2011-27699 Reso RESOLUTION NO. 2011 -27699
A RESOLUTION OF THE MAYOR AND CITY COMMISSION
OF THE CITY OF MIAMI BEACH, FLORIDA, SETTING THE
PROPOSED MILLAGE RATES FOR FISCAL YEAR (FY)
2011/12, 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 2011/12 budget began early with a discussion at
a two day Commission retreat in May 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 provided tax and fee relief while at the same time providing improved services
that address needs and priorities identified by the community and providing structural
changes that enhanced capital funding and reserve; and
WHEREAS, maintaining and enhancing the City's priorities have become
increasingly more challenging in the last five years: first through property tax reform where
tax rates were dramatically reduced; and subsequently with the decline in property as well
as increasing pension costs; and
WHEREAS, the July 1, 2011 Certification of Taxable Value from the Miami -Dade
County Property Appraiser reflects a 0.6 percent decline in Citywide property tax values
from the July 1, 2010 tax roll certification, a 0.5 percent increase in the City Center
Redevelopment area (RDA), and a 0.8 percent decline in values outside the City Center
RDA, which impacts the City's General Fund revenues; and
WHEREAS, in the last four years, the General Fund has absorbed more than $41
million in reductions (and almost $47 million and 260 positions across all funds) in a
General Fund budget that is $237.5 million in FY 2010/11, an almost 20 percent reduction;
and
WHEREAS, a total of approximately $15 million in employee "give- backs" were
achieved between FY 2009/10 and FY 2010/11, which, along with almost $47 million in
efficiencies and reductions, represents more than $62 million in combined "givebacks" and
reductions over 4 years; and
WHEREAS, between FY 1999/00 and FY 2009/10, the total combined City of Miami
Beach property tax rates declined approximately 2.8 mills and 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 to City funded $200 and $300 homeowner
dividends paid to homesteaded property owners in the City in FY 2005/06 and FY 2006/07;
and
WHEREAS, at the May 2011 Commission retreat and at the June 29 2011
Finance and Citywide Projects (FCWPC) meeting, the Administration was directed to
generally preserve recently enacted City initiatives in support of community priorities; and
WHEREAS, at the May 2011 Commission retreat and at the June 29 2011
FCWPC meeting, the consensus was to set the proposed operating millage in July at the
rate of the current millage rate of 6.2155 despite the 0.8 percent decline in property values
outside the City Center Redevelopment area; 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; and
WHEREAS, the January 1, 2010 tax roll declined by almost $1.4 billion between the
July 1, 2010 valuation and the July 1, 2011 valuation due to appeals, adjustments, etc. ,
which resulted in the FY 2011/12 "roll -back rate" being less than the FY 2010/11 current
millage rate; and
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 2011/12
General Operating 6.1072 mills
Capital Renewal & Replacement 0.1083 mills
Total Operating Millage 6.2155 mills
Debt Service 0.2884 mills
Total Combined Millage 6.5039 mills
2) "Rolled- Back" Rate 5.9029 mills
3) The first public hearing on the proposed millage rate and the tentative budget for FY
2011/12 shall be held on Wednesday, September 14, 2011 at 5:01 P.M., in the City
Commission Chambers, City Hall, 1700 Convention Center Drive, Miami Beach,
Florida.
PASSED and ADOPTED, this 13th day of July, 2011.
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COMMISSION ITEM SUMMARY
Condensed Title:
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) 2011/12; FURTHER AUTHORIZING
THE CITY MANAGER TO TRANSMIT THIS INFORMATION TO THE MIAMI -DADE COUNTY PROPERTY
4PPRAISER IN THE FORM REQUIRED BY SECTION 200.065, FLORIDA STATUTES
Key Intended Outcome Supported:
Ensure expenditure trends are sustainable over the long term; Control costs of payroll including salary and fringes;
Minimize taxes; Improve the City's overall financial health and maintain overall bond rating
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 improved services that address needs and priorities identified by the community and
providing structural changes that enhanced capital funding and reserves. However, these objectives became
increasingly more challenging in the last five years: first through property tax reform where tax rates were
dramatically reduced; and subsequently with the decline in property as well as increasing pension costs. In the last
four years, the General Fund has absorbed more than $41 million in reductions (and almost $47 million and 260
positions across all funds) in a General Fund budget that is $237.5 million in FY 2010/11, almost 20 percent.
Further, a total of approximately $15 million in employee "give- backs" were achieved between FY 2009/10 and FY
2010/11. Along with almost $47 million in efficiencies and reductions, this represents more than $62 million in
combined "aivebacks" and reductions over 4 years.
• Between FY 1999/00 and FY 2009/10, total combined City of Miami Beach 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.
• The July 1, 2011 Certification of Taxable Value from the Miami -Dade County Property Appraiser reflects a 0.6
percent decline in Citywide property tax values from the July 1, 2010 tax roll certification. Given that the City Center
RDA had a 0.5 percent increase, the decline outside the City Center RDA, which impacts the City's General Fund
revenues, was greater, at 0.8 percent.
