ECONOMIC ANALYSIS OF “SAVE OUR HOMES” PORTABILITY
For
FLORIDA ASSOCIATION OF REALTORS PREPARED BY:
Regional Economic Research Institute College of Business Florida Gulf Coast University 10501 FGCU Blvd, S., Fort Myers, FL 33965-6565 Phone: 239 590-7319 E-mail:
[email protected]
“Save Our Homes” Portability Study Florida Association of REALTORS
PREFACE ECONOMIC ANALYSIS OF “SAVE OUR HOMES’ PORTABILITY This document represents a summary report of an economic study of the proposed "Save Our Homes" portability amendment to the Florida Constitution. The economic analysis and assessment focused on:
Identifying relevant studies conducted on property based propositions including California proposition 13 and 60;
Understanding the economic implications of HJR 33 and the impact of "lockin" and "portability" and their likely effects on tax revenues and the economy; and
Comprehensive analysis of HJR 33 and its impact on 10 representative Florida Counties.
The project was administered by Florida Gulf Coast University (FGCU), Regional Economic Research Institute. It is hoped that the analysis provided by this study will provide a better understanding of the potential economic changes associated with portability and allow the legislature and the public to have better information for making an informed decision concerning the merits and costs of adding HJR 33, portability amendment. Dr. Gary Jackson Director Regional Economic Research Institute College of Business Florida Gulf Coast University Regional Economic Research Institute
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TABLE OF CONTENTS
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RESEARCH TEAM...............................................................................iii EXECUTIVE SUMMARY .....................................................................iv 1.0 INTRODUCTION ............................................................................ 1 2.0 ECONOMIC LITERATURE REVIEW ........................................... 3 3.0 ECONOMIC ANALYSIS OF HJR33 “PORTABILITY” .................... 9 4.0 FLORIDA AND REPRESENTATIVE COUNTY FORECASTS ..... 25 REFERENCES…. .............................................................................. 75 APPENDICES…................................................................................. 77 A. “Save Our Homes” Legislation .......................................... 78 B. HJR 33 Portability Legislation............................................ 81 C. County Forecast Tables .................................................... 86
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RESEARCH TEAM Regional Economic Research Institute (RERI) is part of the College of Business at Florida Gulf Coast University, and represents collaboration with local and regional governments to develop regional models and studies. Dr. Gary Jackson (Project Director) is currently the Director of the Regional Economic Research Institute at Florida Gulf Coast University. Dr. Jackson’s specialty area is economic analysis and he has conducted extensive research and analysis of numerous industries and organizations. Dr. Jackson earned his Ph.D. in Economics from University of Massachusetts and has been an Assistant Professor of Economics for the University of Tennessee at Chattanooga and is a faculty member of the School of Business at Florida Gulf Coast University. He also has over 23 years experience with the Tennessee Valley Authority in a number of capacities with experience ranging from market analysis and policy, economic forecasting, energy policy, trading and options, to planning and strategic development. Dr. Dean Stansel (Project Co-Director) is Assistant Professor of Economics in the College of Business at Florida Gulf Coast University. Dr. Stansel’s research interests include public economics, urban economics, economic growth, fiscal policy rules, and public choice. He earned his Ph.D. in Economics from George Mason University. Prior to entering academia, Dr. Stansel worked for seven years at the Cato Institute, a public policy research institute, in Washington, D. C. Dr. Arthur Rubens is an Associate Professor of Management in the College of Business and former Director of Sponsored Projects and Programs in the College of Business, Center for Leadership and Innovation, at Florida Gulf Coast University. Dr. Rubens has over 25 years experience as an educator, administrator and consultant having worked with both public and private organizations. Dr. Rubens is experienced in qualitative and quantitative research methods, strategic planning, and quality improvement techniques and practices.
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EXECUTIVE SUMMARY The Florida “Save Our Homes” amendment went into effect in 1995 and has limited the growth in residential homestead property assessment to the Consumer Price Index (CPI) or three percent, whichever is lower. This has resulted in some property owners having substantially lower tax assessments than the just or market value of their properties. The lower property taxes have resulted in a disincentive for a homeowner to move to a more suitable home as his or her needs and requirements change over time. This reduction in mobility is referred to as a “lock-in” effect. In response to this “lock-in effect” a portability bill entitled, HJR 33, Homestead Property Assessments has been proposed. Specifically this bill would allow a homestead homeowner to transfer the difference or part of the difference between just or market value and the lower taxable assessment of their current home to a new homestead within one year, as long as the assessed value of the new homestead is no lower than the previous homestead. The primary purpose of the bill is to reduce the “lock-in” effect of homestead property owners that limits their mobility in selecting the most appropriate living quarters as the needs of their family change. The bill also would result in an extension of the reduced assessed value from the previous homestead resulting in slower growth in the overall total assessed values of a county’s homestead properties. For example, if a county were to hold its millage rate constant, it would see slower growth in property tax revenues over time. The original “Save Our Homes” amendment does not apply to nonRegional Economic Research Institute
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homestead residential or commercial properties. These properties will be taxed on the just or market values and are not capped at the lower acquisition-based assessments. In order to better understand the proposed legislation and its impact on both homeowners and the property tax revenues, the Florida Association of Realtors (FAR) contracted with Florida Gulf Coast University, Regional Economic Research Institute to perform an objective economic analysis of the portability and HJR 33. The study was begun in October 3, 2005 and a copy of the report was submitted to FAR on December 23, 2005. The study was conducted in three distinct phases and used standard economic analysis including a renewal theory model to forecast the lock-in effect increased property tax savings over time if the portability amendment is not passed. Briefly the three major section of the study included the following:
Literature Review/Meta-Analysis: First, a review of the literature is reported and includes major studies done on California’s Proposition 13. California has passed a much more restrictive acquisition-based tax law called Proposition 13 and several portability laws. California’s Propositions 13 extends to all residential and commercial properties. Proposition 50 provides for transfers without reassessment to children. Proposition 110 allows transfers for those that are severely disabled. Proposition 60 is limited to those residents 55 and older who move within the county within two years. Proposition 60 can only be used once and has been extended to allow portability across county lines if the counties have a reciprocity agreement.
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•
Economic Analysis of HJR 33: Second, the economics of the new Florida bill, HJR 33, are discussed along with the impact on the “lock-in” of homesteaders and the likely effects on tax revenues. The section also discusses a range of changes to portability and their likely economic impact.
Forecast Impact Analysis: The final section presents the results for state of Florida and 10 representative Florida counties. The results of these 10 counties are used to illustrate the likely impacts on the other counties and to provide the reader with a graphic representation of the data that that can be used to make comparisons across counties. A brief review of the major tasks and their key findings are presented below:
Economic Literature Search and Analysis In order to better understand the current literature on portability and its impact on economic activity, the authors used economic and business search engines to find and review over 20 articles and books. In addition to the literature review, several authors of select key studies on assessment limitations were contacted by the project team and asked about current research and references beyond those found in the online literature search. Also, the pivotal paper by Wasi and White (2005) was identified and captured in the review. Finally, the research staff at California’s Department of Revenue was also contacted; however, no additional information was obtained from this group.
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One of the major findings of the literature review showed that California has passed several amendments to allow portability under certain restrictions (see below). California Portability Propositions and Special Provisions •
Proposition 58 allows parents to transfer ownership to their children without having the property reassessed to market value.
•
Proposition 193 extends Proposition 58 to the transfer of certain properties from grandparents to grandchildren.
•
Proposition 60 allows those age 55 and over who purchase a home of lesser value within two years to transfer their old property tax basis. This transfer can only be used once and must be in the same county.
•
Proposition 90 extends Proposition 60 to allow counties to have a reciprocity agreement to permit transfers to other counties.
•
Proposition 110 extends the transfer of the old property tax basis to the severely disabled of any age.
The other major findings of the literature review showed that the concept of “lockin” has been extensively examined in California. The Key Findings on the estimation of “Lock In” from these studies found: •
A median time per dwelling increase of 1.2 years and no effect on property values (O’Sullivan, Sexton and Sheffrin, 1995a);
•
Average tenure length increased by about one year but found higher tenure increases of around two years in coastal areas were the tax savings were around $2,000 per year (Wasi and White, 2005); and
•
Empirical studies were inconclusive with respect to lock-in (Negy, 1997; and Sjoquist and Pandey, 2001).
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Finally, the major findings of the literature search helped the study team develop assumptions and models that are used in the economic analysis for this study. For example, general economic theory predicts that the lock-in effect will become important if the tax savings grow to a significant level. However, based on our review of both the theoretical and empirical work, the authors have determined that the reduction in mobility should be taken into account in our study. In addition, based on the Wasi and White estimates, this study estimates and forecasts the potential impact on the tenure of homesteads in Florida. Specifically, the results of the Wasi and White study estimated that for about every $2,000 in tax savings per year, a homestead would on average increase their stay or tenure by about two years. This will have implications for the growth in assessed values over time and ultimately for the property tax revenues of local government. The reduction in mobility is also costly to society since many homeowners who would have moved to a preferred home do not do so due to the additional tax cost of moving.
Economic Description of the “Save Our Homes” and Portability Bill The second major section of the study analyzed the “Save Our Home” amendment and the proposed portability bill, HJR 33. Specifically, the model of the portability bill states:
Homeowners buying a new home of equal or higher market value can transfer their former reduced assessment value.
Homeowners buying a home with a price above the old assessed value but lower than the existing home’s market price can transfer part of the reduced assessment value.
Homeowners buying a new home with a market price below the assessed value of the current home would not transfer any of the reduced assessment value.
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In order to better understand the impact of HJR 33 and the overall impact of portability and its impact on future growth on assessed property taxes the study team developed a model or underlying assumptions to perform its analysis. Specifically cases were developed for: •
no growth in homestead properties,
•
two percent growth in homestead properties, and
•
five percent growth in homestead properties.
Briefly the Key Findings from this analysis showed: •
About 60 percent of home purchasers would be eligible to use portability.
•
Using renewal theory to model the portability bill, it estimated that about 90 percent of those eligible would transfer all or part of their reduced assessment value.
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Predicts that about 50 percent of the total reduction in assessed value would be transferred if the portability bill, HJR 33, were passed.
•
A model to predict the growth in assessed values shows that the growth in the assessed value is highly dependent on the ratio of assessed to just value.
•
Average assessed value will grow faster as the ratio of average assessed to average just value declines.
Case Studies: Since economic analysis can sometimes be complex to understand, a series of “likely case studies or scenarios are developed to better understand the impact of portability on economic activity. For example, a likely case for many counties in Florida is to have the number of homestead properties grow about two percent per year, and it is assumed that the growth in the new homestead properties each year are added to the tax rolls at market or just value. Based on this assumption, if one picks a ratio of average assessed to average just value of 0.7, or 70 percent, the no portability growth rate would be about 5.4 percent and the growth rate for the average assessed value with portability would be about 4.8 percent per year (See example below). The table shows that if housing prices rise very rapidly, reducing the ratio of average to assessed Regional Economic Research Institute
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market value, that the growth rates for both the no portability and the portability average assessments would raise as well since turnover of homes and new additions would be valued at the higher market values. Homestead Taxable Assessed Value Two Percent Growth in Homesteads Case Growth Rates Ratio of Assessed To Just Value 0.5 0.6 0.7 0.8 0.9
No Portability 8.64% 6.74% 5.39% 4.37% 3.58%
Portability 7.15% 5.76% 4.76% 4.01% 3.43%
The growth rates with and without portability are above the inflation rate so long as inflation stays below three percent. This will result in property tax revenues rising faster than the general inflation if the millage rates are held constant. This does not minimize the fact that cities and counties face higher costs for acquiring land and construction costs for roads, schools, and other projects due to the recent rise in land and construction costs. Homeowners with rapidly rising home prices will experience an increase in overall wealth. The wealth effect has been estimated by the Federal Reserve (FRB, 2001-21) to be around three to five percent of the increased property values. This is one of the reasons given for the very fast growth in the local economies and consumption expenditures for durable goods such as furniture, autos, computers, and home improvements. Unfortunately, some homeowners will find that the property taxes are increasing faster than their income and inflation requiring reductions in spending for other goods and services unless the increased wealth is translated into additional income. Local governments and their voters will have to decide whether the increased real property tax revenues at a constant millage rate should be used for additional government services and infrastructure or whether millage rates should be reduced to reflect property tax revenue growth closer to personal income and the general inflation level. Regional Economic Research Institute
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Potential Restrictions and Modifications: Finally, the authors looked at potential restrictions and modifications to the portability bill. Some potential restrictions and modifications to the portability bill are: •
Limit the bill to those over 55 years old: This would restrict its use to about 50 percent of the homeowners. This group would have the highest lock-in values, given that their tenure in a home tends to be longer than for younger homeowners.
•
Transfers limited to moves within the same county: Census 2000 found that approximately two-thirds of moves within the last five years have been in the same geographic area. If one assumes that two-thirds would move within a county to keep their tax savings, then the one-third moving out of the county would be ineligible for portability.
•
Allow two years to sell, purchase or build, and transfer the reduced assessment value: Two years is allowed in California to transfer the old assessed tax basis for those over 55 (Proposition 60). Construction of new homes and delays in either purchasing or selling homes would make the oneyear window for selling and buying somewhat risky. This would create distortions in the market, as home buyers and sellers would most likely take measures such as not selling until they were reasonably sure that another purchase could be made within the one-year transfer window.
•
Limit the use of portability to once per lifetime: This would have a large limiting impact on portability of assessed values. On average, a typical homeowner would own about four different homesteads during his or her lifetime. Limiting the portability to one time means that the household would most likely use portability once and be forced to consider the effects of lock-in when deciding to sell and purchase a home a second time. A single use limitation on the use of portability would also require personnel to track, audit, and enforce the provision especially across county lines.
