Tax hike still on table as South Pasadena shelves new $15M City Hall

SOUTH PASADENA — A major property tax increase is still in the cards even after city commissioners shelved plans for a $15 million new City Hall and scaled back or cut a potpourri of other items.

Commissioners gave initial approval Aug. 25 to a nearly $16 million city budget that calls for a property tax rate of 5.81 mills, about 10% above the rollback rate. The vote came without discussion, although commissioners had discussed the budget at several earlier meetings with staff.

For the owner of a $300,000 home that receives the two homestead exemptions totaling $51,411, the proposed tax increase would raise the annual city tax bill by $159.95, to $1,453.70, city figures show.

Yet even with the proposed increase — and after dropping the new City Hall and other capital projects, including street paving, exercise equipment and a kayak launch — the spending plan would tap more than $532,000 in general fund reserves.

The recommended budget would provide employees a 4% cost-of-living increase. It also would split the city administrator and city clerk jobs, now merged under Carley Lewis, into separate positions.

But the city's capital improvement budget would fall about 28%, from $4 million this year to $2.9 million next year, as projects are pared back or eliminated.

The City Hall project was still on track less than two months ago, when officials discussed financing its construction. Now they are looking at spending about $1.34 million to rehabilitate the existing hurricane-damaged building.

The $15 million price tag for the shelved City Hall was nearly as much as the city's entire proposed $15.77 million budget for the 2026-27 fiscal year that starts Oct. 1.

The change in direction came during an Aug. 18 budget workshop, when Finance Director Heather Guadagnoli told commissioners the city's insurance company recently had City Hall appraised.

That appraisal found the building was worth substantially more than the value the city had been using, Guadagnoli said. That gives the city more room to make repairs without exceeding the Federal Emergency Management Agency's 50% rule.

Under FEMA’s rule, buildings with damage exceeding half their value must meet current floodplain standards, usually requiring them to be elevated.

“We felt that it's much more conservative to just fix this building,” Guadagnoli said at the workshop.

The new appraisal wasn't the only factor.

Guadagnoli also cited proposed changes to Florida's property tax system as a reason to hold off on the new digs.

The city had sought a $3 million state appropriation for the project but didn't receive it.

“We're all disappointed,” Guadagnoli said. “We don't want to not have a nice, beautiful building. But I think that it's the most responsible thing to do at this time.”

At an earlier workshop in June, commissioners left the $15 million replacement City Hall in the city's plans while trimming or cutting other projects.

Then on July 1, Mayor Arthur Penny announced the state Legislature had awarded the city $500,000 toward a “resilient city hall.” Penny said the existing building had suffered major damage during hurricanes Helene and Milton and that the city was “in the planning stages for a new facility.”

Now the city hopes to use that $500,000 along with an estimated $840,000 in insurance proceeds toward the $1.34 million renovation. But whether the state will allow that use of the appropriation is unclear.

The renovations would include restoring the building's elevator and raising electrical panels to protect against future storms. Officials also believe reconfiguring underused space could make the aging building more functional.

A new City Hall now may not happen until 2038, when the city's fire station debt is slated to be paid off. Guadagnoli said the city could then replace that debt payment with financing for a new municipal building.

For now, though, the city's finances are moving in the wrong direction — and officials know it.

As The Pinellas Current reported in July, South Pasadena was the only one of Pinellas County's 24 municipalities to show a decline in taxable property values on the 2026 preliminary tax roll.

The latest budget figures put the city's taxable value at about $907.3 million, down about 0.7% from a year earlier.

The proposed tax rate could still be reduced before commissioners adopt the final budget and millage next month following public hearings. But Guadagnoli is recommending that commissioners stick with 5.81 mills.

“You're going to be tapping into prior year reserves even with the increase in millage,” Guadagnoli told commissioners at the Aug. 18 workshop. “That's a big important point to consider.”

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