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Front Page » Business & Finance » Businesses fight annexations, tax hits

Businesses fight annexations, tax hits

Written by on September 18, 2013

Business owners in a proposed annexation area say they don’t want to become part of Opa-locka as the city moves to expand its boundaries.

They’re circulating a petition addressed to Miami-Dade Mayor Carlos Gimenez and members of the county commission hoping to persuade them to reject the city’s annexation bid when it comes before them for a vote this year.

Their protest is the latest development in annexation debates around the county, including one in the county commission this month, where several commissioners expressed concerns that annexations might lead cities to select the biggest taxpayers, leaving lower-value properties behind for future municipalities.

“It’s economics,” said Ed Lopez, president of Antilles Freight Corp., who adds that his $45,000 tax bill would more than triple if his business fell within Opa-locka’s new proposed boundaries instead of remaining in unincorporated Miami-Dade.

“They’re coming after us because we’re a cash cow. We’re all good businesses and they want our revenue. It just doesn’t make any sense. It doesn’t pass the smell test,” he said. “Why would we want to pay more money, which we have to pass on to our customers, and we’re not getting anything out of it?”

But David Chiverton, Opa-locka’s public information officer, said the city has offered a gradual tax increase and is willing to work with the businesses for an easy transition. Many have not responded to the city’s offers, he said, even though officials wanted to “sit down and work out a solution.”

“We are moving forward with the annexation,” Mr. Chiverton said Monday. “It is their right to express their concerns. We’ve discussed a willingness to sit down and speak with them.”

Antilles Freight Corp. is one of 188 companies, according to the official count, doing business in Area B, a region between Northwest 107th and 127th streets and Northwest 27th and 37th avenues.

That region is now part of unincorporated Miami-Dade, where the estimated tax rate for 2013 is 1.9 mils, or $1.90 tax per $1,000 assessed valuation. If it were to become part of the city, taxes would increase nearly five-fold, as Opa-locka’s rate would be 9.3 mils – $9.30 per $1,000 – according to information from the office of the county’s property appraiser.

The businesses in Area B would generate $2.63 million a year in property tax revenue for the city, according to annexation documents. The city in turn would spend $395,000 on public works and utilities in that region, $231,000 for police and $95,000 on code enforcement. This would leave the city a net budget gain of $1.9 million yearly for Area B.

Area B is one of two sites the city wants to add to its boundaries. Leaders are also considering a site known as Area A, also to the south of the city. The two annexation areas would add about 822 acres of industrial and commercial land, increase the city’s tax base, add jobs and improve services to businesses there, city staff said last week.

Area A would generate $164,292 in property tax revenue – minus $70,000 for public works and utilities; $26,000 for police and $22,500 on code enforcement – leaving the city a net budget gain of $45,792.

The city already provides water to the proposed annexation area, making it a logical region for boundary expansion, Mr. Chiverton said.

The move would also lead to improved police response time and upgraded water and sewer services in the area, he said.

“It’s just progress. That’s what it is,” he said.

Officials also hope is to ease the city’s 18% to 21% unemployment rate by adding these “new” businesses into the city, Howard Brown Jr., Opa-locka’s community development director, said during a Sept. 9 interview.

“Most of our businesses procure employees locally,” he said.

And by extending its boundary to include hundreds of businesses, Opa-locka is also positioning itself to qualify for federal support to develop its industrial zone as part of its long-term strategy, said Mr. Chiverton, assistant city manager.

“We’re looking at the opportunities,” he said.

But businesses in Area B are painting a different picture.

“The only reason they are there is because it’s a low-cost alternative in Dade County,” Peter D. Crovo, vice president of Prologis, a major landowner with about 2 million square feet in Area B. “There are a lot of unintended consequences that will come, which I don’t think Opa-locka has considered.”

One consequence: relocation of businesses from the annexation area to cities with lower tax rates.

Mr. Lopez is already considering that option for Antilles Freight Corp., which employs 19 and has operated from the same location since 1997, when Mr. Lopez bought a building at the Gratigny Industrial Park.

Located at 11206 NW 36th Ave., the property is about 25 feet from neighboring Hialeah, where the tax rate is 6.3 mils.

“That’s a lot better than Opa-locka,” Mr. Lopez said.

Twenty-nine property owners and tenants of Gratigny Industrial Park had signed the petition opposing annexation by press time. They’re satisfied with the public services they’re getting, they wrote, and would “be unduly burdened” by the area’s annexation to a city with “one of the highest millage rates in Miami-Dade County.”

They say they plan to make their case in person to county commissioners, but there’s already been some talk recently in county hall about annexation.

In a Sept. 4 meeting discussing potential incorporations in the south county district of Dennis Moss, some commissioners had concerns about “cherry-picking” during annexations.

Commissioner Jean Monestime, for instance, didn’t support stripping away industrial and commercial bases in now-unincorporated areas.

As the county works with several municipal advisory committees, or MACs, to study incorporating new cities, future municipalities would suffer if current cities deprived them of their potential tax base, he said.

If communities are going to incorporate they need to be able to include “high-value properties that will create a tax base to make these communities or potential cities viable,” Commissioner Moss said.

Problems arise if these high-value properties are “picked off in the meantime,” he said, which is why his District 9 is considering potential incorporation.

“If communities are to have a chance to be viable, they have to be sure they have areas included within their boundaries that allow them a chance of being viable,” Mr. Moss said. “If that doesn’t happen and incorporation should move forward, we’re going to wind up with areas that are not going to be viable and can’t incorporate. And those are areas that the county is going to have responsibility for and not have the resources to provide the level of services that residents in this community expect and desire.”

Commissioner Barbara Johnson also commented during the Sept. 4 meeting.

“My long-time opposition to incorporation without a plan first by this commission [was] because of the cherry-picking that has gone on prior with other municipalities, and even cherry-picking through the annexation process,” she said. “Communities have been able to pick off and choose which areas of unincorporated Dade they would like to have … leaving the remainder that’s most difficult and challenging to Miami-Dade County.”

But that’s not the case in Opa-locka, where even though the first stage included commercial acquisitions, the long-term plan is to leverage business and improve the quality of life for residents, Mr. Chiverton said.

“Our interest in annexation,” he said, “is on a full scale.”