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Model Forecasts for the State of Florida and 10 Select Counties The final major section of the study includes “model forecasts” for selected counties in Florida. In order to perform this analysis, a historical database was obtained for each of the counties in Florida from 1995 to 2004. Information on the number of homesteads, their just value, assessed value and millage rates were obtained from the Florida Department of Revenue. This information was used in a model constructed by the authors based on the renewal model used by O’Sullivan(1995a) which was used to analyze the impact of portability on the state and ten select counties. The renewal model is necessary to track the vintage or year that a home is sold and the likelihood that it will be sold in any one year. The selected counties for analysis are: • • • • • • • • • •
Bay County Citrus County Dade County Flagler County Hillsborough County Lafayette County Leon County Okaloosa County Orange County Palm Beach County
The selection of these counties was a joint decision by the Florida Association of REALTORS and the authors of this paper to represent different geographic regions of the state with a range of characteristics such as slow and fast growth. The counties were modeled to account for the differences in the average tenure or average length of stay in owner-occupied homes.
The model incorporates the concept of lock-in to
modify the average tenure based on potential tax savings from remaining in an existing home. The assumption that on average about 50 percent of the existing reduction in assessments would transfer is based on the work in section 4.0 of this paper.
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The forecast model results are summarized in this part of the executive summary. Forecasts for the state of Florida as a whole and three of the representative counties are used to illustrate the impacts of the portability bill, HJR 33. Section 4.0 of this paper includes a discussion of all 10 selected counties plus the state of Florida as a whole. For the purpose of illustration and brevity, the executive summary will limit the discussion to three counties: •
Lafayette County (a smaller county)
•
Leon County (an Inland county of moderate size)
•
Palm Beach County (a larger faster growing coastal county) A low, medium, and high forecast for the state of Florida average just value and
average assessed values with and without portability (assuming portability would take effect in 2008) illustrated in the below charts, shows that the low forecast has housing prices rising at three percent per year starting in 2006. The medium forecast has housing prices rising at 5 percent per year and the high forecast has housing prices rising at 10 percent per year. The charts further show the historical “runup” in housing prices since 2001. The low state forecast shows steady growth in average assessed values but a slightly slower growth in the average assessed value if portability is allowed.
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Low Forecast Case Average Homestead Just and Assessed Values Florida $350,000
Nominal Dollars
$300,000 $250,000 Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
The medium state forecast assumes housing prices rise on average at five percent per year. Again, the assessed values rise steadily but the growth in the average assessed value with portability rises somewhat slower. The gap between average assessed value with and without portability becomes more evident around 2015 and widens some in the ensuing years.
Medium Forecast Case Average Homestead Just and Assessed Values Florida $450,000
Nominal Dollars
$400,000 $350,000 $300,000
Just Value
$250,000
Assessed Value-P
$200,000
Assessed Value-NP
$150,000 $100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The high Florida state forecast assumes housing prices rise at 10 percent per year. Again, assessed values rise with or without portability but the difference is more pronounced given the fast rise in housing prices. This case like the others assumes that the millage rates are held constant over time. Given that inflation is three percent, real tax collections would be rising at about seven percent per year. It is unlikely that voters would allow real property tax collections to rise much faster than inflation or income over an extended period of time. Such rapid property tax growth led to the passage of Proposition 13 in California in 1978 and the nationwide tax revolt it spurred.
High Forecast Case Average Homestead Just and Assessed Values Florida $900,000
Nominal Dollars
$800,000 $700,000 $600,000
Just Value
$500,000
Assessed Value-P
$400,000
Assessed Value-NP
$300,000 $200,000 $100,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Historical data on the number of homesteads, average just value, average assessed value and average tax savings from the “Save Our Homes” is provided in the following table. This table shows that the range of values and savings vary considerably across the state based on differences in the local economies and real estate markets. Regional Economic Research Institute
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Historical 2004 State and County Tax Data County Lafayette Leon Palm Beach
Homestead Count 1,627 53,863 343,007
Average Just Value $80,498 $153,164 $264,622
Average Assessed Value $51,194 $119,801 $180,320
Average Tax Savings $558 $703 $1,783
4,286,047
$190,580
$132,416
$1,204
Florida
The potential reduction in property tax revenues due to slower growth in assessed values is shown in the following table. These numbers are deflated using a three-percent assumed inflation rate to show them in 2005 dollars.
Lafayette County has an average just or market value of about $80,000. The potential reduction in property taxes ranges from less than $100,000 in 2010 to as much as $0.6 million in 2020.
Leon County had a much higher average just value of about $150,000. This is still below the state average. The potential reduction in property tax revenues would be $3.3 to $7.9 million in 2010 and $8.0 to $43.6 million in 2020. Again, this assumes that the millage rates are held constant and that the growth rates for housing prices are sustained from 2006 to 2020.
Palm Beach County has one of the highest average just values of about $265,000 and has experienced rapid growth, as have many of the coastal counties. The potential reduction in property tax revenues would be $51.1 to $92.7 million in 2010 and $119.8 to $391.5 million in 2020.
Florida, estimates of the potential tax reduction for the state as a whole are shown in the same table. Florida’s potential reduction of property tax revenues would range from $421.4 to $852.8 million in 2010 and $1.03 to $4.26 billion in 2020.
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Potential Reduction in Property Tax Revenues (Millions of 2005 Dollars)
County Lafayette Leon Palm Beach Florida
Low $0.0 $3.3 $51.1
Year: 2010 Medium $0.0 $4.6 $64.7
High $0.1 $7.9 $92.7
Low $0.1 $8.0 $119.8
$421.4
$542.0
$852.8
$1,033.7
Year: 2020 Medium $0.2 $18.2 $230.6
High $0.6 $43.6 $391.5
$2,014.4
$4,262.6
One important aspect of this bill and the stated reason for allowing portability is to reduce the lock-in that results from homeowners not being able to maintain their tax savings if they move to a new home (The results for all the selected counties are shown in Section 4.0 of the paper). An example of lock-in will help to illustrate its importance. The medium forecast for the state of Florida in 2010 is approximately one additional lock-in year if portability is not allowed. This would increase the average tenure from 11.5 years to 12.5 years. If we assume a simple model where the same percentage is sold each year, this would reduce the percentage of homeowners selling each year on average from 4.3 percent to 4.0 percent. The average lock-in effect for Lafayette County is small except for the high case, especially in 2020. This case would occur if prices rose at 10 percent per year for the next 15 years. The average lock-in effect for Leon County is much greater ranging from 0.4 to 1.3 years in 2010 and from 0.1 to 3.1 in 2020. Palm Beach County which was already experiencing fast growth and lock-in would see the biggest impact if portability legislation is not approved. Average lock-in ranges from 0.9 to 2.3 years in 2010 and 0.3 to 5.0 years in 2020. On average, Florida would also see a significant lock-in effect in the medium and high forecast cases ranging from 0.9 to 1.6 years in 2010 and 0.8 to 3.6 years in 2020. The average lock-in effect in the low case, which assumes inflation and housing prices rise at three percent per year, will actually decrease over time since the real dollar tax savings will fall over time. Regional Economic Research Institute
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Average Lock-in Without Portability Additional Years Added to Tenure
County Lafayette Leon Palm Beach
Low 0.1 0.4 0.9
Year: 2010 Medium 0.2 0.6 1.2
High 0.6 1.3 2.3
Low 0.1 0.2 0.3
Year: 2020 Medium 0.4 0.7 1.0
High 1.6 3.1 5.0
0.6
0.9
1.6
0.2
0.8
3.6
Florida
Limitations of the Study It is difficult to forecast unexpected changes such as inflationary increases due to oil curtailments, war, or hurricanes, or the timing of the business cycle resulting in economic booms and slowdowns. This study has taken the approach that the impacts of the portability bill should be analyzed using a low, medium, and high forecast to bracket uncertainty about future events and changes in economic activity. The data that drives much of this study was provided by the Florida Department of Revenue. The Department receives a large volume of data on just value, assessed value, homestead counts, millage rates, and other information from each of the 67 counties in the state so some errors or misreporting are expected. The renewal theory model used in this study has allowed the authors to forecast the “lock-in” effect of the increased property tax savings under existing law if the portability amendment is not passed. This is based on previous economic studies and documented in the literature review section of this paper. Tax savings from “Save Our Homes” has the potential to become very large over time. Lock-in estimates of four or Regional Economic Research Institute
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five or longer years are certainly possible but the uncertainty with the longer lock-in times is higher given that these levels have not been reported by any empirical studies known to the authors. The authors assumed that 70 percent of the homebuyers who are eligible to transfer their reduced assessment would purchase a more expensive home and 30 percent would purchase a lower price home. Information from the Florida Department of Revenue was helpful in arriving at this assumption. If a different distribution is assumed that results in more homebuyers purchasing lower prices homes, the impact of portability on assessed values and property taxes would be lower. The growth in the number of homestead exemptions is based on historical trends from 2001 to 2005. It is assumed that the new additions are added at market value. Finally, the tenure of the owner-occupied householders was obtained from 2000 Census Data. This is a key input into the renewal theory and served as a starting point for the study. The differences in tenure were fairly great so any sampling or estimation errors in the Census estimates would impact the results obtained here.
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1.0 INTRODUCTION In 1992, voters in Florida approved the Save Our Homes (SOH) amendment. The goal of SOH was to reduce the growth of the property tax burden on Florida residents. SOH restricted the annual growth of assessed value of residential property to the lesser of the rate of inflation or three percent. In order to restrict the benefit to fulltime residents, that tax cap only applied to properties that qualified for the homestead exemption. Upon transfer of ownership, such properties would then be assessed at the market value, with future assessment growth then subject to the CPI or three percent cap. This type of property tax cap is typically referred to by economists as an acquisition-value assessment system (as opposed to a market-value assessment system). Although a property’s assessed value is allowed to grow at a modest pace, since market values have tended to rise faster than three percent, its assessed value will eventually be closer to its original purchase price, or acquisition value, than its actual market value. That disparity between assessed value and market value grows larger the longer the property is owned and the housing prices outpace inflation. Under an acquisition-value assessment system, the property tax bill paid by residents on otherwise identical properties depends on how long those residents have owned their house. All else being equal, residents who have owned their houses longer pay a lower tax bill than residents of newly acquired properties. This disparity in tax burden on otherwise identical properties is known as horizontal inequity. A simple example should illustrate the point. Consider two identical homes next door to each other somewhere in Florida. Assume that when SOH was implemented each had an Regional Economic Research Institute
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assessed value equal to their 1995 market value of $100,000. Ten years later, one of them is sold and the assessed value is then equal to the market value (i.e., purchase price). If property values had risen at 10 percent per year, the market value would have risen to roughly $259,000. A two percent property tax rate would yield a tax bill of $5,180. The other house has not been sold. If it’s assessed value had risen at the maximum allowable three percent rate, ten years later it would then be assessed at roughly $134,000. A two percent property tax rate would yield a tax bill of $2,680, about one-half the amount paid by their neighbor in an otherwise identical property. Because under acquisition-value assessment systems, tax bills are inversely related to how long a home has been owned, acquisition-value assessment systems create an implicit tax on mobility. When a homeowner sells an existing homesteaded property and buys another one, they lose all of the benefit of the assessment cap that they have accumulated since they purchased their home, and thus often face a very large increase in property tax burden. This tax on mobility discourages transfer of residential properties and encourages residents to stay in their existing homes longer than they otherwise would. That is often described as a “lock-in effect.” The ultimate result is that there are fewer residential real estate transactions than would otherwise occur in the absence of the tax on mobility.
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2.0 ECONOMIC LITERATURE REVIEW This section provides an overview of economic literature research done as the first part of this study. One of the major findings of this research has been that the concept of “lock-in” has been examined in California and that state has passed several bills to allow portability under certain restrictions. The authors used economic and business search engines to find and review over 20 articles and books. Authors of key studies on assessment limitations were contacted and asked about current research and references beyond those found in our online literature search. One additional paper, Wasi and White (2005), was identified and captured in our review. In addition, the research staff at California’s Department of Revenue was also contacted but no additional information was obtained. Since “Save Our Homes” (SOH) has only been in place for 10 years, very little research has been done on its impact. However, SOH was loosely modeled on California’s Proposition 13, which was approved by voters by a 65-35 percent margin in June of 1978. Proposition 13 was actually a much stronger tax limit. Its four key provisions are:
The maximum property tax rate was limited to one percent (this one percent limit applies to the sum of all local jurisdictions, e.g., city, school district, mosquito district, etc.); Assessed value of all property was reduced to the 1975-76 level; Assessed value could increase every year at the lesser of the rate of inflation or two percent; with change of ownership, properties were reassessed at market value, but then restricted to two percent annual growth again until resale;
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State and local governments could not impose any other property taxes, sales taxes, or transaction taxes on real property (O’Sullivan et al., 1995a, 5-6).
These four provisions applied to all properties, both residential (regardless of residency status) and commercial. Proposition 13 launched a nationwide tax revolt that led numerous other states to enact similar measures shortly thereafter. Some of those states (e.g., Massachusetts, Illinois, and Iowa) adopted measures that limited property tax revenue at the aggregate jurisdictional level rather than at the level of the individual property. Currently, seven other states have adopted measures similar to Proposition 13 that limit the annual growth of assessments on individual properties: Maryland (1959), California (1978), Arizona (1980), Florida (1995), Washington (1997), Texas (1997), and New Mexico (2000). As in Florida, the limits in Maryland, Texas, and New Mexico apply only to homesteaded property. (Sjoquist and Pandey, 2) Because it rolled back assessments substantially and placed a stronger limit on property taxes, Proposition 13 had an enormous impact immediately. Due to this impact and the nationwide tax revolt it inspired, a substantial volume of research on Proposition 13 has been conducted. Since Proposition 13 is also an acquisition-value assessment system, most of the findings of that research also apply to Florida’s SOH. For example, O’Sullivan, Sexton, and Sheffrin (1995a) perform a simulation that shows that, based on certain reasonable assumptions, a switch from a market-value to acquisition-value property tax increases the median time per dwelling by 1.16 years (12.5 percent). Their model finds that the effect on property values is ambiguous.
