New property tax system would slam 'affordable' cities in Broward
August 13, 2007
The communities with many of the condos and homes most affordable for middle-income families in Broward County would take the biggest financial hit if a shake-up of state property tax breaks wins voter approval.
The proposed "super exemption" on a statewide ballot in January could cost Coconut Creek, Lauderhill, Margate, North Lauderdale, Tamarac and West Park at least a tenth of their tax base, according to an analysis of property tax data by the South Florida Sun-Sentinel. Each city would face drastic cuts in services.
The six cities lack large swaths of luxury housing, investment property and commercial development that protect other communities from a major hit. Instead, vast numbers of homeowners in their middle-class neighborhoods and senior communities could cut thousands from their tax bills.
"It would be tough to run the city and offer people the services that we have always offered," North Lauderdale Mayor Jack Brady said. "Come check our books, because we haven't overspent. This would devastate us."
Overall, about 7 percent of the county's $176 billion tax roll could be exempted from taxation if the constitutional amendment creating the "super exemption" wins approval. That would follow on the heels of spending cuts that the Legislature ordered local governments to make this year in the first part of its tax relief package.
The state's existing exemptions – the $25,000 reduction in a home's taxable value and the 3 percent cap on how much that value can increase each year – would be phased out.
Current homeowners would choose whether to keep the existing tax breaks or switch. The new system would exempt 75 percent of a home's first $200,000 in value from taxation and 15 percent of any additional value up to $500,000.
The Sun-Sentinel analysis of tax data for the county's 433,000 homeowners found great disparities in how cities would be affected.
The differences largely are the result of growth patterns and housing prices. Residents who recently purchased homes and owners of more moderately priced homes would benefit the most from the new exemption, and thus cities with more of those types of properties lose the most.
A city's tax base is the total taxable value of all homes, businesses and other property. Cities rely heavily on property taxes to pay for services.
Broward's wealthier communities such as Hillsboro Beach, Lighthouse Point, Southwest Ranches and Sea Ranch Lakes would emerge nearly unscathed. Each would lose less than 4 percent of its tax base.
Also largely unharmed would be Pembroke Park. Although it has a large number of homes affordable to lower- and middle-income residents, it also has a major industrial and commercial tax base and a large number of properties owned by snowbirds who don't get state tax breaks.
The disparate effects exasperate those who have sought to protect existing affordable housing and build more. Government studies have shown a lack of housing in the areas that average workers can afford to buy.
"These are cities that tried hard to provide for the housing needs of their community and now they are being punished," Broward Mayor Josephus Eggelletion said. "That is not fair."
But state Rep. Ellyn Bogdanoff, a Fort Lauderdale Republican who helped push through the tax relief legislation, said concern about property taxes came from every type of community. "This isn't about taking from local government, but about wanting people to pay what they can afford," Bogdanoff said.
The potential impact of the constitutional amendment on cities with large swaths of affordable housing is largely the same, regardless of whether those homes are old or new.
In Lauderhill's older Courts of Inverrary condo community, 92 percent of those currently receiving homestead tax breaks would benefit by switching to the new "super exemption." Homes there have an average assessed value of $187,000, and tax bills would drop about 50 percent.
The Belmont condos in North Lauderdale is a recent apartment conversion project where the average assessed value is $177,000. Every homesteaded resident there would pay less in taxes if they switched, saving an average of 67 percenton their tax bills.
The savings would be far less in pricier neighborhoods and condo buildings because the new exemption tops out at sheltering $195,000 of a home's value from taxation. Just a fifth of homeowners in Fort Lauderdale's Rio Vista neighborhood, for example, would benefit by switching and their average tax savings would be 10 percent.
The six heavily affected cities are already cutting millions of dollars in spending and raising other fees this year in response to the first part of the state-ordered tax relief just as other cities are.
Lauderhill is considering whether to close some park buildings once a week, while Tamarac may cut its weekday community bus service for seniors and reduce how many children can attend summer camp. Margate is increasing its fire assessment fee $80 and may eliminate Fourth of July fireworks and some school resource officers.
Eggelletion and Senate Democratic Leader Steve Geller, of Cooper City, said they believe some cities may not be able to survive both rounds of cuts, while others may have to consolidate some services with neighbors.
They note West Park, which would lose $66 million of its $653 million tax base, already has struggled to maintain basic services during its brief existence. Without that property value on the tax roll, the city will lose about $430,000 at today's tax rates.
Tamarac Mayor Beth Flansbaum-Talabisco said cutting property tax collections another $4 million after this year's $5 million reduction would be extraordinarily difficult. She is uncertain how to make additional cuts and is urging residents to vote against the "super exemption" in January.
"It's a voter decision, and I appreciate that and just hope they are educated and understand what would happen," Flansbaum-Talabisco said. "The impact will be astronomical. It leaves one speechless."
Some residents like longtime condo activist Isadore Nachimson of Pembroke Pines' Century Village view the state proposal as too risky because of the impact on cities. Nachimson's tax bill would be shaved 15 percent if he could switch to the new exemption, but he opposes it because he fears services from mass transit to fire-rescue would be harmed.
Rick Rodriguez of Plantation, though, said cities can make do with less and argues that the Legislature did not go far enough in offering tax relief. His tax bill would drop more than 40 percent if he could switch.
"Government should be streamlined, and it shouldn't be that hard for local government to 'trim the fat' so to speak," Rodriguez said.
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