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In a bit of bad news for our property tax issues, a judge ruled that the language on the property tax reform ballot was misleading, but that doesnt mean the issue is dead… The article below was posted by the Florida Association of Realtors yesterday:

A Leon County circuit judge ruled yesterday that the Florida Legislature’s proposed property tax constitutional amendment is misleading, and he removed it from the Jan. 29 ballot. Weston Mayor Eric Hersh had challenged the amendment.

The Florida Association of Realtors, lawmakers and Gov. Charlie Crist are now reviewing their options: Appeal, revise the amendment wording, or both.

Revise the wording

Circuit Judge Charles A. Francis of Tallahassee ruled that the ballot language was misleading, and the Florida Legislature has a special session scheduled for Oct. 3. Under Florida law, a proposed change to the constitution must be created at least 90 days before the election in which it is to appear, so this could be accomplished without changing the special session dates.

The amendment “came together very fast in June’s special session, so I don’t think it’ll hurt for them to make it a little more understandable,” says John Sebree, FAR vice president of public policy. According to Sebree, the court ruling may not be a setback – it may be an opportunity since it could give lawmakers a chance to make the amendment even stronger.

In its decision, the court ruled that that ballot summary read by voters calls for “preserving application of Save-Our-Homes provisions until an irrevocable election is made.” Francis called that misleading, saying the amendment would actually phase out the existing property tax. Under the change, homeowners could opt to keep their Save-Our-Homes tax savings as long as they live in the same homesteaded property, losing it if they move – just as they do under current law. However, they could not choose Save-Our-Homes tax savings in the future should the amendment pass.

Appeal

Lawmakers could also appeal Francis’ ruling and hope that a higher court will return the question to the ballot. At this point, that appears to be the tactic favored by the Florida Senate. Late this morning, Senate President Ken Pruitt announced that the Senate would rather defend Senate actions in court than change the ballot language.

Revise wording and appeal

Lawmakers could try for some balance. It’s not clear how long a court appeal could take, and whether or not it would happen early enough to make the 90-day waiting deadline for getting amendments onto the January ballot. Lawmakers could choose to hedge their bets by appealing and, simultaneously, tinkering with the amendment. However, it’s unclear right now how that would work.

It’s also possible, though unlikely, that the Legislature could defer the matter to the Taxation and Budget Reform Commission, which has the power to put amendments directly before voters. While powerful, the Commission seemed willing to take a backseat to the Legislature’s efforts, at least until now. In addition, the commission would not be able to place anything on the ballot by January, postponing a general vote until at least November 2008, with changes to Florida property tax laws occurring no earlier than 2009. FAR President Nancy Riley serves on the commission.

FAR’s John Sebree says that the Tallahassee team and FAR leadership will continue to lobby for passage of the January amendment, and his team’s planned sessions visiting local boards will continue as scheduled.

Following the judge’s ruling, legislative leaders quickly voiced their support for property tax relief and promised to continue their work. House Speaker Marco Rubio (R-West Miami) said: “One way or another, we will give Florida taxpayers the relief they deserve.”

© 2007 FLORIDA ASSOCIATION OF REALTORS®

A consultant met with Gov Crist and the Florida cabinet on Wednesday regarding the legislation that was passed in January expanding the reinsurance market for companies in Florida. This was intended to give insurers more options and lower cost reinsurance (which is the coverage insurers purchase for themselves and the main factor behind insurance increases in recent years) and to pass on the savings to Florida property owners.

But the savings have not been as expected so far…

A previous estimate of 24 percent represented the average insurance rate reduction property owners should be realizing, so far it is only half of that. A major contributing factor is the fact that some companies are simply increasing their profit margin, not cutting their policy costs to their policy holders. It seems to be the smaller companies and Florida based companies who are complying while the larger national companies are reluctant to. Some of the large companies claim they are locked into contracts themselves and cannot negotiate better deals for reinsurance. This is puzzling however because they usually purchase their reinsurance from their own subsidiaries. So are they saying they cant negotiate with themselves???

The consultant said that the insurance industry as a whole can easily cut their rates as over the last three years companies have enjoyed profits of $150 billion, or roughly $525 for every man, woman and child in America. And all this was accomplished after paying billions in hurricane claims.

The true test will be seen after September 30th, the date when insurance companies are required to submit filings regarding their compliance with the new laws. At this point with only 10 days left to the deadline only about 90 of some 300 companies have filed.

