Creating a Municipal Services Taxing Unit (MSTU) to fund beach renourishment

Submitted by Suanne Z. Thamm
Reporter – News Analyst
October 8, 2015 8:34 p.m.

 

Camille Tharpe presents MSTU overview to FBCC.
Camille Tharpe presents MSTU overview to FBCC.

During the October 6, 2015 Regular Meeting of the Fernandina Beach City Commission (FBCC), Camille P. Tharpe, Senior Vice President of Government Services Group, Inc., provided an overview of MSTUs in general and identified specific data being used to finalize creation of such a public funding mechanism to pay for renourishment of Amelia Island beaches. Tharpe’s firm has been retained by Nassau County to provide consulting services for this project.  This matter was discussed by both the county and city commissions during their Joint Local Planning Agency meeting held on August 27, 2015 (see previous article).  There were no objections raised by commissioners.

Tharpe explained that many counties use MSTUs to pay for services in their unincorporated areas. This funding mechanism, a levy of ad valorem taxes, is authorized in Section 125.01 Florida Statutes. It does not require a referendum, and it may impose up to 10 additional mills for municipal services and facilities. However, creation of a new MSTU depresses the millage available for general fund and dependent special districts.

MSTU mapThe MSTU proposed to fund beach renourishment includes all property on Amelia Island except that area at the southern end of the island already paying for beach renourishment and maintenance under the South Amelia Island Shore Stabilization Agency (SAISSA). Under the plan as proposed, an island property currently valued at $198,000 would pay $24.20 toward this effort.

MSTU rates

It was stressed during the presentation that this tax would not necessarily be collected every year, but only when a beach restoration project was needed. Money collected may not be diverted to any other purpose or rolled into any other fund. At this time, Nassau County is not imposing the tax, but merely setting up the mechanism which would allow it to do so.

In response to a commission question on when the city needs to begin work on its side of this initiative, City Attorney Tammi Bach responded that Nassau County must first write its ordinance, which it has not yet done.

Should the county and the city wish to impose this tax next year, both local governments must have enabling ordinances in place by January 1, 2016. The tentative millage rate would not be set until the regular budget cycle during the summer of 2016.

MSTU prop

MSTU city

MSTU timetable

For presentation and discussion of Municipal Service Tax Units at the Nassau County Board of Commissioners Meeting, click here.

Suanne Thamm 4Editor’s Note: Suanne Z. Thamm is a native of Chautauqua County, NY, who moved to Fernandina Beach from Alexandria,VA, in 1994. As a long time city resident and city watcher, she provides interesting insight into the many issues that impact our city. We are grateful for Suanne’s many contributions to the Fernandina Observer.

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Vince Cavallo
Vince Cavallo(@grandvin)
8 years ago

Why is it those not on the beach are being forced to pay this assessment at the same rate as those who most benefit i.e. located on the beach or whose businesses attract customers?

Those who cite the notion that living near the beach is financially beneficial fail to note that property values of those who live near the beach are already appraised higher than similar houses off the island; so by extension their real estate tax assessments already reflect this value enhancement. The companion argument those in the unincorporated areas do not support City activities is fallacious: they already pay a 25% surcharge for water and sewer services (to help defray the costs for the ill conceived purchase of the utility company.)

Has anyone considered what the potential long term impact of this “fund” could be? Anyone taken a look at the situation in Villano Beach where shoreline properties are getting set to tumble into the sea and are not marketable? Will this fund become the source for major beach reconstruction against a worldwide ocean rise? “Time and tide wait for no one” but apparently we plan to now alter that axiom by taxation.

To me this looks like an open ended program designed to force those who derive little benefit, especially those in the unincorporated areas of the Island, to partly fund. In addition, it also looks to me as opening the door to much higher taxes than those shown as additional “beach related” costs become added.

John Goshco
John Goshco (@guest_44759)
8 years ago
Reply to  Vince Cavallo

Well stated, Vince.

