‘Tax Limbo’
Low Tax Rate Still a Benefit of Incorporation
By Bari Auerbach

Ever since Sunny Isles Beach incorporated in 1997, residents have appreciated one of the lowest property tax rates in Miami-Dade County – and now, based on the positive findings of a recent audit, the tax rate may get even lower – giving everyone even more reason to celebrate the city’s 8th anniversary.

Jerry Chiocca of City Auditors Rachlin, Cohen & Holtz presented the Audit Report for fiscal year 2003-2004 at the May 12 City Commission meeting. “I have good news,” Chiocca said. “The City of Sunny Isles Beach is in excellent financial shape.

Following a unanimous vote by the Commission to approve the Audit Report, Mayor Norman Edelcup noted, “The city’s fiscal health as we’ve seen is extremely good and we have an over $8 million surplus for a ‘rainy day,’ hurricane or any other catastrophes that could befall the city. [Speaking] with City Manager [Christopher Russo], I asked him to look at this year’s budget to see of it’s feasible that we may be able to give some tax relief to citizens in the coming year given the fact that we are in very strong shape.

“There is a lot of new construction coming up…I know a lot of people have been burdened because of high [property] appraisals - and now there may be an opportunity to do some tax relief. We won’t know this until September, but the Commission will be working diligently with staff to see if this is at all possible.”

Taking new construction into consideration, the percentage increase in total assessed Sunny Isles Beach property values from fiscal year 2004-05 to 2005-06 would be the percentage of a proposed one-time tax rate decrease.

Tracking millage rates
Although Sunny Isles Beach property values have escalated dramatically over the past eight years - millage rates have remained among the lowest in Miami-Dade County – and even better, citizens continue to enjoy the highest quality of life thanks to ongoing initiatives to upgrade municipal services and implement sweeping capital improvements.

Fiscal Year 1997-1998: $2.683 per $1,000 of assessed property value
In 1997, Sunny Isles Beach became a newly incorporated city and residents were looking forward to receiving higher levels of service above and beyond what was previously provided by Miami-Dade County.

FY 1998-1999: $2.399; FY 1999-2000: $2.303
In '98, the city dropped the millage rate to $2.399 per $1,000 of assessed property value; and then again to $2.303 in '99. This was a decrease of over 15 percent from the days of Miami-Dade County's $2.683 millage rate - however the reduction happened at a time when the city was not yet funding or providing the level of services residents are enjoying today.

FY 2000-2001: $2.500
At this time, there was an accompanying increase in costs associated with providing new services and the 2000-2001 budget was the first time they were being fully funded. Therefore, the city's budget called for a millage rate adjustment from $2.303 to $2.50 per $1,000 of assessed property value.

FY 2001-2002: $2.650
"After giving taxpayers a break for several years, we had more services and steadily brought the millage rate back up," Russo explained. This means the average Sunny Isles Beach property owner (with a $25,000 homestead exemption) paid about $34 more in taxes to the city - but rising property values also played a role in the increase. According to the Miami-Dade County property appraiser's office, an average Sunny Isles Beach home [during this time] was assessed at $122,000 - $8,000 more than the previous year's assessed value of $114,000.

FY 2003-2004: $3.35
The Sunny Isles Beach City Commission approved the fiscal year 2003-2004 budget with no increase in taxes thanks in part to escalating assessed property values topping $2.5 billion at the time. While different points of view about issues such as view corridors and other zoning regulations continued to be debated at City Commission meetings, census data showed [single family] home values rose 100 percent in Sunny Isles Beach – the greatest increase in Miami-Dade and Broward within the previous decade.

FY 2004-2005: $3.35
During a budget workshop held at City Hall on August 10, 2004, Russo announced the tax rate for the 2004-05 fiscal year would yet again be one of the lowest in Miami-Dade County - $3.35 per $1,000 of assessed property value.

While Russo said the Sunny Isles Beach tax rate would remain “in the lowest 25 or 30 percentile of [Miami-Dade County]” – the city was still at the height of growth and development evidenced by an impressive rise in property values.

In 2003, the average assessed value of Sunny Isles Beach property was $174,213 – and in 2004, it rose by about 18 percent to $205,916. Due to increased property values, homeowners ultimately wound up paying slightly more in property taxes to the city – but the dividends continued to be a plethora of expanded services and the continuation of major capital improvement/beautification projects.