Issue:
I Shall the Mayor and City Commission adopt the resolution?
Item Summary /Recommendation:
The total proposed operating millage is 6.2155 mills, including a general operating millage rate of 6.1072 and a
General Fund Capital Renewal and Replacement millage of 0.1083. The proposed voted debt service millage rate is
adjusted from 0.2870 to 0.2884.
Advisory Board Recommendation:
1
Financial Information:
Source of Funds: Amount Account
OBPI Total
Financial Impact Summary: Despite a modest adjustment in the tax rate in FY 2010/11, City of Miami Beach
combined millage rates remain approximately 2.2 mills lower than in FY 1999/00, and approximately 1.2 mills lower
than FY 2006/07 when property values were above today's values.
City Clerk's Office Legislative Tracking:
Sign -Offs:
De.. rt t Dir. or Assistant Cit Mana • er C' Mana • er
R -1 �-
MIAMIBEACH AGENDA ITEM DATE �— - I�
MIAMI BEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
COMMISSION MEMORANDUM
TO: Mayor Matti Herrera Bower and Members of the City Commission
FROM. Jorge M. Gonzalez, City Manager
DATE: July 13, 2011 4/0
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) 2011/12; 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 2011/12:
General Operating 6.1072 mills
Capital Renewal & Replacement 0.1083 mills
Sub -Total Operating Millage 6.2155 mills (6.2155 last year, 0.0 increase)
Voted Debt Service 0.2884 mills (0.2870 last year, 0.0014 increase)
Total 6.5039 mills (6.5025 last year, 0.0014 increase)
2) "Rolled- Back" Rate (Truth in Millage) 5.9029 mills
3) The first public hearing to consider the proposed millage rates and tentative budgets for FY
2011/12 shall be Wednesday September 14, 2011 at 5:01 p.m., in the City Commission
Chambers, City Hall, 1700 Convention Center Drive, Miami Beach, Florida
The "Rolled- Back" millage rate for FY 2011/12 is the millage rate required to produce the same
level of property tax revenues in the General Fund in FY 2011/12 as budgeted in FY 2010/11. It
is important to note, that the January 1, 2010 tax roll Citywide declined by almost $1.4. billion
between the July 1, 2010 valuation and the July 1, 2011 valuation due to appeals, adjustments,
etc„ which resulted in the FY 2011/12 "roll -back rate" being less than the FY 2010/11 current
millage rate. The area outside of City Center RDA declined by almost $1 billion.
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 2
SUMMARY
The Administration is recommending a total combined millage rate for the City of Miami Beach
of 6.5039. The total proposed operating millage remains at 6.2155 mills, including a general
operating millage rate of 6.1072 and a General Fund Capital Renewal and Replacement millage
of 0.1083. The proposed voted debt service millage rate is adjusted from 0.2870 to 0.2884, an
increase of 0.0014 mills.
It is important to remember that in prior years, the City of Miami Beach significantly reduced tax
rates as property values increased. Between FY 1999/00 and FY 2009/10, total combined City
of Miami Beach property tax rates declined approximately 2.8 mills. In FY 2007/08 alone, the
millage rate declined by approximately 1.8 mills, with annual savings to the average
homesteaded property of over $400. Further, despite a modest adjustment in the tax rate in FY
2010/11, City of Miami Beach combined millage rates remain approximately 2.2 mills Tower than
in FY 1999/00 (25 percent), and approximately 1.2 mills lower than 2006/07 when property
values were above today's values.
The budget development process is still underway, and the City's Proposed Work Plan and
Budget will be released later this summer. However, at this point in time, it is anticipated that an
estimated $5.4 million gap will need to be addressed primarily due to previously bargained salary
increases and pension and health increases, offset by increased revenues.
Potential Service Enhancements
The July 28, 2011 Finance and Citywide Projects Committee is scheduled for the review of
proposed service enhancements as well as potential efficiencies and /or reorganization
reductions and revenue enhancements. While the operating millage is recommended to remain
at the FY 2010/11 level, it is anticipated that, overall, reductions or revenue enhancements
recommended by the Committee may be used to provide service enhancements, many of which
have been previously discussed by the City Commission, rather than reduce the millage.
Living Wage Impact
It is also important to point out that, subject to Commission approval in September, the Current
Service Level (CSL) budget will need to be increased by approximately $200,000 to incorporate
the impact of adjustments to the living wage that will be presented to the Commission at that
time.
Efficiencies, Reductions, and Revenue Enhancements versus Service Enhancements
As with the preparation of budgets for the last four years, departments are continuing to analyze
and present their budget from two perspectives: 1) a review for potential efficiencies,
reorganizations to reduce cost, etc. without impacting services; and 2) performing 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.
