Title
An Ordinance Of The City Of Hollywood, Florida, Amending Article 4 Of The Zoning And Land Development Regulations Entitled “Schedule Of District, Use And Setback Regulations” By Amending Section 4.6 To Extend The Incentive Program For The Opportunity Zone To Include Sites Or Portions Of Sites Along Federal Highway And 21st Avenue Corridors; Providing For A Repealer Provision And A Severability Clause. (19-T-66)
Strategic Plan Focus
Quality of Life & Strong Neighborhoods
Body
Staff Recommends: Approval of the attached Resolution.
Explanation:
SECOND READING:
During the first reading, on November 2, 2022, several questions were raised regarding the exact boundary of the census track for this opportunity zone. In response, staff has refined the text to make the locations clearer. As described in the attached ordinance, the text change for this incentive will only apply to properties having frontage on 21st Avenue or the west side of Federal Highway; both of which align with this census track.
FIRST READING:
At the June 14, 2022 meeting, the Planning and Development Board unanimously recommended approval of the text amendment.
Opportunity Zones were created across the country through the passage of the 2017 Federal Tax Cuts and Jobs Act with Governors in each state able to designate 25 percent of the qualifying census tracts as Opportunity Zones to incentivize investment in these economically distressed areas. Two census tracts in Hollywood (12011080500 and 12011091801), were designated Opportunity Zones and investments in these areas receive preferential tax treatment under the U.S. Tax Cuts and Jobs Act of 2017. Through investing capital gains in a qualified Opportunity Fund, an investment vehicle organized to make investments in Opportunity Zones, investors can defer federal taxes on that gain until no later than December 31, 2026. Those who hold the investment in the Qualified Opportunity for 7 years will receive a 15 percent step up in basis reducing their tax liability; and those who hold the investment for 5 years will receive a 10 percent step up in basis which allows taxpayers to exclude up to 15 percent of the value of their reinvested capital gains from their taxable income, decreasing their tax liability when they sell or can no longer defer taxation. To take full advantage of the tax incentives offered by investing in an Opportunity Zone, a taxpayer would have to invest funds no later than December 31, 2021.
Currently, 17 federal agencies have developed 132 different actions to further enhance the Opportunity Zone program and have encouraged state and local governments to consider doing the same. Similarly, the City seeks to maximize the benefit of this federal tax incentive to encourage investment that will expand the tax base, create jobs, and revitalize economically challenged areas.
At the November 14, 2019 Planning and Development Board meeting, the Planning and Development Board acting as the Local Planning Agency recommended approval to the City Commission to create an incentive program for the Opportunity Zone within the downtown core. On December 4, 2019, the City Commission passed and adopted O-2019-28, establishing the Downtown Core Opportunity Zone Incentive. For the purposes of this regulation, the Downtown Core shall be defined as the area generally located south of Polk Street, north of Van Buren Street, east of 21st Avenue, and west of 17th Avenue.
Capitalizing on the unique incentive through the opportunity zone existing framework and continued evaluation of the Downtown Core Opportunity Zone Incentive, Staff has identified that extending the Downtown Core Opportunity Zone Incentive’s geographical area to include sites or portions of sites along the major mixed-use corridors, Federal Highway and Dixie Highway/21st Avenue, would further encourage and focus catalytic redevelopment opportunities in the most appropriate areas. The parameters below already in place create the desired incentive, while also ensuring the vision established by the regulatory framework remains balanced:
• Buildable Area Bonus. The buildable area bonus will be generated by allowing developments to base the Floor Area Ratio (FAR) calculation on gross lot area, rather than net lot area.
• Geographic Location. While the Opportunity Zone area is larger-to maximize the potential of the bonus-the program focuses exclusively on the area of highest priority for redevelopment, the Downtown Core and major corridors Federal Highway and Dixie Highway/21stAvenue Limiting the bonus geographically yields a higher success rate within the desired area; and also protects areas where an increase in the buildable area may not be appropriate. As a result of aggregation, these areas do not have a consistent lot pattern and is primarily characterized by commercial uses. Because of this, potential impacts of the bonus would be minimal and easier to mitigate. Additionally, current Floor Area Ratios were created as a function of the net lot area. Therefore, a blanket or broader approach would not be appropriate.
• Sunset Provision. As the program is designed to work in conjunction with the Opportunity Zone, it would sunset within a similar timeframe (five years).
Fiscal Impact:
Approval of this Resolution will not fiscally impact the City.
Recommended for inclusion on the agenda by:
Shiv Newaldass, Director, Development Services
Gus Zambrano, Assistant City Manager/Sustainable Development