TARPON SPRINGS — The city wants to help slam the door on a tax loophole that enables developers to set up nonprofit organizations in order to pay very low property taxes on projects they build.
Tarpon Springs and other city governments stand to lose millions of dollars in revenue if developers take advantage of a new tax break in state law intended for nonprofit organizations — such as Habitat for Humanity — that build low-income housing, city Budget Advisory Committee Chairman Marty Peters told city commissioners Tuesday.
Some developers who have obtained the tax break are wealthy and are not building low-income housing.
Peters asked that city staffers make it a top priority to lobby Tallahassee legislators to change the law.
"This could have a devastating impact on local governments," Peters said. "If one development in Tarpon was to set up this front, we'd lose $200,000 in one year."
Peters learned of the 2011 law after a Tampa Bay Times investigation showed that a handful of builders skirted as much as $215,000 per year in taxes by forming their own nonprofit organizations.
If the practice catches on, Peters said, it will challenge city governments' already stretched budgets for municipal services.
"We have a number of eligible developments, and if all of them convert to this tax loophole, it's going to be a big problem," Peters said. "It's awfully tempting and it is within the law."
It's not clear whether any developers of Tarpon projects are poised to take advantage of the loophole, but Peters said he wants to eliminate the opportunity.
Commissioners agreed the issue needs to be addressed, noting the Florida League of Cities is already lobbying on the issue. The Legislature convened Tuesday to kick off its 60-day session, and two bills to close the loophole are in motion.
The budget committee also asked the city to review its permitting process for businesses. Candidates for the soon-to-be-vacant City Commission Seat 4 have campaigned for months that more businesses will come to Tarpon Springs if the permitting process is less cumbersome.
Commissioners supported a review of the current practices, but emphasized they don't want to roll back too much on regulations.
"We don't want to harm the controls that we have to make sure things are done right," said Commissioner Jeff Larsen. "But we would like to see if there's any way to streamline it."
In other news, commissioners approved a $153,000 plan for a new fence at Cycadia Cemetery. The fence will have a decorative look and provide tighter security to discourage vandalism, said Paul Smith, director of public works.
KMG Fence, a company from Winter Garden outside of Orlando, will build the 6-foot-tall wrought iron-style picket fence for the cemetery's perimeter. Ten bidders offered lower-than-expected prices for the project, leaving extra money for decorative columns of colored concrete block. The city will also install its own acorn-style lamps along the newly reconstructed Keystone Road, Smith said.
The cemetery entrance will close after dark to discourage intruders. Over several decades, vandals have stolen metal vases, bronze plaques and a 75-pound sphere memorializing the cemetery's founder, Smith said.
About nine months ago, someone jumped the cemetery's 2-foot-tall perimeter wall and broke the granite on two cross headstones, he said.
Commissioners praised Smith for the plan and gave a unanimous green light.
"This is a great project, not only from a security perspective, but I also think it will enhance the beauty of the cemetery," said Mayor David Archie.
As the meeting came to an end, and without much fuss, commissioners approved a 180-day moratorium on applications to build kiosks until staff and commissioners agree on a city policy for the free-standing structures.
The move comes after the commission rejected a controversial proposal from George and Beverley Billiris to build six Mediterranean-style mini-stores at the Sponge Docks.
Opponents of the project argued the city should not allow kiosks until officials agree on a policy that could apply to everyone. Without a formal code, they said, any business owner could erect a free-standing structure, no matter how unattractive or unsafe.
Brittany Alana Davis can be reached at [email protected] or (850) 323-0353. To write a letter to the editor, go to tampabay.com/letters.