1. Strategic Plan for the Gradual
Elimination of Property Taxes
for the Town of Miami Lakes*
For your consideration by:
Councilman Nelson Hernandez*The contents of this presentation is the intellectual property of Nelson
Hernandez and cannot be used or reproduced without express authorization.
2. • We are paying so that others enjoy
Town amenities for free.
• Unfair to those that choose not to use
Town services.
• Long wait times for Town services.
• Town services are undervalued and
underutilized.
The Problem with Status Quo?
3. Bold Idea
• Miami Lakes has fantastic services, parks and resources.
• We need to market what we do best.
• Attract South Florida residents to our community, but ensure
that they pay a fair price for the value they’re receiving.
• Residents of Miami Lakes are being squeezed from all
directions. They should be in control of their money.
• Very simplified version of the emotional argument – who pays
for who?
4. Utilization Rates of Miami Lakes
Subsidized Programs
23%
26%
44%
50%
40%
70%
87%
74%
55%
50% 48%
55%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Average: 52%
Town Residents Pay For 100% for these Services
Town Residents use 52%
5. How Are These Programs Paid
For?
• Tax Roll: $2,469,202,655
• Current Millage Rate: 2.3518
• Ad Valorem Tax Yield: $5,516,717
• Residents pay taxes relative to the value of their
properties, not on consumption of services.
• Property taxes account for 37% of Miami Lakes’
Annual Revenues
6. • The Town of Miami Lakes is not permitted to
have pricing differentials between town residents
and non-residents.
• Our Recreational System is being
underleveraged, despite actual demand.
Town of Miami Lakes Return on Assets (ROA)
Is a mere12.4%,
using $5.5 million as profit amount.
Programs Not Leveraged By Miami
Lakes Residents
7. A Better Option
• Gradually replace the $5.5 million in revenues from
property taxes with an alternative source.
– Export Town operation costs.
– Provide immediate property tax relief to residents
– Restore local economic efficiency to our Town.
– Current system susceptible to service shortages.
– Provides wrong incentives.
We need a more equitable system for Miami Lakes.
8. Case Study: Stafford, TX
• Eliminated municipal property taxes in 1995
• Suburban municipality of Houston, TX
• 7 square miles
• Population: 20,000
• Median Household Income: $61,000
• Relies on sales tax and user fee revenue
• Safe haven for senior citizens
• Expected to pay off $2 million Bond debt by 2014
• Success comes from proximity to highways
• Sound fiscal & tax policy management
9. Innovative Government Operations
• Align Town operations with principles of
market demand and profit generation.
– Determine which services can be profitable
– Utilize $50,000 branding initiative to showcase the
Town.
– Assess customer service aspects of our “retail”
services.
– Necessary to compete with other municipalities.
10. Next Steps
1. Conduct an efficiency assessment to
determine where Town services can be
enhanced.
2. Determine fair value of services.
This same process has led the City of
Hialeah Gardens Park System to exceed
$100,000 in profits.
11.
12. Replacing Property Taxes with
Profits
Current Millage Rate: 2.3518
Hypothetical Profits for FY(t-1): $2,000,000
Tax Roll: $2,469,202,655
= 0.80998 (Millage Savings)
Next Fiscal Year(t), our Millage Rate will be:
2.3518 – 0.80998 = 1.5418
34% Property Tax Reduction
13. Current Millage Rate: 2.3518
Hypothetical Profits for FY: $2,000,000
Tax Roll: $2,469,202,655
Property Tax Yield (t-1):
$5,516,717
$2,000,000 $3,516,717
0.80998 mills 1.5418 mills*
*This millage rate is variable
Replacing Property Taxes with
Profits
14. The Big Picture
Town Residents
• Profits will be passed to Miami
Lakes residents in the form of
increased equity towards their
homes.
• Lower taxes result in higher
demand thereby increasing
property values.
• Residents will not be
penalized for choosing NOT to
use Miami Lakes public
services.
• Exempt Miami Lakes
residents from any fees who
are below the Federal Poverty
Line
• Operating as a business will
incentivize the delivery of
better services.
• Low Demand services will
be streamlined (Free Market
Oriented).
• Miami Lakes will be the first
municipality in Florida to
move in the direction of
Consumer Empowerment!
• Funds would be more liquid
since there would be less
risk of default on collecting
from property liens
