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Taxes pummel small businesses

A deputy property appraiser says buyers and sellers, not his staff, are inflating values.

By PAUL SWIDER
Published August 27, 2006

GULFPORT - Simone Frohne is running the same restaurant her parents started 32 years ago, but she's not sure how much longer she'll be able to afford it, especially after her taxes doubled in one year.

"If the money's not there, you can't pay it," said Frohne, operator of La Cote Basque in Gulfport, which the Pinellas County Property Appraiser's Office revalued this year from $255,000 to $510,000. "I was told I'm not assessed enough."

Despite a lull in residential sales, the hot property market in the Tampa Bay area is moving prices up quickly and squeezing businesses that can't easily pass along costs. Coupled with the same insurance woes homeowners suffer, the small local business owner often struggles.

Frohne and other Gulfport business owners shared such stories Thursday with Ron Anderson, the deputy for appraisals for the county. Anderson said he has heard similar complaints from around the county, but says his office doesn't create the values - buyers and sellers do.

"We just reflect the market," he said.

Frohne said she understands that her appraisal went up because of a nearby transaction. When a restaurant a block away changed hands in 2004 for the first time in more than 20 years, its new valuation was sure to jump and push up those around it.

What is now the Aqua Bella Raw Bar sold for $450,000 before being remodeled to include rooftop dining. Frohne said that sales price was actually much higher, but she doesn't understand why the transaction doubled her appraisal while Aqua Bella is assessed at only $425,000. Frohne's property has twice the area, but the Aqua Bella is on Shore Boulevard, right across the street from Boca Ciega Bay.

"Something's not right here," she said.

Anderson said his hands are tied by math and the law. He calculates values based on many factors, not just sales, but he can't underassess an older property because the state's Department of Revenue checks up on him.

"People say, 'Just leave mine alone until I sell it,' " he said. "We're not insensitive, but we have to follow the law."

Seminole Realtor Gary Guetzlaff faced a similar tax problem. Until last month, Guetzlaff owned a five-unit shopping center at Seminole Boulevard and 64th Avenue N. He had his office in one unit and rented the other four. He said he has had to tell his tenants each year that rents were going up because he could not absorb the increased costs of being a landlord.

But this year, he said, things got really bad. First, he lost his insurance and had to pay more than twice as much for a new policy with less coverage. Then his property taxes jumped about $1,300. He decided he could not go to long-term tenants who had become his friends and increase their rents to cover the rising costs.

"It was kind of the last straw," Guetzlaff said. He went to one of the tenants who was interested in the building. "I sold it to her last month."

Anderson said part of his calculus on commercial appraisals includes understanding the income and expenses of property owners, but only as it relates to operating the property, not the businesses in it. With owner-occupied property, like Frohne's and Guetzlaff's, the costs mix so Anderson can't use the data.

Business people in St. Petersburg are annoyed, too. John Warren started buying properties between Dr. M. L. King Jr. and 16th streets in 1973, but his property taxes have increased "dramatically" in the past few years. He said he would like to see provisions for business owners that are similar to homeowners' Save Our Homes property tax cap.

"It does not seem to be fair that small businesses, or maybe lots of businesses, would find themselves in a situation based on paying for a momentary bump in the economy," Warren said. "Because an area is perceived to be hot, somebody will come in - call them speculators - they'll buy a piece of property 20 or 30 percent more than what it was the year before, and everyone has to pay the consequences."

Anderson sees this all over the county. He said it may mean standalone businesses are a thing of the past because they can't generate enough income to pay for themselves, "which is sad."

Frohne said she'd like to expand and diversify her property, but regulations won't allow it. She said the circumstance will force "hard choices."

Frohne also said she is seeking legal help about her tax quandary.

Anderson said he will review Frohne's records, but he reminds that taxes are a function of assessed values and millage rates, the latter of which he never touches. He urged Frohne and others to attend city and county budget hearings if they think taxes are too high, but also said they can contest their assessments with his office. The deadline for filing a challenge to assessments is Sept. 8.

Paul Swider can be reached at 892-2271 or pswider@sptimes.com or by participating in itsyourtimes.com.

[Last modified August 26, 2006, 20:41:21]