County governments in Fla. should see record jumps in the taxes they’ll collect after the hot–market months of 2021 – those property sales will set 2022 value.

FORT MYERS, Fla. – This year turns out to be extraordinary for tax collectors in the Sunshine State because county governments are going to see record jumps in the booty – or bounty, if you will – they’re able to collect after the hot–market months of 2021.

“We are looking at sales occurring in 2021 to set 2022 value,” explains Dorothy Jacks, Palm Beach County’s property appraiser, who points to jumps of 15% in taxable values in the county. That’s a sizeable windfall for county commissioners who determine how much money they’ll need or want in a new budget, and then set millage rates, taxing property owners, to reach it.

“So even though it’s August now,” Ms. Jacks said as that month came to an end, “TRIM notices are based on numbers that occurred in 2021. We have the first half of 2022 to prepare these values, and in August they disclose them to all homeowners.”

It’s not just Palm Beach County, either.

One of the biggest jumps in property values happened in Collier County, where the Just value – that’s the value of a property before any assessments are figured or extra fees are paid if it’s bought and sold – jumped almost 42%, from $131 billion or so in 2021 to $185.6 billion now.

Property Appraiser Abe Skinner, born and raised one county to the north, has served at the Collier County office for 60 years, with a four–year break to run his own business when Haydon Burns and Claude Roy Kirk Jr. were governors in the 1960s, and he was still young.

Mr. Skinner may know everything there is to know about appraising property on the southern Gulf Coast, and until now he may well have thought he’d seen it all.

But maybe not.

“This year was very different – everybody and his brother wants to come to Florida, and they’re paying the price,” he said. “In certain neighborhoods here where you wouldn’t think properties might sell for more than $200,000 or $300,000, they might have sold for $700,000 or $800,000. It shows what’s going on in Collier. The first three quarters of the past year we were appraising many properties that were gradually climbing. And in the fourth quarter it just went crazy.”

After all exemptions have been applied, so far, the taxable value of property in Collier is coming in at about $122.3 billion.

In Lee and Charlotte Counties, too, the word “windfall” for local governments doesn’t seem out of place.

Property countywide is up between 15% and 20% in taxable value, and much more than that in the Just value – in the mid– to upper 30 percentage points – for the first time in more than 15 years, said Paul Polk, Charlotte County’s property appraiser.

“Our Just value, the market value before any exemptions or caps are applied, puts us at $41 billion – that’s an increase of 37%. It was $29.6 billion in 2021,” he noted.

Mr. Polk describes an annual process that takes place in every county.

“In July, the budget director meets before the board, which decides whether they’re going to raise the budget or keep it the same. That means they can lower the millage rate, keep it the same, or raise it.”

With the big jump in taxable value, commissioners could actually reduce tax rates on individual properties and hit the same budget numbers as last year.

“So we had a 17% increase or $3.5 billion in taxable value they were not looking at last year,” Mr. Polk said. “In the initial hearing, they said they would keep the millage rate the same. So they’re going to get more money. They have that option.”

But those figures are not yet set in stone, in any county. Public hearings to determine finally what millage rates to establish, mentioned in TRIM notices, are taking place this week.

Meanwhile, says Ms. Jacks, “each taxing authority sets its own millage rate – and there are 12 or 15 taxing authorities, each with taxing power. They’re looking at, ‘We need X–dollars to run this city or county, or this organization (school boards, mosquito control districts and the like), and they set a rate based on how much value they have to work with.”

How it’s computed

Grim, TRIM and not so slim is how many people these days may view the mail arriving from their county governments in the season we can never seem to escape: Property tax season.

Even hurricanes aren’t annual seasonal occurrences in Florida, which brings to mind an observation first made by Benjamin Franklin in a letter to a French scientist: “The only two certainties in life are Death and Taxes,” he wrote in 1789.

If you’re still breathing this year and you own residential, commercial or agricultural property in any of Florida’s 67 counties, the bill is coming due. August TRIM notices have arrived for property owners: TRIM, an acronym for Truth in Millage.

The millage rate is how much money per thousand dollars of property value elected leaders are going to tax property owners. But those with exemptions – residential homestead exemptions of $25,000 and a few others – won’t pay on the full value of their properties.

What any property owner should know: The tax bill you receive now is for last year’s assessments. Expect to pay more if your property jumped in Assessed value in 2021, as many properties did in a market not just hot, but boiling, for the late months of last year.

And expect to pay a lot more than those with multiyear homestead exemptions if you bought a different home or built a new home anytime after Jan. 1, 2021.

On the other hand, if you remained in a home with a homestead exemption from a previous year (a thing created for all Floridians by former Lee County Property Appraiser Ken Wilkinson), you’re in luck.

Homestead exemptions also restrict jumps in property tax to no more than 3% a year. Other property owners, those without homestead exemptions, are capped at a 10% per year increase.

So here’s a hypothetical: If you bought a home and property for $300,000 in 2011 that you still own, receiving the homestead exemption on it that year and paying $750 in property tax in 2012, your taxes could increase at no more than 3% each year.

The most you could pay this year, therefore – even if your home increased in value from $300,000 to $1 million or more – would be just over $1,000.

But if you sold your home for $1 million in 2021, the new owner could establish a homestead exemption, but he or she would be paying a tax on the new Assessed value.

The various values

It’s not too complicated, but it is both detailed and structured. First, the market value of your home, vacant lot or other property – what you might actually sell it for – is never a direct part of property taxing.

