NAPLES — Taxes are going up in downtown Naples after the city’s leaders on Wednesday took the final steps to approve the Fifth Avenue South Business Improvement District.
While not everyone is happy about it, all eyes will be on the newest mechanism to bring customers back to the city’s prized shopping district.
The plan allows property owners to tax themselves and create a nonprofit organization that will direct those dollars to efforts that promote the district.
“Any time there is change there are issues involved with it,” Councilman John Sorey said, adding that the plan’s proponents still had work to do in convincing Fifth Avenue property owners and merchants of the district’s value. “This is a reasonable risk and reward scenario. I think it is worth the risk and we need to move forward.”
The district is expected to raise $300,000 in the first year and $800,000 every year thereafter. The first assessments will be done this month.
A nonprofit board of seven property owners and merchants will decide how the money is spent.
The program, which will assess taxes based on property values, will sunset in 10 years with the opportunity for one 10-year renewal.
The idea took root two years ago after some business and property owners began looking for ways to compete with large shopping centers, such as the Mercato.
Malls tend to have larger budgets with marketing programs directed to the entire property rather than business owners fending for themselves as is the case on Fifth Avenue South.
Business improvement districts have seen success around the country, with some 400 districts in place and most of them being renewed after their initial phase ended.
But not everyone was convinced.
Councilwoman Teresa Heitmann cast the lone dissenting vote in the 6-1 outcome.
Though she said she agreed that a business improvement district was the best option for Fifth Avenue South, she was concerned with discrepancies in fairness. Heitmann also said she felt rushed into something that should have allowed more time for people to buy into the plans.
“There’s a large group of concerned citizens that said they haven’t been involved in the process,” she said. “(We) haven’t done our due diligence, and that disappoints me that we would vote on that.”
Several shop owners and landlords opposed to the plan have e-mailed council and spoke at Wednesday’s public hearing.
Many were concerned with the timing of imposing a tax on the heels of a recession.
“It makes no sense to try to get blood out of a turnip or kick a man while he’s down,” said Val Prince, manager of Grace’s Paces of Naples, which owns land on Fifth Avenue South.
The tax will be made to property owners but some merchants have been told that the cost will be passed down to them in the form of higher maintenance fees.
“By creating more cost to us, you’re going to lose businesses,” said Gary Bogan, owner of Royalty and Hollywood Jewelry. “We make up Fifth Avenue. Without us you don’t have Fifth Avenue.”
While some spoke out against the plan, many others praised the efforts of the steering committee that worked to finalize the form the district would take.
Beth Ressler, owner of the Wind in the Willows boutique, said she understood the hesitations and frustrations of those like Bogan.
She said two years ago, when the district was first proposed, 17 businesses closed shop on Fifth Avenue South and the last thing she wanted was another bill.
But her opinion has changed.
“I’m going to be paying about $700 a year,” she said of the district’s assessment. “I pay more than that every month to have my windows changed. For $58 a month this is a bargain.”
Though the city has some control over the life of the district, such as with annual reviews of the district’s progress and the ability to extend the program for a second 10-year term, council members praised the effort for having started with those who the tax will affect — the property owners and tenants.
“This has been a citizen initiative from the beginning,” said Councilman Sam Saad. “I can not think of something that has been more fully vetted.”
Saad said even though the vetting process happened in a “compressed time frame” he felt comfortable that the majority of people knew what was going on. He also said no decision would make 100 percent of the people happy.
“This is the best thing we have going to keep it No. 1, or in the top 5, but I believe its No. 1,” Saad said.
Councilman Doug Finlay said the business improvement district is a test case for what will likely lead to other districts forming in the city.
“This is a model for us,” he said. “I think they’re going to work really hard to make this successful.”