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Residents weigh in on condos

Condo development along the beaches can hurt the people who depend on tourism for their livelihood.

By PAUL SWIDER
Published November 20, 2005

ST. PETE BEACH - Mary Wilkerson's business is feeling the crunch of condo development on the Pinellas coastline, so she's mobilizing to save her corner of the tourism industry.

She recently joined www.itsyourtimes.com as a citizen journalist to share her experience.

"I represent a segment of the tourism accommodations industry that is slowly disappearing," she wrote of her two small inns. "Once a mainstay along the barrier islands, this charming part of Florida's history is slowly fading away. Not by choice, but rather forced to sell to developers because they can no longer afford their ever increasing property taxes. And once these charming properties are lost they can never be recreated."

Wilkerson, who owns Gulfside Resorts and Sarah's Seaside villas in Indian Rocks Beach, said she has seen her property taxes go from $4,300 in 1990 to more than $26,000 this year. Her business consists of seven small villas, but the land is zoned for 16 condos, so, she wrote, the county property appraiser assesses her land as if she had condos. Her rental rates can't match her tax increases, so her profits dwindle.

Soaring condo values are affecting many business people like Wilkerson. In a condo conversion report released in February, county consultant Wilbur Smith Associates concluded that a confluence of low interest rates, real estate returns more attractive than stocks, scarce land and the looming retirement of millions of baby boomers is driving condo development along the beaches.

Property values on the beaches should hold steady for a little while, wrote Pinellas Park agent and real estate blogger John Mudd, but, he said, they will continue to increase as long as "300,000 people a year decide they want to move to Florida."

"Small businesses are definitely feeling the pinch, as are some homeowners and condo owners along the beaches."

Condos often replace hotels like Wilkerson's, but businesses that appeal to tourists also shrink, meaning there will be fewer restaurants, shops and entertainment venues for residents, too. Condos are also less likely to allow access to the beach. What remains on the barrier islands will trend ever more upscale.

"I feel like I am living someone else's life here," wrote Tracy Klimczak Woolrich, a St. Petersburg native. "I am not saying that we should stop progress, but do we want to only attract people who can afford $250,000 to $300,000 homes and condos? Where are all the fixed-income and young families going to live?"

Wilkerson is collecting ideas from other communities on how Pinellas can deal with the issue: Incline Village on Lake Tahoe, which sits on the California-Nevada border, is considering taxing owners based on their property's use, not its potential; Maine has special tax relief for working waterfront property; Nevada has a cap that limits tax increases to 8 percent a year on commercial property; Michigan is looking into extending a type of homestead exemption to businesses.

Bill Ockunzzi, the mayor of Indian Rocks Beach, also has suggestions on what government can do. He recommends lowering taxes throughout the county and making it harder to raise them. He said that even though beach communities pay a disproportionate amount of property taxes, they are still happy to appeal to tourists and county residents alike, as long as beach cities are treated better.

"The beach communities are largely hostage to the tax and development policies of Pinellas County and the larger cities," he wrote. "Pinellas County entities use beach property owners as a "cash cow."'

Jim Johnson, a writer and historian from Hudson whose family has lived in Florida for generations, suggests that businesses have actually been getting a break.

"When your average house in Pinellas cost $10,000, the homestead exemption was $5,000," he wrote. "When houses sold for $50,000, homestead exemption increased to $25,000. But homestead exemption hasn't increased since about 1980. Twenty-five years ago! So homeowners have been subsidizing businesses and ball teams and anyone owning a piece of a county commissioner since then. Homeowners get hosed."

Johnson said he thinks the real estate boom will end soon, but in the meantime the speculators should be paying higher taxes. Nonetheless, those speculators will feel the brunt of Florida history, he wrote.

"Sooner or later a hurricane will take care of the beach communities, and the newcomers will learn why the old-timers settled on the high ground. So the beach communities are a fool's paradise in terms of their real value. The beaches need to remain beaches and serve as a magnet for tourism."

Those wanting waterfront don't seem to be holding back, despite hurricanes and expense. Some question the imbalance between the rising values of property and the local economy. Wireless-communication consultant Larry Karisny talked about what he calls "economic beach erosion" and wrote that the expenses would be more manageable if there were well-paying jobs in the Tampa Bay area.

"When I moved down here it was cheap to live," wrote Karisny, who has lived in Madeira Beach for 20 years. "Now people who get transferred to Florida want a moving bonus due to the high cost of real estate."

Karisny said he's selling his waterfront house and plans to either move inland or cash out and move to California for better job opportunities. Depending on real estate tax revenues is risky, leaving the region controlled by national retirement trends, he wrote.

"When interest rates rise, and they will, this whole false economy could come crumbling down on us," he wrote.

The property squeeze clearly affects all sectors, but those operating small businesses said they feel it worst because they lack the clout to change a business model to survive. Ockunzzi speaks for some in his city in describing an inability to simply ramp up revenues to cover rising tax costs.

"How many additional pizzas, haircuts, oil changes, T-shirts, widgets, etc. must a proprietor sell to absorb a 10 percent increase in countywide property taxes or 20 percent increase in beach city tax bills, not including increased costs for insurance, utility charges, etc.?" he wrote.

Wilkerson said that small businesses keep their money circulating in the community, rather than sending it off to corporate headquarters out of state. And small businesses comprise the character and personality of the community, she said, unlike franchises and big-box stores.

[Last modified November 20, 2005, 09:13:03]