Gene Gibson, a longtime resident of Fort Myers, details several wasteful decisions the City of Fort Myers has made in the Operation of its Community Redevelopment District (CRA) in and around its Downtown Area. This needs to stop.
See what Gibson has to say and we believe you will agree…
OpEd originally published in the News-Press on Jan. 7, 2020
Mayor Henderson and the city council like to say that “Fort Myers is open for business.” In reality, it is more like “get your free money — only big developers need apply.” When the city council wears its Community Redevelopment Agency (CRA) hat to fund private developments on West First Street, it spends taxpayer money like drunken sailors on shore leave (apologies to drunken sailors).
The CRA uses a financing mechanism known as tax increment funds (TIFs). Recent West First Street developers committed to building large luxury apartment buildings in return for TIFs.
Over the next 10 to 15 years, up to 95% of the property taxes paid by the owners of the developed property go to repay the developer’s construction loan. These property taxes do not go to provide for essential city services such as police, fire, sewer/water or road maintenance.
The CRA says TIFs incentivize development. But the CRA confuses incentives with subsidies. When Fort Myers reduced its permit and impact fees by half, that constituted an incentive. The city used to have the highest permit and impact fees of any municipality in Southwest Florida. Reducing these fees is a good thing and benefits all developers — not just large developers. Spending millions of dollars to repay large developers’ construction loans for their developments on West First Street is a subsidy.
The CRA has approved TIFs for three large apartment complexes planned along West First Street: City Walk with a $5.5 million TIF approved May 2018; Vantage Lofts with a $11.4 million TIF approved June 2019; and Silver Hills with a $12.96 million TIF approved August 2019. The three TIFs total $29.8 million.
TIFs are supposed to be used in “blighted” areas. West First Street is an easy walk to downtown and a Publix grocery store, and marks the beginning of the McGregor Corridor. Hardly a “blighted” area.
If the CRA continues to award TIFs for large apartment buildings, it should do so in a truly blighted area (eg Midtown) for work-force apartments (not luxury apartments). A best practice is that the first development gets a 60% TIF, the second a 40% TIF, the third a 20% TIF and no more after that.
The opposite is happening on West First Street. After the City Walk developer saw that Vantage Lofts and Silver Hills received TIFs providing for a 95% rebate, it requested that its TIF be increased to 95% for a total award of $10.5 million. Furthermore, City Walk originally committed to including a hotel in its complex. Given the CRA’s desire to promote Fort Myers as a convention destination, the promised hotel was an inducement for the TIF. Now the developer says he cannot afford to build a hotel and needs his TIF doubled.
Sad to say, this is not the first time that the CRA raised a TIF for a first-in developer when later developers received larger TIFs. This demonstrates the moral hazards of subsidies when the government starts interfering in the market.
Given the precedents the CRA has set, how many developers do you think will now build along West First Street without a TIF? How can a developer without a TIF compete with the developer across the street who received a TIF? How many developers will build in Midtown or some other blighted area when free money is available for building on West First Street?
The mayor proudly touts the WalletHub report that Fort Myers is the fastest-growing city in the U.S. Despite this booming real estate market, the CRA remains committed to corporate welfare. Moreover, a plethora of developments are going up in south Lee County without TIFs. The flow of free money for luxury condominiums and apartments in upscale Fort Myers neighborhoods needs to stop.
- Gene Gibson is a resident of Fort Myers