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 3
However, given the significant reductions in the General Fund in the last 4 years, it is anticipated
that most of the reductions that will be identified will be more focused on Enterprise Funds.
While these do not impact the General Fund millage and property taxes paid by Miami Beach
property owners, reductions in these funds in prior years has enabled us to keep utility user fees
flat longer than previously anticipated.
Increased use of Resort Tax Funds to Offset Expenses Currently in the General Fund
Based on an outside consultant study conducted in 2010 using FY 2007/08 actual costs, it is
estimated that there are approximately $50.5 million in eligible resort tax expenditures in the
General Fund.
These include expenses associated with police officers serving entertainment areas; a portion of
fire rescue services from Fire Stations 1 &2; ocean rescue services; enhanced code compliance
provided to respond to evening entertainment area violations and staffing of special events;
other code compliance activities in tourism and visitor related facilities /areas; Tourism and
Culture Department and the Cultural Arts Council; museums and theaters (Garden Center, Bass
Museum, Colony and Byron Carlyle Theaters); golf courses (net of revenues); Memorial Day
and other special event costs; homeless services; July 4 Visitor Center funding; holiday lights;
Festival of the Arts; Jewish Museum; Miami Design Preservation League (MDPL) Orange Bowl;
Monuments; etc. However, $8.8 million of these costs are addressed by dedicated funding for
the South Pointe area pursuant to the Miami -Dade County Convention Development Tax
interlocal agreement, thereby resulting in approximately $41 7 million in eligible Resort Tax
expenses in the General Fund.
Based on FY 2010/11 resort tax collections to date, it is estimated that there will be an additional
$4 million available in resort tax collections to provide additional funding for these General Fund
activities in FY 2011/12.
Potential Decrease in IBNR (Claims Incurred but Not Reported) Funding in the Risk
Management Fund
In the FY 2010/11 Adopted Budget, funding for transfers to the Risk Management Fund for
Claims Incurred but Not Reported (IBNR) was increased by $1.675 million due to increased
actuarial estimates for these claims. As of September 30, 2009, the deficit in the Risk
Management Fund was $9 million, including $14 million in IBNR claims. However, the Risk
Management Fund reflected a surplus of FY 2009/10 revenues over expenditures as a result of
revised actuarial liability estimates, thereby helping to reduce the prior year deficit in the fund. As
of September 30, 2010, the deficit in the Risk Management Fund was $6.8 million, including
$13.3 million in IBNR claims.
The City's adopted financial policy for the Risk Management Fund states that the City shall have
a goal of maintaining a reserve of 100% of pending claims in the Risk Management Fund, and
shall strive to fund 2/3 of the estimated value of IBNR claims. Based on the estimates above,
100 percent of the pending claims in the Risk Management Fund were fully funded as of
September 30, 2010, and $6.5 million of IBNR Claims were funded ($13.3 million in IBNR claims
versus the $6.8 million deficit), resulting in 49 percent of IBNR claims funded. If FY 2010/11
actuarial estimates are similar to FY 2009/10, the additional $1.675 million in FY 2010/11
funding for IBNR claims will further increase this percentage to 61 percent. There is, therefore,
potential for the IBNR funding to be at least partially reduced.
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 4
Increase in Transfers and Interfund Revenues
Part of finalizing the General Fund Budget includes a review of administrative fees charged to
Enterprise Fund Departments, the Resort Tax Fund, and the Redevelopment Agency for support
provided by the administrative departments in the City, all of which are fully contained within the
General Fund. The finalization of the Enterprise Fund Departments, the Resort Tax Fund, and
the Redevelopment Agency budgets are still ongoing. Once these are final, the administrative
fees can be determined based on the overhead rate for each entity that was updated by an
independent consultant in 2010. These will be reflected in the Proposed Work Plan and Budget
which will be finalized after the July 28, 2011 Finance and Citywide Projects Committee meeting.
In addition, as presented at the May 19, 2011 Finance and Citywide Projects Committee
meeting, the amount of funding that the General Fund is having to contribute in support of
Building Department operations has been increasing as costs have increased while revenues
collections remain essentially at FY 2007/08 levels. Projected Building Department revenues,
including the use of $1.5 million in Building reserves, for FY 2010/11 are $9 million, while
expenses, including the overhead for administrative functions as described above, are projected
at $11.5 million, resulting in the use of $2.5 in other General Fund revenues in support of the
activities, an increase from $1.4 million in FY 2009/10. Projected Building Department revenues
for FY 2011/12 are $8.7 million while expenses are projected at $11.8 million, resulting in the
use of $3.1 million in other General Fund revenues in support of the activities.
