Florida Property Tax Rollback

Legislators recently completed a special session to deliver the largest tax cut in Florida history. The plan passed by lawmakers is a two-part proposal.

The first part of the plan includes a freeze on tax rates. The Legislature voted to freeze property tax rates at last year's level. Property owners will benefit from the rollback with an average savings of $174 for homeowners, and an average savings $1000 for commercial property owners. Under this component, cities and counties will also be required to cut taxes to either 3,5,7 or 9 percent, with the larger reductions required for counties and cities where property taxes have increased the most in recent years.

Florida voters will have the opportunity to vote on the second part of the plan. Lawmakers proposed a constitution amendment to create a "Super Homestead" exemption giving property owners the option to switch from the current Save Our Homes exemption to the new one. Save Our Homes is the Florida homestead exemption passed in 1992 that limits residential property tax increases to no more than 3% per year. Under the new "Super Homestead" exemption the first $200,000 of a home's value would be 75% exempt. The next $300,000 would receive and additional 15% exemption. A home valued at $500,000 would receive the maximum exemption of $195,000.

Homeowners will have a one-time only option to choose to remain under the "Save Our Homes" exemption or switch to the new "Super Homestead" exemption. Once their decision is made, they will not be able to change it.

Small business owners will also get a break under the new proposal. The first $25,000 in assessable Tangible Personal Property will be exempt.

Neighbor vs. Neighbor
Under the current Save Our Homes exemption, some residents are stuck paying higher property taxes than their neighbors. This is because they purchased their homes later than their neighbors and at a higher tax rate. The new proposal is designed to create a fairer system of calculating property taxes and to even out the property tax burden.

Stuck in my house!
Some homeowners have found that they are "trapped" in their homes because of the Save Our Homes exemption. They are unable to sell their house and move to a bigger or smaller home because if they do, they will lose their tax protection. The tax bill on their new residences would be so much more than they are currently paying that homeowners are deciding to stay put. Under the new proposal, if you purchase a new home, you will be eligible for the "Super Homestead" exemption and a savings on your property taxes at your new residence.

Benefit: A Healthy Real Estate Market?
Another possible benefit to the new proposal is the Florida real estate market could get a real boost. Due to their fear of paying higher property taxes, many homeowners have opted to stay in their homes. The end result means fewer homes are up for sale. The limited supply of available homes creates higher prices. Higher prices mean less people are able to actually afford a new home. Homebuyers will not lose tax protection when they sell their homes under the new proposal and may be more willing to trade up to a new house.

They Could Have Done More
As usual our politicians have completely ignored or missed the point! The tax issue has never really been about capped homestead property. Yes it would have been beneficial to the retired property owners to have some kind of "Portability" with their tax bills, when purchasing a new home. Let's face facts though and realize that most retired people pretty much stay put until they have to sell and then move in with the kids or to assisted living, etc.

The tax problem/tax revolt deals with the 40-45 percent of the retired, second home, and investment owners. Florida has done virtually nothing to offset the tax burden for them! Rolling taxes back to the highest assessed year and no caps is a joke. The average tax savings will be about $195. It's as if our government has completely forgotten about these people or are sending a message that "if you want stay in Florida or invest in Florida, suck it up and get used to it!" What if you are retired, are living in Florida and have purchased some income producing rentals? Now like day to night your taxes and insurance has quadrupled, you're so upside down you have no choice, but to sell out in a declining market, tuck your tail and try to stay retired!

It remains to be seen the real effect our government's short-sightedness will have on the tax payers of this state, but I sure wish I was selling real estate in states just north and west of Florida!

It's up to YOU...maybe?
Florida voters will have the opportunity to vote on the "Super Homestead" in the presidential primary on January 29, 2008. If 60% of the voters approve, the bill will become law. But the proposal may not make it to the ballot if a lawsuit filed by Weston Mayor Eric Hersh is successful. The lawsuit calls for a repeal of the tax cut and for the amendment to be scrapped. In a recent order, the Florida Supreme Court directed the case be given "expedited consideration" and transferred it to the Leon county circuit court. If the courts side with Hersh, Florida voters will be out of luck and the Save Our Homes exemption will remain.

I urge anyone who has an interest in Florida's future to contact their local and state representatives and let them know how strongly we wanted a fix and not a band-aid solution.

Panama City Airport Update

Construction Management Firm Selected

The FAA recently committed at least $72 million dollars for the relocation of the Panama City - Bay County International Airport to its planned West Bay location. The funds will be dispersed over four years, which is a shorter time period than previously expected. According to the Airport Authority, the quicker disbursement schedule will result in lower financing costs and will ultimately result in a lower total cost to relocate the airport.

