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Real Estate Update in Tampa Florida

March 21st, 2007 8:15 PM by Ron Mastrodonato

Small counties and hospitals avoid House tax ax
TALLAHASSEE, Fla. – March 19, 2007 – A House committee spared hospitals and Florida’s poorest counties from the budget ax Friday, but had no sympathy for larger or growing counties as it passed a Republican-sponsored bill to cut $5.8 billion in property taxes.

The House Policy and Budget Council voted 24-7, largely along party lines, to shear Miami-Dade’s budget $720 million and Broward’s budget $226 million to give the average homeowner a 19 percent cut in property taxes this year. Commercial property owners and those who own second homes in Florida would also see hefty property tax relief.  The measure could be voted on by the full House as early as next week, but it is clearly not the preferred plan of House leadership.

This week, House Speaker Marco Rubio backed off the idea, saying he preferred a substitute plan that abolishes property taxes on primary homes, rolls back county spending less harshly, and pays for it with a 2.5 cent hike in the state sales tax. That would require a constitutional amendment and approval by 66 percent of the voters.

Rubio pitched his substitute proposal to about 100 top GOP supporters, fundraisers and lobbyists in a conference call Friday and urged them to help him pass it, amid growing resistance from the Senate and House Democrats. Gov. Charlie Crist has been noncommittal and Senate leaders are seeking alternatives that avoid a sales tax hike while providing tax relief by increasing the homestead exemptions and altering the Save Our Homes tax cap.

“Home ownership is one of the cornerstones of the American Dream and there’s a fundamental question of whether we should be taxing the American Dream,” Rubio said in what he called a “telephonic town hall meeting.”

The speaker has launched a campaign-like push to promote his plan, employing GOP party staffers to boost his idea and recruiting supporters among the party’s reliable fundraisers.  After Rubio’s phone pitch, the number of signatures to the party’s Internet petition supporting his plan grew by at least 2,000 names to more than 15,000.  As Rubio was marketing his plan, the House council was engaged in a six-hour hearing on the bill that forces counties to scale back spending based on the 2000-2001 budget year.

Democrats tried unsuccessfully to spare police, firefighters, senior healthcare and even homeland security requirements from the cuts, but their amendments were rejected by Republicans.  House Republicans agreed, however, to shield hospital taxing districts, 30 small rural counties and special taxing districts that help with children’s programs from the budget rollback.  Republicans cast the debate as a choice between government and taxpayers.

Rep. David Rivera, a Miami Republican, said the problem with cities and counties wasn’t mismanagement, but “overspending, gluttony, avarice, excess and greed.”

Rep. Frank Attkisson, a Kissimmee Republican, called it ‘an act relating to power . . . the power of who is going to spend your citizens’ dollars.”

Local governments countered that the measure imposes the Legislature’s power over the home rule authority of local citizens.

“We have a problem, but it’s not a problem any county or city commission created,” said Chuck Nelson, a Brevard County Commissioner.
 

Copyright © 2007 The Miami Herald, Mary Ellen Klas and Gary Fineout. Distributed by McClatchy-Tribune Business News.

 

Insurers whittle proposed rate drops
TALLAHASSEE, Fla. – March 19, 2007 – For thousands of frustrated Floridians, the big homeowners insurance rate reductions promised by state lawmakers and Gov. Charlie Crist may never materialize, judging by the companies’ own filings.

The state’s homeowners insurers were required to file proposed reductions in premium rates by Thursday, according to the reform hammered out by lawmakers in a weeklong special session in January.

State Farm Florida Insurance Co., USAA, Liberty Mutual Fire Insurance Co. and First Floridian Auto and Home Insurance Co. on Thursday became the latest major insurers to propose rate decreases far less than the average 25 percent to 30 percent that state legislators and the governor led policyholders to believe were on the way.

State Farm, the state’s second-largest homeowners insurer, is offering policyholders an average cut of 7 percent statewide. USAA, the fifth-largest, has proposed a 3.1 percent reduction, the lowest among the state’s major insurers.

Liberty Mutual and First Floridian, the ninth- and 10th-largest, respectively, offered average cuts of 8.7 percent and 8.2 percent statewide.

Bob Lotane, a spokesman for the state Office of Insurance Regulation, said the filings would get a full review by insurance officials. If they don’t meet specifications set by regulators, he said, they will be rejected.

The less-than-expected decreases, which take effect starting June 1, are not likely to be greeted with much fanfare by shell-shocked homeowners who were looking forward to major relief following years of double-digit increases in insurance rates. It was essentially homeowners’ outcries from being squeezed by higher rates – especially after the 2004 and 2005 hurricane seasons – that finally forced lawmakers into a special session to deal with the issue.