FY 2009/10 Actual FY 2010/11 FY 2011/12
Projected Preliminary CSL
Building Revenues* $ 9,443,040 $ 8,979,298 $ 8,675,063
Building Expenditures 10,852,427 11,504,460 11,784,989
Surplus /(Deficit) $ (1,409,387) $ (2,525,162) $ (3,109,926)
*Includes use of $1 5 mil if on inBuilding operating reserves
As of September 30, 2010, Building Department operating reserves were $4.6 million, with $1.5
million budgeted to be used to support FY 2010/11 operations, leaving an anticipated balance of
$3.1 million as of September 30, 2011. There is, therefore, the potential for increased use of
Building reserves, in the short -term.
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 improved 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 became increasingly more challenging in the last five 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 four years, the General Fund
has absorbed more than $41 million in reductions (almost 20 percent of the $237 million FY
2010/11 General Fund budget) and reductions of approximately $47 million and 260 positions
across all funds.
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 5
Further, a total of approximately $15 million in employee "give- backs" were achieved between
FY 2009/10 and FY 2010/11 through a combination of freezing cost of living adjustments for all
employees for two and one -half years, elimination of merit increases for all employee except
members of the Fraternal Order of Police (FOP) and International Association of Firefighters)
IAFF, increased contribution to pension for all employees except members of FOP and IAFF,
pension plan changes for the Miami Beach Employees Retirement Plan, increased contributions
for take -home vehicles by FOP members for 18 months, reduced holiday pay for IAFF members,
and increased contributions to health insurance by members of the FOP and IAFF for 18
months. Along with almost $47 million in reductions, this represents more than $62 million in
combined "_givebacks" and reductions over 4 years.
Total 4 -Year Reductions*
General Fund $ Impacts FT PT
Public Safety $ (7,282,340) (69 0) 1.0
Operations (5,716,536) (59.5) (23.0)
Administrative Support (2,797,510) (31.9) -
Econ & Cultural Dev (1,193,426) (17.0) -
Citywide (1,392,642) -
Subtotal Reductions $ (18,382,454) (177.4) (22 0)
Transfers $ (22,734,851) - -
Total General Fund Reductions $ (41,117,305) (177.4) (22.0)
Internal Service Funds $ (3,398,225) (37.1) -
Enterprise Funds (2,558,728) (31.5) 8.0
GRAND TOTAL REDUCTIONS ** $ (47,074,258) (246.0) (14.0)
Estimated Employee Givebacks $ (15,297,085)
GRAND TOTAL REDUCTIONS AND GIVEBACKS _ $ (62,371,343) (246.0) (14.0)
* FY 2010/11 Budget included reductions for contracting out/converting positions to part-time mid -year, resulting in
$221,901 in department savings offset by increased operating contingency in the General Fund. These were not
implemented and the FY 2010/11 reductions shown above exclude these "Plan B" reductions
** The City Center RDA also includes the reduction of 1 full time position as part of minimal service impact
efficiencies (4 full time positions as part of "Plan B" were not implemented)
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 FY 2011/12 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 in the Miami Beach Employees Retirement Plan
• Longer term financial sustainability is enhanced by the pension plan restructures that
have been put in place for new employees in the Miami Beach Employee Retirement
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 6
Plan. For example, for General Employees, the plan restructure proposed for new
employees is projected by the City's actuary to reduce the City's annual required
contribution by almost $1 million in FY 2012/13, with additional reductions annually as
the number of employees in the Miami Beach Employees Retirement Plan hired after
October 1, 2010 continues to increase. Further, additional pension plan reform is under
review by the City's Budget Advisory Committee.
All of the givebacks achieved, except the 18 month increased contribution to health by FOP and
IAFF and the increased contributions for take -home vehicles by FOP members for 18 months,
represent ongoing, recurring savings to the City and the employee give -backs contribute
significantly towards the City's strategic goal (key intended outcome) to control payroll costs.
INITIAL BUDGET GAP
On the revenue side, based on the July 1, 2011 Certification of Taxable Value from the Miami -
Dade County Property Appraiser, values of existing properties declined by 1.2 percent from the
July 1, 2010 tax roll certification. This decline was somewhat mitigated by $99 million in new
construction and renovations for an overall 0.6 percent decline in Citywide property tax values.
However, because property values in the City Center Redevelopment Area increased by 0.5
percent, the decline outside the City Center RDA, which impacts the City's General Fund
revenues, was greater, at 0.8 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, it is significantly less than the overall 10.5
percent decrease last year and other revenues such as sales taxes (Intergovernmental
Revenues), licenses and permits, and rents and leases have started to rebound. In addition,
sidewalk cafe revenues reflected under Licenses and Permits incorporate the previously
approved $2.50 per sq. ft. per year increase effective October 1 and Business Tax Receipt
revenues reflect a previously approved 5 percent increase. Corporate Sponsorships
(Miscellaneous) are projected to increase by $400,000 due to an anticipated beverage
sponsorship program already under negotiation, however, uniform sponsorships which were
included in the FY 2010/11 budget have been delayed resulting in a slightly lower overall
increase. Further, the budget reflects decreased revenues previously anticipated from the red
light cameras (under Fines and Forfeits), and the Commercial Pole Banner Program
(Miscellaneous).
