Mulling the Millage Rate: Part 4 of 4

In this long (oh dear) but final (thank goodness) installment of the series—one that I’m sure comes in the midst of considerable subject-fatigue among many of you—we’ll look at KFC’s last and, in my view, most cynical argument against reducing the millage rate: the “too regressive argument.”

I’m glad I saved this one for last, because while it still very much pertains to the millage rate per se, this argument carries a distinctly political, maybe even moral, valence that I fear will linger long after this debate has concluded; a profoundly hypocritical, exploitative, and even pernicious connotation that feels out of place for what should be a fairly vanilla to-be-or-not-to-be policy question.

Typically, I'd share a clip of KFC awkwardly fumbling their way through the argument before steel-manning it myself. Today, however, I'm taking a different approach. I'm yielding the floor to fellow resident, attorney, charter review committee member, and loyal KFC supporter Tom Wells, who left a spirited comment on an episode of the Politics in Paradise podcast. His remarks, in my view, offer an exceptionally thorough and candid articulation of the "too regressive" argument. I believe Wells' comment therefore serves as an ideal steel man, encapsulating the essence of the opposing viewpoint more effectively than I could. It’s long, so I will quote only the most relevant portion:

The people and companies that benefit from this $2.6M tax cut are not limited to residents – it benefits anybody who owns property in Coral Gables whether or not they reside in Coral Gables. And there are many developers that own property (but do not reside) in Coral Gables. For example, the founder of the real estate developer of the Villages at Coral Gables (and many other Coral Gables real estate developments) does not have his homestead in Coral Gables as of January 1, 2024 per the Miami-Dade Property Appraiser. Page 20 of the budget lists principal taxpayers as a percentage of taxable value. The list includes (a) 251 S Dixie LLC at 1.15%, (b) Agave Plaza Trustee LLC at 1.02%, (c) Merrick Park LLC at 0.84%, and (d) 1350 S. Dixie LLC at 0.48%. 1350 S. Dixie is controlled by a person that gave $1,000 to each of Mayor Lago and Alex Bucelo for their election campaign on February 1, 2023. The 2023 tax bill for 1350 S. Dixie was $2.02M so a 2% tax cut is a $40,409 benefit in exchange for $2,000 in campaign contributions. The 2023 property tax bill for Agave Plaza was $3.2M, and it would get a tax cut of over $63,500. The $104,000 tax cut provided to these 2 land owners is 4% of the aggregate $2.6M property tax cut! In addition, there are Coral Gables residents that do not pay property taxes. For example, the residents of The Palace at Coral Gables do not pay property taxes – they pay a flat rate regardless of increases or decreases in property taxes – see https://www.palacecoralgables.com/calc.html Laguna Living, LLC and Century Crystal Group, LLC (2 companies controlled by former developer Sergio Pino) each gave $5,000 on March 20, 2024, to Mayor Lago’s PAC – Accountable Coral Gables, Inc. – to promote his agenda. Real estate developers give money to Mayor Lago, and this tax cut is a way for him to repay those gifts.

Don’t look at me that way. I said it was thorough and candid. I didn’t say it was good.

Taxes and tinfoil hats

Let’s start with the best part: the notion that the mayor would propose a city-wide tax as a strategy to “repay” a handful of wealthy donors. It wasn't enough for Wells to frame benefits to non-residents as an undesirable corollary. He had to allege that these benefits represent deliberate kickbacks, that they’re the main purpose of Lago’s tax cut. Note that Ariel, the unifying figure that he is, leveled this accusation from the dais as well. I assume they all posses a secret window into Lago’s soul, because neither of them has offered anything to support this claim other than “c’mon, just look at him!”

But “c’mon, just look at him” goes a long way in a community with an activist base that has been fed a steady diet of skin-deep politics for years. It even works on the Miami Herald, who employs beat reporters who seem to believe this is how guys like Vince Lago and Francis Suarez hang out all day:

This kickback idea wasn’t couched as a suggestion or a hypothesis. It was an unqualified assertion. As Wells himself wrote, “Real estate developers give money to Mayor Lago, and this tax cut is a way for him to repay those gifts.”

