BY MATTHEW I. PINZUR
mpinzur@MiamiHerald.com
Tax breaks meant to lure businesses into distressed areas could be handed to developers of some of Miami-Dade's most luxurious new condos -- with a cut going to County Hall -- under a plan recommended by Mayor Carlos Alvarez and endorsed by county commissioners.
The proposal could give an estimated $47 million in sales-tax rebates to developers of six projects by moving the boundaries of the county's Enterprise Zone -- more than was given to every business in every enterprise zone in the entire state in 2006-07, and a sum the program's statewide coordinator called ``staggering.''
Tax breaks in the Enterprise Zone are supposed to attract new business to distressed areas. But the proposed changes would admit posh new condos backed by some of Florida's most influential developers, including Icon Brickell, a Miami River-front tower built by Jorge Pérez's Related Group, and the massive Biscayne Landing project on the Intracoastal Waterway in North Miami.
One project, Quantum on the Bay, built by Pedro Martin's Terra Group, is already occupied by condo owners who paid as much as $500,000. Just two of the six projects promise to build homes that meet the county's definition of ``affordable.''
''I am completely offended and appalled by this,'' said Commissioner Natacha Seijas, the only commissioner to vote against the boundary change last Tuesday.
During the '07 fiscal year, all of Florida's enterprise zones combined to provide $45 million in tax breaks. At the cap of $5,000 in rebates for every condo unit, the six new projects in Miami-Dade could exceed that.
''Wow, that's staggering,'' said Burt Von Hoff, who oversees Enterprise Zones as the community development liaison in the Office of Tourism, Trade, and Economic Development.
Von Hoff said he had never seen a community try to give Enterprise Zone tax breaks to projects already well underway. ''The public intent is to attract new business,'' he said.
The state still needs to approve the boundary change, which would also make the projects eligible for corporate income tax breaks.
Terra, Related and Biscayne Landing officials did not respond to interview requests last week about the program.
The county approved any project that met the state's minimum requirements for joining the Enterprise Zone. The ones that are in municipalities have already received approval from the local city commission -- a point emphasized by Alvarez's spokeswoman when The Miami Herald asked about the program.
Miami-Dade had an incentive to encourage applicants: Developers agreed to give 10 percent of their rebates to the county for a new affordable housing trust fund.
''I think probably the commitment to the affordable housing or contributing to the trust fund was a benefit of the investment,'' said Cynthia Curry, senior advisor to County Manager George Burgess.
Tangie White Jackson, an official in the county's Office of Community and Economic Development, publicly told commissioners that Von Hoff approved the arrangement.
''He said it sounded fine,'' she said during Tuesday's commission meeting.
Von Hoff denied it.
''That's the first I've heard of that,'' he told The Miami Herald on Wednesday. ``I'm not familiar with that conversation at all.''
Jackson later said she thought she was being asked about the general practice of allowing companies to ask for admission to the zone.
The policy of requiring the developers to either build affordable housing or give the county 10 percent of their tax break was only vetted by the county's own attorneys.
That idea developed in 2007, when the Biscayne Landing developers asked the city of North Miami to help include them in the zone.
The 193-acre project has only completed a tiny portion of its plans to construct 12,000 homes, a hotel, shopping and office space, and the tax breaks could inject fresh energy into the plans.
Normally the boundary can only be moved once every three years, but the city, county and developer hoped for special dispensation from the Legislature. To sweeten the deal, they offered the county $3 million of their projected $30 million in sales-tax rebates.
Commissioners, led by Sally Heyman and Dorrin Rolle, approved the deal.
The Legislature refused to act, probably because the three-year window was closed, but others took notice.
'A couple of developers called the office and said, `We want the same thing,' '' said José Cintrón, who was running OCED at the time.
When the three-year cycle was up, the county let any business apply under the same terms, a process approved unanimously by the commission in January.
Beyond Biscayne Landing, four other developers submitted a total of five projects:
• Icon Brickell, two condo towers and a hotel, under construction overlooking the Miami River and Biscayne Bay.
• Quantum on the Bay, two condo towers on the bay, one of which is already occupied and the other well into construction.
• Floridian Key, a town house community in Florida City, which has finished its first 71-unit building and is now planning the second. It ultimately plans 614 units.
• Alto Plaza and Altos Pointe, a housing, office and retail complex.
• Terrazas Coconut Grove, a residential and office project.
Heyman now says she did not research the projects other than Biscayne Landing, which she said needs the breaks to fulfill its promises of creating jobs and homes.
''I would assume that in our administration someone scrutinizes,'' she said. ``It leaves me really concerned on how this came forward.''
Only two projects, Biscayne Landing and Floridian Key, offered to set aside at least 5 percent of units for affordable housing.
The rest, including Biscayne, pledged the 10 percent donation to the county.
''The board chose to treat it this way,'' Cintrón said. ``We took our cue from that.''
Altos Pointe, Alto Plaza and Terrazas, all being built by B Developers, are the only projects in the new deal not already under construction.
Company president Miguel Angel Barbagallo -- who has built affordable condos inside the existing zone -- said the tax breaks are crucial to build in-town homes that middle-class families can afford. Many units in his existing buildings sold for under $200,000.
''If you can reduce a little bit of operating costs, it's very important,'' Barbagallo said.
In addition to the sales tax rebates, which are funded by the Department of Revenue after the developer provides receipts for construction materials, businesses can get other deductions.
Companies in the zone -- whether the developers themselves or their business tenants -- can take deductions from their corporate income taxes for 20 to 30 percent of the salary of any employees who live in the zone.
Those businesses might be able to take further corporate tax deductions for up to $50,000 of the property taxes they pay, for up to five years.
Curry, who oversees the development office, said the rules might be changed before 2011, when the county can next alter boundaries.
''More strategic thinking might obviously be more appropriate the next time around,'' she said.
The law does limit the size of enterprise zones, and every piece of land added to the zone requires taking one out. Most of the new projects have small footprints and are replacing tiny doughnut holes taken out of the zone in undevelopable areas such as public parks, a cemetery and a water treatment plant.
Biscayne Landing won its application by suggesting a single 200-acre cut from the existing zone: the north runway at Miami International Airport.
''I think somebody has made a sublime error here,'' Seijas said of the entire plan to amend the zone. ``I'm not accusing anyone of doing anything wrong -- that would be unfair -- but there's been a huge, huge mistake.''
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