Other new initiatives reflected in the FY 2011/12 CSL budget include a new Florida Power and
Light (FPL) franchise agreement anticipated to generate approximately $1 million (offsetting
declining revenues in the current fiscal year), $140,000 in additional bus shelter advertising
revenues from a new agreement currently under negotiation, and $370,000 in ground lease
revenues and administrative fees associated with the New RDA Pennsylvania garage.
Further, similar to the FY 2010/11 budget, FY 2011/12 CSL revenues reflect the use of $3.55
million in prior year surplus specifically set aside for this purpose along with $7.2 million in prior
year Parking Fund operating surplus as planned last year during the development of the FY
2010/11 budget. The total CSL revenue estimate at this time is $241.8 million, an increase of
$4.3 million from the FY 2010/11 budget.
This reflects a increase of approximately $1 million from the estimate presented at the
Commission retreat in June 1, 2011 estimate provided via Letter to the Commission #136 -2011
to reflect the impact of the July 1, 2011 certification of values and refinements in estimates for
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 7
sidewalk cafe revenues, additional bus shelter advertising revenues from the new agreement
described previously, and the in ground lease revenues and administrative fees associated with
the New RDA Pennsylvania garage.
On the expenditure side, CSL 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
2011/12, increases are estimated to result in an approximately $9.7 million (4 %) increase in
expenditures, the majority of which is due to the following
• A $1.9 million increase to reflect a previously bargained salary adjustments for employees,
including a 3 percent Cost of Living Adjustment (COLA) for bargaining employees as
9 P 9 J ( ) 9 9 of
April, 2012; the impact of step increases for employees in the FOP and IAFF bargaining
units; a maximum of 2 percent performance -based merit increase for employees in the
Government Supervisor's Association (GSA) bargaining unit; and a maximum of 2 percent
performance -based merit increase for employees in the American Federation of State,
County and Municipal Employees bargaining unit (AFSCME) as of May, 2012. In addition,
the 3 percent COLA and 2 percent performance -based merit increase has been included for
unclassified and other employees consistent with past practice of treating all employees
equally.
• A $0.3 million increase in overtime cost primarily due to increases in Police court overtime.
• A $4.2 million increase in the General Fund portion of the City's annual required
contributions to the Fire and Police ($2.2 million) and General Employees ($2 million)
pension plans, primarily due to the continued recognition of investment losses from FY
2007/08 and FY 2008/09, updated mortality and revised investment rate of return
assumptions in the Miami Beach Employees Retirement (MBERP) plan, and revised
investment rate of return assumptions in the Fire and Police Pension Plan.
• A $2.8 million increase in health insurance costs based on an estimated 10 percent increase
over the current Fiscal Year, as well as the expiration of the FOP and IAFF additional 5
percent contribution to City health insurance costs which was for an 18 month period, and
which will expire in February, 2012 and January, 2012, respectively.
• A $1.1 million Increase in Internal Service Fund charge -backs to Departments primarily due
to similar increases in salary and pension costs as described above that are then charged
back to the general fund, as well as equivalent increases in health insurance costs for
retirees, and increases in fuel prices. It is important to note that fuel prices in FY 2011/12
are budgeted at current prices. Should prices increase further, the General Fund will need
to fund these increases.
It is important to note that operating costs are approximately $0.7 million less than the FY
2010/11 budget, reflecting the continuation of various cost savings initiatives by the City such as
re- bidding contracts, and careful review of department line item expenditures.
In addition, this reflects a decrease of in expenditures approximately $1 million from the estimate
presented at the Commission retreat in May 2011 primarily due to refinements in estimates for
the Miami Beach Employees Retirement Plan annual contribution requirements, police overtime,
and internal service fund charges.
The resulting gap between General Fund CSL expenditures and CSL revenues as of the July 1,
2011 Certified values is approximately $5.4 million, and improved from the June 1 estimate by
approximately $1.85 million. Attachment 1 summarizes the revenues and expenditures.
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 8
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 %; 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 decrease of only 0.63 %. Further the 2009 Community
Survey, 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 2011/12 budget began early with a discussion at a two -day Commission
retreat in May, 2011 that included a review of priorities, economic projections and their impacts,
taxable values and millage rates. Major economic revenue and expenditure drivers were
discussed and alternatives for long -term solutions were debated.
Additional budget briefings will be held with the Finance and Citywide Projects Committee
(FCWPC) over the summer. These began in June, 2011 with a discussion of capital project
priorities. The next meeting is scheduled for July 28, 2011 to review various department
budgets, potential revenue enhancements and impacts of potential service level alternatives.
It is anticipated that the Proposed Work Plan and Budget that will be published later this summer
will continue our focus on providing "value of services for tax dollars paid ".
