Metro Jacksonville

Apparently Orlando is implementing some cash incentives to attract retail downtown

http://www.orlandosentinel.com/business/os-downtown-retail-incentives-20101206,0,6429602.story

Orlando has been handing out incentives for quite a while.  A couple of years ago, they gave a boat load of cash to convince Publix to open near Lake Eola.

is it working?

Compared to Jacksonville?  Yes.  Their downtown is much smaller yet there are a number of uses that have been coordinated to be clustered together, creating a vibrant environment that can support nightlife, entertainment and complementing retail.

This is the way to do it.

A brown paper bag filled with $100 bills to the right people creates development greater than any other force on earth.

It will be interesting to see what happens with Church Street, with the opening of the Magic's new arena.  When I visit my parents for Christmas in two weeks, I'll get some pics.  

    Incentives and Ranting.  After having my feet on the ground in the city core for almost three years, I have some thoughts regarding the idea of city incentives for businesses attempting to open and survive within the city core.  The following is a bit of evidence that there has been no valid comprehensive plan for revitalizing the city core.  One bit of evidence is that there are no property tax abatements for those of us who invest and take risks as we endure, during the apparently "early" stages of revitalization, the low foot traffic in the core.  For example, my property tax increased from about $11,000 in 2006 when I purchased my building, to the current over $17,000.  While observing businesses attempting to survive with the low foot traffic, which is a condition that my operation is slowly affecting in the positive direction, I would have expected that the city would have realized the value of a property tax abatement to any new business, either a 50% or a 100%.  I purchased my building for $930,000 in January 2006, and invested $600,000 in renovations, and during the process borrowed funds from banks.  To insure the survival of the operation, I've worked seven days per week since opening.  I have not yet had the funds to pay my 2009 or 2010 income taxes.  I am catching up on my property taxes however.

     If my Roosevelt operation had not been enjoying good business, allowing funds to be funneled to the Laura Street store, the Laura operation would have closed - the front would now be boarded up with graffitied plywood again.  Fortunately the Laura business creeps upward... steadily.  There will come a point at which the Laura store will achieve a strong position, especially as the overall population of workers and residents increases in the core area.

     The point is that most businesses who attempt to open in the low-foot-traffic city core may not have the backup funds I've had during the crucial years of start up.  The current unfriendly city core environment, due in part to the lack of any property tax abatement, will kill most businesses during the first two or three years of opening.

     A quick digression from my rant.  My experiences with the building permitting, building inspection offices, code enforcement, and fire department code enforcement etc.. were all positive.  These individuals were fair and quite helpful.  Be reasonable with them, and they will certainly be reasonable with you.  If you initially position yourself in an oppositional stance, then you may in fact be opposed because of it.

     Back to rant.  The fact of no tax abatements for businesses attempting to make a go in the city core, taking the risks at the front lines so to speak, indicates that there is either no desire for positive action among those making the decisions affecting city core revitalization, or, assuming there is a desire, then there is a good measure of stupidity.  It is as if we business people, who endure the current low foot traffic in our city core, are the infantry, in the trenches, placing ourselves at risk of death while we attempt to accomplish much needed victory, and the fellows in the soft chairs, somehow oblivious to the reality of the battle, fail to send us enough ammunition.  What da #*@& is going on here?  Is anyone thinking in city hall.

     There is further evidence of a conspiracy to push all businesses out of the city core.  Get this. Somebody in JEA, late in 2010, somehow got the idea that I was about to make it through the ordeal of surviving in the city core.  Apparently they said.. "Hey, wait a minute, Chamblin's might make it, they might survive.... let's see what the #*+@ we can do about this."... So they increased my JEA deposit from $2,000 to $9,100.... knowing that I've paid every penny I've owed to JEA during over thirty five years of being in business.  I diverted money scheduled to pay property taxes to the JEA deposit, wondering why they need to hold about $285,000,000 in customer deposits in the first place.  A logical person would find themselves wondering just what in hell are the powers at be attempting to do to those of us who are sacrificing all assets, time, and energy.. to make a go in the the city core.  Again ...  what da #*@& is going on?  End of rant.  Thank you.         

Oh .... almost forgot.  Give a man a fish, and you will feed him for a day.  Give him a religion, and he will starve to death while praying for a fish.

Ron, it was good to meet you last week during lunch.  I really enjoy the food and atmosphere.

