CLEARWATER - The Clearwater City Council heard a rosy projection of future tax revenues that will be generated by downtown redevelopment projects last week.
Downtown Clearwater has been established as a Community Redevelopment Area (CRA); incremental taxes generated within the CRA do not go into the City's General Fund, but are retained for reinvestment in the area's public infrastructure in the form of Tax Increment Financing (TIF).
Needing an estimate of those future tax revenues to determine what projects could be funded, the City commissioned an analysis by Swan Development Advisors. Bruce Lyon, Swan's principal, presented his analysis at last week's Council work session meeting.
Lyon described the difficulty of projecting future taxes, claiming that developer's estimates of construction costs are "notoriously inaccurate." Future selling prices are also difficult to project, he said. "It becomes a very vague process in talking with a developer about how much is their project," Lyon claimed.
Lyon's tax increment projections were produced by a spreadsheet that he authored, and consider both estimated construction costs and future selling prices of downtown redevelopment projects. "We wanted to give you two different methods to try to estimate project value," Lyon said. Because of the uncertainty of future development projects and their values, the spreadsheet has been provided to the City so that staff can revise its inputs to produce more accurate projections in the future.
From a 2005 actual Downtown annual tax increment of $1.36 million, Lyons projected 2008 TIF revenues of $1.5 million, 2010 at $5.1 million, 2015 at $5.7 million and 2019 at $6.2 million. Clearwater's Downtown CRA is scheduled to expire after 2019, when the annual tax increment will go into the general funds of the City and Pinellas County.
Although the increasing values of existing Downtown properties contribute to the projected increases in tax increment, it is the impact of new development that will produce the largest gains. Lyons identified several of those projects with their estimated annual tax increment in his report; they include:
Some of the tax increment has already been spoken for. The Acqua project, for example, has asked for $9 million of its tax increment to finance the construction of the 360 public parking spaces that will be part of its mixed-use development. The Downtown TIF has also been eyed as a source of funds for the future redevelopment of Coachman Park.