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,
2011), to advise the Miami -Dade County Property Appraiser of the proposed general operating
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 9
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 2011/12. The
required Debt Service millage rate must also be set at the same time as the general operating
millage.
After setting the proposed operating 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.
ANALYSIS OF PROPERTY VALUES IN MIAMI BEACH
On July 1, 2011, the City received the "2011 Certification of Taxable Value" from the Property
Appraiser's Office stating that the taxable value for the City of Miami Beach is $21,978,289,928
including $98,792,544 in new construction. The preliminary 2011 value represents a decrease
of $0.1265 billion or 0.6 percent less than the July 1, 2010 Certification of Taxable Value of
$22.1 billion, and a decline of 1.2 percent excluding new construction.
The comparative assessed values for the Miami Beach Redevelopment Agency City Center
redevelopment district increased from $3,404,963,718 to $3,423,353,944, an increase of
$0.0184, billion or a 0.5 percent increase in values over 2010 certified values. In addition,
assessed values within the geographic area formerly known as the South Pointe redevelopment
district increased from $3,324,165,654 to $3,446,036,913, an increase of $0.1219 billion, or a
3.7 percent increase in values over 2010 certified values. As a result, taxable values in the
areas outside the City Center RDA/South Pointe area decreased by 1.7 percent, from $15.3756
billion to $15.1089 billion, a decrease of $0.2667 billion.
COMPARATIVE ASSESSED VALUES (in billions)
Jan. 1 2011 -
Value (in Change from 2010
Jan 1 2010 Value (in billions) billions) Value (Budget)
•so uy 'evise. •so uy %Change
2010 Value (For 2011 from Prior
(For FY FY Change in (For Year
2010/11 2010/11 2010 2011/12 $ Revised
Budget) Projection) Values Budget) (in billions) % Value
RDA - City Ctr $ 3 4050 $ 2.9780 $ (0 4270) $ 3.4234 $ 0.0184 0.5% 15.0%
South Pointe 3 3242 3.1138 (0.2104) 3.4460 $ 0.1219 3.7% 10.7%
General Fund 15.3756 14.6281 (0.7476) 15.1089 $ (0.2667) -1 7% 3.3%
Total Citywide $ 22 1047 $ 20.7198 $ (1.3849) $ 21 9783 $ (0.1265) -0.6% 6.1%
Citywide Net of
City Ctr $ 18.700 $ 17.742 $ (0.958) $ 18 555 $ (0.1448) - 0 8% 4 6%
DETERMINING THE OPERATING MILLAGE 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 2011
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 10
Certification of Taxable Value and has been set at $21,978,290. 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 $20,879,376.
Impacts of Decline in Property Values
In FY 2010/11, the operating millage rate for general City operations was adopted at 6.2155.
Based on the July 1, 2011 Certification of Taxable Value, 6.2155 mills would generate
approximately $129,775,762 in tax revenues, a decrease of $746,668 over FY 2010/11
budgeted property tax revenues Citywide (General Fund, City Center RDA and the South Pointe
area). The General Fund property tax revenues will decrease by $0.85 million, if the FY 2010/11
millage rate is maintained.
Further, the January, 1 2010 tax roll Citywide declined by almost $1.4. billion between the July
1, 2010 valuation and the July 1, 2011 valuation due to appeals, adjustments, etc., which
resulted in the FY 2011/12 "roll -back rate" being less than the FY 2010/11 current millage rate.
The area outside of City Center RDA declined by almost $1 billion.
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 I: A majority of the approval of the Commission Millage is required to approve a
millage up to 8.1906 (equivalent to 100.55% of prior year maximum ad valorem proceeds
allowed by a majority vote, net of the impact of the Tax Increment Districts). The adjustment
of 100.55% reflects the statewide per capita personal income increase for the prior year
• Option II: A two- thirds approval (5 of 7 votes) of the Commission is required to approve a
millage up to 9.0097 (equivalent to a 10% increase in the ad valorem revenues above
Option I).
• Option III: A unanimous approval of the Commission or referendum is required to approve a
millage above 9.0097 up to the 10 mill cap
DETERMINING THE VOTED DEBT SERVICE MILLAGE LEVY
The general obligation debt service payment for FY 2011/12 is approximately $6.02 million.
Based on the July 1, 2011 Certified Taxable Value from the Property Appraiser, these bonds
would require the levy of a voted debt service millage of 0.2884 mills. This represents an
increase of 0.0014 mills.
COMBINING THE OPERATING AND VOTED DEBT SERVICE MILLAGE LEVIES
Illustrated below is a comparison of the combined millage rates and ad valorem revenues to the
City of Miami Beach for FY 2010/11 (final) and FY 2011/12 (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 $1.76 million in renewal
and replacement funding.