This is certainly an issue that we as investors and property owners need to stay informed on. Have your policies dropped by the 24 percent estimates? I encourage all to leave a comment on this topic to let others know if your rates have dropped.

Peter J Barnett

With contributions from an Associated Press report.

In a move that is sure to help the commercial real estate market, the central bank policymakers slashed the target federal funds rate from 5.25% to 4.75%. Amid worries of a weakening economy, and increasing credit problems the move was made to not only improve confidence in the economy but give a little relief to the subprime mortgage crisis.

That’s great news for us in Florida as our rising tax and insurance costs have been making many properties out of reach for the traditional investor to purchase. What does this mean to your overall bottom line? For example if you were considering purchase of a $1,500,000 commercial building through a local bank or funding source at a 6.75% rate amortized over 25 years your monthly debt service would have been roughly $10,363 per month. Now thanks to the rate cut you can most likely get the same loan for .5 basis points less at 6.25% lowering your monthly debt service to $9,895. This puts approximately $468 in your pocket each month for reserves, repairs, etc.

Its nice to see a bit of good news for a change.

For the past two years now investors have slowly backed away from the Florida commercial real estate market. Why is that? Much negative news regarding Florida leads many to opine that it is a risky market. Reports come in that foreclosures in Florida are at an all time high, which is true. However the Florida rates of foreclosures are just now reaching the national level, so why all the publicity? For so many years in a row we experienced such rapid appreciation and demand for not only housing but investment real estate coupled with historically low interest rates that foreclosures in Florida were an uncommon thing. After the rates started to rise and so many got locked into adjustable rate mortgages, trouble was seen on the horizon. The cold facts were that by the end of 2005 nearly 1/3 of all homes in Central Florida including Tampa Bay and the greater Orlando area were owned by investors, and when rates started to rise all these homes were dumped on the open market at once amid worries of rising debt service. Thats alot of inventory to hit all at one time and it changed the market overnight.

News of many hurricanes have also soured many on investing in Florida but the real facts on this are eye opening as well. Only six hurricanes of category 3 or stronger have touched Florida mainland from 1950 to 2003, though 8 made landfall in 2004 and 2005 the chances of that happening again are extremely remote and so far this hurricane season has been nothing of consequence. Economists predict that the housing market will get rapidly stronger beginning in early 2008 and will be booming again by 2010 once investors realize just how unique the Florida market is.

Many investors have also been hit hard by recent tax and insurance increases and it’s not surprising this is affecting everyone’s bottom line. But change is on the horizon, as record breaking legislatures for tax cuts and insurance reform have already been instituted and we are just beginning to see the effects of these cuts which should be in full swing for the 2008-2009 year.

So why should investors pay attention to the housing market? As the number of people migrating to Florida increases each year the cost and availability of housing does much to influence new development and commercial trends. For example, if 2000 new families moved into a metropolitan area this would have great affects on each facet of the commercial market. Right now the multifamily market is booming as home costs are still out of reach for many and these new families would need places to live that are more cost affordable. Many of these new families as well bring with them new businesses which need office space both corporate and class B and C. Several hundred of these new Floridians also work in the industrial sector thus increasing the demand for industrial space. And finally all of these new families need various forms of retail shopping, groceries, auto repair etc which increses retail demand.

The bottom line is now is a great time to invest in Florida as savvy investors know that a down turn can be one of the best times to make money as building owners who are not informed are trying to get out now since they dont understand the economic inpact of housing on commercial investment real estate. Taking into consideration the above, it is imperative that investors work with qualified real estate professionals who not only have local market knowledge but are educated in market research and analysis to be able to reasonably forecast the coming years to help make a succesful investment. Contact us today for an analysis of your investment needs and to match you with the best property type and investment to minimize risk and maximize your returns.

Peter J. Barnett, CCIM

No you’re not seeing things, I said “Deconversion”, which is just my non fancy word for a condo conversion that is being back converted into apartments. The first major deconversion has taken place in St. Petersburg Florida showing signs that the market is trying to stabilize itself as the high demand for all levels of apartment housing is remaining strong.

The Laramar Group has acquired a 272-unit apartment property in Pinellas County, Fla. for an undisclosed price. The Snell Isle property was previously a condominium conversion project. But it will now be renovated into high-end waterfront apartment units. Laramar, a private apartment investment firm, acquired the property through a bank foreclosure.