Okay, but Lago has been on the commission since 2013 and has been a prodigious fundraiser ever since. You’re telling me he is only now getting around to implementing this clever tax kickback scheme of his? In 2024? When he’s outnumbered by colleagues who would vote down a cure to cancer were he the one to discover it?

Do any of these people stress-test these ideas? Do they give them any conscious thought? Or do they just spew from their minds like cognitive diarrhea?

Anyway, let’s all put on our tinfoil hats and take a closer look at who Wells, God bless his soul, claims Lago is attempting to “repay:”

Agave LLC:

Owners of The Plaza, a project that Lago voted against over and over again until they finally reduced the primary structure’s maximum height. “Repaying” Agave a tax savings of $63,500 after delaying their project for well over a year and costing them millions in the process would be like trying to compensate someone whose house you stole by giving them a canvas tote bag filled with mints and moisturizers.

Dixie and S. Dixie LLC:

Owners of Thesis and former owners of Gables Station, the projects that virtually everyone hated…including Lago, who voted against them every time they were on the agenda. Notably, the head lobbyist for these projects was Steve Marin, Lago’s old campaign consultant turned mortal enemy. Marin was the impetus behind Lago passing the city’s lobbying restrictions years ago, as well as one of the key players behind the failed mayoral recall. Oh, and I almost forgot, Marin ran Kirk’s political campaign. Those two, along with Ariel, are pretty tight these days. So yeah, Lago cooked up a tax cut just to reward that whole crew. Good catch, Tom.

Merrick Park LLC:

Owners of Merrick Park, obviously. The big fancy mall that happens to be one of M.E.D. Expediters’ biggest clients. And, yes, M.E.D is Dr. Castro’s permit-expediting company. Merrick Park is also a primary beneficiary of a new cooperative parking agreement that was made with The Avenue, a development that’s being built across from Neiman Marcus. This new parking agreement will generate millions of dollars of parking fees for Merrick Park. What’s more, it had to receive commission approval. In other words, the commission had to approve a deal that benefits one of Dr. Castro’s clients to the tune of millions of dollars. Guess who didn’t recuse herself? Guess who didn’t disclose the conflict. Guess who voted to approve it? I’ll give you a hint, she has a Ph.D. (she keeps it framed next to her Nobel).

Laguna Living and Century Crystal LLC:

This one is especially bizarre, as both companies were owned by Sergio Pino, who recently committed suicide at his home in Cocoplum during a federal raid. It’s a tragic story that was years in the making, but that picked up a lot of steam back in June when the Miami Herald wrote about Pino’s troubles. Amazingly, the always professional and not-in-any-way-ideologically-captured Herald actually attempted to link Pino to Lago by mentioning, all the way down in paragraph 31 of the article, the $3,000 Pino donated to Lago’s campaign and PAC. That’s all they mention, though, because that’s all the “dirt” they could manage to dig up. Oddly enough, however, the Herald forgot to mention the $4,000 that Pino donated to Kirk’s campaign (see screenshot below). I guess paragraph 32 was full.

What’s amazing about all this is the notion that Lago just attempted to use broad-brush tax policy to reward a man whom the Herald tried to connect him to back in June, and who everyone—Lago included—knew was either going to end up dead or in prison before the end of the year. Fascinating theory. All that’s missing is a Jeffrey Epstein connection.

Maybe next time.

The medium is the message

Sinister plots aside, there’s much more to consider with regard to this argument and its advocates. Wells laments the fact that the benefits of a $2.6 million tax cut “are not limited to residents.” I won’t reiterate my earlier objection to blaming someone for something he can’t control (Florida does not allow cities to impose different property tax rates on individual property owners), as that would rely too heavily on common sense and logic—and we all know how terribly pedestrian and utterly déclassé that would be.

I’ll just take it on faith that Wells will apply his royal “let-non-residents-eat-cake standard” consistently. I’ll assume that the next time KFC proposes a policy measure that would confer a significant financial benefit to non-residents—like to the operator of a local burger joint or the director of a theatre company or the proprietor of a local beer hall—Wells will be the first to stand up and object. Surely, he’ll post an aggressively critical comment in Gables Insider just like he did here, and just like he did two years ago when Ariel unreservedly argued in favor of tax cuts that would have unavoidably benefited non-residents just the same.

