NAIOP Florida 2019 Legislative Effort Leads to Tax Rollback, Permit Fee Transparency and Major Development Package
For the third consecutive year, the Florida chapters of NAIOP, the Commercial Real Estate Development Association, have won a rollback in the business rent tax from 5.7 percent to 5.5 percent. Office, industrial and retail tenants pay this sales tax on top of rent and common area maintenance. Florida is the only state in the nation to impose a sales tax on commercial leases.
Governor Ron DeSantis is expected to sign this bill and commercial tenants will begin to experience this additional tax relief on Jan. 1, 2020.
“This tax makes Florida’s development and commercial real estate sector less competitive,” says Yvonne Baker, NAIOP’s 2019 state president and regional managing partner of Franklin Street in Orlando. “It zaps money that businesses could otherwise invest in growth and job creation. NAIOP made dropping more money to the bottom line of commercial real estate occupiers and owners a top 2019 legislative priority.”
Leadership from the state’s five NAIOP chapters – Tampa, Central, Northwest, Northeast and South Florida – actively engaged Florida lawmakers with personal visits to the state Capitol and letter-writing campaigns aimed at lowering and eventually eradicating the business rent tax.
Additionally, NAIOP won a major battle in its war against unreasonable governmental delays and rising costs of getting a building permit. Permitting fees charged by local governments are user fees. Robust construction has counties and municipalities taking in more fee revenue, but their capacity to efficiently process and issue permits has not proportionately increased. The new permit transparency legislation requires local governments publicly post permit and inspection fee costs and how that revenue is being applied within government functions.
In a similar accountability initiative, NAIOP also supported legislation that prohibits a local government from collecting impact fees before issuance of a building permit except in the case of water and sewer connection. The new law is effective July 1.
NAIOP Florida also played a key role in passage of several pro-development provisions in a major property development package that emerged out the state’s 2019 legislative session. Chief among them is financial relief to developers from governmental requirements that an affordable housing component be included within a new project. The new law requires that this cost be fully offset. The package also mandates that local jurisdictions review and respond to development applications within 30 days and allows attorneys’ fees to be collected by the prevailing party in a development order challenge.
“The regulatory and financial burdens thrust upon the shoulders of South Florida’s commercial real estate and development sectors, while often well intentioned, create unnecessary hurdles that are frequently counterintuitive to sensible development and increased prosperity across the board,” says Darcie Lunsford, president of the South Florida chapter of NAIOP and executive vice president of Butters. “These are reasonable, but high-impact, reforms that will help ensure that South Florida remains an economic juggernaut.”
NAIOP, the Commercial Real Estate Development Association, is the leading organization for developers, owners and related professionals in office, industrial, retail and mixed-use real estate. NAIOP comprises 19,000 members in North America. NAIOP advances responsible commercial real estate development and advocates for effective public policy. For more information, visit naiop.org.