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 11
% Incl(Dec)
From From FY
FY 06/07 FY 10/11 FY 11/12 Incl(Dec) FY10/11 06/07
City of Miami Beach Millage Rates
Operating 7.1920 6.1072 6.1072 0.0000
Capital Renewal & Replacement 0.1820 0.1083 0.1083 0.0000
Sub-total Operating Millage 7.3740 6.2155 6.2155 0.0000 0.0% - 16%
Debt Service 0.2990 0.2870 0.2884 0.0014
Total 7.6730 6.5025 6.5039 0.0014 0.0% - 15%
If these recommended millage rates are tentatively adopted, then the City of Miami Beach's total
operating millage will remain unchanged from the current year, and the voted debt service
millage will increase by 0.0014 mills.
MILLAGE LEVY IMPACT ON PROPERTY OWNERS
Homesteaded Properties
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 2010, the CPI has been determined to
be 1.5 percent and therefore, the increase is capped at 1.5% for increased values as of January
1, 2011.
Overall, based on an analysis of the homesteaded properties in the 2010 tax roll (the latest
available from the Miami -Dade County Property Appraiser at this time), the median value of
homesteaded property in Miami Beach for 2011 (as of August 2010) was $119,000, and the
average $271,000. Applying the decline to the market value of all existing homesteaded
properties from the 2010 tax roll, and the 1.5 percent CPI adjustment, the impact of the millage
rate adjustment to homesteaded properties would be as shown in the following table.
Homesteaded Properties
FY 2010/11 (as of FY 2011/12 (as of January 12011)
January 1 2010)* with 0.6% Decline with no change with 1.5% CPI
Median I Average Median I Average Median I Average Median I Average
Taxable Value $ 119,000 $ 271,000 $ 118,286 $ 269,374 $ 119,000 $ 271,000 $ 120,785 $ 275,065
City of Miami Beach
Taxes
Operating $ 740 $ 1,684 $ 735 $ 1,674 $ 740 $ 1,684 $ 751 $ 1,710
Voted Debt 34 78 34 78 34 78 35 79
Total Miami Beach $ 774 $ 1,762 $ 769 $ 1,752 $ 774 $ 1,762 $ 786 $ 1,789
$ Change in Taxes
Operating $ (5) $ (10) $ - $ - $ 11 $ 26
Voted Debt - - - - 1 1
Total Miami Beach $ (5) $ (10) $ - $ - $ 12 $ 27
* Source. Miami -Dade County Property Appraiser File as of 8/17/10
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 12
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 increased. 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.
Total Combined Millage
O -.
1 - 1 1 1 1 1 1 1 1 1 1 1 1 1
M - 1 - 1 1 1 1 1 1 1 1 1 1 1 1 1
1 - 1 1 1 1 1 1 1 1 1 1 1 1 1
,�- 1 1 1 1 1 1 1 1 1 1 1 1 1 1
O
98 99 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 11 12
Fiscal Years
The combined millage rate overall remains approximately 2.2 mills lower than it was in FY
1999/00. In addition, the millage rate is almost 1.2 mills lower than it was in FY 2006/07, when
property values were above the July 1, 2011 certified values. As a result, the proposed property
tax levy is lower in FY 2011/12 than it was in FY 2006/07.
Property Values and Tax Levy
250 30
a �
200
150 - - 20 .
1 100 _. . . 10 'I'
see
50 _ _
8 0 1 1 1 1 0
'07 '08 '09 '10 '11 '12
ESE Property Values ---Tax Levy including Debt
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 13
' roperty Value, Millage and Property Tax Levy
Impact to a average value
homesteaded property with
CPI adjustment to assessed
Millage Rates Tax Levy (in millions) value
General Fund
Taxable Total (including
Property General Total S. Pointe, and
Budget Values Total Fund /RDA including Renewal &
Year (billions) Citywide Millage Debt Replacement) Annual Cumulative
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
FY2004/05 $ 14.04 8.1730 7.4250 $ 110.74 $ 79.38
FY2005/06 $ 17.45 8.0730 7.4810 $ 135.91 $ 111.69
FY2006/07 $ 22.74 7.6730 7.3740 $ 168.38 $ 140.31
FY2007/08 $ 26.85 5.8970 5.6555 $ 150.42 $ 125.33 ($436.00) ($436.00)
FY2008/09 $ 26.90 5.8930 5.6555 $ 150.59 $ 125.94 ($86.00) ($522.00)
FY2009 /10 $ 24.70 5.9123 5.6555 $ 138.70 $ 115.73 ($80.00) ($602.00)
FY2010 /11 $ 22.10 6.5025 6.2155 $ 136.55 $ 112.14 $221.00 ($381.00)
FY2011/12 $ 21.98 6.5039 6.2155 $ 135.80 $ 111.29 $27.00 ($354.00)
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 2011/12
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 4,11 and 18 Sundays
September 8 and 22 Proposed dates for Miami -Dade County Public
Hearings
September 7 Miami -Dade County School Board Public Hearing
FY 2011/12 Proposed Millage Rate
July 13, 2011
Page 14
Of the remaining days, it is recommended that the first public hearing be set for Wednesday,
September 14, 2011 at 5:01 P.M., in the City Commission Chambers, City Hall, 1700
Convention Center Drive, Miami Beach, Florida.
