The Taxman Cometh

The Taxman Cometh

The Taxman Cometh The Taxman (Written by George Harrison, performed by the Beatles) Let me tell you how it will be There’s one for you, nineteen for me ‘Cause I’m the taxman, yeah, I’m the taxman The other shoe dropped on the residents of St Lucie County. After seeing that Port St Lucie City Hall was not burned down to the ground on the news of an 18% tax hike the County figured it was okay to announce their own tax increase. Tax BurdenThe County has been dipping into reserves for the past few years to cover the budget deficit. Those from the County will tell that they’ve been cutting government to the bone. To the bone I tell you. That’s probably why they purchased a 4 acre plot of land in Tradition from Digital Domain Land Holdings for $590,000 dollars so the Tax Collector can have a new office. (Digital Domain, the gift that keeps on taking.) The County didn’t purchase a building. The County spent over half a million dollars to purchase 4 acres of empty, flat, undeveloped, prime real estate. They’ll have to spend considerable more to build the Tax Collector a new building. That’s after renovating the offices that the Tax Collector occupies at the county office building, where it belongs. More prime real estate purchased by the government, taken off the tax rolls. Only to have the same government complain that they’re not getting enough taxes. Should five per cent appear too small Be thankful I don’t take it all ‘Cause I’m the taxman, yeah I’m the taxman Highlights in the budget. County Administration personnel costs will increase 37%. To be fair most of that increase was an inter departmental transfer of a job. The old position was $102,000, the new position is $154,000. CUTTING TO THE BONE !!! Good news! The County’s $10 million contract with Torrey Pines ends in fiscal year 2016. So this coming budget will include the last payment to Torrey Pines. A contract is usually when two parties agree on a trade of value for like value. Usually it’s money for goods or services. I wonder what the County is getting in return for the money part of the contract. I also wonder if that check will come back RETURN TO SENDER, NO FORWARDING ADDRESS. $5.7 million to libraries. I know I will be hated here but I have to say it. When was the last time you researched by flipping through a card catalogue? Sat at a library table with a dozen books open in front of you? Unless you’re in med school or law school (they have private libraries) the answer could be decades, if you’re young enough the answer might be never. Technology has made the library obsolete. There, I said it, let the hate rain down. There will always be a place for hard copy books. The original library system was a philanthropic endeavor. There is no reason it cannot be returned, like a library book, overdue. But don’t people have a right to free books? What about people who cannot afford the internet, or a kindle, or an Amazon account? To that I say – don’t people have a right to free guitars? What about people who cannot afford a Gibson, or a Strat, or a Guitar Center credit card? Never confuse Wants and Needs. That’s the prime problem with government. Everything is a dire Need. When in reality they are mostly Wants. We NEED to purchase environmental lands. Why? Between the federal, state, county and local governments, they own over 35% of the state of Florida. We NEED a public transportation system. Why? I’ve seen the buses. I’ve seen no one riding the busses. It would probably be less expensive to give those who have no other means of transportation vouchers for private cab service. If you drive a car, I’ll tax the street If you try to sit, I’ll tax your seat If you get too cold I’ll tax the heat If you take a walk, I’ll tax your feet We’re also told that we need to raise taxes for the sheriff’s office. Interesting because the sheriff’s office has its own line item on your tax bill. Almost as much as the entire county. Yet still nothing compares to the School District with 3 line items on my tax bill, one line says Capital Improvement another line says Required Local Effort. Those are two words I never thought I’d see in a sentence about the St Lucie County School District; improvement and effort. The School District still hasn’t weighed in on how many pounds of flesh they’ll need. Fighting parents who oppose Common Core; fighting charter schools; fighting meaningful reform; all costs money. Don’t ask me what I want it for If you don’t want to pay some more ‘Cause I’m the taxman, yeah, I’m the taxman Ask one of the three who voted for the tax increase, Kim Johnson; Paula Lewis; and Chris Dzadovsky; and they’ll tell you that it’s only $35 or $45 per family. Just the cost of a few pizzas. So on the nights when you’re not eating your pizza think about Chris Craft in his new Tax Collector building and think about the three commissioners who would prefer you not eat your pizza. Now my advice for those who die Declare the pennies on your eyes ‘Cause I’m the taxman, yeah, I’m the taxman The taxman is not done. He’s never satisfied. There’s always more. Expect a sales tax increase as well. A tax that is truly regressive. Meaning those at the top of the economic ladder don’t feel the pinch but the single mom trying to make ends meet with 3 part time jobs at the bottom of the ladder, she feels it like a ton of bricks. Looking at the personnel budget line item of every department at the County and then dividing it by full time employees I have to believe that few who work for the County will feel the pinch. Why are they making 3 and 4 times the median per capita income for the county? Are we still to believe the cuts have been to the bone? And you’re working for no one but me Taxman!              