Also the FAA has approved use of the airport's entitlement funding of about $7.2 million per year for the project. These funds, combined with the recent commitment of $67 million from the Florida Dept. of Transportation and the expected $61 million that the Airport Authority says it will raise from the sale of the land where the current airport sits, will cover the relocation costs, according to the board. The board says that no local tax dollars will be used for this project.

Management Firm Selected - Hiring of Construction Firm delayed

The Airport Authority has also selected the construction firm Kellogg Brown and Root Infrastructure Inc. (KBR) to manage the construction of the new airport. KBR will oversee budgeting, scheduling and other administrative tasks. The company will not be responsible for the actual hiring of construction firms. The airport board will make that selection.

Recently, the board announced that the bidding process, and final selection of a construction firm from six potential companies, has been delayed. The delay comes after the companies had numerous questions about the project and required answers to the questions before submitting their bids. For each question received from a company, the board is required to distribute a copy of the question with an answer to all companies bidding for the project. The bids should be submitted by the end of this month. It is unclear whether or not the bidding process will be delayed again.

Got a Permit for that?

But no construction will take place without the final environmental permit from the U.S. Army Corps of Engineers. These are expected to arrive sometime in the next few weeks. Officials say the new airport is still planned to open at the end of 2009.

Since the mid-1990s, Florida's property-tax system has penalized businesses, landlords and newcomers by shifting a higher tax burden to non-homesteaded property owners. Property taxes have become burdensome for many Floridians and are affecting how people look at home ownership.

Former House Speaker Allan Bense was chosen to lead a panel that will look at a broad range of issues related to state taxes and make recommendations for proposed constitutional amendments.

Governor Charlie Crist wants the Legislature to put property tax relief on the ballot at a special election this year. The commission consists of 11 appointments by Crist and 18 by legislative leaders.

There could not have been a better time for this commission to come forward. It is important for widespread public testimony before the panel's May 4, 2008, deadline to place proposed amendments on tax and budget matters on the November
2008 ballot.

Visit and email your opinions to

• Florida House of Representatives
• and the Florida Senate

The following are some of the issues presented to Governor's Tax Reform Committee from 2006. View full report:

• Assess business property based on current use only, instead of ”highest and best use” value.
• Cap tax revenue growth for individual local governments.
• Cap tax growth for individual properties.
• Full or partial replacement of the property tax with other forms of taxation.
• Assess properties using a moving average value of several years’assessments
  instead of using just the current year’s value.
• Simplify the “Truth in Millage” notice to be more easily understood by taxpayers.
• Increase the homestead exemption.
• Save Our Homes Portability.
• Phase-out of the Save Our Homes tax preference.
• Partial-year assessment of improvements to real property.
• Agricultural use classification improvements.
• Protecting homestead-related tax benefits when property is taken through the use of governmental powers of eminent domain.
• Protecting homestead-related tax benefits during frequent relocations required by military service.

To cut through the clutter, here is a Miami Herald property tax primer, with answers to some of the most commonly asked questions. The accompanying chart compares the four proposals moving through the Legislature.

A. Supporters of overhauling the system -- Gov. Charlie Crist among them:

Property taxes have risen faster than people's ability to pay. For example, property taxes rose 100 percent for the average Floridian in the past six years, while personal income rose 44 percent. The real-estate boom filled local government coffers with extra cash, more than they need to meet reasonable expenses. The Save Our Homes tax cap has created inequities that allow for neighbors with similar homes to pay vastly different tax rates.

Q. What is Save Our Homes?
A. A constitutional amendment passed by Florida voters that took effect in 1995. It basically says that local governments can assess a residence at market value when it is sold, but after that, the assessed value of the home, for tax purposes, can only rise a maximum of 3 percent each year, even if the market value of your home rises much more. Local governments are allowed to reassess at full value again when a home is sold.

Q. What's wrong with that?
A. It benefits some homeowners, but hurts others. Let's say you bought a $100,000 home 15 years ago. Your property taxes have increased slowly since then because of the Save Our Homes cap. But your neighbor next door bought an identical house three years ago -- and it cost him $400,000. He is paying much more in property taxes, because local government
reassessed the property at market value when he bought it.

Also, Save Our Homes affects only residential properties that have homestead exemptions. It doesn't cover other real estate, such as rental property, second homes or commercial property.

Many homeowners say they are afraid to move because they will lose
the tax savings they now enjoy from their current home.

Many older couples say the provision has locked them into their current homes, when they would like to move to a smaller house.

Younger couples say the inequities make it harder for them to buy a first home.

Q. How are property-tax rates determined?
A. There is no set rate governments must charge. Counties and cities decide the amount of money they need to collect to pay for their needs each year. Then they set the tax rate, also known as the millage rate, to bring in the money.