Dave Lott
Dave Lott(@dave-l)
8 years ago

Vince,
Understand your points although I wasn’t sure if your first sentence was meant to be rhetorical or not. Oceanfront and oceanview properties do have a higher assessment as you noted, so the MSTU rate applied to that higher assessment value will result in those properties paying a higher amount than those more inland and presumably at a lower assessment.
As to the 25% surcharge for non-City residents for water/sewer services, I don’t have the numbers but believe that group is a small number compared to the overall base of non-City property owners since water/sewer service to most of the area outside the City limits is provided by Amelia Utilities (JEA). The 25% surcharge is applied across the board to other City services such as P&R fees and is intended to recover some of the overhead expenses incurred by the City through the infrastructure support of the Utilities Department (i.e. HR, legal, finance, etc.).
The best solution for City residents would have been for the County to pay their share of the split cost as they originally agreed to do. Even then, City residents were still being double-taxed since they were paying the City share and then also contributing to the county’s share. At least all county taxpayers were sharing in the cost, not just those on the Island.
The key for City residents is to make sure that the City’s share normally included in the general budget is removed which theoretically should lower the millage rate Of course, it might be easy for some commissioners to keep that in there and simply reallocated it for another capital project.
The ones getting the free ride are the non-Island, day visitors who simply come over and use the beaches and make little contribution to the economy of the City

Vince Cavallo
Vince Cavallo(@grandvin)
8 years ago

Dave,

It was not rhetorical and should have been stated as ocean view as you note.

I agree with you this proposed tax should be more widely funded than just by Island residents albeit the thrust of my argument centered on those who directly benefit should only be the ones paying as there is little distinction between the use benefit derived by someone who lives mid island and drives to the beach verses someone who lives off island and drives to the same facility.

IMO this proposed MSTU is a done deal. The county in any discussion involving financial implications between the island and the rest of the county will vote where the greater voting numbers are especially when the onus for spending is pushed off the general fund accounts.

Again, my chief concern is there has been little discussion of keeping this program tightly within the bounds of a beach re-nurishment. My fear is once the funding source is in place, it will be expanded to cover a number of beach related activities. For example during recent meetings about the MSTU one commissioner wanted to know if storm drainage could be covered. Another wanted to know if the walk overs are included. It is not far fetched for someone or group to request improvement remedies on the taxpayers dime for their real property loses sustained by severe beach erosion. Frankly, I don’t wish to be on the hook for that or for the costs of defending litigation.

Dave, on the water and sewer surcharges you are correct they only affect a relatively few individuals. It is also correct to note just because it affected only a few does not make it the right. They were extant customers of a utility whose rates were determined just by the PUC at the time the utility was purchased. Had the users asked to be connected to the now city owned utility, I might agree the imposition of a surcharge would have been ethically correct. Unfortunately the surcharge was to partly fund the ridicules price paid for the utility so the city used an authority based on a liberal interpretation of the statutes.

Dave Lott
Dave Lott(@dave-l)
8 years ago

Vince,
I guess we will just have to agree to disagree on the utility surcharge. As I said, all non-City residents are charged a 25% surcharge in fee whether for utility service or admission to one of the City swimming pools. I believe the surcharge also extends to the football/baseball youth teams since the County has done very little in funding athletic fields. Again, in my opinion, a legitimate surcharge to avoid City taxpayers from totally subsidizing non-City residents from using the City’s resources.

Betsie Huben
Betsie Huben(@betsie-huben)
8 years ago

This is a complex consideration on the part of both the county and the city. I spoke to the issue when the presentation was made at the County/City meeting. For starters, as a Realtor, I can tell you property advertised by folks like me is frequently published as being near the beautiful beaches of Amelia and it is a selling point for sure. All one needs to do is open the Islander magazine and read the ads. To say that Yulee property vale does not benefit from the beaches is hardly accurate and yet, despite a significant lack of detail about the dual rational nexus test, that is what the county folks (attorney, manager, etc.) would have you believe. As residential development continues along the A1A/200 corridor you can count on the fact that in time, so too will Callahan property. My other point to the county was that our county beach area is regularly being left in a very bad state a la Scott Road beach access on 4th of July, etc. I think that it is hard to re-nourish something that is a debris ridden mess. I am not alone in stating that I think that creating a MSTU to be collected annually (perhaps at a somewhat lower yet sustainable rate to reflect that) with an eye toward creating a maintenance program for all the beaches (akin to what the city does now) is a lasting reminder of how important the beaches are to our county. Finally, I would love it if the SSSA, the city and the state could combine efforts (do we really need 3 sets of approaches to these matters?) such that there was one authority with one set of rules (have you seen the new sign about no dogs on the north end?) for our one beach so that all who visit, residents and visitors alike, see we are so serious about the health and well being of our beaches we managed to work together on a plan. A girl can dream….