Public Infrastructure Fee is not a tax (Florida)

New, privately imposed public infrastructure fees benefit property owners of commercial community associations, such as shopping and entertainment centers

By Deborah Goonan, Independent American Communities

As the holiday shopping season swings into full gear, Florida shoppers should take note of extra fees tacked onto each purchase they make.

Commercial developers in Florida’s Volusia and Duval Counties are charging additional point-of-sale fees in order to raise millions of dollars in additional revenue. Developers and property owners justify the fees as repayment of their investments in large commercial common interest developments.

Commercial common interest developments are the business equivalent of residential community associations or HOAs.

In commercially zoned planned communities, business owners share the cost of developing and maintaining common property.

Shoppers retail store
(Pixabay.com free image)

How much will consumers pay?

Fees of 0.5 to 1 percent of each sale are cropping up at several of Florida’s newest mixed use commercial centers, which feature a variety of dining, shopping, lodging, and entertainment venues.

  • Durbin Park shopping center businesses, located 20 miles north of St. Augustine in St. Johns, is tacking on a “public infrastructure fee” of 0.5 percent.  The funds are funneled to DP1 Community Development District, a private-public tax district established to finance and maintain the new commercial common interest development.
  • Shops, entertainment venues, and restaurants at One Daytona charge customers 1 percent of the purchase price, before sales taxes. One Daytona’s owners are calling it an “enhanced amenity fee,” used to pay for the Center’s attractive promenade, WiFi  access, and live entertainment.
  • Nearby, Daytona Beach Tanger Outlets adds a 0.65 percent “public user” fee, presumably for common property maintenance.
  • Since 2010, The Pavillion at Port Orange, an outdoor shopping center a few miles south of Daytona Beach, has been collecting a “public infrastructure fee” of 1 percent on all sales. The funds have helped SWI CDD, established to build The Pavillion, to repay its bond debt.
Woman-confused-confusion-I don’t know-shrug
(Pixabay.com free image)

The fee that is not a tax

Although customers may think they are paying an additional local sales tax, a Florida judge has ruled that these privately imposed fees are not taxes.

How does that work, you may ask.

You see, the point of sale fees are not imposed by cities or counties. Likewise they are not imposed by Community Development Districts (CDDs).

Since a government isn’t imposing the fees, they are not taxes.

In short, allowing private owners to impose self-serving fees on top of each purchase is a sneaky way to avoid “government action.” Thus, the fees are “not a tax.”

That’s the twisted logic, anyway.

Never mind the fact that private fees collected by merchants are often funneled back to quasi-governmental districts to help repay bonds or offset operation expenses.

So public infrastructure, enhanced amenity fees, or whatever they may be called, are imposed by private, corporate owners and collected at the point of sale by business tenants, as authorized by property deed deeds.

And, get this. Private corporations can continue to collect these fees for 100 years, presumably long after development bonds are repaid by CDDs. Or, I suppose, consumer fees could be used to fund the sale of bonds for future redevelopment.

Assuming customers are willing to pay them.

 

Related:
Tampa CDD condo owners left paying debts of convicted developer

 

Retail store cosmetics
(Pixabay.com free image)

Consumers pay extra for public-private partnerships

It’s bad enough that private corporations are charging fees for investor-funded development.

But two commercial developments were partially funded by local taxpayers.

To get One Daytona and Tanger Outlets built, the City of Daytona Beach and Volusia County contributed $40 million in grants and tax incentives. That’s a lot of taxpayer money handed over to private developers and business investors.

Yet despite the huge public investment in both commercial developments, not one penny of these not-a-tax fees goes back to local governments.

Can you believe it?

In their defense, the City and County say that future tax collections from businesses and commercial landowners will repay their $40 million outlay.

At least in theory.

What if the commercial ventures doen’t thrive as expected? What if a commercial project fails miserably?

Since when did government take on the role of venture capitalist?

Small business retail shop store
(Pixabay.com free image)

Government action vs. inaction

So, now I hope it’s clear to readers that there was no government action to impose fees on sale of merchandise and services in the above-referenced Florida business centers.

So, what we have here, dear readers, is a classic case of government inaction.

It’s a case of local government simply looking the other way and allowing wealthy corporate CEOs to exploit taxpaying consumers, little by little. Why? So that corporate investors and stockholders can reap the benefit of millions of dollars in additional revenue each year.

How unfair to small businesses and legacy shopping centers. Those business owners don’t get the tax incentives, grants, and fancy new infrastructure of large-scale commercial development.

I assume that the City of Daytona Beach, and Volusia and Duval Counties have not stopped to consider how much tax revenue will be lost when existing businesses shut their doors, their owners and employees facing future unemployment or underemployment.

And what about all of the commercial property vacancies that will soon follow? Think it will be easy to collect property and sales taxes from empty storefronts and abandoned restaurants, especially when resale property values plummet?

This is the typical outcome when government picks winners and losers.

 

For more details on this alarming new “privately imposed fee” trend, here’s some essential reading.

Customers pick up tab for Durbin Park infrastructure fees

By Stuart Korfhage
Posted Nov 24, 2018 at 6:28 PM
Updated Nov 24, 2018 at 6:28 PM

Shoppers at the recently opened Durbin Park shopping center might notice that they’re paying a little extra for their purchases.

That’s because the stores there are adding an extra 0.5 percent as part of its Community Development District responsibilities. Some shoppers were confused at first because their receipts seemed to show extra sales tax.

And that’s understandable since the rate has changed in recent years here and in Duval County. The sales tax rate is 6.5 percent here and 7 percent in Duval.

However, St. Johns County administration has been quick to point out the extra 0.5 percent isn’t a tax that goes back to the county but a fee that only applies to Durbin Park and goes to infrastructure for that development.

The Commission did not grant a specific right to charge customers at businesses in the development of the CDD fee. However county officials pointed out that, by state statute, the “DP1 CDD has the sole authority to impose a Public Infrastructure Fee (PIF) within the district and may do so completely independent of authorization by the Board of County Commissioners.”

According to the county staff, Durbin Park is the only commercial development to pass the CDD costs directly to retail customers.

Read more:

www.staugustine.com/news/20181124/customers-pick-up-tab-for-durbin-park-infrastructure-fee

Customers pay the price as private fees pop up at 3 Volusia shopping complexes

By Seth Robbins

Posted Mar 31, 2018 at 12:47 PM
Updated Apr 1, 2018 at 10:51 PM

Diners and shoppers at One Daytona pass small white placards stuck on glass doorways or placed near registers that alert them to a 1 percent charge on all purchases.

Most probably don’t even notice the signs — or the nominal amount tacked onto their bills.

The new shopping and entertainment complex across from Daytona International Speedway is one of only a handful in the state — but the third in Volusia County — to tack on such fees, which can reap millions of dollars for their owners over a span of some 100 years. Experts say it could be a growing trend.

But critics see the extra fees at One Daytona and the Daytona Beach Tanger Outlets as a cash grab and a way to shift risk away from influential and wealthy developers, who were also given millions in tax breaks and subsidies. They say the fees are just another advantage not afforded to local business owners — which are unable to demand that their customers provide a virtually unlimited revenue stream for property maintenance or entertainment.

There’s nothing in the law that prohibits the extra fees — any property owner can impose one, said Mark Watts, a Cobb Cole attorney who has represented the developers at all the local complexes. And the fees are not a tax, though a local circuit court judge had to rule that was so in one case.

The fees are “privately imposed,” Watts said. “You can’t have a tax if there is no government action.”

Read more:
www.news-journalonline.com/news/20180331/customers-pay-price-as-private-fees-pop-up-at-3-volusia-shopping-complexes

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