Q. What is millage?
A. One mill is equal to $1 for every $1,000 in assessed value. For example, if you have a home valued at $200,000 for tax purposes, and the county's millage rate is one mill, you pay $200 in property tax. If the rate is eight mills -- a little closer to reality -- then you would pay $1,600. Of course, you actually pay a little less because of your homestead exemption.

Q. What is a homestead exemption?
A. The Florida Constitution entitles every person who owns a permanent primary residence in Florida to a reduction of $25,000 off the taxable value of their home. So if your home has an assessed value of $200,000 and you have a homestead exemption, you actually pay taxes on $175,000.

Q. My house is valued at $200,000 and my millage rate is eight. But my taxes are a lot higher than $1,600. Why?
A. Because the county is not the only agency taxing you. Your municipality, school district, water and sewer district and, in some areas, special taxing districts, are also allowed to charge property taxes. Each sets its own millage rate, and you pay according to the assessed value of your property.

Q. My county has lowered the millage
rate. Why are my taxes still going up?
A. Because property values throughout much of Florida rose dramatically over the past few years, property taxes also rose even if millage rates remained stable or went down. State economists say that the median house price in Florida increased 90 percent from July 2001 to July 2006.

While most counties reduced their millage rates during those years, soaring
property values allowed them to collect more tax revenue than the year before.

Q. How much money will the tax reform proposals save me?
A. It all depends on which plan ultimately passes. Homeowners would save the most under either of the House Republicans' two plans. One reduces taxes across the state $3.9 billion by eliminating all property taxes on primary homes, requiring counties to roll back their taxes based on the 2003-04 budget year, and raising sales taxes 2 ½ cents. The other does not eliminate property taxes but saves taxpayers $5.8 billion by requiring counties to roll back their taxes based on the 2000-01 budget year.

House Democrats propose giving a $3.8 billion tax break by sharply increasing tax exemptions on homeowners and businesses and making up the money lost with a one-cent increase in the sales tax.

The plan that saves homeowners the least is the governor's, which doubles the homestead exemption to $50,000. Expect a compromise somewhere in between.

Q. Why are counties and cities opposed to the House Republican plan?
A. They don't oppose changing the property tax structure, but they say the cuts required would be too deep and would require eliminating services.

Q. How likely is it that we would do away with property taxes?
A. Hard to say. Even if the Legislature were to pass the proposal, it would take a constitutional amendment approved by voters to eliminate property taxes.

The governor is noncommittal on the idea. Early indications are that most of the Senate does not want to raise the sales tax and prefers a combination of rollbacks and changes to the tax system.

Q. Why does it take a constitutional amendment?
A. The state Constitution establishes the tax structure, so any change to it must be approved by voters. If the plan includes an increase in the sales tax, the Constitution requires that it must be approved by 66 percent of voters in order to pass.

Q. School districts rely on property taxes. What impact would the House sales tax plan have on schools?
A. Property taxes would continue to be collected from businesses and owners of second homes to pay for schools, but going forward those collections would be limited by an index based on inflation and population growth. This will put more pressure on the state to find new sources of money to improve schools.

Q. I have seen figures that show commercial property owners benefit the most under some plans. Why?
A. Individual owners of commercial property are not getting a bigger break, but there is so much commercial property in the state and its value is so high that the total amount of savings statewide would be much larger than to homeowners.

Q. What impact does the House Republican plan have on snowbirds and owners of second homes?
A. Property taxes would still be collected, but they would be scaled back, to an undetermined amount, and capped at the rate of inflation in the future.

Q. Will local governments increase other taxes and fees to make up for the lost tax revenues?
A. Probably. They could increase non-property tax revenues such as impact fees and other special assessments.

Q. What does the governor think about all this?
A. The governor said he wants property taxes to come down and proposed his own plan, but has said he is not bound by his own idea and is open to others'.

Q. Why doesn't the Senate have a plan?
A. Senate leaders are expected to come forward this week with some ideas. Among those they are considering: expanding the homestead exemption, raising the cap on the Save Our Homes assessment but allowing homeowners to carry their savings with them when they move, and changing the way property is assessed.

Q. What about the proposal to make the Save Our Homes savings portable to another home?
A. Legislators are struggling to find a way to make it possible for people to take the tax savings from Save Our Homes with them when they move. Some legal experts say allowing portability is unconstitutional and could jeopardize the constitutional footing of the current Save Our Homes cap. The only idea that appears to be likely is to allow people to keep their Save Our Homes savings when they move within a county.

Pier Park

Forecasted to become the new "Downtown Panama City Beach;" with its collection of upscale culinary experiences and espresso bars to chic retail shops and couture boutiques—all set against a backdrop of vibrant special events overlooking the Emerald Coast, introduce yourself to PIER PARK.