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Wasi and White (2005) used empirical data to examine how Proposition 13 affected the average tenure of homeowners and renters in California. They found that from 1970 to 2000, the average tenure length increased by 1.04 years (10 percent) for owners and 0.79 (19 percent) for renters relative to those in other states. The tenure for renters is included because Proposition 13 also affects the rental market, both directly because it applies to landlords and indirectly because it reduces the turnover of owneroccupied homes. Note that the direct effect does not apply to Florida’s SOH, since it is restricted to homesteaded properties. For owner-occupiers, the impact on tenure increases sharply as the size of the subsidy rises. The subsidy for homeowners in inland cities averaged only $110 per year and their tenure increased only 0.11 years, whereas the subsidy for homeowners in coastal cities averaged in the thousands of dollars and their tenure increased by two to three years. Stohs, Childs, and Stevenson (2001) compared the mobility of homeowners in two metropolitan areas in California to those in similar metro areas in Illinois and Massachusetts over the period from1995 to 2000. After controlling for a variety of important factors, they found that the percentage of homes sold in any given year was lower for the California metro areas than for those in Illinois and Massachusetts. Since a wide variety of control variables were used, the authors attribute this difference in mobility to the lock-in effect of Proposition 13. O’Sullivan et al. found an increase of 1.16 years in length of time spent in one’s home. Wasi and White found an average increase of 1.04 years, with a range of 0.11 years in inland cities (where the assessment reduction is lowest) to two to three years in coastal cities where the assessment reduction is highest due to faster appreciation in Regional Economic Research Institute
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and higher levels of property values. In contrast, Nagy (1997) and Sjoquist and Pandey (2001) found no impact on mobility. Nagy (1997) compared mobility in three California metropolitan areas before and after Proposition 13 with mobility in seven non-California metro areas. While mobility in California after Proposition 13 did decline, there was also a national decline in mobility at that time. The author attributes that national decline in mobility to the fact that interest rates were quite high in the late 1970s and early 1980s when Proposition 13 was enacted. High interest rates create their own lock-in effect as homeowners do not want to sell and give up their current lower mortgage rate. The three California metropolitan areas actually saw smaller declines in mobility after Proposition 13 than did most of the non-California metro areas. Thus, Nagy fails to find evidence that Proposition 13 reduced mobility. However, this analysis was based on a fairly short period of time immediately after the implementation of Proposition 13 (1978-82). As Nagy discusses, it would be reasonable to expect an increase in mobility in the shortrun as homeowners who anticipated selling in the coming years did so earlier to lock-in the protection of Proposition 13. This would tend to bias his results in favor of finding no effect on mobility from Proposition 13. Sjoquist and Pandey (2001) investigated a property tax limit enacted in 1983 in Muscogee County, Georgia (Muscogee County and the city of Columbus are a consolidated city-county government). This produced a pure acquisition value assessment system, that is, assessed values were not allowed to increase at all unless the property was sold or an addition or renovation was done. The lock-in effect, or reduction of mobility, should be expected to be even greater with this tax limit than with Regional Economic Research Institute
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California’s Proposition 13 or Florida’s Save Our Homes amendment, which allowed assessed values to grow at three percent (or the inflation rate, whichever is lower) respectively. Using a probit regression for 1997 residential sales, the authors found that the value of the assessment freeze had no significant effect on the probability of a property being sold. The authors suggest that perhaps “the benefits of the assessment limitation are not sufficient to significantly affect housing turnover”. Voters in California eventually sought to address Proposition 13’s tax on mobility. Proposition 58, passed in 1986, allowed parents to transfer ownership to their children without having the property reassessed at the market value (exempted transfers had originally been limited to those from spouse to spouse). Proposition 193, passed in 1996, later extended this exemption to the transfer of certain properties from grandparents to grandchildren. Proposition 60 was also passed in 1986. It allowed those aged 55 and over who sell their home and then purchase one of lesser value in the same county to maintain their low assessment (by transferring the base year value of their home). However, this exemption can only be granted one time. In 1988, Proposition 90 extended this exemption to moves into another county. However, individual counties had to approve this change in order for it to be effective in their county. Only 13 counties did so, and by 2004 only eight of those counties still accepted Proposition 90 transfers. (HJTA, 2005) Another proposition, 110, extends the ability to transfer the old property tax basis to the severely disabled of any age. The five amendments to Proposition 13 discussed above have reduced the tax on mobility, but because their provisions are limited to very narrow categories of transactions, that reduction has been very modest. For example, homeowners who Regional Economic Research Institute
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wish to purchase a larger house to accommodate their growing families are particularly harmed by this tax on mobility. None of those amendments offer them any relief. Nevertheless, for those over 55, to whom the portability measure (Proposition 60) applied, Ferreira (2004) finds that the impact has been substantial. He found that in 1990, 55-year olds had a 1.2 to 1.5 percentage point higher rate of moving (on a base of approximately 4%) than 54-year olds in 1990. This 54 to 55 disparity did not exist in 1980 (before portability was enacted), nor in Texas (used as control state) in 1990. Economic theory predicts that the lock-in effect will become important if the tax savings grow to a significant level. Based on our review of both the theoretical and empirical work, the authors have determined that the reduction in mobility should be taken into account in our study. Based on the Wasi and White estimates, this study estimates and forecasts the potential impact on the tenure of homesteads in Florida. The results of the Wasi and White study estimated that for every $2,000 in tax savings per year, a homestead would on average increase their stay or tenure by about two years. This will have implications for the growth in assessed values over time and ultimately for the property tax revenues. The reduction in mobility is also costly to society since many homeowners who would have moved to a preferred home do not do so due to the additional tax cost of moving.
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3.0 ECONOMIC ANALYSIS AND DESCRIPTION Voters in Florida approved the Save Our Homes (SOH) amendment in 1992. That amendment capped the growth of assessed value of individual homesteaded residential properties. Upon transfer of ownership, such properties would then be assessed at the market value. As a result, one of the unintended consequences is that when homeowners sell and relocate to another home, they often face a substantial increase in their property taxes. That essentially creates a tax on mobility, which produces a lock-in effect that encourages homeowners to remain in their current homes longer than they otherwise would have. Lock-in reduces the number of homes being bought and sold. In response to this issue, in recent years, elected representatives in Florida have proposed an amendment that would make the assessment reduction portable. New portability legislation would allow residents to transfer their assessment reduction to another home, with various restrictions; thus avoiding the otherwise large increase in property tax burden. By reducing the tax on mobility, such a portability measure should also produce an increase in the number of residential real estate transactions. This paper provides an economic analysis of the impact of this proposed legislation. 3.3.1 “Save our Homes” Amendment The first step in conducting an economic analysis of the proposed portability of the limitation on taxable real property assessed value is to understand the original “Save Our Homes” program that would be modified to allow portability. This section discusses the rules developed to implement the original amendment 10 to the Florida Regional Economic Research Institute
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Constitution as described by Florida Statutes 193.155 Homestead assessments. The full text of the amendment is contained in Appendix A. The “Save Our Homes” Amendment of the Florida’s State Constitution was approved by Florida voters in 1992 and put into effect in 1995. This “Save Our Homes” legislation places a limitation on the increases in taxable assessed value of a homestead property of the lesser of three percent or the percentage change in the Consumer Price Index. This legislation did not place limits on the millage rate that can be levied on the assessed values, nor did the assessment cap apply to business property or non-homesteaded residential property. Any changes, additions or improvements to the homestead property are assessed at just value for the first year that they are added to the tax roll. The following year they are then subject to the Save Our Home cap. Homestead property loses the Save Our Homes limitation or “cap” following a change in ownership. This includes any sale, foreclosure, or transfer of legal title or beneficial title in equity to any person. The property will then be assessed at just value following removal of the original homestead exemption. The property will also be assessed at just value following the removal of homestead exemption for any valid reason where there is no change in ownership. If a property appraiser discovers that a person was not entitled to the homestead assessment limitation within the prior ten years, the Property Appraiser must record a notice of tax lien in this state subject to the unpaid tax, 50 percent penalty and 15 percent interest per annum.
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In September 1995, the Florida Department of Revenue adopted a rule approved by the Governor and Cabinet referred to as the “recapture” rule directing property appraisers to raise the assessed value of a qualifying homestead property by the lower of three percent or the Consumer Price Index on all properties assessed at less than full market value, whether or not the property’s value increases during the calendar year. Over time, the differences between the taxable assessed values and the full market or just values have grown for those with a homestead exemption as housing prices have generally increased by more than the three percent limitation or the CPI limitation. Some of the housing markets, especially coastal areas of the state, have seen dramatic increases in property values in recent years. This hot demand for housing has pushed housing prices up substantially and the “Save Our Home” legislation has limited the taxable assessed values of homes qualifying for homestead. As a result the difference between market value and assessed value has grown substantially over the last five years. The average just value for a Florida homestead was $190,580 in 2005 and the average assessed value was $132,416. The state ratio of assessed to just or market price has fallen from an average of .89 in 2001 to .69 in 2005. There is considerable variation across counties depending on how fast housing prices are rising and the rate of turnover. Some counties that have not experienced much growth in housing prices such as Taylor County will have relatively high ratios. Those counties with fast housing price escalation such as many of the coastal counties (e.g., Collier and Palm Beach Counties), will have much lower ratios.
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Businesses and non-resident homes have assessments at full market (or just) values. Given the same millage rate for a particular county or city, the differences in assessed values will result in substantially different property taxes for the resident and non-resident and business owner. This paper does not address these fairness or equity issues related to the original legislation.
3.3.2 Description of Save Our Homes Portability Amendment (HJR 33) The purpose of a portability amendment is to allow homestead owners to keep all or part of their existing acquisition-based assessment reduction instead of returning to a market-based assessment (which would generally be much higher) when acquiring a new homestead property in the state of Florida. The portability amendment (HJR 33 – Homestead Property Assessments) under consideration in the Florida legislature would allow a Florida resident, under certain conditions, to transfer some or all of the reduction in assessed homestead value to a new homestead. (The full text of the bill is contained in Appendix B.) There are two key limitations proposed in the Florida House Bill. (1) To use portability, the assessed value of the new home must be greater than the assessed value of the old home, and (2) Homeowners must purchase a new homestead, apply for a homestead exemption, and for the transfer of the reduced assessed value within one year of selling their previous residence. The first condition limits the impact of portability on the tax base of the cities and counties by not allowing the new homestead to have a lower assessed value due to portability. If a person or family downsizes and purchases a new homestead that has a market value below the taxable assessed value of the previous home, the new Regional Economic Research Institute
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homestead’s assessed value will be set to market or just value and there are no reduced assessment benefits transferred
To transfer the benefits of some or all of the
reduced taxable assessment to a new homestead, the new homestead must have a market or just value above the existing taxable assessment on the original homestead. The implications of these limitations are described in more detail below. Let
NJV= the new homestead just or market value NAV= the new homestead assessed value OJV= the old or previous homestead just or market value OAV= the old or previous homestead assessed value
The rules for portability would be: (1) (2) (3) (4)
NAV> or = OAV Full Portability of OJV-OAV if NJV > or = OJV Partial Portability of NJV-OAV where OAV < NJV < OJV No Portability 0 if NJV< or = OAV
Example 1, a higher cost home: A Florida resident with a homestead exemption sells a home for $200,000 that has an assessed value of $100,000. The new home costs $250,000. What would the new assessed value be if the sale and purchase meet the portability conditions?
The old just value (OJV) was $200,000. The new just value (NJV) is $250,000. The old assessed value (OAV) is $100,000 The new assessed value (NAV) is $150,000
This situation satisfies condition (2) above so that the portability would be OJV-OAV or $200,000-$100,000 which is $100,000 since the new just value (NJV) of $250,000 is greater than the old just value (OJV) of $200,000. This example results in a new homestead with a just or market value of $250,000 and an assessed value of $150,000. Regional Economic Research Institute
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It also must meet condition (1) which is the new assessment value of $150,000 has be greater than or equal to the old assessment value of $100,000.
Example 2, a somewhat lower cost home: A Florida resident with homestead exemption sells a home for $200,000 that has an assessed value of $100,000. The new home costs $150,000. What would the new assessed value be if the sale and purchase meet the portability conditions?
The old just value (OJV) was $200,000. The new just value (NJV) is $150,000. The old assessed value (OAV) is $100,000 The new assessed value (NAV) is $100,000
This situation satisfies condition (3) above so that the portability would be NJV-OAV or $150,000-$100,000 which is $50,000 since the new just value (NJV) of $150,000 is less than the old just value (OJV) of $200,000 and the (NJV) of $150,000 is greater than the (OAV) of $100,000. This example results in a new homestead with a just or market value of $150,000 and an assessed value of $100,000. It also must meet condition (1) which is the new assessed value of $150,000 has be greater than or equal to the old assessed value of $100,000.
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Example 3, a much lower cost home: A Florida resident with homestead exemption sells a home for $200,000 that has a assessed value of $100,000. The new home costs $100,000. What would the new assessed value be if the sale and purchase meet the portability conditions?
The old just value (OJV) was $200,000. The new just value (NJV) is $100,000. The old assessed value (OAV) is $100,000 The new assessed value (NAV) is $100,000
This situation satisfies condition (4) so there is no portability and the just or market value is equal to the taxable assessed value for the first year. The “Save Our Homes” cap or limit would apply in the following years based on the new market value of the homestead property.
