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Guest Opinion: CRA incentives well spent on future location for Starbucks

June 21, 2013
Cape Coral Daily Breeze

The recent editorial in the weekend Breeze, "Pave the Road to Recovery," simultaneously welcomes the news of a new development in the CRA area featuring Starbucks while criticizing the CRA Board of Commissioners for approving $27,000 in tax rebates. The editorial goes on to take the City to task for not following the County's lead in reducing impact fees. Transparency and public trust are important, so addressing comments that are not quite on target is necessary to ensure accurate information.

Only a few months ago, the CRA's fund balance was on a path to depletion. Debt service payments and operational costs were exceeding revenues and cutting into the agency's fund balance. No funds were available for investment, and within two years, the CRA's fund balance would be gone. City Council made the difficult, but financially prudent, decision to bring CRA operations in house.

Since that time, the focus has been on preserving the fund balance while looking for the best opportunities to invest in the CRA area. The $27,000 economic development incentive provided to the developer of the property presented one of those opportunities. Note: Starbucks is not the recipient of the incentive as they will be a tenant of the building.

The development will result in a $1 million investment to build and equip a 1,800-square-foot, LEED-certified, energy efficient building. The $27,000 CRA incentive will rebate future tax dollars generated from the increased property value of the development. This incentive also is tied to job development (25 jobs).

Based on our calculations, it could take up to 11 years for the developer to receive the entire $27,000. If it takes less time, then that would be good news for the CRA as it would mean values are on the upswing.

An investment of $27,000 for "gap financing" to help leverage a $1 million project in our CRA is a common economic development incentive. The CRA Board and staff are identifying projects where the limited resources available will have the greatest impact.

Other projects include the $1.2-million stormwater project along Lafayette Street, which could help ease development restrictions in the CRA due to stormwater management requirements. This project is being funded out of the City's Stormwater Fund with another $250,000 from the CRA to add a streetscape component with streetlights, bulb outs, landscaping improvements and pavers. The CRA portion will come from this year's budget ($100,000) and next year's budget ($150,000). The CRA Board also approved $100,000 in the FY 2014 budget to use as "matching" grant funds up to 25 percent toward costs incurred by businesses that install the same streetscape components.

These targeted investments of CRA dollars demonstrate the Board's commitment to improving the CRA area while still preserving fund balance.

The editorial also refers to the City's "change of use" impact fee waiver as our "single best incentive." During the 18-month trial period for the waiver, only 10 projects received a waiver of road impact fees, all of which occurred in the first six months. The lack of interest in the program the final 12 months led to the decision to allow the incentive to sunset.

As for the statement that the City has done nothing to follow Lee County's lead regarding reduction of impact fees, the City of Cape Coral took a different approach. Lee County chose to reduce impact fees ahead of addressing overall budget challenges and potential loss of revenues. A recent newspaper article indicated that less than three months after cutting impact fees, Lee County now is looking for ways to generate funds for road projects. We do not want to find ourselves in the same position.

Our priority was to achieve economic sustainability and address impending budget reductions and projected revenue shortfalls. Any discussion involving impact fee reductions should take place only after we have achieved our primary goal of economic sustainability. And our operational definition of "economic sustainability" incorporates a functional municipality. To have a functional municipality means we have enough revenue coming in to provide a level of service that the public not only enjoys, but demands.

In response to the question posed in the editorial whether the City supports economic development, the answer is an emphatic "yes." But to have successful economic development, a city first must be economically sustainable. A city cannot achieve one without the other.

Thank you for your time.

John Szerlag is the city manager of the city of Cape Coral.



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