Budget Nears Final Approval

Susan Askew
Susan Askew

Budget Nears Final Approval:

Increased fees, new revenue opportunities up for discussion this week

The difficulty in arriving at a balanced budget this year continues to resonate in City Hall. When Miami Beach Commissioners meet for their final budget hearings this week, there are some fee increases on the agenda. The one giving Commissioners the most heartburn is a proposed increase in sidewalk café permit fees. Another to pass the cost of recycling directly through to residents was withdrawn at their meeting earlier this month. Revenue enhancements, mostly in the form of advertising in public places and naming rights for the Convention Center are also on the table.
 
The recommended final budget is $345,145,000. To close an initial budget shortfall of about $6 million, the City Administration and the Commission’s Finance Committee recommended a combination of budget cuts and increases in fees. Most of the increases are non-controversial, including an increase in elevator fees, fees for waste haulers, and an increase in parks and recreation fees for non-residents. But a proposal to raise sidewalk café permit fees by $5 a square foot is causing concern because of its immediate impact. Sidewalk café permit fees are due October 1, giving operators little time to digest the increase.
 
The last time fees were increased was over a two-year period in 2010 and 2011 when the $5 bump was divided in two, rising $2.50 per square foot each of the two years. Commissioners voted to approve the fee increase on first reading earlier this month but asked for options to ease the pain as well as more information on how the fees would impact individual operators. 
 
Jay Fink, Assistant Director of the City’s Public Works Department told Commissioners, “It’s not something that anyone wants to do” but the City needed to look at ways to generate additional revenue.
 
Michael Góngora who was also on the Commission when the fees went up previously said he thought the current proposal was “too much, too soon” with fees due October 1. He wants to “do it in a more considerate manner,” and proposed staggering the increase “over two years, what we did ten years ago to allow the business community to absorb these cuts.”
 
Mark Samuelian who is going through his first budget process on the Commission and as a member of the Finance Committee said, “We keep running into the CPI thing” referencing the lack of automatic increases to keep up with the Consumer Price Index. “Costs go up every year. We’ve waited years without acknowledging cost increases… that’s partly on us. We need to stop that.”
 
The vote to increase the sidewalk café fees was 5-2 with Góngora and Kristen Rosen Gonzalez voting no on first reading.
 
In a memo to accompany the budget item at this week’s second reading and public hearing, City staff said the fees could be implemented April 1, giving operators six months to prepare but ensuring the full $358,000 in anticipated revenue would be received in FY 2019. If it were to be staggered over two years, the increased revenue for FY 2019 would be cut by half, meaning that money would need to come from somewhere else.
 
With regard to its impact, the staff memo lists approximately 160 sidewalk cafes, 30 of which are currently exempt from fees (restaurants located in North Beach and Washington Avenue). As the fees are based on square footage, the largest increases fall on Lincoln Road businesses as they utilize larger areas of outdoor café space. In fact, the top 20 most impacted business (e.g. those with the greatest annual difference between current fees and the proposed fees) are all located on Lincoln Road. 
 
Havana 1957 would pay an additional $10,440 annually. Balans at $10,295, Segafredo/Colony Theater $9,520, Enso $8,785, and D’Vine Hookah at $8,275 round out the top five.
 
The staff memo and chart are here.

Other proposed increases:
 
20% increase in all elevator fees ($240,000 in annual revenue)
Impacts new construction but also all buildings that have an elevator, escalator, wheelchair lift, etc. within the City. For the average residential condominium building with a single elevator, certificate of operation fees are proposed to increase from $75 per elevator to $90 and the fee for Monitoring/Jurisdictional is proposed to increase from $200 per elevator to $240. The total annual increase would, therefore, equal $55 per elevator.
 
Parking fees:
The City proposes changes to the following parking fees:
  • Entertainment District between 5th and 15th where metered parking is enforced from 9 am to 3 am. There is currently no charge between the hours of 3:00 am and 9:00 am. Charging for meters 24 hours a day would raise an estimated $135,000 in additional revenue.
  • 46th Street & Collins Avenue Parking Lot (P71): Fees at this garage are $1 per hour, Monday through Friday, 8 am to 6 pm. On weekends, there is a flat rate/24 hour daily rate of $20 for visitors and $6 for residents. The City proposes moving to the flat fee 7 days a week/24 hours a day for $539,000 in additional revenue. At the same time, the lot would become automated, saving $149,000 in parking attendant service costs.
  • Increasing daily parking space rental fees (from $25.00 to $35.00 per space) for temporary use of parking spaces related to private construction activity that may pose a pedestrian and/or vehicular safety issue. Additional revenue: $224,000.
  • Increasing the daily hostel guest parking permit for hostels located within restricted residential parking zones from the annual residential parking permit fee of $54.60 in most residential zones to the daily residential visitor permit fee of $3.00. Additional revenue: $30,000.
 