Wait. What’s that? Wells didn’t object back then? Oh well, never mind that last part.

I’m sure that was just an exceptionally rare oversight, because Tom Wells is a vigilant man who won’t let even the slightest transgression evade his detection. He’s a real stickler for laws, rules and order, right down to the smallest detail. It’s partly why, one imagines, he’s so exceedingly fond of citing obscure and very precise sections of the city code or Robert’s Rules of Order or the Galactic Constitution. I bet he’s a real blast during family game night: “No! No! No! Incorrect! That is not a valid answer. According to Section 7, Subsection C, Paragraph 4, Clause ii, Sub-clause b, Footnote 3 of the Trivial Pursuit rulebook, all answers have to be in the form of a haiku!!!!”

And I'm sure it will be any day now that he finally gets around to lambasting KFC for their flash-hiring of Aimless Amos and for awarding him Peter Iglesias' top salary as his starting wage. After all, Wells is unfailingly consistent and steadfast in his principles. No one was more passionate and uncompromising in their stance against the former city manager's exorbitant compensation, and no one was more insistent on hiring a more experienced and qualified candidate as his replacement. Here's what Wells had to say about Iglesias’ compensation and qualifications earlier this year in Gables Insider (emphasis mine):

For those who have had to deal with Mr. Iglesias, you quickly realize that he is not an accessible or friendly public servant.

The information in Enriquez Lopez’s post as to Mr. Iglesias’ compensation is from govsalaries.com. Mr. Iglesias is the highest paid Coral Gables City employee and is being paid more than 55% above the average salary for other city managers in Florida. I believe his excessive compensation of $300,000 is causing him not to retire or resign amicably. And for this excessive salary, the City should have a City Manager who has a history of serving as a CEO/City Manager of a comparable city (or at least a Public Administration degree like other local City Managers).

In fact, this eminently gracious and dignified man is so committed to the idea of sensible compensation that he even tried to block Iglesias’ severance package shortly after his termination. Make sure to listen to the very end for the cherry on top of this very principled sundae:

How’d you like that independent search committee, Tom?

But I’m sure the always outspoken Wells will take aim at the new manager’s excessive compensation and complete lack of anything resembling relevant experience soon enough. I bet he is merely biding his time, building suspense, letting us all stew as we eagerly await his masterstroke, his tour de force, his epic takedown of KFC’s self-serving hypocrisy and betrayal of sacred principles.

Either that, or he was just blowing smoke this whole time, which in a world where the medium is very much the message, should outrage those who truly espouse the ideas and principles Wells only pretends to defend.

Residents First Only!

Once again, one has to wonder if the “tax cuts are bad because they benefit non-residents and deep-pocketed developers the most” line of reasoning has been subjected to any internal scrutiny whatsoever, or is it nothing more than a kind of lizard-brain impulse shooting straight out of some kind of collective amygdala?

I mean, those advancing this argument do realize that there will never be a time when property tax cuts don’t generate greater savings for large commercial properties vs residential ones, right? That if they object to lowering the millage rate because of this, and actually mean what they say, they can quite literally never lower the millage rate again. They’ll be stuck with 5.559 mills as a floor no matter how high their property values climb, because supposedly demonic entities like Agave will always “benefit” from a rate cut far more than the rest of us. They do realize that they’ll have to abandon this precious principle at some point, don’t they?

Speaking of benefits, they do understand that the contrapositive to the proposition that large commercial properties benefit much more from tax cuts is that those properties pay much more in taxes, right? Wells, to his credit, grasps this and at least acknowledges the fact that the reason Agave would see a savings of $63,500 from a 2% rate reduction is because its annual tax bill is roughly $3.2 million.

But what neither Wells nor anyone else advancing this argument seems to appreciate is that Agave’s current $3.2 million tax bill is still $600,000 more than the total amount that a 2% rate reduction would remove from the budget—$2.6 million. That’s the same $2.6 million they claim would inexorably devastate the city if removed from next year’s budget. Therefore, the city’s future, per the KFCs and Wellses of the world, hinges on an amount of revenue that Agave generates by itself. Talk about biting the hand that feeds you.

