Cape Coral voters casting a ballot in the Nov. 8 General Election will decide whether the Cape Coral City Council should the given the authority to approve property tax exemptions to new and existing businesses that invest in the city and create jobs and meet criteria established by state statute.

The total exemption amount would be capped at $2 million annually and would be limited to firms that also pass through a city vetting process.

Voter approval is required and the exemption would sunset in 10 years unless voters agree to extend that authority via a renewal referendum.

The city of Cape Coral agreed to participate in a Q&A as part of an effort by The Breeze to help inform Cape voters.

The general questions submitted to the city were culled from Q&As posted to various county and city websites where the exemption, also a provision in the Florida State Constitution, has been proposed, approved or renewed by voters

The more specific questions were developed by The Breeze.

The answers were provided by the city of Cape Coral:

Q – What is the ballot language:

A – City of Cape Coral Referendum

Providing City Council with the Authority to Grant Economic Development Ad Valorem Exemptions

Shall the City Council of the City of Cape Coral be authorized to grant, pursuant to Section 3, Article VII of the State Constitution, property tax exemptions to new businesses and expansions of existing businesses that are expected to create new, full‐time jobs in the City?

Yes – For authority to grant exemptions

No – Against authority to grant exemptions

Q – What is the city’s Summary Explanation:

A – Summary Explanation:

What is it? The Ad Valorem Tax Exemption is an economic development incentive tool made available to cities through the Florida Constitution that must be approved by the city’s voters. When casting their vote on the November 8, 2022 ballot, Cape Coral voters will be asked whether or not to approve the Economic Development Ad Valorem Tax Exemption. This exemption is designed to encourage new commercial development and expansion of existing businesses within Cape Coral, which will create new job opportunities for the community.

What does it do? It grants tax exemptions to developers of specific projects, which will facilitate the growth and creation of business enterprises in Cape Coral. The City of Cape Coral is seeking opportunities to become more business-friendly. By providing economic incentives with the purpose of creating employment and investment, the City can expand economic activity, create a more positive image and stabilize the city’s tax base. The program authorizes the City to grant qualifying businesses a limited property tax exemption for up to 10 years.

What’s next? To qualify, an applicant business must:

Create at least 10 new full-time jobs

• Provide an annual average wage for new full-time jobs of at least 100 percent of the Average Annual Private Sector Wage or Capital Investment exceeding $10,000,000 for a period of 5 years

• Submit an annual renewal statement and annual report for each year the exemption is granted

• The maximum amount of property tax revenue the City may forego any fiscal year using the exemption is $2 million. Also, the Economic Development Tax Incentive Exemption program will sunset after 10 years.

Q – Is this tax abatement program used in other counties or cities in Florida?

A – It is a common program used in other Florida counties and cities and is authorized by Florida Statute Chapter 196 Section 1995 of the Florida Statutes. Communities offering this incentive include but are not limited to St. Lucie County, City of Coral Springs, the City of Sarasota, City of St. Petersburg, Polk County

Q – What economic development of business incentive programs does the city currently have available?

A – City Council approved the Cape Competes Economic and Business Development Program in December 2021. Programs include a

1) Job Growth Incentives program offering funding per new job created in targeted industries

2) the CreativeCape Arts Incentive Program offering funding for businesses that are primarily music, dance, theatre, and cultural arts

3) Cape Collaborates — a Small Business Program offering forgivable loans

4) a Building Infrastructure Grant assisting developers with site development costs

5) the Enhanced Value Recapture Grant assisting large scale private development by providing a portion of taxes directly generated from the project.

Q – What are some of the successes of the incentive programs that the city currently has available?

A – The program has generated a great deal of interest in the business community and prospects for bringing much needed commercial space on line. Recent data indicates that the City of Cape Coral has vacancy rates of nearly 2% in retail and office and 1% in industrial.

Q – How much incentive money has been awarded through CapeCompetes and to what entities, if any?

A- A Letter of Intent was extended to the Pine Island Park Project for a grant amount not to exceed $160,000

Q – Why does the city want to add this incentive program?

A – Programs are designed to attract and retain companies with the goal of tax base diversification and job creation.

Q – Is this similar to the Tax Increment Financing incentive limited to the South Cape CRA?

A- They are different programs. Tax Increment Financing is a tool that uses the increased property taxes generated by new development to finance costs related to the project. The referendum is proposing a tool offering limited exemption from payment of municipal ad valorem taxes (property taxes).

Q – Would commercial businesses qualify? What types?

A – Projects are assessed under three tiers:

I. Tier One: 100% of Average Annual Private Sector Wage

10+ manufacturing jobs or $10 million+ capital investment

25+ jobs

50+ office jobs if new business / $5 million+ capital investment

Duration: 5 years

II. Tier Two: 115% of Average Annual Private Sector Wage

25+ manufacturing jobs or $20 million+ capital investment

50+ jobs

50+ office jobs if new business / $10 million+ capital investment

Duration: 7 years

III. Tier Three: 125% of Average Annual Private Sector Wage

75+ manufacturing jobs

75+ jobs

75+ office jobs if new business

Duration: 10 years

Q – What annual average wage would businesses need to pay to qualify?

A – Lee County Average annual wage published by the U.S. Census Bureau – $34,818.

Q – Would the program create more competition for existing businesses?

A – The program expands and diversifies the tax base.

Q – Could existing businesses take advantage of this program?

A – Yes, existing businesses that are expanding and meet criteria will also qualify.

Q – What taxes would be eligible for exemption and what taxes would participating businesses still have to pay?

A – Following a company’s investment in real estate improvements and capital investment, the exemption applies to a limited portion of the new property taxes generated from the increased assessed value.

Q – How would the application and approval process work?

A –

I. Eligible person(s), firms, partnerships or corporation file written application with City Manager.

II. City Manager has 10 days to review and notify applicant of the success or deficiencies in the application.

III. When complete, the application is delivered to Property Appraiser for review. Property Appraiser will determine:

• Total ad valorem tax revenue available to City for current fiscal year

• Amount of revenue lost to City for current fiscal year due to previous exemptions granted

n Estimate of amount of revenue lost to City if current exemption request is approved

IV. City Council reviews application to determine if it meets Exemption Criteria and approves exemption by ordinance.

Q – What are the projected costs?

A – The estimated aggregate annual amount of ad valorem tax revenues the City may forego using the exemption is $2 million each fiscal year.

Q – What happens if a business that has been granted an ad valorem tax exemption fails to comply with the job creation requirements of the Economic Development Ad Valorem Tax Exemption Program?

A – The municipality has authority to revoke the exemption.

Q – Why give big for-profit companies a tax break?

A – Exemptions are not limited to big for-profit companies however offering the tax break allows Cape Coral to remain competitive with other municipalities that offer the incentive.