Thanks Doug.  Is good to know who someone else is on MJ.  I only knew of Mr. Dare.  Hope you can come more often.  Our soups and stuff gets better and better. 

Ron, I can see that you and other businesses need to be able to keep more of your gross receipts but is there any thing the city could do to help that wouldn't involve taxes?

Absolutely Urban.  Actually, I'm optimistic that some of the things that should be done, will soon be done, as I sense it is improbable that the critical issues to core development can be ignored much longer.  I am going to attempt to devote more time and energy to focusing in a positive, non-ranting, way on identifying some of the most pressing issues.

I might mention that the project of the new convention center, although needed, is a no brainer.  It is easy, and took very little vision or creativity.  I'm not impressed.  My concern is that we will "do" these easy projects; i.e. Prime Osborn, the Skyway, thinking that we are making a big impact on city revitalization by these actions alone, while ignoring the subtle but powerfully important issues which, lying hidden from easy view, escape solution, and therefore perpetuate the stagnated condition we've all seen for much too long. 

I'm wondering if it is practical to begin a mechanism within this forum that will, in a structured way, discuss the issues seriously, with the objective of reaching a point of agreement of what important actions must be taken, and then to have someone or some group, convey this agreement to whoever can facilitate the action.  This could be done to the point of refusing to accept complacency, or a condition of being ignored, by those in the decision making process; that is, about whatever critical action items we have agreed upon. 

But .....I focused on the property tax in my rant because it seems to be an easy no brainer; that is, to have some of the burdens endured by the city core businesses, shared by those in the suburbs.  The suburbs will benefit also by the existence of a vibrant city core.  The decision must be made.  Do we, or do we not (the majority of voters), want a vibrant city core?  I think that one of the most important objectives is to convince the majority of voters that it would be a great benefit to all people within northeast Florida to have a vibrant city core.  I have seen no real campaign to accomplish this convincing process.  This is amazing.

IMO, the first step to improving downtown will be to stop subsidizing surburban development.  The Mobility Plan will accompish this at no additional cost to the city.  The second step comes as a result of the Mobility Plan - and that is to improve access to downtown with a functional transit system (i.e. Skyway, streetcars, commuter rail).  The more people who come downtown by transit means more walking, which in turn leads to more activity on the street in stores and restaurants.  I feel that the number one killer of downtown has been the parking garages and surface parking lots.

Originally, I thought the city should look into setting up Tax Allocation Districts, especially one for downtown.  It would freeze property taxes in an area and make it easier to float bonds to support new developments in struggling areas.  Without going into details, Atlanta has set up 10 of these districts and boosted their tax base by hundreds of percent in most of the areas currently set up with a TAD.

However, our property taxes are already too low.  Therefore, I agree with you Ron, we need to be selective and set up abatements for small businesses opening up shop (and perhaps a TAD in parts of Riverside, Springfield, NW Jax, and Arlington).  Jax needs higher taxes overall in the city with freezes and abatements in select areas and for select individuals/businesses.  It should be easy (it has been easy to do similar things in literally every single other city).  Of course, I would not hold my breath for any simple solutions in Jacksonville.  For all these trips to other cities and the resumes of the Chamber people, one would think someone out of that whole bunch could push to set this kind of thing up after seeing it everywhere else.

The leaders in Jacksonville do not ever think past their short noses and when they smell money it's time to go running.  Hiking up and imposing fees to get more money is one thing; having a decent tax level that remains constant and is easy to figure out is quite another.  I would rather pay a constant ~30 mil property tax without a million loopholes and stipulations than pay a 15 mil tax with fees and upcharges coming at me from all different directions to 10 different authorities.  FTR, Atlanta's millage rate is around 44 or 45 and the city seems to be growing by leaps and bounds still (and attracting corporations).  Small businesses aren't scared away by city leaders and large companies have more to work with regarding the general population.  Many of the small business owners (i.e. chefs and long time biz owners like yourself) are local celebrities in their own rite.

Ron, any reason given why JEA set the deposit so high?

