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Resolution 2018-30429RESOLUTION NO. 2018 -30429 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA SETTING 1) THE PROPOSED OPERATING MILLAGE RATE; 2) THE REQUIRED DEBT SERVICE MILLAGE RATE; 3) THE CALCULATED "ROLLED- BACK" RATE; AND, 4) THE DATE, TIME, AND PLACE OF THE FIRST PUBLIC HEARING TO CONSIDER THE MILLAGE RATES AND BUDGETS FOR FISCAL YEAR (FY) 2018/19; AND, 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 set the millage rate and adopt an annual budget; and WHEREAS, development of the FY 2018/19 budget began early in the year and has included several discussions with the City Commission that included a review of priorities, economic projections and their impacts on the budget, preliminary projected revenues, and expenditures; and WHEREAS, over the last several years, the City of Miami Beach has adopted budgets that have provided tax and fee relief, while at the same time providing improved levels of services that address needs and priorities identified by the community; and WHEREAS, maintaining and enhancing the City's priorities have become increasingly more challenging due to a slowdown in the increase of property values, declining property tax rates, and increasing personnel costs which include pension - related costs; and WHEREAS, the July 1, 2018 Certification of Taxable Value from the Miami -Dade County Property Appraiser reflects a 4.0 percent increase in citywide property tax values from the July 1, 2017 tax roll certification, a 5.1 percent increase in property tax values in the City Center Redevelopment Area (RDA), and a 3.8 percent increase in property tax values outside the City Center RDA, which directly impacts the City's General Fund property tax revenues; and WHEREAS, the City's current general operating millage rate is comprised of a general millage, which funds operating costs in the General Fund, and a renewal and replacement millage, which provides a dedicated source of funding for capital renewal and replacement projects that extend the useful life of General Fund capital assets; and WHEREAS, at the May 24, 2018 Commission Budget Workshop, and at the June 8, 2018 and July 13, 2018 Finance and Citywide Projects Committee budget briefings for the development of_ the proposed FY 2018/19 operating and capital budgets, the Administration recommended that the general operating millage rate be comprised of an additional millage rate established for "Pay - As- You -Go" (PAYGO) capital funds, which will provide dedicated funding for General Fund capital projects and allow for growth over time with property values; and WHEREAS, at the May 24, 2018 Commission Budget Workshop, and at the June 8, 2018 and July 13, 2018 Finance and Citywide Projects Committee budget briefings for the development of the proposed FY 2018/19 operating and capital budgets, the Administration recommended that the proposed FY 2018/19 "Pay -As- You -Go" (PAYGO) millage rate be set to the equivalent of the $2,400,000 already proposed in the FY 2018/19 operating budget based on the July 1, 2018 Certification of Taxable Value from the Miami -Dade County Property Appraiser; and WHEREAS, based on the July 1, 2018 Certification of Taxable Value received from the Miami -Dade County Property Appraiser, the consensus was to set the total operating millage, including the additional millage rate established for dedicated "Pay -As- You -Go" (PAYGO) capital funds that would be offset entirely by a decrease in the City's general millage rate, at 5.7288 mills and to set the voted debt service millage rate at 0.1660 mills, for a total combined millage rate of 5.8888 mills, which is the same as the total combined millage rate adopted in FY 2017/18; and WHEREAS, the City of Miami Beach is required to notify 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; and WHEREAS, the January 1, 2017 tax roll declined by $758.1 million between the certified July 1, 2017 valuation and the final July 1, 2018 valuation due to appeals and adjustments, which is part of the reason why the FY 2018/19 "rolled- back" rate is 5.4727, which is 0.2497 mills lower than the adopted FY 2017/18 total general operating millage rate of 5.7224 mills. 