Port St Lucie City Center Problem

Lilly Zhong’s SAD Situation

  In our last installment we told you how the County stands to make 18% interest. Not on actual money, but on an accounting entry. You can read it here. Today we’ll dig deeper in to what’s going on. The sale or transfer of the land surrounding the Civic Center, also known as City Center, to Lilly Zhong happened behind closed doors. Almost in the dead of night, as one might say. The City of Port St Lucie was unaware that it happened. At least that’s what they claim. Taxes were owed on the numerous parcels of land that make up City Center, and under normal circumstances those taxes would have had to be paid for clear title to pass. Many questions remain with few answers. Yet for most residents of Port St Lucie there is only one important question. When will it be developed? The answer might be never. It’s a SAD situation. Not emotionally but financially. In November 2006 the City of Port St Lucie issued $25 Million in bonds to pay for the City Center project infrastructure. It was to be an area of bustling business, non-stop conventions, the jewel of the Treasure Coast.   The bond’s principal and interest to be paid off through special taxes levied on the owners of the land surrounding the Civic Center, the area known as City Center. These special taxes are levied to anyone owning property in that designated area or Special Assessment District (SAD).    [By the way, in 2008 before the paint was dry on that bond the City refinanced it. Not to lower the interest rate but to take out more cash. Now the City Center debt is $31 Million and the interest rate went up about 2%. This increases the interest that will be paid over the life of the bonds from $12.8 million to $34.4 million an increase of 268% per the estimated debt schedules provided in each bond document.] The problem is the City has made the property too expensive to develop and every year it will get worse. While the ad-valorum tax will fluctuate with the property value, the SAD will not. Back in 2006 the City never dreamed that property values would fall. The City never considered that the bubble would burst. The City never considered that developers desire to profit from their work. Values fell, the bubble burst and the truth is developers like to turn a profit. The current $13 million tax liability will continue to increase at over $3 million per year on the 21 acres owned by Lilly Zhong. Most of the $3 million yearly taxes comes from the SAD charges. Here is a link to one of the parcels. (US Investment, LLC is Lilly Zhong’s company.) The assessed value of the property is $210,000. The ad-valorum tax is $5,151 the non-ad-valorum tax is $587. Total tax is $5738 but the SAD on this parcel is $42,700. The SAD is 740% higher than the tax on the property, and the total due for one year is over $48,400. Is it any wonder the property remains undeveloped? The City of Port St Lucie will not issue any permits for construction until the back taxes are paid. Then of course there will be the usual impact fees and other fees charged to build. Then you get to the cost of the actual project and the cost to make improvements to land you don’t even own but the City wants improved. With each tax year the unpaid tax amount will increase and the likelihood of development will decrease. It’s too expensive to make lemonade out of this lemon as the cost gets more expensive with each passing year. At least for now you can enjoy parking in what might just be the most expensive parking lot in the state if not the nation. I know, you were hoping for a happy ending. Me too, but this is not the end. There’s more to the story. So sign up – up there in the right hand corner so you don’t miss the next exciting episode.

Mrs. O’Leary’s Cow

Mrs. O’Leary’s Cow

October 11, 1871 (reporter from the Chicago Sun) Mrs. O’Leary, any comments about the fire for the press? Mrs. O’Leary – “I think leaving a lit lantern in my barn, next to my cow, was a great idea, and I’d do it all over again.” I doubt this interview ever happened after the Chicago fire of 1871

Would Mrs. O'Leary think leaving a lit lantern in the barn was a sound decision.