3.3.3 Economic Analysis of the Theoretical Impact of Portability The overall impact of “Save Our Homes” has been to switch from a market-based assessment system to an acquisition-based assessment system that limits the growth in assessed values of homes that have homestead exemption. This was seen as a way to protect households from having to move due to higher taxes associated with higher property values. The result is that households in otherwise identical houses can pay different levels of taxes based on the year that they acquired their home. The acquisition-based assessment system does allow the assessments to increase at the rate of inflation (CPI) or three percent, whichever is less. The acquisition-based assessment system will result in substantial differences between the market and taxable assessments over time. The limitation on assessed values and property taxes results in Regional Economic Research Institute
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a lock-in effect, where the average tenure of households in a particular homestead increases, limiting mobility. This lock-in effect will slow the resale of homes and make it more likely that homeowners will renovate their existing homes rather than buy a different homestead that can better meet their needs. The reason is that large increases in home values will make for some very large differences in assessed values and the market or just values. The higher the millage charge for a particular city or county, the higher will be the tax savings from increasing tenure. Palm Beach County, for example, had an average 2004 market or just value for homestead properties of $217,164 with an average assessed value of $135,772 (FDOR, 2004). The average reduction in assessed value over market value was about $81,000 or a reduction of about $1,700 in taxes per year based on the county average millage rate of 21 mills. Estimates from California studies (Wasi, 2005) would suggest that the tenure in Palm Beach County would increase by about two years, slowing the turnover of homes. Portability would help to reduce the lock-in caused by the move to an acquisition-based tax system. However, it will not eliminate the lock-in since there are restrictions on transferring the discount to market value if the new home has a lower market price. Some homeowners who wish to downsize to a lower-priced property will not do so because they will lose their tax savings. Nevertheless, the portability amendment will substantially reduce the overall lock-in effect. To estimate the impact of this limitation on transferring the tax savings to lower-priced homes, the authors used a wellestablished statistical theory called renewal theory (O’Sullivan, 1995a) to model the Regional Economic Research Institute
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distribution of homes based on the year of acquisition. An approximation of the transfer of lower assessed value was based on an assumption that 70 percent of the homeowners will purchase a higher-priced home and 30 percent will purchase a lowerpriced home. This is based on a discussion with the Florida Department of Revenue staff member who used a tax data base study to arrive at this estimate. This information was used to model a distribution of prices that were compared to the acquisition based assessments to estimate that about 90 percent of the individuals that are eligible to transfer their lower assessed value would do so. However, only about 83 percent of the overall value of the reduced assessments would transfer, since some homesteaders would transfer partial assessment reductions It will be important to consider what percent of homeowners will be able to transfer the reduced tax assessment if the portability bill becomes law. There are five specific categories of homeowners that will not be eligible to use portability. Those categories and the estimated percent of home purchases that fall into those categories are listed below. • • • • •
Category First-Time Home Buyer In-Migration to Florida Out-Migration to Other States Inherited Properties Other Reasons
Percent 29 3 2 1 5
The first-time homebuyer estimate was obtained from the Florida Association of REALTORS and the in- and out-migration numbers were obtained from the 2000 Census. The inherited property rate is based on an average lifetime of about 80 years.
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The final category of “other” reasons is an estimate that includes transfers such as conversions to rental or commercial property and foreclosures. These estimates imply that about 40 percent of home buyers will not be eligible to use the portability to transfer the lower assessed value. This leaves about 60 percent of homebuyers that could use portability to transfer some or all of the reduced assessment. Using a renewal theory model for the state of Florida, it is estimated that roughly 90 percent of the eligible homeowners would transfer some amount of reduced assessment. This analysis also estimates that about 83 percent of the reduced assessment value would be transferred each year to new home purchases for those eligible. For the overall analysis, based on the 60 percent eligible and the 83 percent transfer of value discussed above, it is estimated that the equivalent of about 50 percent of homes purchased each year will be able to transfer the full average reduction in assessment. 3.3.4 Economic Model of Property Tax Growth and Portability This section will construct a simple model of household tenure and estimate the growth in the assessed value of homestead properties with and without portability. Assume for simplicity that the average tenure is 11.5 years with 4.35 percent of the homes selling each year and that inflation is equal to three percent. This means that the assessed value of homestead properties would rise at three percent per year and that any sold or transferred properties would be assessed at market value. The percentage change in assessed value would be: AVg = {[((.9565 x 1.03 x AVt-1) + (.0435 x JVt))/ AVt-1]-1} x 100 Regional Economic Research Institute
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Where
AVg = Assessed Value Growth in percent AVt-1 = Assessed Value in period t-1 JVt = Just or market value in period t
Multiplying the equation by JVt/JVt and rearranging terms simplifies the equation to: AVg= {[(.9565x 1.03 x (AVt-1/JVt) + .0435)/(AVt-1/JVt)]-1} x 100
(2)
This says that the growth rate in assessed value is dependent on the ratio of assessed value to just value. If the just value is $200,000 and the assessed value the year before is $100,000, then the growth in assessed value would be 7.22 percent. The increase would reflect the three percent growth in assessed value for 95.65 percent of the properties plus a 100 percent increase in assessed value for 4.35 percent of the properties where assessed value is set to 100 percent of market value. If we add portability and assume that about 50 percent of the homesteads are able to get full portability, then on average the other 50 percent will be reassessed to full market value.
In addition, the tenure for the cases without portability was increased by
two years to reflect a potential lock-in effect. The actual average lock-in may increase or decrease with time depending on the growth in housing prices, millage rates, and tenure. The following tables provide the growth rates of aggregate assessed value with and without portability for five different ratios of assessed to just (market) value. Most of the counties in Florida have a ratio of assessed to just value of about .6 to .8. However, those ratios will vary over time depending on the growth in housing prices and turnover. Regional Economic Research Institute
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Table 3.3-1 provides growth rate comparisons for a constant homestead case. It assumes that there is no growth in the number of homesteaded houses, so portability allows the equivalent of 50 percent of the homesteads to keep the reduced assessment. The table shows that portability will decrease the growth in aggregate assessed property values. However, it is clear from the analysis that the growth in property assessments and property taxes would still be above the three percent cap imposed by Save Our Homes, since properties are revalued to market value periodically.
Table 3.3-1 Homestead Taxable Assessed Value Constant Homestead case Growth Rates Ratio of Assessed To Just Value .5 .6 .7 .8 .9
No Portability 6.59% 5.36% 4.47% 3.81% 3.30%
Portability 5.12% 4.40% 3.88% 3.49% 3.19%
If we introduce growth in the number of homestead properties, the growth rates will increase for both the no portability and portability cases. Table 3.3-2 shows the impact with two percent growth and Table 3.3-3 shows the impact with five percent growth in homestead properties.
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Table 3.3-2 Homestead Taxable Assessed Value Two Percent Growth in Homesteads Case Growth Rates Ratio of Assessed To Just Value 0.5 0.6 0.7 0.8 0.9
No Portability 8.64% 6.74% 5.39% 4.37% 3.58%
Portability 7.15% 5.76% 4.76% 4.01% 3.43%
Although portability will reduce the growth in assessed property values, the growth rates are fairly high when compared to recent historic inflation rates of two to three percent. Most counties reported a ratio of assessed to just value around 0.7 which would still yield a growth rate of 4.8 percent given two percent growth in the number of homesteaded properties and portability being allowed. The faster the growth in market prices for housing, the faster the growth in assessed values. Given inflation around three percent per year, if millage rates were held constant, counties would still have real dollar increases in the property tax collections (meaning increases greater than the inflation rate) even with portability.
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Table 3.3-3 Homestead Taxable Assessed Value Five Percent Growth in Homesteads Case Growth Rates Ratio of Assessed To Just Value .5 .6 .7 .8 .9
No Portability 11.87% 8.97% 6.89% 5.34% 4.13%
Portability 10.33% 7.93% 6.22% 4.94% 3.94%
The one issue that may be of a concern deals not with portability but with the original “Save Our Homes” amendment. If general inflation were to rise above three percent such as in 1990 and 1991 when inflation rose to four to five percent or earlier when inflation rose much faster from 1973 to 1982 (with some years over 10 percent inflation), then the cities and counties would have to raise the millage rate to maintain the same purchasing power or real dollars. The inflationary increases in the early and late 1970s were associated with oil supply shocks where world oil prices rose substantially. The state has a cap of 10 mills per jurisdiction so the ability to raise millage rates is limited. If the cap was only the Consumer Price Index (CPI) and not the lesser of three percent or the CPI, then the assessments could rise with general inflation level. 3.3.5 Other Potential Specifications for the Portability Amendment California has a portability law that is limited to those over 55 years old and provides two years to transfer the lower assessed value. However, homeowners are only allowed to transfer their assessment reduction once. The law also limits the Regional Economic Research Institute
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transfer to homes within the existing county of residence unless a reciprocity agreement is in place with the other county allowing the transfer. (As of 2004, only eight counties accepted those transfers.) The size of the impact of such a measure in Florida would depend on the percent of homeowners that are over 55. According to the 2000 Census, there were 4,441,711 owner-occupied housing units in Florida, 2,236,011 of which (or about 50.3 percent) were owned by a householder 55 and older. The average tenure for a homeowner in Florida was about 11.5 years, but for the 55 and over age group, the average tenure was about 15.3 years. This implies that a restriction on portability to those 55 and over would limit the use of the transfer to only about half of the potential users, and to those who would use it less often due to the higher average tenure. The higher tenure also implies that the average lock-in effect for the 55 and over group would be large since the number of years at the capped limit would be higher. Limiting the move to the county of residence will also reduce the potential group of homeowners who can utilize the portability. Data on moving within county is difficult to find, but the Census 2000 does provide some information that may be useful. In Florida, about 67 percent of those who relocated within the last five years moved to a different residence in the same geographic area. The census question does not say county, so there may be some moves in the same geographic area that move across county lines. County Census data shows that the percentage varies considerably; residents of counties with smaller populations are more likely to leave the county when they move than residents of larger counties.
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In California, homeowners are allowed two years to purchase a new residence and transfer the reduction in assessed value. The current bill being proposed in the Florida legislature restricts portability to those who purchase a new residence within one year of selling their old residence. Allowing only one year to transfer the lower assessed value would reduce the flexibility for homeowners; therefore fewer homeowners would be expected to take advantage of the tax benefits provided by portability. For example, one concern might be if the homeowner wants to build a new home. If the home takes more than one year to permit and build, the homeowner would be forced to delay putting his or her home on the market until they could be sure that the new home would be completed in time to transfer the tax benefits. Homeowners in California can only transfer their assessment reduction to another home one time. The Florida bill does not impose this restriction. Like the time restriction, limiting the portability transfer to one time per family would also limit its impact. Assume that the typical household owns a home (not the same house) for 50 years of their lives. Given average tenure in Florida of about 11.5 years per house in 2000, they would move on average about 4 times. Limiting the portability to one time means that the household would most likely use the portability once and be forced to consider the effects of lock-in when deciding to move a second time since portability would not be available. Initially, there would be a reduction in the lock-in and more homes would be sold and purchased. Over time, only those who had been a first-time Florida homebuyer or who had passed up the use of portability would be eligible.
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3.3.6 Lock-in and Documentary Stamp Revenue Collections Florida has a documentary stamp payment of $7.00 per $1000 of market value. A new law designed to increase portability and relieve lock-in would generate additional documentary stamp payments as more homes would be sold. An example might be helpful to explain the potential impact on documentary stamp revenue collections. In 2004, the state of Florida had 4,286,047 homes with a homestead exemption. If lock-in results in one additional year of tenure, assuming an average tenure of 11.5 without lock-in and 12.5 with the lock-in effect, on average an additional 12,858 homes would be sold. Assuming and average Florida market price of $190,000 the documentary stamps would cost $1,330 per home, which would result in an additional $17.1 million being collected due to the elimination of lock-in. This amount would increase over time if additional years of lock-in result.
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4.0 FLORIDA AND REPRESENTATIVE COUNTY FORECASTS This section of the paper applies the theory described earlier and forecasts a range of outcomes of SOH Portability for Florida and ten select counties in Florida. These counties are Bay, Citrus, Dade, Flagler, Hillsborough, Lafayette, Leon, Okaloosa, Orange, and Palm Beach Counties. The selection of these specific counties was a joint decision by the Florida Association of REALTORS and the authors of this paper selected representative counties that are in different geographic regions of the state and with a range of characteristics such as slow and fast growth. Data on average just value, assessed value, assessed value reduction, and millage rates were gathered for each county. Tables 4.1-1 through 4.1.-3 provide this information by county. The represented counties names and numbers are shown in bold. A rough approximation of the estimated impact for a particular county can be made by selecting a representative county that has values close to those of the county of interest. Table 4.1-1 shows counties with an average just value less than $100,000. Table 4.1-2 shows counties with an average just value of between $100,000 and $200,000, and Table 4.1-3 shows counties with average just values over $200,000.