Lest one is tempted to argue that the fact that Agave is a much larger tax-dollar contributor in absolute terms is offset by its being a much larger tax-dollar consumer, one should keep in mind that what Agave pays is roughy equivalent to what 1,054 median residents pay combined (fun fact: if every last KFC voter were to leave the city and somehow take their property taxes with them, we’d only need 3.7 Agaves to make up the revenue shortfall).

Agave may consume more in the way of city services than any one resident, but it doesn’t consume more than 1,054 of them. Actually, I take that back. I can think of at least one resident that just might singlehandedly out-consume Agave in terms of the city’s single most coveted resource, police protection:

What, you thought I was kidding? That’s two blanket watch orders spanning a period of two months. What’s unclear is whether the entries on the supplementary spreadsheets represent watch orders beyond the blanket monthly orders, as each row on those spreadsheets appears to represent a unique event. That would mean there have been roughly 90 watch-order events attributed to one person—and that’s only for 2024, with more than four months still to go.

So we’re clear: Mrs. Cruzchev has had a personal police detail assigned to her for months at a time with the official justification being as little as “friends advising Mrs. Cruz to be careful.” It’s good to be the Queen.

Isn’t it interesting, though, how despite Wells and KFC and their ilk constantly tut-tutting about the lack of adequate police resources, they somehow feel no compunction about standing in solidarity with the biggest municipal resource hog south of the Mason-Dixon line? It’s almost as if they don’t take any of that tut-tutting very seriously.

The economic reality is undeniable: those large mixed-use properties in the CBD are major subsidizers of that elite suburban lifestyle we all cherish. That’s because those properties, and those who operate them, are net resource contributors, whereas the rest of us, especially those of us who would recoup only “tens of dollars” from a tax cut, are net consumers. This is due largely to the efficiencies and economies of scale associated with mixed-use developments. The Agaves of the world concentrate services and infrastructure in a single location. They typically require fewer police and fire department resources per capita due to their consolidated nature and often superior security systems. Moreover, they generate significant ancillary revenue through sales and business taxes, all while placing relatively little strain on day-to-day municipal services.

They’re also managed by highly sophisticated entities, ones who know how to marshal their considerable resources to effect desired outcomes. Frankly, this community should be grateful that Agave isn’t run by someone as absurdly petty as I am, because I’d be pulling a Trump Tower on this city out of pure spite.

I’d have a crack legal team vigorously challenging my tax assessment every year. I’d employ creative valuation methods and lease structures, hold more vacant space, defer low-priority improvements and a host of other strategies to lower my assessed value by a pretty penny. I’d make a concerted financial effort to cozy up with the county and Tallahassee. You liked SB102? Great, enjoy the sequel!

I’d spend five dollars just to deprive you of one, all because you think it’s cute to scapegoat and demonize me and carry on as though I should be drinking from a separate water fountain because of what I do for a living. I’d make it my mission to deprive this city of nothing less than $2,600,001. But that’s just me.

Fortunately billionaires aren’t known to be ruthless and Machiavellian.

In sum

The “too regressive” argument is one this community literally cannot afford to take seriously. It would effectively ensure perpetually higher taxes, which in turn would lead to a more bloated and less efficient government, one that would be permitted to grow in lockstep with the housing market. Voluntary tax cuts and other self-limiting measures would be essentially out of bounds, as cutting taxes would invariably benefit non-residents—and Lord knows we can’t have that. We would have to cut off our noses to spite our Agaves for the rest of time.

Make no mistake, I’m firmly against increased development outside the existing CBD. If a developer comes along and tries to extend existing boundaries and draw a bunch of new MXs all over the zoning code (Hi, Kirk), I’ll be sure to grab my pitchfork and join you at City Hall. But nothing good will come from demonizing the large commercial properties that aren’t going anywhere. The ones against which the city has no meaningful leverage. The ones that lay all the golden eggs that fund this lovely community. Indeed, it’s probably not a good idea to cook up conspiracy theories and invent dark overlord classes out of thin air simply because it provides a useful political narrative.

It’s stupid. It’s ugly. And it can someday prove a self-fulfilling prophecy.