Are changes to CRA limits in the charter really needed? An opinion

Submitted by David Lott

I would like to offer a different perspective to Mike Zaffaroni’s recent opinion piece (click here) advocating approval of the referendum item that will permit an open-ended increase of the City’s Community Redevelopment Area from the current limitation of 2% of assessed real property value as well as removing the current restriction of having no more than two CRAs.  I certainly support the general concept of the CRA and agree with all the positive attributes of a CRA that Mike detailed.  However, as the City has seen with its existing CRA, the mere creation of a CRA is not a magic bullet to solve the development problems of that particular area.  Among the success stories cited in Mike’s article was Church Street Station in the Downtown Orlando CRA.  The CRA certainly helped in the initial resurgence of this area in downtown Orlando as a dining and entertainment hotspot.  But as Disney and Universal Studios created their own nighttime entertainment districts, the Church Street district lost a lot of its appeal and has declined substantially even with the completion of the adjacent, new arena for the Orlando Magic NBA team and other structures financed with CRA bonds.  A successful CRA has to have a short- and long-term development plan as well as include a high level of interest by property owners to improve their existing properties or develop vacant properties.

But before we make a change to the Charter I think we need to address the question as to whether such a change is really necessary?  Do the limitations that currently exist impose restrictions from forming CRAs that really need to be created for the betterment of the City?  I don’t believe they do and for that reason don’t believe the referendum warrants approval.  My reasoning is outlined below.

Based on the 2013-14 City budget information, the total assessed real property value in the City is approximately $1.3 billion.  The 2% restriction would calculate to a CRA cap of about $26.5 million dollars in real property value.  The current waterfront CRA real property value is only about $11.7 million, so we are only at 40% of the capacity.  Doesn’t the existing 2% cap still provide a sufficient level of unused capacity to launch any other needed CRAs with an additional existing capacity of approximately $14.8 million?  One must remember that the incremental tax revenue must be spent in the CRA area so creating a large area covered by one or more CRAs will take revenues away from the rest of the City’s general operating budget resulting in additional taxation or expense reductions that could translate into service reductions.

As to the limitation in the Charter currently of allowing only two CRAs, are there more than two non-contiguous areas that would even be candidates for CRA status?  Over the years, the only other area I have mentioned is along the 8th Street corridor.  Where else?  Certainly there are pockets of residential areas in the Southside and north of Atlantic that need attention, but is a CRA the most effective way of dealing with those isolated properties?  I think alternatives such as the City’s current effort with its CDBG Rehabilitation grants program is a faster and more effective solution.

There is a specific set of criteria that must be met for an area to be eligible for CRA status.  In essence, an area containing housing must be deemed to be a “slum or blighted area”; whereas a commercial tourist area must be “deteriorating and economically distressed due to outdated building density patterns, inadequate transportation and parking facilities, faulty lot layout or inadequate street layout.” One only needs to look at a map of the property parcels included in the current CRA to see how the boundary lines had to be drawn to exclude properties that did not meet that criteria.

Initial efforts to expand the boundaries to include some residential areas to the north and south were met with extreme resistance by homeowners who didn’t want their properties to be classified as “slums” or “blighted” for obvious reasons.  There were also strong concerns the residential areas were being included only to serve as the CRA’s “cash cow” since there was little development underway along the waterfront and all the project money would be spent to improve the infrastructure supporting the waterfront properties and not for needed sidewalks, lighting and stormwater in their neighborhoods that had been ignored for decades.

The creation of a CRA is, as it should be, a deliberate process.  The eligibility of an area to be a CRA involves an evaluation by an objective, third-party firm with costs for the evaluation ranging from $50,000 to $100,000+ depending on the size of the area and number of structures in the area that must be evaluated.  Once completed, there must be public hearings conducted and then the City Commission must take action to create the CRA and determine who will be responsible for the governance of the CRA.  The current CRA is administered by the City Commissioners sitting as the Community Development Agency and advised by an Advisory Board chaired by Mr. Zaffaroni.

So I close asking each reader to research and study the pros and cons of the proposed changes to the CRA and answer the ultimate question: Are these changes really necessary and should they be open-ended?  And then vote accordingly.

Editor’s Note: David Lott has been a management consultant specializing in consumer banking and payment systems for 30+ years. A resident of the City for almost 11 years, Dave has served on numerous City advisory committees. David served as Interim City Manager and was appointed to the City’s Audit Committee. He now resides and works in Atlanta.

October 21, 2013 8:15 a.m.