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Table 4.1-1 Average Just, Assessed, Reduction, Tax Savings, and Homestead Count 2004 Average Just Value Under $100,000 Florida Counties Ranked by Average Just Value
County Taylor Calhoun Liberty Washington Hamilton Dixie Madison Holmes Jackson Gadsden Hardee Putnam Union Gilchrist Lafayette Bradford Columbia Suwannee Baker Levy Jefferson Highlands Desoto Glades Escambia Henry
Average Just Value $53,694 $55,873 $59,841 $61,728 $62,422 $63,504 $67,422 $68,662 $70,698 $73,314 $75,104 $76,844 $77,321 $79,576 $80,498 $81,856 $87,417 $88,671 $92,033 $92,465 $92,790 $94,796 $95,279 $96,607 $97,590 $98,644
Average Average Assessed Assessment Value Reduction $47,801 $48,093 $42,234 $52,149 $48,922 $36,520 $51,235 $50,704 $56,010 $60,090 $55,619 $58,444 $56,080 $57,277 $51,194 $64,315 $69,271 $56,453 $65,565 $62,126 $62,307 $71,470 $67,036 $64,486 $78,803 $70,192
$5,893 $7,781 $17,608 $9,579 $13,500 $26,983 $16,188 $17,958 $14,688 $13,224 $19,485 $18,399 $21,241 $22,299 $29,304 $17,541 $18,145 $32,218 $26,468 $30,339 $30,483 $23,325 $28,243 $32,121 $18,787 $28,452
Average Tax Homestead Savings Count $106 $132 $294 $185 $258 $595 $331 $331 $229 $252 $359 $383 $420 $443 $558 $340 $366 $642 $537 $588 $616 $488 $533 $623 $356 $628
5,025 3,166 1,461 5,780 2,615 4,306 4,349 4,727 10,688 10,424 4,715 20,575 2,148 4,319 1,627 6,061 14,437 9,773 5,423 11,471 3,519 24,806 5,967 2,434 71,529 6,397
Source: 2004 Florida Department of Revenue Data
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Table 4.1-2 Average Just, Assessed, Reduction, Tax Savings, and Homestead Count 2004 Average Just Value Over $100,000 and Under $200,000 Florida Counties Ranked by Average Just Value
County Polk Marion Okeechobee Citrus Wakulla Hernando Sumter Lake Pasco Bay Santa Rosa Alachua Clay Osceola Duval Leon St. Lucie Volusia Okaloosa Hillsborough Orange Flagler Nassau Pinellas Gulf Charlotte Seminole Brevard Walton
Average Just Value $105,878 $106,909 $107,503 $111,085 $116,048 $122,577 $122,752 $125,327 $127,106 $128,689 $132,097 $136,261 $137,269 $137,372 $152,096 $153,164 $154,330 $156,364 $164,765 $171,690 $174,722 $178,184 $180,078 $180,938 $182,757 $182,982 $183,666 $184,641 $187,668
Average Average Average Assessed Assessed Tax Value Reduction Savings $84,158 $84,685 $76,554 $82,296 $78,928 $93,026 $91,703 $109,404 $96,333 $98,040 $105,481 $105,829 $109,960 $112,486 $115,629 $119,801 $104,460 $107,674 $120,036 $123,350 $138,761 $132,450 $134,132 $120,878 $94,282 $122,723 $141,569 $113,522 $127,867
$21,720 $22,224 $30,949 $28,789 $37,120 $29,551 $31,050 $15,923 $30,772 $30,649 $26,616 $30,431 $27,309 $24,886 $36,467 $33,363 $49,870 $48,690 $44,729 $48,339 $35,961 $45,734 $45,946 $60,060 $88,475 $60,260 $42,097 $71,119 $59,801
$405 $476 $576 $556 $701 $592 $583 $285 $566 $575 $605 $759 $498 $416 $715 $730 $1,199 $1,121 $676 $1,035 $663 $777 $862 $1,329 $1,267 $976 $768 $1,494 $702
Homestead Count 121,484 86,869 7,841 45,984 6,705 49,145 20,521 72,600 121,320 37,438 37,843 47,905 44,886 44,429 191,352 53,863 62,101 129,528 42,926 255,495 201,125 23,393 18,124 257,818 3,677 50,074 97,701 150,215 12,783
Source: 2004 Florida Department of Revenue Data
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Table 4.1-3 Average Just, Assessed, Reduction, Tax Savings, and Homestead Count 2004 Average Just Value Over $200,000 Florida Counties Ranked by Average Just Value Average Average Average Average Just Assessed Assessed Tax Homestead County Value Value Reduction Savings Count Manatee Lee Broward Dade Indian River Palm Beach St. Johns Sarasota Martin Franklin Collier Monroe
$210,734 $215,362 $224,702 $241,031 $241,358
$152,201 $154,121 $143,977 $150,837 $170,355
$58,533 $61,240 $80,725 $90,194 $71,003
$1,121 $1,178 $1,984 $2,233 $1,219
76,162 141,451 424,094 427,825 35,749
$264,622 $266,277 $269,954 $301,469 $380,326 $392,938 $552,473
$180,320 $195,041 $182,816 $191,910 $135,416 $274,513 $309,779
$84,302 $71,236 $87,138 $109,560 $244,910 $118,425 $242,695
$1,783 $1,201 $1,545 $2,015 $2,124 $1,584 $2,635
343,007 44,101 111,889 42,951 3,356 74,845 17,730
Source: 2004 Florida Department of Revenue Data
The primary source of the data to drive the forecast is from the Florida Department of Revenue. Information on the number of homestead properties, their just values, and assessed values were obtained from their annual publication, Florida Property Valuation & Tax Data as well as from the department directly. The staff at the Florida Department of Revenue were very professional and were helpful in providing and explaining the data and its limitations. The millage data provided by the Florida Department of Revenue is an average millage rate.
Property owners who live in cities
would be expected to pay more and those in unincorporated areas would generally pay less than the average millage rate used in this study. Additional data on the tenure of households and the mobility of households were obtained from the U.S. Census.
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The model developed for this project is based on a well-established statistical branch known as renewal theory. The “Save Our Homes” amendment made homestead assessments a function of the acquisition value of a home plus growth of three percent or the Consumer Price Index (CPI), whichever is less. Renewal theory requires that a distribution of homes be analyzed based on the year of purchase so that in many ways, it is similar to vintage analysis where groups of homes are tracked by the year of purchase.
For the purposes of the forecast, it is assumed that inflation (CPI) is
three percent. The portability amendment analyzed here is modeled after HJR 33. Three cases were run for each county. Each one assumes that the inflation rate is three percent. The low case assumes that housing prices slow considerably and grow three percent per year starting in 2006 and continuing until 2020. The medium case assumes that housing prices grow at five percent starting in 2006 until 2020. The high case assumes that housing prices grow at ten percent per year starting in 2006 until 2020. Most economists would not expect the recent extremely fast growth in housing prices to continue. The range of forecasts for housing prices from three to ten percent per year provides a reasonable basis for evaluation of the impacts of a Florida portability amendment. For each county there are five charts. The first three charts provide a low, medium, and high forecast of the average just value, average assessed value with portability, and average assessed value without portability. Two assessed values are shown, one for the average assessed value with portability (P) and one for assessed value without portability (NP). The low forecast case has home prices rising at three percent per year. The medium forecast has home prices rising at five percent per year Regional Economic Research Institute
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and the high forecast has home prices rising at 10 percent per year.
Faster growth in
housing prices will lead to a bigger differential over time, as shown by the high forecast case. The impact is cumulative, so over time the differential will grow. The fourth figure illustrates a range of possible reductions in potential property tax revenues due to the introduction of portability. The fifth graph shows the average estimated homestead lock-in based on tax savings from remaining in the current residence. Lock-in occurs when a homeowner decides to keep his or her current home and not move because they would have to give up the reduced taxes of the existing homestead. Increased lock-in will slow the sale of homes and slow the growth rate in average assessed values as fewer home assessments are reset back to just or market value.
Tables that support the graphs are provided in the appendix.
4.1 Florida Florida had an estimated 4,286,047 homestead parcels in 2005 with an average just value of $190,580 and an average assessed value of $132,416. This resulted in an average reduction in assessed value of $58,164 and using the average millage rate of 20.7, the average homesteader saved approximately $1,200 in property taxes. The following range of forecasts for average just value, average assessed value and average assessed value with portability are shown in Figures 4.1.1 through 4.1.3.
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Figure 4.1.1 Florida Low Forecast Case Average Homestead Just and Assessed Values $350,000
Nominal Dollars
$300,000 $250,000 Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
The medium forecast for Florida shows that if housing prices rise faster at five percent, the difference between assessed values with and without portability will slowly widen.
Figure 1.1.2 Florida Medium Forecast Case Average Homestead Just and Assessed Values $450,000
Nominal Dollars
$400,000 $350,000 $300,000
Just Value
$250,000
Assessed Value-P
$200,000
Assessed Value-NP
$150,000 $100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The high forecast for Florida has housing prices rising at 10 percent and inflation at three percent. The difference between just or market value and assessed values diverges over time as expected. Even with portability, property taxes would grow faster than inflation but the growth in assessed values would slow.
Figure 4.1.3 Florida High Forecast Case Average Homestead Just and Assessed Values $900,000
Nominal Dollars
$800,000 $700,000 $600,000
Just Value
$500,000
Assessed Value-P
$400,000
Assessed Value-NP
$300,000 $200,000 $100,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
The reduction in potential property taxes is shown in Figure 4.1.4. The range of estimates for potential property tax reduction are $1.1 to $3.3 billion in 2015 rising to $1.6 to about $6.6 billion in 2020. These are in nominal dollars and would be considerably lower if adjusted for inflation. If deflated using 3 percent inflation, the 2015 range would be $851 million to $2.4 billion in 2005 dollars and the 2020 numbers would range from $1.0 to $4.3 billion in 2005 dollars.
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Figure 4.1.4 Florida Reduction in the Potential Property Tax Revenues Millions of Nominal Dollars $7,000 $6,000
Millions $
$5,000 Low Case
$4,000
Med Case
$3,000
High Case
$2,000 $1,000 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
The potential lock-in effect for Florida is shown in Figure 4.1.5.
In the high
forecast case, the lock-in could become a problem with the average tenure increasing by 3.6 years from about 11.5 years to 15.1 years. This would slow the sales of homes, restrict mobility, and slow the growth in average assessed values received by the county.
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Figure 4.1.5 Florida Additional Average Tenure or “lock-in” without Portability 4.00 3.50 Years Lock-in
3.00 2.50
Low Case
2.00
Med Case
1.50
High Case
1.00 0.50
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.2 Bay County Bay County is Northwest coastal area of Florida. It had an estimated 37,438 homestead parcels in 2005 with an average just value of $128,689 and an average assessed value of $98,040. This resulted in an average reduction in assessed value of $30,649 and using the average millage rate of 18.77, the average homesteader saved approximately $575 in property taxes.
The following range of forecasts for average
just value, average assessed value and average assessed value with portability are shown in Figures 4.2.1 through 4.2.3.
Figure 4.2.1 Low Forecast Case Average Homestead Just and Assessed Values Bay County $250,000
Nominal Dollars
$200,000 $150,000
Just Value Assessed Value-P
$100,000
Assessed Value-NP
$50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.2.2 Medium Forecast Case Average Homestead Just and Assessed Values Bay County $300,000
Nominal Dollars
$250,000 $200,000
Just Value
$150,000
Assessed Value-P Assessed Value-NP
$100,000 $50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.2.3 High Forecast Case Average Homestead Just and Assessed Values Bay County $600,000
Nominal Dollars
$500,000 $400,000
Just Value
$300,000
Assessed Value-P Assessed Value-NP
$200,000 $100,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year Regional Economic Research Institute
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The reduction in potential property taxes is shown in Figure 4.2.4. The estimates for potential property tax reduction are $5 to $16 million in 2015 rising to $7 to about $34 million in 2020. These are in nominal dollars and would be considerably lower if adjusted for inflation. If deflated using 3 percent inflation, the 2015 $16 million high case nominal value would fall to about $12 million in 2005 dollars and the 2020 high case nominal value would fall to around $22 million in 2005 dollars.
Figure 4.2.4 Reduction in the Potential Property Tax Revenues Bay County $40 $35
Millions $
$30 $25
Low Case
$20
Med Case High Case
$15 $10 $5 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
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The potential lock-in effect for Bay County is shown in Figure 4.2.5.
In the high
forecast case, the lock-in could become a problem with the average tenure increasing from about 13 years to a couple of years longer. This would slow the sales of homes, restrict mobility, and slow the growth in average assessed values received by the county.
Figure 4.2.5 Additional Average Tenure or “Lock-In” Without Portability Bay County 3.00
Years Lock-in
2.50 2.00
Low Case
1.50
Med Case High Case
1.00 0.50
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.3 Citrus County Citrus County is in Central West Coast area of Florida. It had an estimated 45,984 homestead parcels in 2005 with an average just value of $111,085 and an average assessed value of $82,296. This resulted in an average reduction in assessed value of $28,789 and using the average millage rate of 19.31, the average homesteader saved approximately $550 in property taxes from the “Save Our Homes” reduction. The following range of forecasts for average just value, average assessed value and average assessed value with portability are shown in Figures 4.3.1 through 4.3.3.
Figure 4.3.1 Low Forecast Case Average Homestead Just and Assessed Values Citrus County $200,000 $180,000 Nominal Dollars
$160,000 $140,000 $120,000
Just Value
$100,000
Assessed Value-P
$80,000
Assessed Value-NP
$60,000 $40,000 $20,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.3.2 Medium Forecast Case Average Homestead Just and Assessed Values Citrus County $250,000
Nominal Dollars
$200,000 $150,000
Just Value Assessed Value-P
$100,000
Assessed Value-NP
$50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.3.3 High Forecast Case Average Homestead Just and Assessed Values Citrus County $500,000 $450,000 Nominal Dollars
$400,000 $350,000 $300,000
Just Value
$250,000
Assessed Value-P
$200,000
Assessed Value-NP
$150,000 $100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The reduction in potential property taxes is shown in Figure 4.3.4.
The
estimates for potential property tax reduction are $6 to $23 million in 2015 rising to $8 to about $49 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation. Assuming 3 percent inflation, the high estimate for 2015 would be about $17 million in 2005 dollars and the high estimate for 2020 would be about $32 million in 2005 dollars.
Figure 4.3.4 Reduction in the Potential Property Tax Revenues Citrus County $60 $50
Millions $
$40
Low Case Med Case
$30
High Case $20 $10
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
The potential lock-in effect for Citrus County is shown in Figure 4.3.5.
In the
high forecast case, the lock-in could become a problem with the average tenure increasing from about 9.7 years to almost 11.4 years and this would slow the sales of homes, restrict mobility and slow the growth in average assessed value. Regional Economic Research Institute
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Figure 4.3.5 Additional Average Tenure or “Lock-In” Without Portability Citrus County 1.80 1.60
Years Lock-in
1.40 1.20
Low Case
1.00
Med Case
0.80
High Case
0.60 0.40 0.20
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.4 Dade County Dade County is in the Southeast Coast area of Florida. It had an estimated 427,825 homestead parcels in 2005 with an average just value of $241,031 and an average assessed value of $150,837. This resulted in an average reduction in assessed value of $90,194 and using the average millage rate of 24.76, the average homesteader saved approximately $2,200 in property taxes from the “Save Our Homes” reduction.
The following range of forecasts for average just value, average assessed
value and average assessed value with portability are shown in Figures 4.4.1 through 4.4.2.
Figure 4.4.1 Low Forecast Case Average Homestead Just and Assessed Values Dade County $400,000
Nominal Dollars
$350,000 $300,000 $250,000
Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.4.2 Medium Forecast Case Average Homestead Just and Assessed Values Dade County $600,000
Nominal Dollars
$500,000 $400,000
Just Value
$300,000
Assessed Value-P Assessed Value-NP
$200,000 $100,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.4.3 High Forecast Case Average Homestead Just and Assessed Values Dade County $1,200,000
Nominal Dollars
$1,000,000 $800,000
Just Value
$600,000
Assessed Value-P Assessed Value-NP
$400,000 $200,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The reduction in potential property taxes is shown in Figure 4.4.4. The estimates for potential property tax reduction are $181 to $329 million in 2015 rising to $271 to about $535 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation. The high case numbers assume that housing prices grow at 10 percent per year until 2020. In 2005 dollars, the high estimates for 2015 and 2020 are $245 million and $344 assuming three percent inflation.