Sanitation:
Increasing the franchise fee paid to the city by its franchise waste contractors from the current fee of 18% to 20% of the franchisee’s total monthly gross receipts from solid waste collection and disposal in the City. Additional revenue: $84,000
 
Increasing roll off container permit fees from 18 to 20% for solid waste franchisees that provide roll off service to commercial and residential accounts. The City says this fee has not been raised in over 10 years. Additional revenue: $20,000.
 
The proposal to increase the recycling fee pass through to residents ($3.52 a month) was withdrawn after several Commissioners expressed concern about its impact on residents. The Sanitation Fund is operating at a deficit and this fee was proposed as a small step toward balancing the department's budget. Recycling fees would have generated about $300,000
 
Frustrated by the lack of support for the months of work to balance the budget, Finance Committee Chair Ricky Arriola said, “It’s really easy to sit here and try to rack up some political points saying ‘I object to raising fees’ without actually having done the numbers, spent countless hours, like some of us did…. Unfortunately, this is something we have to do.”
 
Commissioner Micky Steinberg replied, “I don’t look at these all the same. I feel like they all have a different weight on them, our residents, and our environment as a whole. So, unlike maybe the elevator and the inspection fee that I don’t think is going to have the same impact, this one does have a direct impact on people and I’m willing and prepared to go through that budget and look at some of the ‘nice to have’ things we have on there and say no to some of that spending so I can help subsidize some of this because I don’t think it’s fair to put all of this burden on the residents right now.”
 
“It may seem like just $3.52 but it adds up,” Steinberg said. “That added with the stormwater rates that we’re going to be looking at and other things that are coming, I have concerns. I’m not saying that we don’t do anything but I don’t know that I want to go the full increase.”
 
Commissioner John Alemán added, “The CPI increase should be added automatically to everything we’re doing because now we find ourselves in this catchup mode. We need to fix that all across the board so that we don’t keep arriving at this juncture.”
 
“Sanitation should cover its costs,” City Manager Jimmy Morales said. Because of the heavy burden on Sanitation from the City’s visitors, the costs have been subsidized by resort taxes and the South of Fifth CRA fund which is now being allocated to stormwater projects. While there has been a reduction in resort tax revenues due to the Convention Center being offline, demand for services has only increased as the Department is asked to increase garbage pickup on the beach, provide better litter control throughout the City, lessen the impact of major events, and then add to that, last year’s hurricane debris cleanup. As a result, the Sanitation Fund has been declining and the deficits have grown, this year to $2.5 million.
 
Fink told Commissioners,“These are not any things that are being taken lightly.”
 
Millage rate:
One thing not going up, property taxes. The FY 2019 budget keeps the millage rate the same, the lowest it has been for at least 55 years, the furthest back anyone can find records. The proposed rate is 5.8888 mills or 5.8888% per $1,000 in property values. 
 
But not everyone was satisfied. Arriola objected to reducing staff costs by not filling vacant positions, rather than looking for areas to cut. “We’re not firing anyone, just not filling vacant positions, that’s what I’m saying. We just don’t have the guts to do it. You’re telling me that everybody that’s employed today deserves to be in their job? I don’t buy that. There’s a lack of accountability in government. Nobody likes to make hard decisions. Everyone wants to be popular. But in an organization this big, even a small organization, there are people that don’t belong, positions that don’t belong and we need to take a hard look at those. This is the easy way of doing it, just don’t fill vacant positions."
 
Góngora said, “Quite frankly, I’m not convinced. I don’t think the Administration has done a good enough job reducing administrative costs… We’re not showing what the salaries are in the budget, what the impact of the pensions are. Instead we got caught up with little details like residential recycling fees, and little one-time recurring things… I don’t think the Administration really did a good enough job, quite frankly, of going back knowing that we were looking at a deficit, reducing their costs, and instead pushed it upon us so that we’re forced to raise these fees which I don’t want to do.”
 
Mayor Dan Gelber said he was going to “take the Finance Committee recommendations. As a Commission, we do add a lot of stuff. When people are upset about a certain area, we put more Park Rangers in there and I don’t feel very comfortable just saying it’s the Administration. I feel like we give them a lot of leadership and direction in what to do.”
 
CFO John Woodruff used an example of a recent Neighborhoods Committee meeting during which Commissioners “made a recommendation that they would love to increase the level of service for Sanitation but we can’t really afford to do the level of service we have today, so if we went back and cut [personnel] expenses, at least in the Sanitation bucket, we’re really talking about the very services that what we’re hearing is we want to ramp ‘em up, so we’re kinda caught in a conundrum here where we’re trying to meet an expectation that I feel we’re not equipped for.”
 
