Brent Batten: The business of saving homeowners money


Maybe you’re retired and aren’t concerned about the long-term vibrancy of the Collier County economy.

Maybe the status quo is working OK for you so you see no need to try to attract diverse businesses to the area.

Or maybe you don’t want a bunch of high-tech firms with their computer technicians and their iPhones and their loud rock-and-roll music.

There’s still a reason to get behind the effort to revitalize the economy _ it could save you money.

In his proposed strategic plan for economic development in Collier County, consultant Jim McGraw, cites as a threat to the local economy an “ad valorem tax imbalance.”

What that means is basically this: Compared to other places, Collier County’s property tax base is too heavily residential.

According to figures from the Collier County Property Appraiser, The market value of residential properties in the county, including single family homes, condominiums, apartments and other categories, is $58.1 billion. The combined value of commercial and industrial properties is $4.25 billion. That’s a ratio of almost 14 to 1 in favor of residential.

Lee County’s ratio is about 6 to 1. In Hillsborough County it’s about 2 to 1.

That’s a problem, because when it comes to government services, residential properties are net liabilities while commercial properties are net contributors.

A 2007 study by the American Farmland Institute showed that for every dollar of property tax assessed on residential property, governments spend $1.19 providing services.

For every dollar raised through taxes on commercial and industrial uses, the government spends just 29 cents, the study indicates.

Citing similar cost studies the AFT report authors wrote, “They generally show that residential development is a net fiscal loss for communities and recommend commercial and industrial development as a strategy to balance local budgets.”

And, “On average, because residential land uses do not cover their costs, they must be subsidized by other community land uses. Converting agricultural land to residential land use should not be seen as a way to balance local budgets.”

The imbalance works against Collier County in a couple of ways, McGraw says. The lack of a broad commercial tax base to offset some of the costs puts a bigger per-capita tax burden on residents. That it turn, tends to discourage businesses seeking to locate here, since it equates to a higher cost of living than might be found elsewhere. “Businesses subsidize residential taxpayers,” McGraw said.

A recent report by Florida TaxWatch found that Collier County residents pay the second-highest amount of property taxes per person in the state, at more than $2,300 each. Only Monroe County, at $2,800 a person ranked higher.

Lee County residents pay about $1,600 each and in Hillsborough, they pay a little over $300.

Businesses that add to the tax base and either hire locals already living here and paying taxes or have their transferring employees move into existing homes that are already on the tax rolls will lower the per person property tax bill.

A good example of how adjusting the property tax imbalance can benefit residents’ bottom line is the recent approval of a shopping center in Golden Gate Estates. While controversial because of its location in what was billed as a rural, residential area, the shopping center will add tax dollars to county coffers while at the same time reducing the demand for roads, a major expense for any government, said Nick Casalanguida, director of the county’s community development division. “Commercial definitely helps,” he said.

McGraw’s report proposes a dedicated funding source to provide financial incentives to attract businesses. He says a referendum should be held to seek voter approval of the funding source, which could take the form of a property tax.

Prior to the referendum it will be necessary to educate voters about the importance of bringing business to Collier County.

Part of that education will be the premise that spending a little to draw business in could save a lot down the road.

Connect with Brent Batten at

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