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 2018/19: General Millage Capital Renewal & Replacement Millage Pay -As- You -Go (PAYGO) Millage Total General Operating Millage Voted Debt Service Millage Total Combined Millage 2) "Rolled - Back" Rate 5.6298 mills 0.0235 mills 0.0755 mills 5.7288 mills 0.1600 mills 5.8888 mills 5.4727 mills 3) The first public hearing to consider the proposed millage rates and budgets for FY 2018/19 shall be held on Wednesday, September 12, 2018, at 5:01 P.M., in the City Commission Chambers at 1700 Convention Center Drive, 3rd Floor, Miami Beach, Florida 33139. ATTEST: PASSED and ADOPTED, this 25th day of July, 2018. Rafael . Granado, City Clerk APPROVED AS TO FORM & LANGUAGE FOR EXE UTION 4-L CI City Attorn Dote MIAM BEACH Resolutions - R7 E COMMISSION MEMORANDUM TO: Honorable Mayor and Members of the City Commission FROM: Jimmy L. Morales, City Manager DATE: July 25, 2018 SUBJECT: A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA SETTING 1) THE PROPOSED OPERATING MILLAGE RATE; 2) THE REQUIRED DEBT SERVICE MILLAGE RATE; 3) THE CALCULATED "ROLLED - BACK" RATE; AND, 4) THE DATE, TIME, AND PLACE OF THE FIRST PUBLIC HEARING TO CONSIDER THE MILLAGE RATES AND BUDGETS FOR FISCAL YEAR (FY) 2018/19; AND, 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. RECOMMENDATION See attached Memorandum. Legislative Tracking Budget and Performance Improvement ATTACHMENTS: Description a Memo - FY 2018/19 Proposed Millage Page 1059 of 1464 BEACH City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov TO: FROM: DATE: SUBJECT: COMMISSION MEMORANDUM Mayor Dan Gelber and Members of the City Commission Jimmy L. Morales, City Manager July 25, 2018 A RESOLUTION OF THE MAYOR AND CITY COMMISSION OF THE CITY OF MIAMI BEACH, FLORIDA SETTING 1) THE PROPOSED OPERATING MILLAGE RATE; 2) THE REQUIRED DEBT SERVICE MILLAGE RATE; 3) THE CALCULATED "ROLLED- BACK" RATE; AND, 4) THE DATE, TIME, AND PLACE OF THE FIRST PUBLIC HEARING TO CONSIDER THE MILLAGE RATES AND BUDGETS FOR FISCAL YEAR (FY) 2018/19; AND, 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 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 2018/19: General Millage Capital Renewal & Replacement Millage Pay -As- You -Go (PAYGO) Millage Total General Operating Millage Voted Debt Service Millage Total Combined Millage 2) "Rolled- Back" Rate (Truth in Millage) 5.6298 mills 0.0235 mills 0.0755 mills 5.7288 mills 0.1600 mills 5.8888 mills (same as last fiscal year) 5.4727 mills 3) The first public hearing to consider the proposed millage rates and budgets for FY 2018/19 shall be held on Wednesday, September 12, 2018, at 5:01 p.m., in the City Commission Chambers at 1700 Convention Center Drive, 3rd Floor, Miami Beach, Florida 33139. The "rolled -back" millage rate for FY 2018 /19_is_the millage_ rate_ required__ to produce__ the same level of property tax revenues in the General Fund in FY 2018/19 as anticipated to be received in FY 2017/18. It is important to note that the January 1, 2017 citywide tax roll declined by almost $758.1 million between the July 1, 2017 certified valuation and the July 1, 2018 final valuation due to appeals, adjustments, etc., which is part of the reason the FY 2018/19 "rolled- back" millage rate is 0.2497 mills lower than the FY 2017/18 general operating millage rate and is lower than it would have been if the "rolled- back" rate was only adjusted for the increase in revenues generated Page 1060 of 1464 FY 2018/19 Proposed Millage Rate July 25, 2018 Page 2 by higher property values. The area outside of the City Center Redevelopment Area (RDA), which impacts General Fund revenues directly, decreased in value by approximately $525.2 million during the same period. The proposed millage provides funding to offset increases for personnel costs, such as a 1 percent cost of living adjustment, effective April 1, 2019; a 5% step increase for all Fraternal Order of Police (FOP) and International Association of Fire Fighters (IAFF) personnel; 0 -3% percent performance -based merit increase for all non -FOP and IAFF personnel; the impact of annualized costs for expenditures added per direction received from the City Commission during FY 2017/18; and other increases for operating and internal services funds expenditures. In FY 2017/18, the Administration adopted a total combined millage rate for the City of Miami Beach of 5.8888 mills, which is the lowest rate in at least 20 years. There are two main components to the City's total combined millage rate: the operating millage rate and the voted debt service millage rate. The operating millage rate, which is comprised of a general and a renewal and replacement millage, funds operating costs in the