Figure 4.4.4 Reduction in the Potential Property Tax Revenues Dade County $600 $500
Millions $
$400
Low Case Med Case
$300
High Case $200 $100
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
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The potential lock-in effect for Dade County is shown in Figure 4.4.5. Dade County currently has an average tenure for homeowners of about 12.9 years. The higher tax savings in the high forecast case (fast growth in housing prices) will result in a longer tenure and slower turnover of homestead homes. Lock-ins of a couple years have been estimated for California however, the high case pushes the limits of our estimates and analysis with additional tenure of almost seven years. The higher lock-in will result in higher tenure, less mobility and fewer sales over time as homesteaders weigh the cost of giving up lower property taxes for a more desirable homestead.
Figure 4.4.5 Additional Average Tenure or “Lock-In” Without Portability Dade County 7.00
Years Lock-in
6.00 5.00 Low Case
4.00
Med Case
3.00
High Case
2.00 1.00
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.5 Flagler County Flagler County is in the North East Coast area of Florida. It had an estimated 23,393 homestead parcels in 2005 with an average just value of $178,184 and an average assessed value of $132,450. This resulted in an average reduction in assessed value of $45,734 and using the average millage rate of 16.98, the average homesteader saved approximately $780 in property taxes from the “Save Our Homes” reduction.
The following range of forecasts for average just value, average assessed
value and average assessed value with portability are shown in Figures 4.5.1 through 4.5.3.
Figure 4.5.1 Low Forecast Case Average Homestead Just and Assessed Values Flagler County $300,000
Nominal Dollars
$250,000 $200,000
Just Value
$150,000
Assessed Value-P Assessed Value-NP
$100,000 $50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.5.2 Medium Forecast Case Average Homestead Just and Assessed Values Flagler County $400,000
Nominal Dollars
$350,000 $300,000 $250,000
Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.5.3 High Forecast Case Average Homestead Just and Assessed Values Flagler County $800,000
Nominal Dollars
$700,000 $600,000 $500,000
Just Value
$400,000
Assessed Value-P
$300,000
Assessed Value-NP
$200,000 $100,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The reduction in potential property taxes is shown in Figure 4.5.4. The estimates for potential property tax reduction are $5 to $23 million in 2015 rising to $6 to about $58 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation. In 2005 dollars, the high forecast for 2015 would be $17 million and $37 million in 2020 assuming three percent inflation.
Figure 4.5.4 Reduction in the Potential Property Tax Revenues Flagler County $70 $60
Millions $
$50 Low Case
$40
Med Case
$30
High Case
$20 $10 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
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The potential lock-in effect for Flagler County is shown in Figure 4.5.5. Flagler County currently has a relatively low average tenure for homeowners of about 8.1 years. The higher tax savings in the high forecast case (fast growth in housing prices) will result in a longer tenure and slower turnover of homestead homes. Lock-ins of a couple years have been estimated for California and the high case would add about 1.6 years to average tenure. The higher lock-in will result in higher tenure, less mobility, and fewer sales over time as homesteaders weigh the cost of giving up lower property taxes for a more desirable homestead. It will also slow the sales of property reducing the growth in assessed values.
Figure 4.5.5 Additional Average Tenure or “Lock-In” Without Portability Flagler County 1.80 1.60
Years Lock-in
1.40 1.20
Low Case
1.00
Med Case
0.80
High Case
0.60 0.40 0.20
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.6 Hillsborough County Hillsborough County is located on the west central coast area of Florida. It had an estimated 255,495 homestead parcels in 2005 with an average just value of $171,690 and an average assessed value of $123,350. This resulted in an average reduction in assessed value of $48,339 and using the average millage rate of 21.4, the average homesteader saved approximately $1,000 in property taxes in 2005. The low case results for the property values and the assessed values with and without portability are shown in Figure 4.6.1. The recent run-up in housing prices can be seen by the sharp upward trend in the just or market value of the homestead properties. Over time as the homesteader is able to transfer all or part of his or her reduced assessment, the assessed value given portability (Assessed Value-P) becomes lower than the assessed value without portability (Assessed Value-NP).
Figure 4.6.1 Low Forecast Case Average Homestead Just and Assessed Values Hillsborough County $300,000
Nominal Dollars
$250,000 $200,000
Just Value Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The medium case assumes a higher growth rate of 5 percent for home prices and inflation is assumed to remain at three percent and is show in Figure 4.6.2. Over time the assessed values for portability and non-portability separate as one might expect. The long-term growth rate of 5 percent is assumed to take hold in 2006 and would result in a doubling of housing prices every 14 years.
Figure 4.6.2 Medium Forecast Case Average Homestead Just and Assessed Values Hillsborough County $400,000
Nominal Dollars
$350,000 $300,000 $250,000
Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
The high case forecast assumes that housing prices rise very rapidly at ten percent per year. This case is shown in Figure 4.6.3 and assumes again that inflation stays at three percent per year. This is very rapid growth and one can see that housing prices double on average every seven years.
The difference between the average
assessed value with and without portability widens in this case. It should be pointed out that average assessed values will rise faster than three percent since the sale of a Regional Economic Research Institute
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property will result in a large increase in its assessed value if it is transferred to a new owner that does not have or lacks the qualification for transferring the reduced value with portability.
Figure 4.6.3 High Forecast Case Average Homestead Just and Assessed Values Hillsborough County $800,000
Nominal Dollars
$700,000 $600,000 $500,000
Just Value
$400,000
Assessed Value-P
$300,000
Assessed Value-NP
$200,000 $100,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
The reduction in potential tax revenues is shown in Figure 4.6.4. It is assumed that the 2004 average millage rate of 21.4 mills is held constant over the period. If property values rose very quickly such as in the high case of 10 percent per year, the counties and cities would have large increases in tax revenues and would have to decide whether to lower taxes or use the additional money for community infrastructure. In each of the cases presented, the rise in property tax revenues is greater than inflation so that counties and cities are able to keep up with inflation with or without the potential new portability amendment. Inflation levels higher than the growth in assessed values Regional Economic Research Institute
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would create funding issues for many cities and counties due to the limitation of the “Save Our Homes” amendment and limits on their ability to raise millage rates. The estimates for potential property tax reduction are $57 to $173 million in 2015 rising to $82 to about $368 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation. In 2005 dollars, the high forecast for 2015 would be $128 million and $236 million in 2020 assuming three percent inflation.
Figure 4.6.4 Reduction in the Potential Property Tax Revenues Hillsborough County $400 $350
Millions $
$300 $250
Low Case
$200
Med Case High Case
$150 $100 $50 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
Homeowners must weigh the benefits and costs of moving in deciding when and where to move.
Lock-in occurs when a homeowner will lose an existing benefit or
incur additional costs to move. Lock-in has been observed and studied and is generally associated with a homeowner having to give up a tax advantage or a mortgage advantage. Lock-in restricts mobility and can result in fewer moves and for Regional Economic Research Institute
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some the choice may be to remodel and not move to a small or larger housing structure based on their current needs. Figure 4.6.5 shows the estimated lock-in. It becomes significant in the high case with large increases in just or market value and a limitation on the assessed value due to “Save Our Homes”. One of the key findings of this study is that lock-in will reduce tenure and that homeowners will be expected to stay in their existing dwelling longer.
This will slow
sales of homes and property tax revenues to cities and counties. The reduction in mobility means that sales that would normally bring the assessed value back to market or just value will not happen as often. Figure 4.6.5 provides a bar chart showing the impacts of lock-in on the length of stay in the county. Currently, 2000 Census data shows that on average a Hillsborough homeowner will have tenure of about 12.6 years. Average tenure is forecast to rise by two or more years in the high case, significantly affecting the mobility of homeowners, sales of homes, and the property tax revenue.
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Figure 4.6.5 Additional Average Tenure or “Lock-In” Hillsborough County 3.50
Years Lock-in
3.00 2.50 Low Case
2.00
Med Case
1.50
High Case
1.00 0.50
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.7 Lafayette County Lafayette County is in the North Central area of Florida. It had an estimated 1,627 homestead parcels in 2005 with an average just value of $80,498 and an average assessed value of about $68,796. This results in an average reduction in assessed value of $11,702 and using the average millage rate of 19.05, the average homesteader saved approximately $200 in property taxes from the “Save Our Homes” reduction. The following range of forecasts for average just value, average assessed value and average assessed value with portability are shown in Figures 4.7.1 through 4.7.3
Figure 4.7.1 Low Forecast Case Average Homestead Just and Assessed Values Lafayette County $140,000
Nominal Dollars
$120,000 $100,000 Just Value
$80,000
Assessed Value-P
$60,000
Assessed Value-NP
$40,000 $20,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.7.2 Medium Forecast Case Average Homestead Just and Assessed Values Lafayette County $180,000
Nominal Dollars
$160,000 $140,000 $120,000
Just Value
$100,000
Assessed Value-P
$80,000
Assessed Value-NP
$60,000 $40,000 $20,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.7.3 High Forecast Case Average Homestead Just and Assessed Values Lafayette County $400,000
Nominal Dollars
$350,000 $300,000 $250,000
Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The reduction in potential property taxes is shown in Figure 4.7.4. The estimates for potential property tax reduction are $0.1 to 0.4 million in 2015 rising to $0.1 to about $0.9 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation.
Figure 4.7.4 Reduction in the Potential Property Tax Revenues Lafayette County $0.9 $0.8 $0.7 Millions $
$0.6
Low Case
$0.5
Med Case
$0.4
High Case
$0.3 $0.2 $0.1 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0.0
Year
The potential lock-in effect for Lafayette County is shown in Figure 4.7.5. Lafayette County currently has a fairly long average tenure for homeowners of about 15.3 years based on Census 2000 data. The higher tax savings in the high forecast case (fast growth in housing prices) will result in a longer tenure and slower turnover of homestead homes.
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Figure 4.7.5 Additional Average Tenure or “Lock-In” Without Portability Lafayette County 1.80 1.60
Years Lock-in
1.40 1.20
Low Case
1.00
Med Case
0.80
High Case
0.60 0.40 0.20
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.8 Leon County Leon County is in the northwest inland area of Florida and includes the capital of Tallahassee. It had an estimated 53,863 homestead parcels in 2005 with an average just value of $153,164 and an average assessed value of $119,801. This resulted in an average reduction in assessed value of $33,363 and using the average millage rate of 21.89, the average homesteader saved approximately $700 in property taxes from the “Save Our Homes” reduction.
The following range of forecasts for average just value,
average assessed value and average assessed value with portability are shown in Figures 4.8.1 through 4.8.2.
Figure 4.8.1 Low Forecast Case Average Homestead Just and Assessed Values Leon County $300,000
Nominal Dollars
$250,000 $200,000
Just Value
$150,000
Assessed Value-P Assessed Value-NP
$100,000 $50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.8.2 Medium Forecast Case Average Homestead Just and Assessed Values Leon County $350,000
Nominal Dollars
$300,000 $250,000 Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.8.3 High Forecast Case Average Homestead Just and Assessed Values Leon County $700,000
Nominal Dollars
$600,000 $500,000 Just Value
$400,000
Assessed Value-P
$300,000
Assessed Value-NP
$200,000 $100,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The reduction in potential property taxes is shown in Figure 4.8.4. The estimates for potential property tax reduction are $9 to $32 million in 2015 rising to $12 to about $68 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation. In 2005 dollars, the high forecast for 2015 would be $24 million and $44 million in 2020 assuming three percent inflation.
Figure 4.8.4 Reduction in the Potential Property Tax Revenues Leon County $80 $70
Millions $
$60 $50
Low Case
$40
Med Case High Case
$30 $20 $10 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
The potential lock-in effect for Leon County is shown in Figure 4.8.5. Leon County currently has an average tenure for homeowners of about 11.9 years. The higher tax savings in the high forecast case (fast growth in housing prices) will result in a longer tenure and slower turnover of homestead homes.
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Figure 4.8.5 Additional Average Tenure or “Lock-In” Without Portability Leon County 3.50
Years Lock-in
3.00 2.50 Low Case
2.00
Med Case
1.50
High Case
1.00 0.50
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.9 Okaloosa County Okaloosa County is in the Northwestern coastal area of Florida. It had an estimated 42,926 homestead parcels in 2005 with an average just value of $164,765 and an average assessed value of $120,036. This resulted in an average reduction in assessed value of $44,729 and using the average millage rate of 15.11, the average homesteader saved approximately $700 in property taxes from the “Save Our Homes” reduction.
The following range of forecasts for average just value, average assessed
value and average assessed value with portability are shown in Figures 4.9.1 through 4.9.2.
Figure 4.9.1 Low Forecast Case Average Homestead Just and Assessed Values Okaloosa County $300,000
Nominal Dollars
$250,000 $200,000
Just Value
$150,000
Assessed Value-P Assessed Value-NP
$100,000 $50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.9.2 Medium Forecast Case Average Homestead Just and Assessed Values Okaloosa County $400,000
Nominal Dollars
$350,000 $300,000 $250,000
Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.9.3 High Forecast Case Average Homestead Just and Assessed Values Okaloosa County $800,000
Nominal Dollars
$700,000 $600,000 $500,000
Just Value
$400,000
Assessed Value-P
$300,000
Assessed Value-NP
$200,000 $100,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The reduction in potential property taxes is shown in Figure 4.9.4.
The
estimates for potential property tax reduction are $6 to $20 million in 2015 rising to $9 to about $42 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation. In 2005 dollars, the high forecast for 2015 would be $15 million and $27 million in 2020 assuming three percent inflation.
Figure 4.9.4 Reduction in the Potential Property Tax Revenues Okaloosa County $45 $40 $35 Millions $
$30
Low Case
$25
Med Case
$20
High Case
$15 $10 $5 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
The potential lock-in effect for Okaloosa County is shown in Figure 4.9.5. Okaloosa County currently has an average tenure for homeowners of about 12.8 years. The higher tax savings in the high forecast case (fast growth in housing prices) will result in a longer tenure and slower turnover of homestead homes.
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Figure 4.9.5 Additional Average Tenure or “Lock-In” Without Portability Okaloosa County 3.00
Years Lock-in
2.50 2.00
Low Case
1.50
Med Case High Case
1.00 0.50
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.10 Orange County Orange County is in the central inland area of Florida. It had an estimated 201,125 homestead parcels in 2005 with an average just value of $174,722 and an average assessed value of $138,761. This resulted in an average reduction in assessed value of $35,961 and using the average millage rate of 18.43, the average homesteader saved approximately $660 in property taxes from the “Save Our Homes” reduction.