€œLaramar plans extensive renovations and the addition of resort-like amenities to the Snell Isle Luxury Apartments, which will greatly enhance this property and maximize its outstanding setting and waterfront location,€ says Ron Roan, vice president of acquisitions for Laramar€™s regional office in Palm Beach Gardens, Fla. €œThe Snell Isle Luxury Apartments offer a high quality living environment in a beautiful and well located area.€

Chicago-based Laramar has been an active buyer in Pinellas County. In late August, for example, Laramar bought a 228-unit apartment property in Clearwater. This was also a failed condominium conversion project that will instead be redeveloped into Class-A rental units.

Laramar expects to spend roughly $11 million on a complete renovation of the Clearwater property, which is located near St. Petersburg. The property has an excellent setting with approximately 1,500 linear feet of water frontage, and a new seawall on Smacks Bayou that leads into Tampa Bay.

Though there are several other condo conversion in Tampa Bay still attempting to sell their units, this was the first major acquisition through foreclosure that the are has seen. Now is the time to get into the multifamily market as demand remains high and the cost of owning a home forces thousands to seek rental housing. Contact us at J.A. Barnett Realty Group today to find a property that works for your budget and investment expectations.

Peter J. Barnett, CCIM

With contributions from NREI Newsline.

How motivated are some developers getting to unload their unsold condo units? How about auctioning off their last 20 unsold units, 8 of which will have no reserve. The following article appeared in the Miami Herald a short time ago:

Panoramic views of Biscayne Bay. A short distance to the Carnival Center and downtown Miami. Living in the heart of Miami’s emerging Edgewater neighborhood.

It’s all yours ” for auction next month inside a Marriott Hotel ballroom.

In what may preview the straits the ailing South Florida condo market faces in the coming months, developers of the Platinum condominium are auctioning 20 condos in its 119-unit, 22-story tower. Eight will go to the highest bidder, no matter how low the sales price. The rest require the developer’s approval.

Carmen Redondo, a principal with Maysville, the property’s builder, said buyers started closing on units at Platinum, 480 NE 30th St., in May, but the remaining inventory couldn’t attract enough interest in the sluggish market. We decided to auction the last 20 units so we can finish this project and go to a new thing,” Redondo said.

The move echoes the condo bust of the 1980s, when new units were auctioned in bulk across South Florida. Recently, individual condo owners, companies converting apartments into condos and single-family builders have already experimented with auctions, both online and in person with full-throated auctioneers.

But South Florida condo builders, who are completing a record spate of new towers, have been slow to adopt auctions to move unsold units.

This may be among the first auctions for new condos in South Florida in the current downturn, said Jack McCabe, a Deerfield Beach real estate analyst who has long warned about condo overbuilding.

Market watchers bet more are to come, given conditions in the condo market. In June, the number of Miami-Dade condos sold dropped 52 percent from the same month a year earlier ” although prices held on, gaining 7 percent year-over-year to a median price of $275,500.

Richard Swerdlow, chief executive of condo seller condo.com, said the company is launching an online auction business for new condos within the next two months.

Real estate analyst Michael Cannon said auctions are not necessarily a sign of distress but another marketing tool. Developers have adopted a range of measures to sell units, from lavishing incentives on buyers to offering to temporarily lease back units.

Cannon also said the 1980s auctions were not always successful. The state of the market was so depressed then,” he said. That is not necessarily the case today because there are still buyers in this market. They are just looking for better deals.”

The Platinum auction, meanwhile, presents an interesting twist. Typically, auctions establish a floor price at the start of bidding. If the minimum is too high, bidders sit out and the seller keeps the unit. But at the Sept. 20 auction, eight of the 20 units will be sold without any minimum ” meaning the highest bidder, no matter how low the winning price, gets the unit.

It will be very interesting to see what prices they fetch for those,” Swerdlow said. I may go down there and buy a unit.”

Miami Herald staff writer Steve Rothaus contributed to this report. Copyright © 2007 The Miami Herald, Matthew Haggman.

What does this mean for investors looking to invest in Florida Commercial Real Estate? It means you need to have someone working with you who can not only advise you on the current market but recognize and forecast market trends to help you invest wisely. Part of the CCIM training is dedicated to market and area analysis and it is a powerful tool to have at your disposal. Contact J.A. Barnett Realty Group today for an in depth analysis of your current portfolio of investment properties or help with a purchase of a new property.

Peter J. Barnett, CCIM