By DOTTY NIST
After a lively debate, a proposal to implement a five-year, 100-percent ad valorem tax exemption for Empire Truck Sales, a business locating at the Mossy Head Industrial Park, failed to carry.
The decision came at a 4 p.m. Jan. 27 Walton County Board of County Commissioners (BCC) public hearing on the proposal at the Walton County Courthouse. All commissioners were present with the exception of District 1 Commissioner Bill Chapman.
In the 2012 General Election, voters had approved a referendum establishing authority for the BCC to grant ad valorem tax exemptions for economic development. The approval provided for the county commission to furnish, based on Florida Statutes, ad valorem tax exemptions to new businesses and businesses which are expanding, at the BCC’s discretion.
Following an exemption request by Empire Truck Sales and a request for a renewal of a previously-approved exemption for Professional Products, in November 2014 the BCC had approved a set of criteria for review and evaluation of applications for economic development ad valorem tax exemptions. Utilized in connection with the criteria were the amount of capital investment to take place and wages associated with new jobs to be provided.
At the Dec. 9, 2014 BCC meeting, Walton County Administrator Larry Jones had reported that, based upon the evaluation formula approved by the BCC, Empire Truck Sales would qualify for a 100-percent tax exemption for up to a 10-year period, with annual reviews of the exemption to take place. The reviews would be to determine whether the business was complying with the investment and job creation that had been part of the terms of approval for the exemption.
The BCC had voted 4-1 at that time in favor of the exemption, subject to official language to implement the measure, with attached conditions for the exemption to be discontinued if a catastrophic event or events such as a hurricane should occur and impact tax revenue.
A proposed ordinance setting forth the tax exemption was presented to the BCC at the Jan. 27 meeting. The ordinance stated that the contract for the exemption would “contain language that requires review and amendment or repeal of the exemption if Walton County’s ad valorem tax base decreases by 10-percent from one tax year to the next.”
District 2 Commissioner Cecilia Jones was first to speak, initially asking for “some time to think” about the proposal. She described what was being considered as “opening a door” because rather than being used as a means to attract a business, the exemption would be implemented for a business already coming to the county.
“If we open the door, at what point do we stop?” Jones asked. She could foresee many tax exemption applications, including applications from existing local businesses.
District 5 Commissioner Cindy Meadows also commented that she was not in favor of approving a 100-percent tax exemption for Empire. She did not say that she would not consider an exemption of a lesser percent.
District 4 Commissioner Sara Comander countered that Empire would be constructing a $4 million building for their dealership and would be buying supplies locally. They would also be creating jobs for people who would live here, she added.
According to information provided at the hearing, the company expects to create up to 10 new jobs at start up and 28 additional jobs within its first eight years of operation.
Comander also looked at the exemption as a way of sending the message, “Walton County is business friendly.”
Meadows responded that there is no guarantee where supplies for the building will be bought or whether company employees will live in the county, as they could live in nearby Niceville, for example.
Walton County Commission Chairman Bill Imfeld reminded the other commissioners that as a board they had previously supported telling companies that the BCC would consider abatement of their taxes if the businesses met the set of criteria established by the county. He was concerned about the message that not following through with the exemption would convey.
Meadows commented the BCC’s decision on the exemption would also send a message to the tax-paying public.
Comander motioned for approval of the ordinance, and Imfeld seconded.
Coming forward to comment, south Walton County resident Bill Fletcher brought up recent studies challenging the economic development effectiveness of tax exemptions and enterprise zones, areas in which Florida businesses receive state sales tax refunds and job tax credits. The Mossy Head Industrial Park is among the enterprise zones in Walton County.
Fletcher made the case that businesses make the decision to come into an area based on location and whether they believe they will be successful there. He argued that Walton County does not need to entice businesses to the industrial park with tax exemptions. Neither, he said does the county need to “give” Empire $17,000, the annual amount they would pay in ad valorem taxes to the county, in order for the business to be successful. If a tax exemption is provided for one business, why not all? he questioned.
“I think you have a jewel there that will continue to grow,” Fletcher said of the Mossy Head Industrial Park.
Meadows asked if Empire had closed on their property at the industrial park. The response was that they had.
Imfeld pointed out that results of rural enterprise zones have been reported as better than ones in urban areas. He added that the county’s consideration of a tax exemption for a business interested in locating in Freeport has been “key” to wooing that business. The name of the business was not identified in the discussion.
Cecilia Jones responded that the difference with the Empire Truck Sales situation is that “this one is retroactive, I believe.” With the business interested in locating in Freeport, she said, the business “may not come in unless we roll the red carpet out.”
Imfeld said his point had been that the commissioners should not “take a broad brush” approach to tax exemptions.
Comander commented that the BCC had promised to create jobs. “We’re trying to do it,” she said.
Meadows said she would look at applications for tax exemptions on a “case by case basis.” She noted that she had not said that she would not vote for other exemption proposals.
“These incentives do not work,” Fletcher reiterated.
South Walton County resident Bob Hudson pointed out that the county had received quite a good return on investment in connection with the 10 acres sold to Empire Truck Sales. He calculated the return on investment at $140,000, considering that the land had been obtained by the county at an approximate cost of $600 per acres. Hudson pointed out that the property up to now had not collected “a dime” of property taxes as it sat vacant.
Since the industrial park has begun to be aggressively marketed, $7 million in investment in the property has occurred at no cost to taxpayers, among other benefits, Hudson continued. “I don’t want us to stop,” he said.
In response to a question, Walton County Attorney Mark Davis stated that Empire had applied for the tax exemption in August 2014 and had closed on their property at the industrial park on Oct. 1, 2014.
With discussion concluded, a vote was taken, with Comander and Imfeld voting in favor and Jones and Meadows voting no. This resulted in failure of the motion and denial of the exemption ordinance.