General Fund while the debt service millage rate funds debt service for previously issued General Obligation (G.O.) bonds. In FY 2018/19, the projected debt service payment is $5.9 million, which requires the levy of a voted debt service millage rate of 0.1600 mills. The FY 2018/19 debt service millage rate is 0.0064 mills less than in FY 2017/18 and this difference is proposed to be applied to the general operating millage rate, as approved by the Finance and Citywide Projects Committee ( FCWPC) at the June 8, 2018 and July 13, 2018 budget briefings. Commencing FY 2018/19, as presented and recommended during the City Commission's Budget Workshop held on May 24, 2018, and approved by the FCWPC at the June 8, 2018 and July 13, 2018 budget briefings, the operating millage rate will be comprised of an additional millage rate for Pay -As- You -Go (PAYGO) capital funds, which will provide dedicated funding and allow for growth over time with property values. This additional dedicated millage rate, equivalent to $2.4 million included in the proposed FY 2019 General Fund budget, will be offset entirely by a decrease in the City's general millage rate. Overall, the City's total combined millage rate for FY 2018/19 is proposed to remain flat as reflected below: FY 2017/18 FY 2018/19 Adopted Proposed General 5.6989 5.6298 Capital Renewal & Replacement 0.0235 0.0235 Pay -As- You -Go (PAYGO) 0.0000 0.0755 Inc / (Dec) (0.0691) 0,0000 0.0755 Total General Operating Millage Debt Service 5.7224 5.7288 0.1664 0.1600 0.0064 (0.0064) Total Combined Millage 5.8888 5.8888 0.0000 ANALYSIS OF PROPERTY VALUES IN MIAMI BEACH On July 1, 2018, the City received the 2018 Certification of Taxable Value from the Miami -Dade County Property Appraiser's Office indicating that the taxable value for the City of Miami Beach was $38.9 billion, which included $186.1 million in new construction. Property taxes comprise approximately 54% of total General Fund revenues. Page 1061 of 1464 FY 2018/19 Proposed Millage Rate July 25, 2018 Page 3 The following table shows the difference between the preliminary June 1, 2018 values and certified July 1, 2018 values, and the impact on projected FY 2018/19 property tax revenues: The preliminary June 1, 2018 property tax revenue projections assumed the City Center RDA would increase by approximately 3.9 percent over the certified July 1, 2017 values based on historical trends. However, based on the certified July 1, 2018 values received, the City Center RDA increased approximately 5.1% over the certified July 1, 2017 values, thereby slightly decreasing the citywide total by a greater percentage than originally projected. The comparative assessed values for the City Center RDA increased from $5.7 billion to $6.0 billion, which is an increase of approximately $290 million, or 5.1 percent, over the certified 2017 values. Citywide values, excluding the City Center RDA district, increased from $31.7 billion to $32.9 billion, which is an increase of $1.2 billion, or 3.8 percent, over the certified 2017 values. Comparative Assessed Values Citywide vs. City Center RDA January 1, 2017 Value (in billions) January 1, 2018 Value (in billions) July 1, 2017 (FY2017/18 Budget) Revised Value (FY2017/18 Projection) Change in 2017 Values Chg. July 1, 2018 (FY2018/19 Budget) $ Change. (in billions) % Chg. Total Citywide $ 37.397 $ 36.639 $ (0.758) -2.0% $ 38.888 $ 1.491 4.0% City Center RDA $ 5.703 5.470 $ (0.233) -4.1% $ 5.993 $ 0.290 5.1% Citywide - Net of City Center RDA $ 31.694 $ 31.169 $ (0.525) -1.7% $ 32.894 $ 1.200 3.8% VALUE OF ONE MILL OF TAXABLE VALUE 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 every $1,000 of property value. For the City of Miami Beach, the value for each mill for the proposed FY 2018/19 budget is determined by the 2018 Certification of Taxable Value, which has been set at $38.9 million. Florida Statutes permit a discount of up to five percent for early payment discounts, delinquencies, etc. Therefore, the 95 percent _value of one _mill citywide is $36.9 million. Net of Center City RDA tax increment available to the General Fund, the value of one mill at 95 percent is approximately $31,8 million. Page 1062 of 1464 June 2018 Preliminary July 2018 Certified Property Assessment Existing Values 38,556,000,000 38,701,545,195 New Construction 97,000,000 186,115,906 Total 38, 653, 000, 000 38, 887,661,101 City Center RDA 5,927,316,190 5,993,199,959 Citywide Total 32,725,683,810 32,894,461,142 