But the so–called market value determined in part by the sales prices of similar or nearby properties, also helps determine what Just value, Assessed value and Taxable values property appraisers will put on your property, explains Matt Caldwell, Lee County’s property appraiser.

“Just value is like the market value you see on a private house, but there’s a difference: the Just value has to reflect pure cash. The commissions you pay for the sale have to be deducted, so your Just value should be lower than your market value.”

But your property tax isn’t based on that.

“From the Just value you step down to Assessed value,” Mr. Caldwell explained, “And that includes your caps: the 3% for the homestead or 10% for other.” There are a host of additional exemptions, too – for widows, for example.

And after assessing all of that, property appraisers determine the taxable value actually reflected in your slim, grim, TRIM notice.

“So in Lee County, the Just value went up 35%, the Assessed value is up 18%, and the Taxable value went up more than 15%,” Mr. Caldwell said.

In Lee, “of the 550,000 properties, about half are homestead properties, so they’re capped at 3%. The only people who will pay more than 10% are people who bought brand new in 2021 or did brand new construction. They’re starting at the top of the benefit ladder.”

In Charlotte County, Mr. Polk said, “we have over 200,000 properties we have to value each year, and we’re required to evaluate starting Jan. 1 each year.

“We’re going into neighborhoods, looking at sales. We have vacant lots that were selling in January 2021, for $10,000. By the end of the year they were selling for $25,000. Markets more than doubled. There’s been no jump like than in 15 years. And 17% is big because we have the homestead cap of 3%, and 65,000 or 70,000 homes with homestead only went up 3%.”

With commercial rather than residential property, however, “we’re using more of an income approach,” Ms. Jacks explained. “So think about an office tower or strip center – we’re looking at data of rents in a property doing that, along with other things, such as the actual cost of doing business.

“One of the things about our work, by its nature because we’re doing it in mass, is that it’s done with a broad brush. We’re not looking at individual properties one by one.”

What to do with all the money

In the eyes of county commissioners determining county budgets, the big 2021 boost is not likely to mean spending like there’s no tomorrow, especially since taxpayers tend to pay attention and take it personally if they feel they’ve been stung by unnecessary spending.

But it may mean some catch–up spending, both in infrastructure and on human capital.

“My view is we have to spend on infrastructure, not just road ways but sewer and water, and we have to support our people,” explained Kevin Ruane, a Lee County commissioner and former mayor of Sanibel Island, who has spent a professional career in finance.

“The county has more than 800,000 residents, and there are 18 additional budget requests we have to consider for our budget.

“The biggest, 42% of our budget, goes to the Sheriff’s Office. The biggest pieces are for capital improvements, but the Sheriff’s budget alone cost us $25 million for personnel.”

And personnel are key.

“The pendulum has to swing both ways,” Mr. Ruane said. “During the recession there were seven years of no raises. So this year the county did an adjustment: at the low end, raises are 10%. At the upper end, it’s 3%, for a 7.8% increase overall in salaries.

“If we want to be the county of choice when there’s not enough labor, how do you do that? You take care of people. So we were proactive.”

In Collier County, eight–year commissioner Penny Taylor echoed some of Commissioner Ruane’s thoughts.

“What are we going to do with the money? Well, we anticipated this a little, budgeting for around a 6% increase, and it went up to almost 16% – and we’re already spending it,” she said.

“The sheriff came to us at our budget meeting and said in order to keep the deputies here and on the job, he’d need $4 million to implement a new pay plan.”

The commissioners gave it to him in their budget planning. There’s a reason for that, Ms. Taylor said: “The private sector is paying more than the government sector and we’re losing folks.

“So the money will go for public safety, for storm water operations and maintenance, and for transportation.”

Before the current high times – which appear to be settling down as markets become more steady – Florida residents in Collier County saw property values increase by 26% in 2006, as the markets boomed. In 2007, Ms. Taylor recalled, that increase dropped to 16%, and then 2008 arrived.

The world seemed to turn upside down for many, and so did property values, which plunged.

“We didn’t climb out of the recession until 2013,” Ms. Taylor recalled.

While that may be the big picture, when TRIM notices arrive in mailboxes as they have in recent days, they aren’t absolutes. They can be challenged in any county, Mr. Caldwell explained.

“If a property owner gets a TRIM notice and has a question, they can go on line, chat or come into the office. I have 82 people, but the 20 or 25 who deal with these issues have heard it and seen it all, and they’re extremely helpful, on the phone or in person.”

Homeowners have 25 days after receiving a TRIM notice to file a petition to have it changed.

“If you feel strongly we got your number wrong, reach out and let’s talk,” Mr. Caldwell said. “Is there something we missed? Maybe we said you have three bathrooms but you only have two. If it’s issues of opinion, talk to us. We resolve a lot of questions that way.”

Last year, he noted, the county had 550,000 real estate parcels and after the August TRIM notices went out, only about 2,000 petitions for a change in values.

And if talking won’t work and an owner doesn’t like a resolution, “we can go to court. We had a dozen go to court last year.”

Meanwhile, come Jan. 1, property appraisers will have eight months again to tally the data from an astoundingly vigorous 2022 before sending out next year’s TRIM notices.

Although the market in the first six months was still a boil, it now seems now to be calming a bit.

What will those notices a year from now look like?

“We still have five months to go, and properties are staying on the market for a little longer now, and that tells us the market is starting to simmer, to relax a bit, to go back to a more normal market,” Ms. Jacks said.

“That may mean that although we will see increasing values next year, they may not be at this level.”

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Author: marlam