The following range of forecasts for average just value, average assessed
value and average assessed value with portability are shown in Figures 4.10.1 through 4.10.3.
Figure 4.10.1 Low Forecast Case Average Homestead Just and Assessed Values Orange County $300,000
Nominal Dollars
$250,000 $200,000
Just Value
$150,000
Assessed Value-P Assessed Value-NP
$100,000 $50,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.10.2 Medium Forecast Case Average Homestead Just and Assessed Values Orange County $400,000
Nominal Dollars
$350,000 $300,000 $250,000
Just Value
$200,000
Assessed Value-P
$150,000
Assessed Value-NP
$100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.10.3 High Forecast Case Average Homestead Just and Assessed Values Orange County $800,000
Nominal Dollars
$700,000 $600,000 $500,000
Just Value
$400,000
Assessed Value-P
$300,000
Assessed Value-NP
$200,000 $100,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The reduction in potential property taxes is shown in Figure 4.10.4.
The
estimates for potential property tax reduction are $31 to $121 million in 2015 rising to $42 to about $263 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation. In 2005 dollars, the high forecast for 2015 would be $90 million and $169 million in 2020 assuming three percent inflation.
Figure 4.10.5 Reduction in the Potential Property Tax Revenues Orange County $300 $250
Millions $
$200
Low Case Med Case
$150
High Case $100 $50
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
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The potential lock-in effect for Orange County is shown in Figure 4.10.6. Orange County currently has an average tenure for homeowners of about 11.5 years. The higher tax savings in the high forecast case (fast growth in housing prices) will result in a longer tenure and slower turnover of homestead homes.
Figure 4.10.5 Additional Average Tenure or “Lock-In” Without Portability Orange County 3.00
Years Lock-in
2.50 2.00
Low Case
1.50
Med Case High Case
1.00 0.50
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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4.11 Palm Beach County Palm Beach County is in the Southeast coastal area of Florida. It had an estimated 343,007 homestead parcels in 2005 with an average just value of $264,622 and an average assessed value of $180,320. This resulted in an average reduction in assessed value of $84,302 and using the average millage rate of 21.15, the average homesteader saved approximately $1800 in property taxes from the “Save Our Homes” reduction.
The following range of forecasts for average just value, average assessed
value and average assessed value with portability are shown in Figures 4.11.1 through 4.11.3
Figure 4.11.1 Low Forecast Case Average Homestead Just and Assessed Values Palm Beach County $450,000
Nominal Dollars
$400,000 $350,000 $300,000
Just Value
$250,000
Assessed Value-P
$200,000
Assessed Value-NP
$150,000 $100,000 $50,000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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Figure 4.11.2 Medium Forecast Case Average Homestead Just and Assessed Values Palm Beach County $600,000
Nominal Dollars
$500,000 $400,000
Just Value
$300,000
Assessed Value-P Assessed Value-NP
$200,000 $100,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
Figure 4.11.3 High Forecast Case Average Homestead Just and Assessed Values Palm Beach County $1,200,000
Nominal Dollars
$1,000,000 $800,000
Just Value
$600,000
Assessed Value-P Assessed Value-NP
$400,000 $200,000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
$0
Year
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The reduction in potential property taxes is shown in Figure 4.11.4.
The
estimates for potential property tax reduction are $136 to $332 million in 2015 rising to $187 to about $610 million in 2020. These are in nominal dollars and would be lower if adjusted for inflation. In 2005 dollars, the high forecast for 2015 would be $247 million and $391 million in 2020 assuming three percent inflation.
Figure 4.11.4 Reduction in the Potential Property Tax Revenues Palm Beach County $700 $600
Millions $
$500 Low Case
$400
Med Case
$300
High Case
$200 $100 2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
$0
Year
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The potential lock-in effect for Palm Beach County is shown in Figure 4.11.5. Palm Beach County currently has an average tenure for homeowners of about 10.4 years. The higher tax savings in the high forecast case (fast growth in housing prices) will result in a longer tenure and slower turnover of homestead homes. Palm Beach County has an estimated lock-in of about 1.5 years in 2005 and this would increase significantly in the high case.
Figure 4.10.5 Additional Average Tenure or “Lock-In” Without Portability Palm Beach County 6.00
Years Lock-in
5.00 4.00
Low Case Med Case
3.00
High Case
2.00 1.00
20 19
20 17
20 15
20 13
20 11
20 09
20 07
20 05
20 03
20 01
0.00
Year
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References Census 2000 Summary File 3, HCT7, Tenure by age of householder by year householder moved into unit Census 2000 PHC-T-22, Table 1, Gross migration for the Population 5 years and Over for the United States, Regions, States, Counties, New England Minor Civil Divisions, and Metropolitan Areas: 2000 Census 2000 PHC-T-22, Table 3, State of Residence in 2000 for the Population 5 Years and Over by State of Residence in 1995. Federal Reserve Board, Dean M. Maki and Michael G. Palumbo, “Disentangling the Wealth Effect: A Cohort Analysis of Household Saving in the 1990s”, 2001-21. Florida Department of Revenue, Florida Property Valuations & Tax Data, 1995 to 2004. Florida Department of Revenue, Average 2004 millage rates by county, direct correspondence. Ferreira, Fernando. 2004. You can take it with you: transferability of Proposition 13 tax benefits, residential mobility, and willingness-to-pay for housing amenities. paper presented at the NBER Summer Institute. Howard Jarvis Tax Association (HJTA). 2005 http://www.hjta.org/faq. Nagy, John. 1997. Did Proposition 13 Affect the Mobility of California Homeowners? Public Finance Review 25:102-16. O’Sullivan, Arthur, Terri A. Sexton, and Steven M. Sheffrin. 1995a. Property taxes and tax revolts: the legacy of Proposition 13. Cambridge: Cambridge University Press. O’Sullivan, Arthur, Terri A. Sexton, and Steven M. Sheffrin. 1995b. Property taxes, mobility, and home ownership. Journal of Urban Economics 37:107-29. Poterba, James M. 1984. Tax subsidies to owner-occupied housing: an asset-market approach. The Quarterly Journal of Economics 99 (4):729-52. Rosen, Kenneth T. 1982. The impact of Proposition 13 on house prices in northern California: A test of the interjurisdictional capitalization hypothesis. Journal of Political Economy 90 (1):191-200. Sexton, Terri A, Steven M Sheffrin, and Arthur O'Sullivan. 1999. Proposition 13: Unintended effects and feasible reforms. National Tax Journal 52 (1):99-111. Regional Economic Research Institute
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Sjoquist, David L., and Lakshmi Pandey. 2001. An analysis of acquisition value property tax assessment for homesteaded property. Public Budgeting and Finance 21 (4):117. Stohs, Mark H., Paul Childs, and Simon Stevenson. 2001. Tax Policies and Residential Mobility. International Real Estate Review 4 (1):95-117. Wasi, Nada, and Michelle J. White. 2005. Property tax limitations and mobility: the lockin effect of California’s Proposition 13. NBER Working Paper Series WP 11108.
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APPENDIX
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APPENDIX A Florida Statutes: Save Our Homes 193.155 Homestead assessments.--Homestead property shall be assessed at just value as of January 1, 1994. Property receiving the homestead exemption after January 1, 1994, shall be assessed at just value as of January 1 of the year in which the property receives the exemption. (1) Beginning in 1995, or the year following the year the property receives homestead exemption, whichever is later, the property shall be reassessed annually on January 1. Any change resulting from such reassessment shall not exceed the lower of the following: (a) Three percent of the assessed value of the property for the prior year; or (b) The percentage change in the Consumer Price Index for All Urban Consumers, U.S. City Average, all items 1967=100, or successor reports for the preceding calendar year as initially reported by the United States Department of Labor, Bureau of Labor Statistics. (2) If the assessed value of the property as calculated under subsection (1) exceeds the just value, the assessed value of the property shall be lowered to the just value of the property. (3) Except as provided in this subsection, property assessed under this section shall be assessed at just value as of January 1 of the year following a change of ownership. Thereafter, the annual changes in the assessed value of the property are subject to the limitations in subsections (1) and (2). For the purpose of this section, a change in ownership means any sale, foreclosure, or transfer of legal title or beneficial title in equity to any person, except as provided in this subsection. There is no change of ownership if: (a) Subsequent to the change or transfer, the same person is entitled to the homestead exemption as was previously entitled and: 1. The transfer of title is to correct an error; or 2. The transfer is between legal and equitable title; (b) The transfer is between husband and wife, including a transfer to a surviving spouse or a transfer due to a dissolution of marriage; (c) The transfer occurs by operation of law under s. 732.4015; or Regional Economic Research Institute
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(d) Upon the death of the owner, the transfer is between the owner and another who is a permanent resident and is legally or naturally dependent upon the owner. (4)(a) Changes, additions, or improvements to homestead property shall be assessed at just value as of the first January 1 after the changes, additions, or improvements are substantially completed. (b) Changes, additions, or improvements do not include replacement of a portion of real property damaged or destroyed by misfortune or calamity when the just value of the damaged or destroyed portion as replaced is not more than 125 percent of the just value of the damaged or destroyed portion. The value of any replaced real property, or portion thereof, which is in excess of 125 percent of the just value of the damaged or destroyed property shall be deemed to be a change, addition, or improvement. Replaced real property with a just value of less than 100 percent of the original property's just value shall be assessed pursuant to subsection (5). (c) Changes, additions, or improvements include improvements made to common areas or other improvements made to property other than to the homestead property by the owner or by an owner association, which improvements directly benefit the homestead property. Such changes, additions, or improvements shall be assessed at just value, and the just value shall be apportioned among the parcels benefiting from the improvement. (5) When property is destroyed or removed and not replaced, the assessed value of the parcel shall be reduced by the assessed value attributable to the destroyed or removed property. (6) Only property that receives a homestead exemption is subject to this section. No portion of property that is assessed solely on the basis of character or use pursuant to s. 193.461 or s. 193.501, or assessed pursuant to s. 193.505, is subject to this section. When property is assessed under s. 193.461, s. 193.501, or s. 193.505 and contains a residence under the same ownership, the portion of the property consisting of the residence and curtilage must be assessed separately, pursuant to s. 193.011, for the assessment to be subject to the limitation in this section. (7) If a person received a homestead exemption limited to that person's proportionate interest in real property, the provisions of this section apply only to that interest. (8) Erroneous assessments of homestead property assessed under this section may be corrected in the following manner: (a) If errors are made in arriving at any assessment under this section due to a material mistake of fact concerning an essential characteristic of the property, the just value and Regional Economic Research Institute
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assessed value must be recalculated for every such year, including the year in which the mistake occurred. (b) If changes, additions, or improvements are not assessed at just value as of the first January 1 after they were substantially completed, the property appraiser shall determine the just value for such changes, additions, or improvements for the year they were substantially completed. Assessments for subsequent years shall be corrected, applying this section if applicable. (c) If back taxes are due pursuant to s. 193.092, the corrections made pursuant to this subsection shall be used to calculate such back taxes. (9) If the property appraiser determines that for any year or years within the prior 10 years a person who was not entitled to the homestead property assessment limitation granted under this section was granted the homestead property assessment limitation, the property appraiser making such determination shall record in the public records of the county a notice of tax lien against any property owned by that person in the county, and such property must be identified in the notice of tax lien. Such property that is situated in this state is subject to the unpaid taxes, plus a penalty of 50 percent of the unpaid taxes for each year and 15 percent interest per annum. However, when a person entitled to exemption pursuant to s. 196.031 inadvertently receives the limitation pursuant to this section following a change of ownership, the assessment of such property must be corrected as provided in paragraph (8)(a), and the person need not pay the unpaid taxes, penalties, or interest.
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APPENDIX B HJR 33 – Homestead Property Assessments FLORIDA HOUSE OF REPRESENTATIVES House Joint Resolution A joint resolution proposing an amendment to Section 4 of Article VII of the State Constitution to provide an additional circumstance for assessing homestead property at less than just value. Be It Resolved by the Legislature of the State of Florida: That the following amendment to Section 4 of Article VII of the State Constitution is agreed to and shall be submitted to the electors of this state for approval or rejection at the next general election or at an earlier special election specifically authorized by law for that purpose: ARTICLE VII FINANCE AND TAXATION SECTION 4. Taxation; assessments.--By general law regulations shall be prescribed which shall secure a just valuation of all property for ad valorem taxation, provided: (a) Agricultural land, land producing high water recharge to Florida's aquifers, or land used exclusively for noncommercial recreational purposes may be classified by general law and assessed solely on the basis of character or use. (b) Pursuant to general law tangible personal property held for sale as stock in trade and livestock may be valued for taxation at a specified percentage of its value, may be classified for tax purposes, or may be exempted from taxation. (c) All persons entitled to a homestead exemption under Section 6 of this Article shall have their homestead assessed at CODING: Words stricken are deletions; words underlined are additions. hjr0033-00
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Page 2 of 5 FLORIDA HOUSE OF REPRESENTATIVES just value as of January 1 of the year following the effective date of this amendment. This assessment shall change only as provided herein. (1) Assessments subject to this provision shall be changed annually on January 1st of each year; but those changes in assessments shall not exceed the lower of the following: a. Three percent (3%) of the assessment for the prior year. b. The percent change in the Consumer Price Index for all urban consumers, U.S. City Average, all items 1967=100, or successor reports for the preceding calendar year as initially reported by the United States Department of Labor, Bureau of Labor Statistics. (2) No assessment shall exceed just value. (3) After any change of ownership, as provided by general law, homestead property shall be assessed at just value as of January 1 of the following year, unless the provisions of paragraph (8) apply. Thereafter, the homestead shall be assessed as provided herein. (4) New homestead property shall be assessed at just value as of January 1st of the year following the establishment of the homestead, unless the provisions of paragraph (8) apply. That assessment shall only change as provided herein. (5) Changes, additions, reductions, or improvements to homestead property shall be assessed as provided for by general law; provided, however, after the adjustment for any change, addition, reduction, or improvement, the property shall be assessed as provided herein.
