Realtors take mixed view of Vero property tax hike
Some island realtors were shocked when the Vero Beach City Council voted to raise property taxes to bring in 38 percent more revenue to fund city services and infrastructure improvements.
“I think a 38 percent increase is outrageous, no matter how it hits the bottom line,” says Cindy O’ Dare, a broker associate with Premier Estate Properties who, with her partner Clark French sells many of the most expensive homes on the island. “I think it is unfair, uncivilized and a slap in the face to our community.”
“This will hurt our market,” says Sally Daley, owner of Daley & Company Real Estate. “It is all about cost of ownership, not just cost of acquisition, and buyers are already concerned about this.”
Other realtors are not as troubled by the proposed increase.
“I am not all that worried about it,” says Michael Thorpe, co-owner of Treasure Coast Sotheby’s International Realty. “Our tax rates are some of the lowest in the state, and this is not that big of an increase.” (According to “Florida County Property Tax Report Card,” 20 counties in the state have lower property tax rates than Indian River County, while 46 counties have higher rates.)
“I’m fine with it,” says Christine McLaughlin, owner of Shamrock Real Estate Corp. “My clients aren’t paying a million for a beach bungalow to live in a place with reduced services. What makes Vero Vero is the services and ambiance we offer. I want Vero to continue to be the special place it is and it can’t be maintained without tax increases.”
The new property tax rate, if set at the maximum approved when a final vote is taken in September, would be $2.64 per $1,000 in taxable property value. That’s up 61 cents from the current rate of $2.03, and up 73 cents from the “roll-back rate” of $1.91 per $1,000 value that Vero would charge to bring in the same $4 million in property taxes as this past year.
Because Vero’s tax bite is only part of homeowners’ overall property tax bill, the 38 percent increase does not mean a 38 percent jump in total tax. Instead, it adds about 5 percent to the bill.
The owner of a home in the Vero Beach city limits with a $500,000 taxable value, after homestead exemption, under the maximum tax rate could expect to pay $305 more to the city in the coming year than the tax bill received last fall.
For a home with a $1 million taxable value, the hit would be $610, or about $50 a month with a homestead exemption.
“It is one meal out a month,” says Thorpe.
Thorpe’s point makes sense when just looking at the proposed Vero Beach tax hike, but the city increase continues a trend of steadily swelling property tax bills in the county over the past few years, and it is only one of a number of hikes planned for the coming 2015-2016 fiscal year, which begins in October.
The County Commission has voted to raise the millage rate for the second year in a row, as have the Emergency Services District, the Hospital District and other local taxing entities.
At the same time, increased property values are pushing rates higher still.
A home in Riomar, selected by price but otherwise at random from the Indian River Property Appraisers website, illustrates just how much property taxes have jumped in the past several years.
The house, which does not have a homestead exemption, is located on Riomar Drive, midway between the ocean and the lagoon. It has a 2015 assessed value of $1.24 million and the owner will pay a whopping $22,623 in property taxes this year if Vero’s increase gets final approval.
That is up $6,568 from a $16,055 bill in 2012, a 40 percent increase.
Part of that is due to the home’s increased value in a rising market, a good thing, but Vero’s proposed tax hike accounts for almost $1,000 of the $6,568 in additional taxes.
The increase since 2012 amounts to an extra $545 per month, considerably more than the cost of a dinner out.
It is the type of tax creep that could well have an impact on potential buyers, especially if the increases continue, which may be in the cards.
At the meeting where the Vero Council voted for the tax increase, Councilman Randy Old said, “I actually think we’ve got more ahead of us. This is a first step in getting the city where it needs to be.”
“People have a finite pot of money, for both acquisition and upkeep,” says Daley. “Since the Great Recession, buyers are very sensitive to taxes and HOA fees. [These tax increases] will create downward pressure on pricing and reduce buyer traffic.”
“A large tax increase would obviously adversely affect the allure of our area,” says Thorpe.
Mayor Dick Winger, Councilwoman Amelia Graves and Old voted in favor of increasing city taxes. Vice-Mayor Jay Kramer and Councilwoman Pilar Turner voted no.
The city’s final property tax rate will be decided after budget hearings in September where members of the public can have their say on the matter.