Property Tax Revenue Projection 181,200,000 182,168,000 Property Tax Revenue Projection Variance 968,000 The preliminary June 1, 2018 property tax revenue projections assumed the City Center RDA would increase by approximately 3.9 percent over the certified July 1, 2017 values based on historical trends. However, based on the certified July 1, 2018 values received, the City Center RDA increased approximately 5.1% over the certified July 1, 2017 values, thereby slightly decreasing the citywide total by a greater percentage than originally projected. The comparative assessed values for the City Center RDA increased from $5.7 billion to $6.0 billion, which is an increase of approximately $290 million, or 5.1 percent, over the certified 2017 values. Citywide values, excluding the City Center RDA district, increased from $31.7 billion to $32.9 billion, which is an increase of $1.2 billion, or 3.8 percent, over the certified 2017 values. Comparative Assessed Values Citywide vs. City Center RDA January 1, 2017 Value (in billions) January 1, 2018 Value (in billions) July 1, 2017 (FY2017/18 Budget) Revised Value (FY2017/18 Projection) Change in 2017 Values Chg. July 1, 2018 (FY2018/19 Budget) $ Change. (in billions) % Chg. Total Citywide $ 37.397 $ 36.639 $ (0.758) -2.0% $ 38.888 $ 1.491 4.0% City Center RDA $ 5.703 5.470 $ (0.233) -4.1% $ 5.993 $ 0.290 5.1% Citywide - Net of City Center RDA $ 31.694 $ 31.169 $ (0.525) -1.7% $ 32.894 $ 1.200 3.8% VALUE OF ONE MILL OF TAXABLE VALUE 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 every $1,000 of property value. For the City of Miami Beach, the value for each mill for the proposed FY 2018/19 budget is determined by the 2018 Certification of Taxable Value, which has been set at $38.9 million. Florida Statutes permit a discount of up to five percent for early payment discounts, delinquencies, etc. Therefore, the 95 percent _value of one _mill citywide is $36.9 million. Net of Center City RDA tax increment available to the General Fund, the value of one mill at 95 percent is approximately $31,8 million. Page 1062 of 1464 FY 2018/19 Proposed Millage Rate July 25, 2018 Page 4 DETERMINING THE VOTED DEBT SERVICE MILLAGE LEVY The General Obligation (G.O.) Bond debt service payment for FY 2018/19 is projected to be $5.9 million. Based on the July 1, 2018 certified taxable values received from the Miami -Dade County Property Appraiser's Office, this debt service payment would require the levy of a voted debt service millage of 0.1600 mills, which represents a decrease of 0.0064 mills over the FY 2017/18 voted debt service levy of 0.1664 mills. IMPACT OF PROPOSED MILLAGE LEVY IMPACT ON PROPERTY OWNERS Homesteaded Properties In 1992, voters approved an amendment to the Florida Constitution known as Amendment 10, or Save Our Homes (SOH). SOH is an assessment limitation, or "cap ", on increases in the assessed value of a homestead residence. Those increases are limited to 3% or the percent change in the CPI (Consumer Price Index), whichever is less. The "cap" goes into effect beginning the year after a homestead exemption is granted. Based on the January 1, 2018 homesteaded property values as of July 1, 2018, the median value of homesteaded property in Miami Beach was $186,172 and the average was $473,353 (assuming a 2.1 percent increase over 2017 median and average homesteaded property values pursuant to SOH). The impact of the proposed millage rate adjustment to homesteaded properties in Miami Beach would be an increase of $24 for the median and an increase of $58 for the average value homesteaded property as reflected in the table below: Homesteaded Properties FY 2017/18 FY 2018/19 Median ** Average ** Median Average $ 473,3537 Preliminary Taxable Value ** $ 182,3431 $ 463,617 $ 186,172 City of Miami Beach Operating Voted Debt $ 1,043 30 $ 2,653 77 $ 1,067 30 $ 2,712 76 Total Miami Beach $ 1,073 $ 2,730 $ 1,097 $ 2,788 $ Change in Taxes Operating Voted Debt $ 24 - $ 59 (1) Total Miami Beach $ 24 $ 58 * *Source: Miami -Dade County Property Appraiser's - 2017- average- median- homestead - residential- values file Historical Perspective It is important to note that in prior years, the City of Miami Beach significantly reduced tax rates as-property values increased. Between F -Y 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. Further, the proposed City of Miami Beach combined millage rate for FY 2018/19 is the lowest it has been in at least 20 years and is equivalent