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Much has been published over the past year of the Florida legislatures attempts to help homeowners lower their taxes to reduce costs. However, little concern has been shown to non-homesteaded or commercial properties during this time period. I just received an update from the Florida Association of Realtors who is lobbying to help commercial owners reduce their costs as well. Here is a recent update of what has been happening:

This week the Florida Tax and Budget Reform Commission (TRBC) passed CP 002. What does it do? Here’s a summary: 1. Starting in 2009, limit assessment increases to 5% a year on all non-homestead property. This is down from the 10% included as part of Amendment 1 passed in January, and keeps it permanent (Amendment 1st cap lasted only for 10 years.)

2. It requires the Florida Legislature in 2010 to abolish the states required local effort for schools. It will be somewhere between $9-11 billion dollars, and that money can be made up in any combination of 4 ways.

a. An increase of up to one percentage point to the sales tax (The Florida statewide sales tax is currently 6%)

b. Spending reductions for other components of the state budget and revenue increases resulting from economic growth attributable to lower property taxes

c. The repeal of sales tax exemptions, but not including food, health services, prescription drugs, the sale of real property, and items for resale

d. Other revenues identified or created by the Legislature.

3. This will result in lower property taxes between 25-50%, depending on where you live in Florida. More simply, it does away with the School Board portion of your property taxes, though local school boards will retain a very small amount of discretionary taxing authority.

The important part for Commercial property owners is the 5% cap on non-homestead properties. If you own a property that has been receiving large increases each year, that will be no longer the case as the limit will be 5% each year. This is a welcome relief to owners here in Florida who have been hit hard over the past 5 years with tax hikes.

But this amendment is not passed yet…It needs 60% approval by the voters in November to be passed into law so if you live in Florida now’s the time to do your part and help save yourself some money. In this down market all of us need all the good news we can get, and this time we can affect our own pockets for a change.

Peter J. Barnett, CCIM

If any of you have been waiting with baited breath for part 2 and beyond of our series on selling multifamily properties I apologize. The good news is that I have been so busy with market activity that I have not had time to post, but I promise more is coming. It contains a wealth of information that comes from experience in real life deal making and property ownership.

Now for a brief update on the actual feel of the Tampa Bay Commercial Market:

In the past several months activity from buyers have increased by at least 50-75% over last years levels at this same time. The general consensus I get when I speak to buyers is that they are waiting for the market to stabilize before they invest. So the root of the problem is not a lack of capital or investment desire; the root is fear of the market caused by instability. Whether or not the recent drops in the Federal Funds rate have helped quell that feeling or not is uncertain. However, one thing is becoming more certain; the fact that buyers are once again ready to make actual purchases. This being said we are still seeing our fair share of ridiculous low ball, bottom-feeder offers. As many will tell you from experience, sometimes these low offers will be accepted but I do not believe Sellers in the current market feel their properties have bottomed out enough to start cutting loose their equity in a last ditch effort to simply be rid of their properties.

Another good sign for all investors is the availability of financing increasing. Local banks, conduit lenders and other funding sources were very tight fisted in past years with their underwriting and their desire to take on new projects in our local area but those fists are slowly opening. In the multifamily market many new sources of funding are opening up on both a local and national level.

The bottom line is the market is starting to stabilize at least in my opinion and by the end of the year buyers and sellers may be their closest to a meeting of the minds that they have been in the last 5 years. If that happens, it will be a great time for everyone.

I look forward to any comments or critiques you might have on the subject. A good dialogue is always welcome on this blog.

Peter J. Barnett, CCIM