HJR 33 2006 CODING: Words stricken are deletions; words underlined are additions. hjr0033-00
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Page 3 of 5 FLORIDA HOUSE OF REPRESENTATIVES (6) In the event of a termination of homestead status, the property shall be assessed as provided by general law. (7) The provisions of this amendment are severable. If any of the provisions of this amendment shall be held unconstitutional by any court of competent jurisdiction, the decision of such court shall not affect or impair any remaining provisions of this amendment. (8) When a person sells his or her homestead property within this state and within one year purchases another property and establishes such property as homestead property, the newly established homestead property shall be initially assessed at less than just value, as provided by general law. The difference between the new homestead property's just value and its assessed value in the first year the homestead is established may not exceed the difference between the previous homestead's just value and its assessed value in the year of sale. In addition, to be assessed as provided in this paragraph, the assessed value of the new homestead must equal or exceed the assessed value of the previous homestead. Thereafter, the homestead shall be assessed as provided herein. (d) The legislature may, by general law, for assessment purposes and subject to the provisions of this subsection, allow counties and municipalities to authorize by ordinance that historic property may be assessed solely on the basis of character or use. Such character or use assessment shall apply only to the jurisdiction adopting the ordinance. The requirements for eligible properties must be specified by general law.
HJR 33 2006 CODING: Words stricken are deletions; words underlined are additions. hjr0033-00 Regional Economic Research Institute
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Page 4 of 5 FLORIDA HOUSE OF REPRESENTATIVES (e) A county may, in the manner prescribed by general law, provide for a reduction in the assessed value of homestead property to the extent of any increase in the assessed value of that property which results from the construction or reconstruction of the property for the purpose of providing living quarters for one or more natural or adoptive grandparents or parents of the owner of the property or of the owner's spouse if at least one of the grandparents or parents for whom the living quarters are provided is 62 years of age or older. Such a reduction may not exceed the lesser of the following: (1) The increase in assessed value resulting from construction or reconstruction of the property. (2) Twenty percent of the total assessed value of the property as improved. BE IT FURTHER RESOLVED that the following statement be placed on the ballot: CONSTITUTIONAL AMENDMENT ARTICLE VII, SECTION 4 HOMESTEAD PROPERTY ASSESSMENTS.--Proposing an amendment to the State Constitution to provide for assessing at less than just value property purchased within one year after a sale of homestead property and established as new homestead property, limited by the difference between the new homestead property's just value and its assessed value in the first year the homestead is established not exceeding the difference between the previous homestead's just value and its assessed value in the year of sale and the new homestead property's assessed value
HJR 33 2006 CODING: Words stricken are deletions; words underlined are additions. hjr0033-00
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Page 5 of 5 FLORIDAHOUSEOFREPRESENTATIVES equaling or exceeding the old homestead property's assessed value.
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APPENDIX C Tables Corresponding to Forecast Charts in the Body of the Paper Table
Region Or Area
C-1 C-2
Florida Florida
C-3 C-4 C-5
Florida Bay County Bay County
C-6 C-7 C-8
Bay County Citrus County Citrus County
C-9 C-10 C-11
Citrus County Dade County Dade County
C-12 C-13 C-14
Dade County Flagler County Flagler County
C-15 C-16 C-17
Flagler County Hillsborough County Hillsborough County
C-18 C-19 C-20
Hillsborough County Lafayette County Lafayette County
C-21 C-22 C-23
Lafayette County Leon County Leon County
C-24 C-25 C-26
Leon County Okaloosa County Okaloosa County
C-27 C-28 C-29
Okaloosa County Orange County Orange County
C-30 C-31 C-32
Orange County Palm Beach County Palm Beach County
C-33
Palm Beach County
Table Description Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In Average Just and Assessed Values Potential Reduction in Property Tax Revenues in Millions of Nominal Dollars Average Years Lock-In
The low case assumes that average just or market value of housing prices increases at 3 percent starting in 2006. The medium case assumes that the average market price rises at 5 percent per year starting in 2006 and the high case assumes that average market prices rise at 10 percent per year starting in 2006. 89 Regional Economic Research Institute
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Table C-1 Florida Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value –NP
2005
Low Case 2010 2015
2020
$190,580 $132,416 $132,416
$220,934 $175,870 $180,794
$296,917 $265,262 $278,288
2005
Middle Case 2010 2015
2020
$190,580 $132,416 $132,416
$243,234 $180,033 $186,367
$396,202 $301,918 $327,302
2005
High Case 2010 2015
2020
$190,580 $132,416 $132,416
$306,931 $191,478 $201,444
$796,100 $432,155 $485,867
$256,124 $218,380 $228,710
$310,435 $233,924 $249,941
$494,315 $282,189 $311,703
Table C-2 Florida Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0 $0 $0
$488 $628 $988
$1,144 $1,774 $3,268
$1,610 $3,138 $6,641
Table C-3 Florida Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
1.0 1.0 1.0
0.6 0.9 1.6
0.4 0.8 2.4
0.2 0.8 3.6
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Table C-4 Bay County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$128,689 $98,040 $98,040
$149,186 $123,025 $125,717
$200,493 $178,301 $186,728
2005
Middle Case 2010 2015
2020
$128,689 $98,040 $98,040
$164,243 $125,187 $128,866
$267,535 $197,451 $215,149
2005
High Case 2010 2015
2020
$128,689 $98,040 $98,040
$207,255 $131,071 $137,237
$537,566 $264,874 $307,524
$172,947 $148,878 $154,982
$209,621 $156,889 $167,127
$333,786 $181,598 $202,598
Table C-5 Bay County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$2.0 $2.7 $4.5
$4.7 $7.9 $16.1
$6.8 $14.2 $34.2
Table C-6 Bay County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
0.5 0.5 0.5
0.3 0.5 1.0
0.2 0.5 1.6
0.1 0.5 2.4
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Table C-7 Citrus County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$111,085 $82,296 $82,296
$128,778 $107,572 $110,544
$173,067 $158,917 $165,856
2005
Middle Case 2010 2015
2020
$111,085 $82,296 $82,296
$141,776 $110,216 $114,275
$230,937 $181,505 $197,133
2005
High Case 2010 2015
2020
$111,085 $82,296 $82,296
$178,903 $117,466 $124,287
$464,029 $261,872 $304,019
$149,289 $131,981 $137,783
$180,946 $141,642 $151,639
$288,126 $171,639 $193,302
Table C-8 Citrus County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$2.9 $4.0 $6.6
$6.2 $10.7 $23.1
$8.1 $18.3 $49.3
Table C-9 Citrus County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
0.5 0.5 0.5
0.3 0.4 0.8
0.1 0.4 1.2
0.1 0.4 1.7
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Table C-10 Dade County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$241,031 $150,837 $150,837
$279,422 $203,387 $209,739
$375,519 $314,841 $335,375
2005
Middle Case 2010 2015
2020
$241,031 $150,837 $150,837
$307,624 $207,708 $215,369
$501,087 $354,211 $387,455
2005
High Case 2010 2015
$241,031 $150,837 $150,837
$388,184 $219,566 $229,535
$323,926 $256,054 $270,842
$392,615 $272,504 $292,749
$625,174 $323,456 $350,299
2020 $1,006,848 $493,405 $533,984
Table C-11 Dade County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$72.4 $87.3 $113.6
$181.4 $248.3 $329.3
$271.1 $438.9 $535.7
Table C-12 Dade County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
1.9 1.9 1.9
1.3 1.7 2.9
0.8 1.6 4.4
0.6 1.6 6.5
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Table C-13 Flagler County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$178,184 $132,450 $132,450
$206,564 $183,809 $187,964
$277,605 $270,389 $274,511
2005
Middle Case 2010 2015
2020
$178,184 $132,450 $132,450
$227,413 $191,120 $197,366
$370,432 $326,340 $340,234
2005
High Case 2010 2015
2020
$178,184 $132,450 $132,450
$286,967 $211,271 $221,237
$744,319 $530,454 $573,233
$239,464 $226,653 $231,795
$290,243 $252,098 $263,228
$462,163 $332,211 $357,472
Table C-14 Flagler County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$2.5 $3.7 $5.9
$4.6 $10.0 $22.6
$5.5 $18.7 $57.6
Table C-15 Flagler County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
0.7 0.7 0.7
0.2 0.4 0.8
0.1 0.3 1.1
0.0 0.3 1.6
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Table C-16 Hillsborough County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$171,690 $123,350 $123,350
$199,035 $161,397 $165,202
$267,487 $241,119 $251,220
2005
Middle Case 2010 2015
2020
$171,690 $123,350 $123,350
$219,124 $165,122 $170,117
$356,930 $274,215 $294,747
2005
High Case 2010 2015
2020
$171,690 $123,350 $123,350
$276,508 $175,395 $183,254
$717,190 $391,864 $437,127
$230,736 $199,253 $207,251
$279,664 $213,268 $226,075
$445,318 $256,827 $281,047
Table C-17 Hillsborough County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$23.8 $31.2 $49.1
$57.0 $91.3 $172.6
$82.1 $167.0 $368.1
Table C-18 Hillsborough County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
0.9 0.9 0.9
0.5 0.8 1.5
0.3 0.7 2.3
0.2 0.7 3.3
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Table C-19 Lafayette County Average Just and Assessed Values 2005 Average Just Value Average Assessed Value-P Average Assessed Value -NP
$80,498 $68,796 $68,796
2005 Average Just Value Average Assessed Value-P Average Assessed Value -NP
$93,319 $82,651 $83,547
$108,183 $97,867 $100,061
2020 $125,413 $115,427 $118,647
Middle Case 2010 2015
2020
$102,738 $83,735 $85,158
$167,350 $125,286 $133,934
$80,498 $68,796 $68,796
2005 Average Just Value Average Assessed Value-P Average Assessed Value -NP
Low Case 2010 2015
$131,123 $101,935 $106,471
High Case 2010 2015
2020
$129,643 $86,681 $89,533
$336,260 $159,864 $185,114
$80,498 $68,796 $68,796
$208,791 $114,456 $125,657
Table C-20 Lafayette County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$0.0 $0.0 $0.1
$0.1 $0.1 $0.4
$0.1 $0.3 $0.9
Table C-21 Lafayette County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
0.2 0.2 0.2
0.1 0.2 0.6
0.1 0.3 1.0
0.1 0.4 1.6
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Table C-22 Leon County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$153,164 $119,801 $119,801
$177,559 $150,614 $153,589
$238,625 $217,984 $226,396
2005
Middle Case 2010 2015
2020
$153,164 $119,801 $119,801
$195,481 $153,636 $157,829
$318,417 $244,545 $263,729
2005
High Case 2010 2015
2020
$153,164 $119,801 $119,801
$246,672 $161,873 $169,057
$639,805 $338,504 $384,472
$205,840 $182,275 $188,683
$249,488 $193,473 $204,827
$397,268 $228,105 $251,638
Table C-23 Leon County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$3.8 $5.3 $9.1
$8.8 $15.6 $32.3
$12.4 $28.4 $68.0
Table C-24 Leon County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
0.6 0.6 0.6
0.4 0.6 1.3
0.2 0.6 2.0
0.1 0.7 3.1
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“Save Our Homes” Portability Study Florida Association of REALTORS
Table C-25 Okaloosa County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$164,765 $120,036 $120,036
$191,008 $153,550 $157,416
$256,698 $226,126 $237,785
2005
Middle Case 2010 2015
2020
$164,765 $120,036 $120,036
$210,287 $156,467 $161,618
$342,535 $252,196 $275,649
2005
High Case 2010 2015
2020
$164,765 $120,036 $120,036
$265,356 $164,480 $172,739
$688,264 $344,237 $398,343
$221,430 $187,621 $196,209
$268,385 $198,535 $212,464
$427,358 $232,307 $259,430
Table C-26 Okaloosa County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$2.7 $3.6 $5.7
$6.3 $10.2 $19.9
$9.1 $18.2 $42.1
Table C-27 Okaloosa County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
0.6 0.6 0.6
0.4 0.5 1.0
0.2 0.5 1.6
0.2 0.6 2.4
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Table C-28 Orange County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$174,722 $138,761 $138,761
$202,551 $174,897 $178,114
$272,212 $252,843 $261,044
2005
Middle Case 2010 2015
2020
$174,722 $138,761 $138,761
$222,995 $178,763 $183,411
$363,235 $286,579 $306,771
2005
High Case 2010 2015
2020
$174,722 $138,761 $138,761
$281,392 $189,359 $197,519
$729,859 $406,410 $457,286
$234,812 $211,686 $218,280
$284,604 $226,017 $238,288
$453,185 $270,482 $296,720
Table C-29 Orange County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$13.3 $19.3 $33.8
$30.5 $56.8 $121.4
$42.4 $104.4 $263.1
Table C-30 Orange County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
0.6 0.6 0.6
0.3 0.5 1.1
0.2 0.5 1.9
0.1 0.6 2.8
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Table C-31 Palm Beach County Average Just and Assessed Values
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
Average Just Value Average Assessed Value-P Average Assessed Value -NP
2005
Low Case 2010 2015
2020
$264,622 $180,320 $180,320
$306,769 $244,269 $251,492
$412,272 $371,707 $389,518
2005
Middle Case 2010 2015
2020
$264,622 $180,320 $180,320
$337,732 $250,681 $259,819
$550,129 $426,912 $461,203
2005
High Case 2010 2015
$264,622 $180,320 $180,320
$426,176 $268,193 $281,293
$355,629 $305,331 $320,032
$431,041 $328,973 $351,306
$686,360 $402,388 $438,230
2020 $1,105,390 $623,518 $681,724
Table C-32 Palm Beach County Potential Reduction in Property Tax Revenues Millions of Nominal Dollars Case Low Medium High
2005
2010
2015
2020
$0.0 $0.0 $0.0
$59.2 $74.9 $107.4
$136.3 $207.0 $332.3
$186.6 $359.3 $609.9
Table C-33 Palm Beach County Average Years Lock-in Case Low Medium High
Regional Economic Research Institute
2005
2010
2015
2020
1.5 1.5 1.5
0.9 1.2 2.3
0.5 1.1 3.4
0.3 1.0 5.0
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