     There is a policy Marksjax for establishing deposits.  If a customer is late in payment, or if they have their power cut off, points are deducted from their credit rating so to speak.  If the rating drops below a certain figure, then JEA has established the right to increase a deposit to twice the average monthly bill.  My average must be about $4,400 or so.  For 34 years my deposit was set at $2,000.  According to JEA policy, they had the right to increase my deposit to $9,100 or so because I was late several times during my renovation project downtown from 2007 through 2009, when I was paying out many thousands of dollars per week to pay contractors etc.   There was one semi-chaotic time when I simply did not open my mail, on the run with work etc.,  forgetting to pay the bill, and they cut the power completely at the Roosevelt location.  No warning.  I thought it was perhaps a traffic accident causing an outage.  In this instance I had the funds to pay, but not having an employee to do these things for me, I simply forgot.  Took at least five hours to get the power turned on.   

     So..... yes there was reason for the increased deposit.  Is the deposit policy appropriate?  Is the whole concept of having a $285,000,000 fund of customer deposits on hand necessary?  Are all 500,000 or so JEA customers going to go out of business or depart the area at the same time, and therefore put JEA down?  A reasonable deposit fund is needed to cover the occasional business failure, or to cover the quick exit of a fugitive resident etc.

     A deposit fund is needed to cover what would otherwise be losses inflicted on JEA as a result of business failures and resident area departures.  However is a deposit fund exceeding by perhaps $200,000,000 over what is needed to protect JEA from a few customer defaults really needed and appropriate?  Is this fair to customers?  Is it legal?  Is it a subtle form of trickery...of taking money unfairly from customers?

      Those in power sometimes allow themselves to slide into subtle forms of abuse, if only by carelessness in policy.  Those in a position of performing in a somewhat opaque environment, such as "some" attorneys who work behind the scenes, perhaps charging 40 hours for 4 hours work, are able to gain without cause, thereby abusing their professional position... fleecing their customers.  Is JEA transparent.  What is done with these huge reservoirs of deposits?  Where is the money now?  Can I see it? 

     Surely, perhaps only $60,000,000 in customer deposit reserves would protect JEA from any losses from business failures and resident payment defaults.  How transparent is JEA.  If I have the time tomorrow,  I think I will walk down to JEA and take a detailed look at their books.     

Ron,

This is not a continuation of my earlier JEA rants.  Most of JEA's policies are automated.  There is no human thought or compassion in effect when they put in a work order to shut off your power.  The work orders are computer generated, plain and simple.  I think it would benefit you greatly to go to the main branch, speak to one of the CSMs and explain your situation to an actual person.  Someone that has the ability and authority to actually see that you've been a long time customer in good standing with an explainable blip on an otherwise perfect history.  There's a good chance that they will refund all if not most of your deposit.

Thanks Non-Red.  If I had the time to engage someone down there, and if I really had the desire to get money back, I would do so.  But to be honest, my concern is to question if it is necessary and appropriate for JEA to hold the deposit funds, amounting to hundreds of millions of customer money.  Besides, it would probably take me three days to get through to the right person at JEA, and then, if my objective was to get most of my deposit back, it would take another two weeks of negotiating.  But ....... thanks.  I rest.

Ron,

Thanks for the explanation. I never thought about all the $$ that is tied up in deposits either. That would be worthy of a thread all on it's own (first, is it necessary and/or excessive and second is it being used for operating expenses or investments or is it just sitting in a bank? hmm, another question comes to mind- which bank and who decides which bank to use? Decisions, decisions!).

Best of luck and keep fighting the good fight Downtown! ;)
Mark

Ron, both the property tax increase and the deposit being required by JEA are insane. I applaud your efforts downtown and hope you can afford to stay there for the long haul. I've been in there several times... it's one of the few parts of downtown that makes it feel like a "real city" if that makes sense.

     Upon thinking more about the deposit policy of JEA, I have come to realize that the deposit system, as implemented by JEA, is necessary in order to be fair to all JEA customers.  If JEA did not require heavy deposits, then those businesses and residents who skipped out, leaving large unpaid electric bills, would place the burden of paying their unpaid bills indirectly to all the other JEA customers.   

     Unfortunately some residents probably depart the area, intentionally leaving the unpaid bills at JEA.  And too, some businesses go down, leaving large sums unpaid with JEA.  Therefore, to insure that those who use electricity ultimately pay for it, even if they go out of business, or must leave town, the deposit equal to twice the average monthly bill must be assessed to all who are thought to be somewhat a risk of not paying their bills.

     I see no other method of protecting JEA customers, or the JEA balance sheet.  This deposit system "forces" those using electricity to pay for all they use.

