tampabay.com

Market chills, tax bills won't

By WILL VAN SANT and MICHAEL VAN SICKLER
Published April 28, 2007


Ballooning tax bills fueled a storm of citizen unrest that now has state leaders searching for a fix. But the root cause of the tax revolt was a record surge in property values over the past few years.

With the housing market no longer on steroids, some owners may be hoping for a reduction to their tax bills, regardless of what changes Tallahassee makes to the state's tax structure.

No such luck, at least not this year. And homeowners with homestead exemptions will probably never see their tax bills shrink because of a downward market.

Government appraisers base a property's value, which helps determine an owner's yearly tax bill, on market conditions during the previous year. Though sales slowed down in 2006, sale prices continued to inch up, though not nearly as much as in prior years.

Pinellas County Property Appraiser Jim Smith is estimating a rise in the overall value of taxable property of 6.4 percent as of Jan. 1 of this year, though he said that number may be slightly lower once final calculations are established at the end of May.

Last year, property values in Pinellas jumped a staggering 20.1 percent.

In Hillsborough, values are expected to grow between 5 percent and 8 percent this year, said Warren Weathers, the chief deputy property appraiser. Last year, values in Hillsborough spiked 24.2 percent.

"Relatively speaking, there hasn't been a full price decline, " Weathers said. "There's still a demand for well-located properties. Values in many areas are holding well."

For property owners, this means a guaranteed increase in this year's tax bill unless property tax rates are trimmed. The average taxable value of a home in Pinellas was $135, 160 last year. If that home's value increases at 6.4 percent as projected, it's in unincorporated Pinellas and it's not homesteaded, the owner will pay the county $1, 217 this year, up from $1, 143 in 2006.

On both sides of the bay, however, there are signs of a market decline not seen in years, and if the trends continue, owners may see some relief on their tax bills in 2008.

Joni L. Herndon, a Seminole Heights appraiser who is a member of the Appraisal Institute, works in both Pinellas and Hillsborough. Herndon said that from December 2005 to March 2006, condos at one Carrollwood location were going for $254, 000. Now, she said, they're at $218, 000.

In Pinellas during the first three months of last year, the median sale price of a home was $212, 000. In the first three months of this year, the figure dipped to $198, 000.

"This year you'll see declining values, " Herndon said. "But the tax relief will probably come later, not this year."

For Smith, the Pinellas property appraiser, the downturn that has taken hold is the market's returning from orbit to solid ground.

"Now things are starting to get a little bit more real, " Smith said. "I think prices are coming down to normalcy."

Of course, these market shifts mean little to the vast majority of Tampa Bay area homeowners who claim homestead exemptions. Increases to the value of their homes is capped at 3 percent a year. In Pinellas, 91 percent of residences are protected by the cap.

Homesteaded property owners would benefit from a cooling market only if their assessments dropped below the taxable values of their home.

But for other property owners, including commercial property owners, the lagging market's not translating into immediate tax savings may be confusing. Weathers said he'll be ready in August after his office starts issuing truth in millage notices and homeowners discover that they won't see any decreases.

"I do expect a lot of calls saying, 'I thought this market tanked. Why did my values go up?' " he said.

Will Van Sant can be reached at 727 445-4166 or vansant@sptimes.com.

Fast Facts:

Determining market value

Property appraisers in Florida, and across the country, use three chief methods to determine market value. The first involves comparing what similar properties in an area are being sold for. The second approach calls for estimating what it would cost to replace a given structure at current costs for material and labor. The first two approaches are used primarily for residences.

The third approach, generally used for commercial properties, bases value on the amount of income a given property generates.

Once a market value has been established, assessed value is calculated by subtracting estimated sale costs from 100 percent of market value. In Florida, governments appraise all properties annually based on conditions as of Jan. 1.

Property values

Record run ups in property values have sent Florida lawmakers scrambling to pass tax relief measures. But the effort comes as the market cools. Hillsborough officials predict tax rolls will increase between 5 percent and 8 percent from last year's. In Pinellas, officials project 6.4 percent. That's far below the record increases of recent years shown below. Figures for taxable value are in billions. Percentages have been rounded to the nearest whole number.

Hillsborough County

Pinellas County

Year

Total taxable value Annual increase
2006 $71.2 24%
2005 $57.3 17%
2004 $48.9 11%
2003 $43.9 10%
2002 $40 10%

Sources: Pinellas, Hillsborough property appraiser offices.

Year

Total taxable value Annual increase
2006 $75.5 20%
2005 $62.9 15%
2004 $54.9 11%
2003 $49.6 9%
2002 $45.5 7%