Adviser: Now a Bad Time For CRA

LAKE ALFRED | Forget about it, at least for the next few years.

That's the crux of the advice that Pat Steed delivered to the Lake Alfred City Commission regarding forming a new Community Redevelopment Agency.

"This would be a very bad time to implement a CRA," Steed, executive director of the Central Florida Regional Planning Council in Bartow, told the commission last week. "You should establish one when property values are rising."

The local real estate market won't likely hit bottom until 2012, according to the council's economic advisers, she added. Annual property value growth after that will be sluggish, probably 1 percent to 3 percent.

CRAs are vehicles for cities and counties to spur economic development. It allows the local government to designate part of the community as a redevelopment area for up to 40 years.

Once the CRA begins, it can collect tax revenue from the increased value of all property within the designated area. If total property value within a CRA area were $100 million in the base year, for example, and it increased to $105 million the following year, the agency would get the property tax revenue from the $5 million increase.

That includes the tax revenue both the city and the county would have collected against that $5 million. Whatever money the CRA collects can be used within the designated area for economic development projects, thus spurring property-value increases in future years.

So if Steed's forecast proves accurate and the Lake Alfred Commission were to start a CRA this year, it would collect no revenue for the next two years of property value declines and in following years until values rise above the 2010 level.

Commissioners took the sobering news to heart and decided to delay going forward with a Lake Alfred CRA until a real estate upturn. The commission had contracted with the Regional Planning Council in 2007 to do the studies and other groundwork required under state law to establish a CRA.

The heads of other Polk County CRAs agreed with Steed's advice.

"It would definitely be detrimental to start a CRA now," said Dale Smith, acting city manager in Winter Haven who oversees the city's two 11-year-old CRAs. "Timing is everything."

Winter Haven's Downtown CRA has had to pare back its redevelopment activities after seeing its budget shrink from $2.2 million in 2007-08 to $1.7 million this year, Smith said. He agreed with Steed's forecast that local property values will decline through 2012.

The Bartow CRA, also centered around the downtown, has seen its budget shrink by 12 percent and 7 percent during the past two years, said Executive Director Jim Duane. Its current budget is $1.15 million.

The local CRA was not affected as much as others in Polk because government is a major economic engine in Bartow, Duane said. That includes not only the county government but Polk County schools and the regional office of the Florida Department of Transportation.

Although government land does not pay property taxes, the government agencies attract residents and private businesses that contract with them. The Bartow CRA has benefited from continued growth in the latter, Duane said.

"Our (property value) loss was primarily residential," he said. "We would have seen an even worse loss if there was a commercial downturn."

The extent of losses among Polk CRAs depends on how big they are and the mix of residential and commercial properties within its area, Steed said.

CRAs with large residential areas have seen the biggest revenue losses so far, she said, but many economists forecast a downturn in commercial real estate during the next couple years. That's because commercial downturns generally lag behind residential downturns.

"What we're seeing throughout Florida is more and more businesses going empty, more and more store fronts shuttering," Steed said.

[ Kevin Bouffard can be reached at kevin.bouffard@theledger.com or at 863-422-6800. ]