How did you come to that extremely unpopular conclusion Ron?

Bridge and Stephen.  The following might explain why I believe that JEA has no other choice but to impose the two month average monthly deposit to all customers; that is, if their objective is to keep rates as low as possible.  I am not saying that there is no corruption, waste, or obscene salaries or expenditures within the JEA system.  But, follow me through on this.  Where am I wrong. 

Let’s assume that there were absolutely no deposits for residential or commercial customers.  Let’s assume that under this arrangement that JEA was operating at a profit, stabilized, and all the customers were happy about “no” deposits.

Let’s assume that JEA had structured the rates slightly higher to absorb the occasionally unpaid bill left by an exiting commercial or residential customer.
This arrangement would seem okay, as their would be no huge deposit fund, and the “losses” incurred upon JEA by exiting non-paying customers would be “paid for” by the JEA customer base.. you and me included… by way of the slightly higher rates. 

What is wrong with this arrangement?  The bottom line is that the unpaid bills are “paid” by the large customer base of JEA.  The people who clearly “make out” are those exiting without paying their last two or three bills.  But, all is good.  JEA’s running costs are taken car of because of the slightly higher rates to cover this kind of non-payment.   

The above scenario does not agree with me because those who exited without paying their bills get off scott free.  They in effect have stolen electrical power for a period of at least two months, and who has to cover the losses?  You and me. 

I would rather these residential and commercial customers be forced to pay a deposit equal to an average of two months bills, allow JEA to hold the deposit, to be used in the “end” to pay their power usage if they decide to go out of business, or to skip town. 

This two month deposit scenario does not allow “any” JEA customer to exit or disappear while owing money to JEA.  Result?  You and me do not have to pay for the power they used during their last two months of being a JEA customer in the form of slightly higher rates.

In short, the current deposit policy keeps rate lower for you and me simply because the otherwise higher rates aren’t necessary to cover the occasional non-payment by an exiting, departing, or failing customer.  The bottom line is that “somebody” is going to pay for the electricity produced and supplied.  The currently enforced deposit policy insures that in each case, those who consume, ultimately pay for their consumption, and not me and you in the form of increased rates.  Sorry about the repetition. 

Now, if only that procedure was followed for property insurance. You and I would not have to pay the high rates we do because someone decides to build on a barrier island or a flood plain. A substantial deposit, a huge substantial deposit to be assessed to and held in escrow for those who have their home wiped out and then rebuilt. As it stands now the risk is spread out over the multitudes so that the few are spared outrageous policy costs.

I hear that State Farm is about to raise rates because they are contemplating huge claims for sink hole damages. I don't think I live in a sinkhole prone area so why should I have to help cover other peoples losses or contribute to the bottom line of a for profit company should there be no sinkholes.

QuoteThe real unpaid bill rate is more like 3% unpaid balances.

Citation please?

Seems like JEA has hijacked a thread, hmmmmmmm, powerful conglomerates at work indeed.

      Stephen.  I would like to work this thing through to what could be a solution.  So….lets suppose that there was in fact a lower deposit fund, perhaps $20,000,000, enough to cover a few commercial and residential non-payments.  This would allow all of us to have a deposit equaling only ten to twenty percent of our monthly bill.  With time, occasional customer non-payments would lower the fund slightly, so that once below a certain level, all of us would have to pay a slight additional deposit, which would be tolerable as its necessity would be understood.     

     So, instead of my current $9,100 deposit, it would be only about $1,000 or so.  If I ran into bad times, and began to sink into history, I would or could leave an unpaid JEA bill amounting to $9,000 or so.   My small deposit of $1,000 would pay for some of it, but JEA would still be stuck with $8,000 unpaid as a result of my business demise.

     In the above decreased deposit arrangement, considering the possibility that I would never have the funds to pay the bill, you and your fellow JEA customers would pay it for me by paying the increased rates.  Somebody has to pay for the coal and operating costs.  If I do not pay for my use, then you and others will pay for me. 

     So it seems that we must make a decision as to whether or not we want to get into a form of welfare for the unfortunate customers who run into troubles and are unable or unwilling to pay for electricity they consume. 

     Personally I do not want to be on the receiving end of welfare.  I would rather pay the two months average bill of $9,000 ahead of time, so that if and when things got tough, I could proudly exit the JEA system having paid for all of the electrons I had consumed.  An additional benefit of having the large deposit is the fact that, if and when I closed my doors, it would be a nice bit of cash returned to me upon my exit from the system.