Would Mrs. O’Leary think leaving a lit lantern in the barn was a sound decision.

but if it did it was replayed at the Port St. Lucie budget retreat by city manager Jeff Bremer. The budget retreat is where the individual city departments report to the city council and tell them why they need more tax dollars. Or at least why they shouldn’t be on the budgetary chopping block. In Bremer’s report to the city council about our $12 million deficit he gave a quick rundown of what we know, and his view of things. Bremer said that the decisions made in the 2000’s were “sound”. Bremer was alluding to the 100% financing of Digital Domain, VGTI and Torrey Pines. One business with no history of ever being profitable, and two others that exist only on government handouts. “The idea of diversifying our economy was supported by the state, county, the public and the newspapers,” said Bremer in defense of the city’s misguided foray into venture capital. Yet, it is only the city left holding the bag. Everyone will support spending money, as long as it isn’t theirs. Bremer pointed to sequestration as the reason for the downturn in Torrey Pines and VGTI. As if to say our inability to control our debt is a direct correlation to the federal government’s inability to control theirs. Bremer spoke about the recession as if the word had not existed prior to 2008. He talked about lessons to be learned from the housing market. Which lesson? The one where house prices fall? Which time was that? Was it 2008? Or the 1890’s, the 1900’s, 1920’s, 1940’s, 1950’s, 1960’s, 1980’s or 1990’s? Housing prices rise and fall all the time. Here’s a 100 year chart by Yale economist Robert Schiller of the Case-Schiller housing indices. It’s not a straight line. The only lesson learned is that government on all levels refuses to believe that they are bound by the laws of economics, that they believe that they have the power to avoid cycles, and they need only to spend more money to make things better. Nothing against Mr. Bremer. He was left to muck out the barn and he’s spinning the muck as best he can. That’s his job. His job is also to spend your money so he talked about increasing revenue. Which is code for raising taxes. IMHO the best way to increase revenue is to stop decreasing it and prioritize spending. For instance put an end to the non-stop purchasing of land. The purchase and annexation of McCarty Ranch (over $10 million) comes to mind. So does the purchase of the Liberty Medical building. The city purchase of the defunct Liberty Medical building does many things. It takes the property off the tax rolls, about $200,000 between the county, city, school board and all the other taxing entities. It also increases spending, not only the cost of the building ($4.4 million) but the blank check that exists in renovating it for the city’s use. Once again, nothing against Mr. Bremer. He’s an addict. He is addicted to spending other peoples’ money, and like most addicts he’ll be fine after just one more hit. Like most addicts they will tell you in a most convincing voice this will be his last high, then he’ll quit altogether. This time the hit is a 15% tax increase on the residents of Port St Lucie to pay for what Bremer calls “sound decisions” and decisions he’d make all over again. (In Bremer’s defense he didn’t make those decisions in the first place.) Mr. Bremer is part of government and therefore is solid in the belief that more government is the answer to everything. Bremer also showed surprise at the recent downgrade in the city’s credit rating. Ratings are based the size of your debt compared to your income, which correlates to your ability to pay off your debt. Also considered is your willingness to pay off your debt. Port St Lucie does not pay off its debt. It refinances it, not all of it, but too much of it. This downgrade is due to the failure of all those “sound decisions” Bremer spoke about. I’m surprised at Bremer’s cavalier attitude towards our tax dollars and the future of the city. Here’s a list of what Bremer called sound investments in our economy just in case you forgot. Digital Domain, VGTI and mortgaging the City Hall Complex for Torrey Pines combined tallies the initial borrowing at $149 million. If you want to add in the interest to maturity you come up with a figure of $267.5 million to build 3 buildings. Let that sink in for a moment because we recently sold one of those buildings for $13 million. I chose not to include the money borrowed to build the Civic Center and City Center because I don’t want your heads to explode. Running a city is not an easy task. But not acknowledging the fact that sometimes those in government are wrong makes it more difficult. It makes it impossible to learn from mistakes, if only because you refuse to see mistakes for what they are. Just tag the taxpayer with the bill, shrug it off as “legacy”, and move on to the next disaster. That’s exactly what will happen unless the citizens wake up. It will happen unless taxpayers fill the city chambers and demand accountability. Wait, I’m wrong. If you don’t fill the chamber you won’t see Bremer’s proposed 15% tax increase . It will be 18% that was approved by the council, with a single dissenting vote by Mayor Greg Oravec. I want to give kudos to Mayor Greg Oravec. He was the lone dissenting vote on the purchase of the Liberty Medical building. He was also able to quiet Councilwoman Shannon Martin down without having to use a Taser on her. Martin is a member of the ‘better government through ever increasing government club’. Martin was ranting on and on about how the city needed more full time employees to keep up with mowing absentee owner lots. The city has become the landscaper of last resort. Oravec was able to calmly talk her in off the ledge and suggested that it would be better if the city just prioritize which lots must be taken care of first. Well done Mr. Mayor.

