Proposed Property Tax Exemption

Presentation to the Orange County Board of County Commissioners

December 6, 2011

Overview Background

Eligible Businesses

Application Process Questions

Proposed Property Tax Exemption

Fla. Constitution authorizes economic development property tax exemption for new businesses and expansions of existing businesses by ordinance after voter approval

Enabling legislation, Section 196.1995 Florida Statutes, amended in 2011 to expand eligibility of businesses and emphasize creation of new jobs paying above average wage

Proposed Property Tax Exemption

BACKGROUND

September 20, 2011, Board passed Resolution calling referendum during Presidential Preference Primary asking voter approval to grant these exemptions

Primary is Jan. 31, 2012

Early voting begins Jan. 21, 2012

Proposed Property Tax Exemption

BACKGROUND (Cont’d)

Proposed Property Tax Exemption

BACKGROUND (Cont’d)

• Brevard• Osceola• Hillsborough• Dade• Palm Beach• Martin• Escambia• Charlotte

If voters approve exemption:

BCC may grant tax exemptions to eligible businesses for buildings and tangible personal property going on tax rolls for first time

Cannot include value of land

May last for 10 years or Board may approve less

May include 100% of assessed value of buildings and tangible personal property or less

Exemptions can be revoked if jobs not created as represented

Proposed Property Tax Exemption

ELIGIBLE BUSINESSES

New: Business or organization creating 10 or more new full-time jobs with average wages higher than area average that:

Manufactures, processes, compounds, fabricates or produces for sale items of tangible personal property at a fixed location; or

Is a “target industry business” as defined in Section 288.106(2)(q) Florida Statutes; or

Proposed Property Tax Exemption

ELIGIBLE BUSINESSES (Cont’d)

“Target Industry Businesses” are corporate headquarters or business engaged in target industries identified by the state expected to have future growth, stability, high wages, diversification and positive economic impact.

2011 Target Industries are: “CleanTech”, Life Sciences, Information Technology, Aviation/ Aerospace, Homeland Security/Defense, Financial/Professional Services, Emerging Technologies including global logistics.

Proposed Property Tax Exemption

ELIGIBLE BUSINESSES (Cont’d)

Creating 25 or more new full-time jobs with more than 50% sales outside of Florida; or

Office space established by a newly domiciled business housing 50 or more full-time employees separate from any other operation; or

Any business in Enterprise zone or Brownfield area that first begins operation on site separate from other commercial or industrial operation owned by the same business

Proposed Property Tax Exemption

ELIGIBLE BUSINESSES (Cont’d)

Expansion of Existing Business:

Creating 10 or more new full-time jobs with higher wages than area average which :

Manufactures, processes, compounds, fabricates or produces for sale items of tangible personal property at a fixed location; or

Target industry business as defined in Section 288.106(2)(q) Florida Statutes; or

Proposed Property Tax Exemption

ELIGIBLE BUSINESSES (Cont’d)

Expansion of Existing Business: cont’d

Creating 25 or more new full time jobs with more than 50% sales outside of Fla. increasing operations in the County resulting in a net increase in employment or productive output or sales of at least 10%; or

located in Enterprise Zone or Brownfield area that increases operations on a site located within the same zone or area co-located with a commercial or industrial operation owned by the same business

Proposed Property Tax Exemption

ELIGIBLE BUSINESSES (Cont’d)

If voters approve, BCC must adopt a separate ordinance for each authorizing economic development tax exemption granted to a qualified businesses

Proposed Property Tax Exemption

APPLICATION PROCESS

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Must be filed a

minimum of 60 days prior to obtaining

certificate of occupancy or the

installation of eligible equipment

By January 15th each year

Pre-application submittal

meeting with Orange County

Office of Economic, Trade & Tourism

Development (OCOETTD)

Application is submitted to

OCOETTD. The Economic

Development Administrator (EDA)

determines if the company meets the basic criteria for Tax

Abatement

Property Appraiser conducts

analysis and determines if company is

eligible

EDA places ordinance on

Orange County BCC agenda.

OC BCC conducts public

hearing to consider

ordinance

OC BCC conducts public

hearing and conducts second

reading on ordinance

Company files annual report with EDA each

year they are to receive the exemption

EDA forwards application to

Property appraiser and requests a

report

Property Appraiser completes report and

returns to EDA

 

Clerk (?) places public hearing legal notice in

local newspaper for second reading of ordinance

EDA sends final ordinance to

Property Appraiser

EDA determines eligibility of

company and presents a report

to the OC BCC and the Property

AppraiserEDA sends out letter

of inquiry to environmental

agencies if existing location could be

deemed as hazardous

Economic Impact Analysis

complete (EDC?)