to the total combined millage rate adopted in FY 2017/18. Page 1063 of 1464 FY 2018/19 Proposed Millage Rate July 25, 2018 Page 5 STATUTORY REQUIREMENTS Florida Statute 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 Florida Statute, the City is required, within 35 days of receipt of the "Certification of Taxable Value" (received July 1, 2018), 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 budgets for FY 2018/19. The required debt service millage rate must also be set at the same time as the general operating millage. After setting the proposed FY 2018/19 millage rate, the Commission may, at any time prior to the final adoption, lower the rates by adjusting priorities. However, increasing the millage rate may only be accomplished by an expensive mailing and advertising process to every property owner on Miami Beach. The City's proposed operating millage rate as well as that of other taxing authorities will be included in the Truth -in- Millage (TRIM) statement sent to each property owner in the City. MAXIMUM MILLAGE DETERMINATION As presented at the May 24, 2018 Budget Workshop, and June 8, 2018 and July 13, 2018 FCWPC budget briefings, the proposed FY 2018/19 operating millage rate, which includes a dedicated millage for Pay -As- You -Go (PAYGO) capital funds and allows for growth over time with property values equivalent to $2.4 million included in the FY 2018/19 proposed General Fund budget and entirely offset by a decrease in the City's general millage, is 5.7288 mills. Based on the July 1, 2018 Certification of Taxable Value received from the Miami -Dade County Property Appraiser, the levy of 5.7288 mills would generate approximately $182.2 million in General Fund property tax revenues, which is an increase of $6.8 million over FY 2017/18 budgeted property tax revenues Citywide (net of the City Center RDA). Property Aesessrnent Existing Values New Construction July 2017 Certified 36, 538,197,107 858, 865, 383 Total 37, 397, 062, 490 July 2018 Certified 38, 701, 545,195 186,115, 906 38, 887, 661,101 City Center RCA 5,702,556,459 Citywide Total. 31,694,506,031 Property Tax Revenue Projection 175 363 000 Property Tax Revenue Projection Variance 5, 993,199, 959 32, 894, 461,142 182,168, 000 6,805,000 Further; - pursuant to State Statute, the City may elect to approve millage rates above the "rolled - back" rate up to the constitutional cap of 10 mills, subject to the following votes by the Commission or referendum: • Option I: A majority approval of the Commission is required to approve a millage up to 6.1024 mills (equivalent to a 1.47% increase in Property Tax revenues). The 1.0147 increase is the State per capita personal income gain for the prior calendar year. Page 1064 of 1464 FY 2018/19 Proposed Millage Rate July 25, 2018 Page 6 • Option II: A two - thirds approval (5 of 7 votes) of the Commission is required to approve a millage up to 6.7126 mills (equivalent to a 10% increase in Property Tax revenues above Option I). • Option III: A unanimous approval of the Commission or referendum is required to approve a millage above 6.7126 mills. Adoption of the proposed FY 2018/19 total general operating millage rate of 5.7288 mills, therefore, requires a majority approval (4 of 7 votes) by the City Commission per the State of Florida's Truth -in- Millage (TRIM) requirements. FIRST PUBLIC HEARING The first public hearing on the proposed operating millage rate and budget for FY 2018/19 must be held no later than 80 days, or earlier than 65 days, from the start of the TRIM 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 hearing; 2) If on a day other than Saturday, it must be held after 5:00 P.M.; and, 3) must be held immediately following discussion of the tentative millage and budget of its principal taxing authority (City of Miami Beach). Based on these guidelines, the first hearing must be held between September 3, 2018 and September 18, 2018. These dates are unavailable for the following reasons: September 9 and 16 September 3 September 5 September 6 Sundays Labor Day Miami -Dade County School Board Public Hearing Miami -Dade County Public Hearing Of the remaining days available, it is recommended that the first public hearing be set for Wednesday, September 12, 2018 at 5:01 P.M., in the City Commission Chambers at 1700 Convention Center Drive, 3rd Floor, Miami Beach, Florida 33139, immediately following the City of Miami Beach's public hearing. JLM /JW /TOS Page 1065 of 1464