Port St Lucie City Center Problem

Lilly Zhong’s SAD Situation

  In our last installment we told you how the County stands to make 18% interest. Not on actual money, but on an accounting entry. You can read it here. Today we’ll dig deeper in to what’s going on. The sale or transfer of the land surrounding the Civic Center, also known as City Center, to Lilly Zhong happened behind closed doors. Almost in the dead of night, as one might say. The City of Port St Lucie was unaware that it happened. At least that’s what they claim. Taxes were owed on the numerous parcels of land that make up City Center, and under normal circumstances those taxes would have had to be paid for clear title to pass. Many questions remain with few answers. Yet for most residents of Port St Lucie there is only one important question. When will it be developed? The answer might be never. It’s a SAD situation. Not emotionally but financially. In November 2006 the City of Port St Lucie issued $25 Million in bonds to pay for the City Center project infrastructure. It was to be an area of bustling business, non-stop conventions, the jewel of the Treasure Coast.   The bond’s principal and interest to be paid off through special taxes levied on the owners of the land surrounding the Civic Center, the area known as City Center. These special taxes are levied to anyone owning property in that designated area or Special Assessment District (SAD).    [By the way, in 2008 before the paint was dry on that bond the City refinanced it. Not to lower the interest rate but to take out more cash. Now the City Center debt is $31 Million and the interest rate went up about 2%. This increases the interest that will be paid over the life of the bonds from $12.8 million to $34.4 million an increase of 268% per the estimated debt schedules provided in each bond document.] The problem is the City has made the property too expensive to develop and every year it will get worse. While the ad-valorum tax will fluctuate with the property value, the SAD will not. Back in 2006 the City never dreamed that property values would fall. The City never considered that the bubble would burst. The City never considered that developers desire to profit from their work. Values fell, the bubble burst and the truth is developers like to turn a profit. The current $13 million tax liability will continue to increase at over $3 million per year on the 21 acres owned by Lilly Zhong. Most of the $3 million yearly taxes comes from the SAD charges. Here is a link to one of the parcels. (US Investment, LLC is Lilly Zhong’s company.) The assessed value of the property is $210,000. The ad-valorum tax is $5,151 the non-ad-valorum tax is $587. Total tax is $5738 but the SAD on this parcel is $42,700. The SAD is 740% higher than the tax on the property, and the total due for one year is over $48,400. Is it any wonder the property remains undeveloped? The City of Port St Lucie will not issue any permits for construction until the back taxes are paid. Then of course there will be the usual impact fees and other fees charged to build. Then you get to the cost of the actual project and the cost to make improvements to land you don’t even own but the City wants improved. With each tax year the unpaid tax amount will increase and the likelihood of development will decrease. It’s too expensive to make lemonade out of this lemon as the cost gets more expensive with each passing year. At least for now you can enjoy parking in what might just be the most expensive parking lot in the state if not the nation. I know, you were hoping for a happy ending. Me too, but this is not the end. There’s more to the story. So sign up – up there in the right hand corner so you don’t miss the next exciting episode.