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SPECIAL REPORT: Your neighbor's tax bill

A mayor who moved: 'It's unfair taxation'

In Pinellas Park, Lealman and Seminole, residents and officials talk of homeowners held hostage.

By ANNE LINDBERG
Published March 26, 2006

Pinellas Park Mayor Bill Mischler and his wife attained a goal last November that many in mid Pinellas envy: a retirement home in the Mainlands.

But they also got something else: higher property taxes. Not only higher than they'd been paying at their comparably priced old home, but thousands more than the homeowners who live in the virtually identical houses around them.

Consider the numbers. The Mischlers paid $285,000 for their Mainlands home. If tax rates remain the same, they'll pay about $5,550 in property taxes for the 2006-07 fiscal year.

The former owner would have paid about $2,220. One neighbor will pay about $2,200. Another, about $1,700. All for cookie-cutter houses that are virtually the same.

Why? The other owners are protected by the Save Our Homes cap on property taxes. By buying, the Mischlers' new taxes will be figured on a percentage of the purchase price, minus homestead and any other exemptions.

"It's unfair taxation ... the house next to me is identical," Mischler said. "It's total unfair taxation."

Property taxes, he said, should not be based on sales price. They should be based on the value of the home. Something needs to be done, he said.

Mischler is not the only one who thinks that. The Legislature is considering changing Save Our Homes to allow homeowners to take the cap with them.

The need for a change seems clear as people from across Pinellas blame the cap and high insurance rates for everything from hurting the real estate market to decreasing the number of entry-level homes in the county.

"It's killing the economy in Pinellas along with the insurance," said Sandy Hartmann of Hartmann & Associates, a real estate agency in the unincorporated Seminole area.

"It's not the prices of the homes; it's the taxes and the insurance that's killing the market," Hartmann said.

People are being "held hostage to their houses" in two ways, she said. Some who want to move to larger or more expensive homes hesitate because of the hit in higher taxes and insurance. Some who want to downsize, like empty-nesters, also hesitate because they may end up paying more in property taxes on the smaller home.

Landlords are also affected, Hartmann said. Because their property does not receive the Save Our Homes protection, landlords see taxes jump each year. They can pass the increases on to their tenants, but renters must be able to afford the higher rents or move on.

The result, Hartmann said, is that renters are being pushed out of the county.

Frank Bowman, a senior community planning specialist for the county, said he sees many problems in his daily work. Bowman, who oversees the county's redevelopment project in the unincorporated Lealman area, said fewer people are moving out of starter homes not only because of high prices but because of the heavy hit they would take in property taxes and insurance.

What that means in the long run, Bowman said, is that entry-level homes, which tend to be more affordable, are becoming scarce because owners are refusing to move up.

Harry Kyne, the director of administration for Seminole, agrees that a remedy is in order. But Kyne, who oversees Seminole's budget, said the Legislature is going about it the wrong way.

The danger of allowing homeowners to take their existing caps with them is twofold, Kyne said.

One is the effect on government budgets.

Kyne said he begins budgeting by estimating how much money the city will get from taxes. He adds 3 percent to the previous year's tax revenue. That's a safe way to start, he said, because all residential property will increase in value by at least the 3 percent cap.

But if the cap from a less expensive home is transferred to a more expensive home, the tax income from that more costly home could actually decrease. There would be no way to know that until the final property valuations are in, Kyne said, which would limit the time for planning the budget.

The second problem Kyne sees with the legislative proposal is the possibility of manipulation. Savvy buyers, he said, might first buy a less expensive property to get the lower cap, then sell the property and buy a million-dollar home that would be protected by the cap from the less expensive house.

A better solution, Kyne said, would be for a home buyer to take over the existing cap of the house.

[Last modified March 25, 2006, 04:12:02]