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Miami plans to seek state OK to offer tax breaks to condo developers
By Paola Iuspa
City of Miami officials plan to ask state legislators next spring to permit tax breaks for condominium developers in an effort to lure residents to the central business district.
Miami commissioners next week will discuss tax abatements for commercial rental properties in neighborhoods along the Miami River and in the downtown area.
If passed, developers of rental projects could be eligible for exemptions of up to 100% of assessed value of any improvements or expansion to a business. The exemptions would only apply to the city portion of the developer's property taxes and be valid for up to 10 years.
A state statute prohibits applying such incentives to for-sale units, said Dena Bianchino, an assistant city manager.
Mayor Manny Diaz said he plans to go to Tallahassee to lobby in person for legislation that could allow such breaks on for-sale properties. He said his administration is committed to making it easier for developers to build condos where home ownership is almost inexistent.
There is now only one project planned for the district that will add condo units for middle-income households. The 90-unit Flagler First Condominium, 101 E Flagler St., will result from the conversion of an old office building into condos. Those renovations started a few months ago and could be complete by late next year.
Many developers shun investing in the business district because comparable properties don't exist to help them determine demand and how much buyers would be willing to pay to live there, said Jason McArthur, director of Wood Partners, which builds multi-family projects. His company's main office is in Atlanta but he is based in Boca Raton.
Mr. McArthur said his firm is interested in developing Miami's the central business district but right now "it is too risky."
He said Miami-Dade and city governments do provide grants to promote development, but the funds have so many strings attached that it often makes no economic sense to use them. He said granting tax breaks could make a difference.
"They should give incentives, including per-unit subsidies, to the first 1,000 units in the area," he said. "After that, they could cut back in incentives."
Rafael Kapustin, one of the developers of First Flagler and a downtown landowner, said the area needs three basic incentives: tax abatements on for-sale units, reimbursement of building-permit and impact fees, and fast-tracking of the application and review process.
"These," he said, "are the ingredients to build a vibrant downtown."