Breaking ground in March 2002 and located on 93 acres that covers land from Front Beach Road (at the City Pier) to the heavily-traveled Highway 98 is Pier Park, Glimpses of Pier Park’s 21st-century design, a departure from the Panama City Beach of old, the new model marks a fundamental change of direction in this city’s development and growth. A Simon Property Group development, Pier Park will serve as the premier shopping destination for the Panama City Beach market and the entire Emerald Coast.

Target is now open for business and some retailers will open their stores at Pier Park in 2007. The Grand Opening of the project is scheduled for spring 2008.

Pier Park on the Horizon

• "Street Scapes" retail concept featuring restaurants and several hotels (Back Porch Seafood House and Reggae J's Island Grill -both feature fresh Gulf seafood and direct views of the Gulf of Mexico. Ron Jon's Surf Shop, Panera Bread, Old Navy, Johnny Rockets, Longhorn Steakhouse and Starbucks are other restaurants and retailers to look out for.
• 900,000 sq. ft., open-air lifestyle center is ideally situated between Front and Back Beach Roads, right in the heart of Panama City Beach, to serve the growing residential community, exploding condo market, and over six million tourists that visit each year.
• About 30 acres featuring soccer fields, festival site, and nature trails will be on the north side of Back Beach Road (Hwy. 98).
• The Grand 16 Theatre with 16 screen-3,200-seat multiplex movie theatre will be the largest in the Panama City Beach, Panama City, Destin and Ft. Walton area. The Pier Park Grand Theatre will include stadium seating, digital sound, high back rocker seats on 18-inch risers, three concession areas, a specialty café and a game room. The theatre is scheduled to open in May 2007.
• Panera Bread’s 5,000-square-foot restaurant will open in April. It will face Back Beach Road and seat 175 people.

Does the Condo Market Resemble the Titanic?

With a rate of predictably paralleling the uncertainty of summer storms, the real estate market on the Emerald Coast has experienced recent activity unlike anything in the forecast of two years ago. Since I have lived in Panama City over the past 31 years, [I’ve] seen the highs and lows of our real estate market, but nothing could have prepared us for the market events of 2004, 2005 and now 2006.

While the market is now in a correction period, we are watching prices level out and available inventory increase, Condo Owner decided to seek the advice of those in the know to translate the terms and give readers the bottom line. The outcome? Unanimous. We are now focused on true end-users looking for a lifestyle as well as an investment. The“flipping” phenomenon of previous years “has gone the way of the buffalo.”

Pictured above is Laketown Wharf in its preconstruction phase with Ripley's Believe It Or Not Museum presented as the Titanic.

In 2003, anyone who knew anything about our real estate market expected a spike of 25 to 30 percent in pricing just to bring us up to some parity with our neighbors to the west. No one expected what transpired with the ‘flippers’ coming to town. During 2003, two-bedroom condos were selling at the end of the year for less than $250 per square foot. By the end of 2005, the price for a two-bedroom [unit] was about $500 per square foot, with developers asking up to $600 per square foot for their new projects.

What people don’t understand is that we are not experiencing a bad market; we just experienced this short time period of the buying and flipping, but people buying today can still expect a respectable return of 10 to 20 percent a year. Like the stock market, the time to buy is when everyone is selling. Property values seem to have fallen anywhere from 10 to 20 percent depending upon the location and amenity level of the specific condominium complex. Panama City Beach is in the midst of reforming itself into a great vacation destination with projects like the Grand Panama Beach Resort and The Town of Seahaven are evidence of the Renaissance Panama City Beach is experiencing.

I would not be afraid to buy a quality unit in a first-class facility with nice amenities. I believe complexes that have only average amenities will have a difficult time attracting numerous buyers at this time because the current supply has far surpassed the current demand. Buyers can once again get excited about purchasing their Florida dream because prices are down below $350 per square foot, with sellers willing to negotiate.

If considering selling, however, I would think about what I have invested and determine what a respectable return is. While we were all brainwashed into thinking we were supposed to make hundreds of thousands in resale, most people still find $25,000 is respectable, and they can still expect that. People have to understand that a real estate investment was never supposed to be a short term one, especially with closing costs and other expenses that relate to the transaction. You’re supposed to hold on to it for a year or longer. Do the math and don’t just throw a price out there based on what others are trying to sell for because, chances are, they’re probably not moving.

We have a lot of great new condos and condo resorts coming out of the ground. Most are being fueled by now long-term property owners.

As owners compare the value of buying real estate on the Emerald Coast versus in the Miami/Ft. Lauderdale, Naples/Ft. Myers/ Sarasota areas, they will realize that their investment dollar will go much farther in Northwest Florida. We still have a Baby Boomer turning 60 every 10 seconds in America. Unless they prefer the desert, my guess is that they will follow the sun, the water and the dolphins to the Emerald Coast.