     So………… welfare or no?  Do we want to pay for other’s use of JEA power?  If we do not mind paying the bills of those who cannot or choose not to, then by all means, we can go the route of the much lower deposit policy.  However, If we do not want to participate in a form of welfare, we must also see the necessity of having every customer pay a deposit equal to the average of two months usage. 

     As shown by my first posts on the subject, the high deposits, and the high multimillion dollar deposit funds each year, at first seem excessive and unreasonable, but in the end, we, as customers, pay less for our electric service if JEA maintains the current system of deposits.

     As one approaches going out of business, one begins to scramble for funds.  The time for a business to pay a large deposit equal to twice a monthly bill is during the good times, when it is usually not a burden.  By this method, his last bill is paid, JEA is covered, and you and me do not have to engage in welfare by paying for the power used by the unfortunate who have to exit the system unable or unwilling to pay their last two months of usage.   

     

     

You're making me think Stephen.  Not used to it, and it hurts. Be back.

Stephen's model could be quite correct under the assumption that every JEA account is charged a 200% deposit.  But in reality, the only accounts that are required to maintain a 200% monthly balance are the ones that have already proven to be potential liabilities due to a poor credit history upon signing up for new service or a poor JEA credit rating based on non-payments and disconnects among other things.

So the question now would be how many customers are required to pay / have paid the 200%, and how many others have either a minimal or no deposit.

There are also alot of assumptions or "facts" Stephen is using that may or may not be correct.  50% return on basic service?  Losses due to non payment 3%?  Theoretical vs actual exposure?  Just to list a few...

I called JEA yesterday about setting up a new account and the deposit amounts I was quoted were: $0 good credit (which is what I paid), $300 poor credit, $500 or 2 months avergae whichever is greater for customers with no credit.

Quote from: cephus on February 16, 2011, 03:45:52 PM
I called JEA yesterday about setting up a new account and the deposit amounts I was quoted were: $0 good credit (which is what I paid), $300 poor credit, $500 or 2 months avergae whichever is greater for customers with no credit.

OH.... MUH ....GAWD

I'm willing to bet that if you keep your account in good standing, you'll never see the dreaded 'We Take What We Want' notice in your mail either.

      I think we are having difficulty with the JEA deposit issue because it is impossible for the two most desirable conditions to exist simultaneously; the first desirable being the condition wherein we do not want any JEA customer to exit the system while owing hundreds or thousands of dollars, and the second being our wish to have JEA hold only about $20,000,000 or so of our deposit funds.  If every customer pays 200% their average monthly bill, then the deposit fund is forced upward to obscene levels, but at least this will not allow anyone to skip out while owing money.
     If we desire to limit the JEA deposit fund by allowing for most customers to have very low deposits, then we will be approving of occasional non-payments by exiting customers.  This latter condition may be okay in some respects, as it will be giving those in financial stress a break.
     And if JEA is operating with a large cash cushion, as some have suggested, then it really does not matter how much they hold in deposits.  So perhaps it is okay to suggest the low end for the deposit fund, say $15,000,000, instead of the $200,000,000 to $300,000,000 level of recent years.
     I personally believe that “all” JEA customers should be forced to pay for all of the electricity they consume, and the “only” way to do this is to have a policy of making customers have on deposit 200% of their average monthly bill.  The problem is that we have this huge deposit fund, which seems obscene.  What to do with it?  Perhaps JEA could have the deposit fund draw interest, and use the interest to improve the balance sheet so that customers would pay less for electric use.  In my view, as long as JEA is efficient, is empty of corruption, and is run like a businesses, and attempts to keep the rates as low as possible, then what more could we ask of the operation?         

     I agree that the JEA scenario is too complex for the time and ability available to me.  And so, my attempt to simplify by stating that my main concern was to insure that every customer, in the end, pays for all electrical power he or she or they have consumed, has not faired well.  Too bad the seemingly obscene huge deposit fund cannot be targeted via some kind of investments to ulitimately benefit all the customers by lowering electrical rates.

     My earlier hopes that our casual posting might approach a solution on this particular problem was apparently too ambitious, but I thoroughly enjoy the exercise in thinking and discussion on this productive MJ forum, which, by virtue of our efforts has remained civil and on the subject.  Thank you. :)