Woodruff said 27 positions had been cut in the FY19 budget and other organizational efficiencies were being considered. At the same time, he pointed out the addition of Park Rangers and MBPD officers in each of the City’s public schools as areas where Commissioners asked for additional staffing, the net effect of which is “it looks like we’re continuing to add to the headcount,” Woodruff said.
 
Arriola and Góngora said they wanted to continue to look at the Administration’s budget for “fat” before casting final votes to approve it. Expect that discussion this week.
 
Potential new sources of revenue:
Commissioners will also consider alternative sources of revenue including:
 
Advertising on the exterior windows of the City’s trolleys
It is anticipated that advertising on the City’s 25 trolleys could generate $500,000 in revenue for the FY 2019 budget. 

Sponsorships including naming rights for the Convention Center:
According to a staff memo, similar sponsorships around the country include:
  • CenturyLink Center in Omaha, NE, Convention Center naming rights: $14 million over 15 years
  • Huntington Bank Convention Center of Cleveland, $10 million over 20 years
Cultural venues include the Carnival Center at $10 million for one year and Adrienne Arsht, $30 million in perpetuity.
The memo suggested that “per the current City Code, the naming of the MBCC may have to go to referendum.”

Advertising on the back of the City’s fleet building
According to the City, this area is visible to cruise ship passengers and boats only due to its location on Terminal Island. “The Port of Miami has approximately 5.3 million passengers each year,” the staff memo states. “Murals of this size have potential to sell for more than $20,000 per month or $240,000 per year.”
 
Watch or attend the budget hearings: City Commission
Wednesday, September 26, 5 pm
City Hall, Commission Chambers
Details

 The North Beach Town Center guidelines, with a maximum height of 200 feet as recommended by the City’s Planning Department, passed on first reading earlier this month, but refinements are expected to be made at this week’s Commission Land Used and Development Committee meeting that might include staggered heights, with lower height given in the 69th Street residential area and taller buildings allowed in the core of Town Center on 71st and 72nd Streets. That is not a new discussion, but one Miami Beach Commissioners continue to grapple with.
 
The slow pace of the Town Center development regulations since last year’s voter approved increase in density to a 3.5 FAR (Floor Area Ratio) has claimed at least one victim. Developer Silvia Coltrane, whose hotel project is planned for the block at 72ndand Collins (above), 
https://www.remiamibeach.com/north-beach/developer-wins-approval-for-bigger-north-beach-hotel/
said she lost her hotel flag due to the lack of progress in the area. 
 
Coltrane implored Commissioners to take action. “Without development there will be no progress. Without development there will be no new taxes generated by those developmnts to address other community needs. There will not be any new jobs. The business community will continue to suffer and some will be forced to closed.”
 
“Our project is the only project that has been approved in Town Center and I’m grateful for this but I am here pleading for your positive vote today,” Coltrane said. “We started with a lot of enthusiasm and I had it all worked out with the funding, the hotel flag, and we were planning to commence construction in September.” Noting she has already paid more than $1 million to Florida Power and Light to relocate transformer lines, she said, “But our rug has been pulled from under our feet because there’s no possible commitments that my lenders, the hotel flag, investors or anyone involved in our projects can detect because there has been no activity. One project alone cannot make a difference in this town. We will not start on this until we have your commitment and your commitment will be with a yes vote today.”
 
Regarding the hotel flag, she said, “It has been at a great loss because it would have been a very positive flag for North Beach.”
 
City staff is recommending a maximum building height of 200 feet with certain public benefits to paid by developers who start projects quickly, obtaining a building permit within 15 months. Higher height, they argue, would allow for more green space and light. 
 
According to an analysis by Miami Economic Associates Inc (MEAI), an increase in height to 200 feet “would result in no more than 11 – and more likely, 8 or fewer – buildings being developed to a height of 200 feet in the Central Core of the North Beach Town Center during the next 3 to 5 years.”
 
Most of those, up to six, would be located in the 71stand 72ndStreet areas, “where they will face a park rather than any existing residential structures,” according to MEAI. 
 
“Further, if the draft regulations are amended to include a proposal made by Commissioner Michael Góngora at a meeting of the City’s Land Use Committee on July 31, 2018, that ties increased height to lot size, the number may not exceed 3 with the remaining buildings in the area that are taller than the by-right limit of 125 feet being no taller than 165 feet in height,” according to MEAI.
 
The analysis stated that MEAI agreed with City Planning staff that these taller buildings with setbacks “would result in better individual projects as well as better pedestrian environments being created. Most specifically the provision would allow more natural light to reach the surface of the street while making the buildings appear less massive.” 
 
 

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