JMG:KGB
m MIAMI BEACH Attachment 1
FY 2011/12 GENERAL FUND BUDGET
AS OF JULY 2011
GENERAL FUND REVENUES CHANGES AS OF MAY RETREAT
Intergovernmental (sales taxes, etc.) 4%
FPL Franchise Fees $ 1,000,000
Utility Franchise /Tax Trends $ (1,000,000)
BTR Receipts /CU /etc. $ 320,000
Sidewalk Cafe Fees $ 501,660
Golf Course Revenues $ 200,000
Red light cameras $ (695,000)
Lease Revenues $ 370,000
Commercial Banners $ (300,000)
Sponsorships $ 400,000
2012 Proj as of 2012 Proj as of 2012 Proj. as of
2011 Budget May 1 June 1 Jul 1 $ Change % Chng.
Property Taxes $112,245,132 $106,632,875 $111,347,171 $111,397,825 ($847,307) -1%
Other Taxes $25,417,600 $25,417,600 $25,417,600 $25,417,600 $0 0%
Licenses & Permits $15,506,204 $16,003,204 $16,003,204 $16,327,864 $821,660 5%
Intergovernmental $9,618,140 $10,002,866 $10,002,866 $10,002,866 $384,726 4%
Charges For Services $10,348,050 $10,548,050 $10,548,050 $10,548,050 $200,000 2%
Fines and Forefeits $3,211,263 $2,516,263 $2,516,263 $2,516,263 ($695,000) -22%
Interest S3,552,000 $3,552,000 $3,552,000 $3,552,000 $0 0%
Rents and Leases $4,892,352 $5,262,352 $5,262,352 $5,702,352 $810,000 17%
Miscellaneous $11,392,781 $11,492,781 $11,492,781 $11,567,114 $174,333 2%
Resort Taxes $24,465,440 $24,465,440 $24,465,440 $24,465,440 $0 0%
Other $8,064,508 $8,064,508 $8,064,508 $8,064,508 $0 0%
Reserves - Bldg Dept $1,546,709 $1,546,709 $1,546,709 $1,546,709 $0 0%
Parking Surplus Transfer $3,600,000 $7,200,000 $7,200,000 $7,200,000 $3,600,000 100%
Prior year set aside $3,657,935 $3,551,120 $3,551,120 $3,551,120 ($106,815) -3%
Total $ 237,518,114 $ 236,255,768 $ 240,970,064 $ 241,859,711 $ 4,341,597 2%
GENERAL FUND EXPENDITURES
COLA: 3.0% Apr -12
MERIT /STEP: 2% Max for General Merit except CWA - Police and Fire Steps
PENSION COSTS $5 million preliminary estimate from pension plans Citywide
HEALTH & LIFE INS 10%
2012 Proj as of 2012 Proj as of 2012 Proj. as of
2011 Budget May 1 June 1 Jul 1 $ Change % Chng.
Salaries $99,515,410 $101,447,870 $101,447,870 $101,447,870 $1,932,460 2%
Overtime /Other Wages $12,347,060 $12,820,426 $12,820,426 $ 12,642,593 $295,533 2%
Benefits
Pension - F &P $33,429,345 $35,611,651 $35,611,651 $35,602,142 $2,172,797 6%
Pension - MBERP $8,940,594 $11,340,310 $11,340,310 $10,965,525 $2,024,931 23%
Other Pension Costs $5,848,934 $5,802,867 $5,802,867 $5,802,867 ($46,067) -1%
Health and Life $6,355,606 $9,155,788 $9,155,788 $9,155,788 $2,800,182 44%
Other Benefits $3,965,449 $4,041,231 $4,041,231 $4,041,231 $75,782 2%
Total Benefits $ 58,539,928 $ 65,951,847 $ 65,951,847 $ 65,567,553 $ 7,027,625 12%
Total Salary and Benefits $ 170,402,398 $ 180,220,143 $ 180,220,143 $ 179,658,016 $ 9,255,618 5%
Operating $27,778,666 $27,018,750 $27,018,750 27,083,719 ($694,947) -3%
Internal Service Funds 35,216,360 36,816,360 36,816,360 36,288,270 $1,071,910 3%
Capital & Debt $4,120,690 $4,117,173 $4,117,173 4,184,534 $63,844 2%
Total 237,518,114 248,172,426 _ 248,172,426 247,214,539 9,696,425 4%
Net Revenues Less Expenditures 1 $ 0 1 $ (11,916,658)1 $ (7,202,362)1 $ (5,354,828)1 $ (5,354,828)1 N /AI