Broward's richest owners get biggest tax break on homes
Others pay proportionately more after caps on property values
By Scott Wyman and John Maines
South Florida Sun-Sentinel
March 25, 2007
Broward County's wealthiest residents have benefited considerably from the state's popular but controversial Save Our Homes law that caps property values used to set local tax bills.
A South Florida Sun-Sentinel analysis of property records shows owners of palatial estates and waterfront mansions pay taxes on less than half of their home value. However, the owners of the most modest homes and condos are taxed on two-thirds of their home value.
Former football star Dan Marino, auto dealer Rick Case and JM Family Enterprises founder Jim Moran are among the biggest beneficiaries. Others include Swap Shop owner Preston Henn, local real estate investor M. Austin Forman and former Philadelphia 76ers basketball team owner Harold Katz.
State and county officials said the disparity has been created because prices rise faster on more expensive homes. Since Save Our Homes prevents the taxable value of a home from increasing more than 3 percent a year, over time a larger and larger portion of the actual value of higher-end properties is exempt from taxation.
About $48 billion in property value was shielded from taxation last year in Broward because of Save Our Homes, up from $4.9 billion in 2001.
Anger over assessments and the ensuing tax bills has spurred a fight in the state Legislature over the property tax system. Suggestions range from dropping property taxes in favor of a higher sales tax to limiting local government spending.
Legislative analysts noticed the trend statewide last year and warned lawmakers that tax rules are "highly skewed" to the wealthy. Voters approved Save Our Homes in 1992 as a way to protect longtime residents from dramatic tax increases as property values rise.
Fort Lauderdale attorney William Scherer Jr., whose home is valued at $3.6 million but taxed at $1.1 million, said he would forgo the tax benefit "in a heartbeat" as part of a broad-based reform. He worries the area's economy is being heavily damaged by the tax inequities that Save Our Homes has created among longtime homeowners, their newer neighbors, businesses and landlords.
"Save Our Homes is horrible because what it does is discriminatory and unfair," said Scherer, whose tax bill on his home was $24,600 this year.
Not so, say others with super-sized tax protections.
Former U.S. Rep. Clay Shaw and former Hillsboro Beach Mayor Chuck Sussman both argue longtime residents of affluent neighborhoods would have been just as vulnerable to higher tax bills as those in middle-class areas. Save Our Homes, they said, protected rich and poor alike from being forced from their homes as new neighbors paid higher prices for their homes and drove up property values.
"There are many people who couldn't afford to live in these areas given the appreciation in property if it were not for Save Our Homes," said Shaw, whose Fort Lauderdale home is valued at $3.3 million but taxed at $740,000.
And while Forman said voters approved Save Our Homes and that the same standards apply to all property owners, Henn noted the $101,000 tax bill on his oceanfront house is more than twice as high as that on his Colorado vacation home even though the taxable values are not nearly so different.
"To me, it's fairly steep," Henn said.
Marino, Case and Katz could not be reached for comment. Moran declined to comment.
The tax protection is available to Florida residents on the primary home and has no limit on how much of its value can be exempt from taxation.
The Sun-Sentinel looked at the Property Appraiser's Office records on homes receiving the Save Our Homes break. The newspaper compared the upper fifth of recipients based on the size of the tax benefit with the lower fifth of recipients.
The difference broke down this way in 2006:
For the upper fifth, the average market value of a home was $868,000. Of that, $464,000 was exempt from taxation. The average tax savings was $10,400.
For the bottom fifth, the average market value of a home was $180,000. Of that, $59,000 was exempt from taxation. That equates to a tax savings of $1,300.
The growing benefit to the wealthy is a byproduct of a six-year real estate boom.
According to the newspaper analysis, just over 26 percent of the property value of the top fifth of Save Our Homes beneficiaries was untaxed in 2001. Now, it's 53 percent.
Joe Zdanowicz, who supervises appraisals for Property Appraiser Lori Parrish, said his office cannot control the differences in Save Our Homes benefits. He said the number of elite properties is limited so values increase faster than other homes.
"If I have a single-family property off West Davie Boulevard in a nice neighborhood, it may be nice but the appreciation is not going to be as high as a property on the Intracoastal Waterway," Zdanowicz said.
Broward has more than 750 homes with at least $1 million in untaxed value, up from only 34 in 2001.
Among those properties are more than half the mansions on A1A in Hillsboro Beach, more than 300 residences in the waterfront neighborhoods of Las Olas Isles and Rio Vista in Fort Lauderdale and eight condos in the oceanside high-rise L'Hermitage near Oakland Park Boulevard and A1A.
While most of the properties with at least $1 million in value off the tax rolls were in Fort Lauderdale and Hillsboro Beach, there were also homes in the Hollywood Lakes neighborhood of Hollywood, Eagle Trace in Coral Springs and Windmill Ranch Estates in Weston.
The largest tax break is on the 20,000-square-foot oceanfront home of one-time Blockbuster Entertainment and Waste Management executive Donald Flynn. The Save Our Homes law caps its taxable value at $17 million even though the Property Appraiser's Office says it's worth $27 million.
A lawyer at Flynn's Chicago office declined to comment.
In addition to Flynn, 10 other homeowners have at least $5 million in property value exempt from taxation this year.
"In its infancy, everyone knew at some point there would be huge disparities from Save Our Homes for different portions of the population and that it would be one of the most unfair tax systems in the country," said County Commissioner Kristin Jacobs, who is representing Broward in the tax reform debate in Tallahassee.