Fernandina Beach Weighs Property Tax Rates With Paid Parking Revenue at Risk

By Mike Lednovich/Editor

FERNANDINA BEACH — City commissioners will meet Tuesday to decide how much flexibility they want to preserve as they set the tentative property tax rate for Fernandina Beach’s 2026-27 budget.

City Manager Sarah Campbell is recommending a rate of 4.5444 mills, down from the current rate of 4.6849 mills.

The proposed rate is described as a “modified rollback rate” because it is designed to keep the city tax impact approximately the same for homesteaded properties whose assessed values are limited by Florida’s Save Our Homes cap.

At 4.5444 mills, property owners would pay $4.5444 for every $1,000 of taxable value after exemptions.

The rate would generate an estimated $23.17 million in property tax revenue — about $952,000 more than the $22.22 million generated at the current rate this year. The additional revenue comes primarily from rising property values and new construction.

The city’s taxable property value has increased to nearly $5.1 billion, up 7.5% from the current budget year.

Tuesday’s vote will not establish the final tax rate. It will set the maximum rate commissioners can consider during the remaining budget process. They can lower the rate before adopting the final budget in September, but they cannot increase it above the tentative rate without restarting the state-required notification process.

"Staff has prepared a draft budget with a tentative millage rate which maintains and, in some instances, expands, public service levels," city documents state.

That leaves commissioners with several choices.

The full rollback rate is 4.4425 mills. That rate would generate approximately $22.65 million, essentially the same total property tax revenue as the current year after accounting for new construction. Choosing the rollback rate would leave the proposed budget about $519,000 short of the administration’s current plan.

The recommended modified rollback rate of 4.5444 mills would generate $23.17 million. The proposed budget assumes the city will collect 96% of that amount, or approximately $22.24 million, for operations.

Keeping the current rate of 4.6849 mills would generate approximately $23.88 million — $716,260 more than the proposed budget currently requires.

Commissioners will also be shown a higher “what-if” rate of 4.8530 mills. It would generate approximately $24.74 million, or $1.57 million more than the administration’s proposed budget.

That scenario was developed to give commissioners the ability to replace paid parking revenue if city voters approve an Aug. 18 charter amendment requiring voter approval for paid parking.

The city has committed paid parking revenue to the $12.6 million demolition of Brett’s Waterway Cafe and the redevelopment of that section of the city marina. Eliminating the program could leave commissioners searching for another source to meet those obligations.

Since launching in February, the paid parking program has generated nearly $500,000 in net revenue after operating expenses and management fees.

“In a presentation prepared for Tuesday’s meeting, City Manager Campbell listed contingency funds, debt reduction, conservation land acquisition and replacement of paid parking revenue for the marina redevelopment as possible uses of revenue from a higher millage rate.”

Commissioners could still reduce the rate later if the additional money is not needed.

A separate finance worksheet lists 4.8868 mills as the rate necessary to generate nearly $24.91 million. Adopting that rate would require unanimous approval from all five commissioners. The administration, however, is not recommending that rate.

The proposed 2026-27 spending plan is built around maintaining current city services and expanding some services. It also preserves a General Fund reserve equal to 20% of spending, the minimum established by city policy.

The city budgets only 96% of projected property tax collections, slightly above the state-required minimum of 95%, to account for discounts, delinquencies and other uncollected taxes.

For an individual homeowner, the effect will depend on taxable value, exemptions and whether the property is protected by the Save Our Homes assessment cap.

For example, a homesteaded property with $100,000 in taxable value this year would owe about $468 in city property taxes at the current rate. If its taxable value rises by 3%, applying the proposed 4.5444 rate would produce a city tax bill of approximately $468 — essentially unchanged.

Non-homesteaded properties, commercial properties and recently purchased homes could see larger increases because their assessed values are not protected in the same way.

Last year, commissioners voted 4-1 to retain the 4.6849-mill rate despite requests from residents to adopt the lower rollback rate. The same rate was ultimately incorporated into the city’s $240 million budget, which included a $44 million General Fund and $28 million in capital projects.

This year’s decision comes as the city faces several significant financial demands, including marina redevelopment, new soccer fields and other projects in the recently approved five-year capital improvement plan. Commissioners are also looking ahead to a November statewide vote on expanding the homestead exemption, which city officials estimate could eventually reduce Fernandina Beach property tax revenue by about 16%.

Tuesday’s 5:05 p.m. decision at City Hall will therefore determine not only the ceiling for next year’s tax rate, but also how much room commissioners retain to respond to paid parking, property tax reform and other financial uncertainties before the final budget is adopted.