Request Economic Impact Analysis

(EDC?)

Proposed Property Tax Exemption

APPLICATION PROCESS (cont’d)

Statutory Requirements for consideration:

Net number of new jobs Average wage of new jobs Capital investment to be made by applicant Type of business – target industry? Environmental impact Extent applicant intends to source supplies &

materials within county Economic related characteristics deemed

necessary by county

Proposed Property Tax Exemption

APPLICATION PROCESS(Cont’d)

Proposed Property Tax Exemption APPLICATION PROCESS (cont’d)

QTI Tax Abatement

Program Administration

State Local

Incentive Award Per JobPercentage of Taxes

paid

Wage Requirements 115%Determined by OC

BCC

Eligible CompaniesTargeted Industry

Only Expands beyond QTI

Capital Investment Not Incentivized Incentivized

Eligible Taxes NumerousReal & Personal

Property

Proposed Property Tax Exemption APPLICATION PROCESS (cont’d)

Past County Incentivized Projects (12 Years)

Total Projects: 41 Average Jobs: 202 Average Salary: $57,164 Average Capital Investment:

$36,751,444

Proposed Property Tax Exemption

APPLICATION PROCESS (cont’d)

HYPOTHETICAL APPLICATION: Company: USim Bio: Located in Simi Valley, CA, USim is a global is a

global industry leader in security and strategic defense simulation development and training.

 Clients include the U.S. Department of Defense, Department of Homeland Security, and Fortune 500 companies.  USim seeks to consolidate all development and training in one Central Florida location on a 15 to 25 acre campus and expand its employment to 228.   The new USim campus will include buildings for Administration, Sales, Marketing, Research and Development, Application Development and a state of the art simulation training facility.   

Jobs: 228 Average Wage: $76,500 Capital Investment: $82M Real Property Improvements

$38M Tangible Personal Property $120M

Proposed Property Tax Exemption

APPLICATION PROCESS (cont’d)

HYPOTHETICAL APPLICATION: (cont’d)

PROPERTY APPRAISER’s OFFICE :

Primary Responsibility Provide Estimate of Value Provide Tax Impact

PROPERTY APPRAISER’S REPORT

The total revenue available to the county for current fiscal year from ad valorem taxes.

Revenue lost to the county for current fiscal year by virtue of previously granted exemptions.

The value of the real property improvements to be built and the tangible personal property to be purchased.

Estimate of revenue which would be lost to county for current fiscal year if exemption applied for were granted if property were subject to tax.

Determination as to whether property is a new business or the expansion of an existing business.

Proposed Property Tax Exemption APPLICATION PROCESS (cont’d)

PROPERTY APPRAISER’S REPORT

The Property Appraiser’s estimate is only as good as the information provided.

The Property Appraiser may request additional information such as: • Reasonably detailed cost estimates of the

improvements to be constructed and the tangible personal property to be acquired.

• The Property Appraiser’s report may include additional

information relied upon and deemed necessary to reaching its determination.

Proposed Property Tax Exemption APPLICATION PROCESS (cont’d)

The Property Appraiser will carefully review and consider the information

provided.Consideration may be given to:

• Current construction costs, size, materials, etc...

• Original cost and present worth of TPP.

• Taxable vs. Non-taxable TPP.

• Current TPP exemptions.

• Any non-realty items.

Proposed Property Tax Exemption APPLICATION PROCESS (cont’d)

Example of Property Appraiser Considerations for

TPP

Proposed Property Tax Exemption APPLICATION PROCESS (cont’d)

Proposed Property Tax Exemption

APPLICATION PROCESS (cont’d)

SAMPLE DR-418

Proposed Property Tax Exemption

APPLICATION PROCESS (cont’d)

SAMPLE DR-418

Proposed Property Tax Exemption

APPLICATION PROCESS (cont’d)

Timeline

2/01/12 – Pre-submittal Meeting

2/14/12 – Application Finalized

3/13/12 – BCC Public Hearing

6/01/13 – Construction Completed

1/01/14 – Property added to TaxRoll/Exemption Applied

Proposed Property Tax Exemption

Next Steps

Voting Early Voting

January 21, 2012

General Election January 31, 2012

Proposed Property Tax Exemption

QUESTIONS?

Proposed Property Tax Exemption

Presentation to the Orange County Board of County Commissioners

December 6, 2011

ORANGE COUNTYENTERPRISE ZONES

Proposed Property Tax Exemption

ELIGIBLE BUSINESSES (Cont’d)

ORANGE COUNTYBROWNFIELD AREAS

Proposed Property Tax Exemption

ELIGIBLE BUSINESSES (Cont’d)