‘Extraordinary growth’
"In the first couple of years after incorporating, the city reduced the millage rate because
revenue was coming in while they were still gearing up to deliver all the services residents said they wanted most," Russo explained. "The single biggest undertaking was establishing the Police Department...an over $5 million expenditure. Combine that with all the costs of land purchases for parks, capital improvements, beautification projects and establishing a shuttle system and it added up to quite a bit of money.

"As promises started to come to fruition and more services began to come on-line,
city officials were still committed to keeping the tax rate below what it was in 1997 for as long as possible. So in fiscal year 2000-2001, the millage rate went to 2.50 and for the 2001-2002 fiscal year it went to 2.65 - just below what it was when the city first incorporated.

"As Sunny Isles Beach entered its fifth year of existence as a city, the millage rate was still below what it was when the city was first formed. The Mayor and City Commissioners did more than just keep a promise to not raise the tax rate - they actually gave a 'rebate' for a few years while in the process of creating all the new services and city operations residents currently appreciate.

“Even better news for our city was the tax base in 2004 exceeded $3.2 billion – up from about $2.5 billion in 2003. “That was the biggest [approximately 27%] increase in any single year that the city had - representing over $2.2 million of increased revenue. The [city’s] revenue from property tax was estimated to go from a little over $8 million to [over $10.3 million].”

Luxury on the rise
Many real estate experts attribute the surge in property values to development of new oceanfront condos and resorts in Sunny Isles Beach replacing the old motels - plus comprehensive capital improvements and beautification projects underway since the city incorporated in 1997.

Real estate industry analysts also attributed soaring values to the “high-flying” real estate market, with prices increasing as investors turned away from a sagging stock market in favor of real property – including the most desirable oceanfront real estate in Sunny Isles Beach. Just some of the “famous names” contributing to Sunny Isles Beach prosperity and revitalization include Donald J. Trump and the Dezer family; the Trumps of Williams Island; The Related Group of Florida; Turnberry Associates; J. Milton & Associates; and Fortune International.

“We have to thank the developers who came and put the high rises on the beach…this is why the people on the west enjoy the same raise in the appreciation of property values as the people on the east,” a resident recently noted at a City Commission meeting.

City staying in ‘excellent’ financial shape
Regardless of whether or not the Commission decides lowering the millage rate will be in the city’s best interest (a decision is anticipated by mid-July when the 2005-06 budget is complete) – the good news is, “The City of Sunny Isles Beach is in excellent financial shape,” according to Jerry Chiocca of City Auditors Rachlin, Cohen & Holtz.

Chiocca presented the Audit Report for fiscal year 2003-2004 at the May 12 Commission meeting and while discussing highlights of the report he noted, “As of September 30, 2004, total assets were a little over $63.3 million; there were liabilities of $33.6 million; and net assets of just about a little under $30 million…of that, $4.5 million is invested in capital assets (streets, drainage, Government Center and other enhancements. We also have restricted funds of $14.1 million for capital projects and unrestricted net assets of a little over $9.7 million.

“[Looking at] the balance sheet for governmental funds, we have $26.2 million in total assets; liabilities of approximately $2 million; and fund balances of $24 million. A substantial part of that is designated for capital projects but there is $8.7 million undesignated that can be used for any lawful purpose of the city.

“The budgetary comparison schedule [shows] a balanced budget which fulfills the requirements of the state…There are total budgetary revenues of $15.2 million - and $15.7 million came in, so you had a positive variance of about $551,000. Total expenditures were budgeted for $13 million and we only spent $12 million so we had a positive variance of $935,000…Overall, we had a positive change of fund balance of approximately $1.487 million.

“The internal control of financial report says that we’ve noted no matters involving internal control finance reporting that we need to bring to your attention. In addition, the results of our tests disclose no instances of non-compliance. We feel confident of internal control structure in this city.

“During the course of our audit, the city was not in violation of any laws, rules, regulations, contract or provisions. The city did not make any illegal or improper expenditures. The city also had no deficiencies in the area of internal control regarding improper or inadequate accounting procedures or fail to promptly record transactions - and the city was not in a state of financial emergency as defined by the Florida statues.”

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