remaining days, it is recommended that the first public hearing be set for Wednesday,
September 15, 2010 at 5:01 P.M., in the City Commission Chambers, City Hall, 1700
Convention Center Drive, Miami Beach, Florida.
JMG:KGB