Fernandina City Officials’ Tax, Borrow & Spend Approach

Fernandina Beach has earned another distinction that places it within the top five percent of the cities in Florida. Of all the cities in the state, only five percent (or one out of 20) raised its property tax rate this year and also borrowed a significant amount of money. This is a dubious distinction.

EDITOR’S NOTE: Contributing columnist, Steve Nicklas, expresses his views and insights on various topics in Marketplace column.

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Fernandina Beach has earned another distinction that places it within the top five percent of the cities in Florida.

City Hall Fernandina Beach Florida
City Hall Fernandina Beach Florida, Ash Street

Of all the cities in the state, only five percent (or one out of 20) raised its property tax rate this year and also borrowed a significant amount of money. This is according to the Florida League of Cities, which tracks this sort of thing.

This is a dubious distinction. Maybe Fernandina Beach officials know something that other city officials don’t, or maybe not. Either way, local officials are following a tax-and-spend, borrow-and-spend approach.

As a justification, some local commissioners have cited the internal investment of $80 million that the Omni Amelia Island Plantation will make into its property. This is indeed an investment (new hotel rooms, a new ballroom, etc.) because it will provide an anticipated return — by creating additional revenues streams.

Fernandina Beach commissioners raised the property tax rate because it will generate about the same amount of revenues as prior years (as property values have fallen). While families and businesses are cutting back and doing more with less, city officials felt entitled to hold the line.

In addition, new projects costing more than $5 million and as much as $15 million in borrowed money will produce virtually no tax revenues (these are a revitalized post office building, a new library, a new waterfront park, opening Alachua Street, and improving the crossings at Front Street).

This is a major difference between what the Omni is doing and what city officials are planning. And, by the way, the city is borrowing its money through taxes and levies on the public; the Omni is using private funds.

Meanwhile, city officials point out that borrowing costs are low right now, and that they are seizing this opportunity to borrow. This is like a family receiving a credit card offer in the mail to borrow $100,000 at a very low rate. A responsible family throws this offer in the trash, not because the rate is unattractive — but because you have to pay the money back, with interest.

Government officials on the national level on down to the local level are not grasping this concept right now. Borrowing money feels good at the time, but not during the 30 years it takes to pay it back.

Omni Amelia Island Plantation is investing internally into projects that will improve the resort — and generate additional revenues. (Read Amelia Island Living’s article, “Grand Plans: Re-Imagination of Amelia Island Plantation.”)  The Ritz-Carlton, Amelia Island has expanded its conference rooms to accommodate larger meetings and the likes. It also helps drive revenues.

In other cities, St. Augustine added a community theater that attracts major musical acts and fosters tax-generating activities. Here, the Yulee International Trade Plex and the Ritz-Carlton both are additions that have substantially improved our quality of life and our tax base. It can be done again here, even with public funds — but the city plan is just not the answer.

A major civic and political leader on the west side of Nassau County says he can’t wait to get his News-Leader each week. He likes to keep up with what Fernandina Beach city officials are doing. And laugh.

“Fernandina Beach is the laughing stock of the county,” he says, referring to the recent decisions and antics by city officials. Unfortunately, this kind of entertainment doesn’t generate any additional revenues for the city.

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