The way we tax land snuffs out mom & pop

Published October 1, 2006

Ann Hartwig thought a quilting shop would be perfect for the little building she owns on Beach Boulevard in Gulfport. The pleasant, open street leads to the waterfront and is the scene of regular "art walks" for folks to come and stroll.

Hartwig's store is named StarGazer Quilting. She has fabrics, supplies, classes and gifts. "What I've done is charming and cute and appropriate," she says proudly.

Here is what is not cute and charming: her tax bill.

Last year, her property taxes were $3,762.

This year, they will be between $6,900 and $7,100, depending on how early she pays them to get the discount.

The appraisal of her building, a former single-family home, went from $172,700 last year to $355,200.

"This," Hartwig told me sarcastically, "is the American dream."

As we talked, Theresa Frohne and her daughter Simone listened and nodded. For the past 32 years their family has owned La Cote Basque, a country-French restaurant one block down Beach Boulevard.

Theresa got the restaurant's property tax bill a few weeks ago. "Oh, my God, Simone," she cried out to her daughter as she read it. "They've finished me."

Simone handed me a handwritten sheet with the restaurant's tax history:

$2,604.64 2001

$2,948.14 2002

$3,747.76 2003

$4,303.28 2004

$5,332.77 2005

$10,894.42 2006

The value of the restaurant property, according to the county appraiser's office, went from $255,000 last year to $510,000 this year.

"I can't exist like this," Theresa Frohne said. Simone began to cry as she talked about her late father, Ernest, who started the restaurant with her mother.

So, this is Florida's tax policy.

Yes, we have protected homeowners with the "Save Our Homes" amendment. Homeowners' valuations can't go up more than 3 percent a year.

But that's not true for small-business owners like Hartwig and the Frohne family, or owners of any nonhomestead property. Their taxes are rising a lot faster:

The real estate market in Florida has been red hot, driving up everybody's property value.

Our law in Florida - as in lots of places - says that property must be taxed according to its "highest and best use," and not its existing use.

Hartwig has a bitter but clear understanding of what this means. It means Florida's tax policy is pushing her to sell so that her land can be used for something "better."

We talk about "good planning" and "quality of life" and "community character." But beneath it all, our tax policy pushes out the quilt shops and family restaurants in favor of condos and denser, moneymaking uses.

Hartwig doesn't want to sell. "I thought this was the perfect fit for our little arts district," she said. But in dealing with the government, she said, "I feel like I'm the only one with a sense of responsibility for this neighborhood."

I talked with Jim Smith, the Pinellas property appraiser, and he was sympathetic. He owns a building in Clearwater that he rented to artists. When his building got socked with a 25 percent increase, his appraisers told him maybe he should be renting to doctors or lawyers instead - economically, a "higher" and "better" use.

Smith is frustrated. His office is only obeying the state law on how property is valued, but gets blamed for higher taxes when local governments don't cut their tax rates as fast as land values are growing. He got booed at a public event the other night.

"We need to do something to keep businesses from being valued out of their property," Smith said. "The question is, how do we help small-business people out. By God, we should."

We could create a small-business version of "Save Our Homes," with major consequences for local government.

We could assess property a different way to consider existing use, but that would require changes at the state level, and there would be other side effects and injustices.

"We have to come up with something that makes sense," Smith said. "And I don't know what that is."