Nowhere is the sting of higher insurance rates felt more than in Palm Beach County, where homeowners also have been hit with nonrenewal notices. But in Palm Beach County and the Treasure Coast, State Farm is proposing to reduce rates between 8 percent and 10.7 percent, slightly above the insurer’s statewide average.

County breakdowns were not available for other insurers late Thursday.

“I’m a little perplexed,” Sen. Bill Posey, R-Rockledge, chairman of the Senate Banking and Insurance Committee, said after hearing of the reduction plans filed by insurers Thursday.

Posey, a key player in the reform debate during the special session, said insurers had told lawmakers an average 25 percent rate reduction was realistic if the state expanded the Florida Hurricane Catastrophe Fund. The fund was more than doubled to offer insurers as much as $28 billion in coverage.

Posey said insurers paid an average of 49 cents for each dollar of reinsurance – insurance for insurers – in 2006-07, and the catastrophe fund has reduced costs to as little as 6 cents for each dollar of coverage. He said it would be up to state Insurance Commissioner Kevin McCarty to determine whether the insurers’ filings were accurate.

William Stander, a regional vice president for the Property Casualty Insurers Association of America, said lawmakers were warned that a “one size fits all” solution would not work because insurers had varying reinsurance needs.

Chris Neal, a spokesman for State Farm, said the company already was buying reinsurance at rates cheaper than the state reinsurance fund offers, so the company could not pass along major savings to policyholders.

Bob Hartwig, an economist with the Washington-based Insurance Information Institute, said smaller insurers will receive the most benefit from the expansion of the state catastrophe fund because they did not have the clout to get the best reinsurance rates.

Some insurers did offer substantial rate reductions Thursday. Gainesville-based Tower Hill Preferred, the 23rd-largest insurer, said it would cut rates by 22.4 percent statewide. Some smaller companies offered rate reductions in excess of 30 percent.

But for the bigger companies that control more than 60 percent of the market, the savings were smaller. Allstate Floridian announced a 14 percent rate decrease this week, and Nationwide offered a 4.6 percent decrease.

On March 1, McCarty said regulators concluded that rates should go down an average of 24 percent and required insurers to develop new rates by March 15.

No matter what happens with the rate reduction plans, it’s likely that some homeowners may end up with rate increases because of previous rate hikes already granted by regulators. State Farm started putting into effect a 52.9 percent rate hike in November, but policyholders learn their new rate only at renewal time. In parts of Palm Beach County, that rate increase exceeds 100 percent.

The biggest increase in the works, however, could be from Nationwide. The company is appealing regulators’ rejection last year of its proposed 73 percent rate hike to an arbitration panel, which has the power to grant the increase.
 

Copyright © 2007 The Palm Beach Post, Fla.,Randy Diamond. Distributed by McClatchy-Tribune Business News.

Falling home prices level borrowers, Greenspan says
BOCA RATON, Fla. – March 19, 2007 – The meltdown in the subprime mortgage market is an inevitable result of falling home prices, former Federal Reserve Chairman Alan Greenspan said Thursday during a question-and-answer session here.

“What we’re dealing with is something that’s more an issue of home prices than it is of mortgage credit quality,” Greenspan told about 500 people attending the Futures Industry Association’s conference at the Boca Raton Resort and Club.

During the housing boom that cooled in 2005, soaring home prices and looser lending standards made it possible for buyers with spotty credit to buy homes, often with little money down. But now that prices are flat or falling and adjustable-rate mortgage payments are rising, so-called subprime borrowers cannot refinance their way out of trouble.

Subprime borrowers “come in late in the game, after most of the rise in the market has taken place,” Greenspan said. “When prices flatten out and go down, all of a sudden you see the thing caving in.” He stressed that there’s little trouble in the “prime” mortgage market, in which borrowers with good credit get the lowest mortgage rates.

“If we somehow could wave a wand and home prices would go up 10 percent, the subprime mortgage problem would disappear,” he said.

But, he added, “If home prices go down from here, I think we’ll have problems.” Wearing a dark suit and oversize glasses, Greenspan seemed relaxed as he fielded questions from futures traders. He reminisced about his days as a professional musician and his early forays into cotton trading.

He begged off a request to predict the direction of interest rates, and he showed a sense of humor that did not come out in the purposely confusing pronouncements he made during his long tenure as Fed chairman.

When one attendee asked him to comment on his reputation for striking fear into markets, Greenspan demurred.

“I know my wife doesn’t quake in her boots,” he joked.
 
But Greenspan was not joking about what he sees as a “significant” problem for the nation’s Medicare program, which provides health coverage for the elderly. Retiring Baby Boomers will burden the Medicare system, he warned. 

“The problem is that we really cannot tell if we’ll have enough in the way of hospitals, physicians, nurses and the like,” he said. “We may find that we’ve promised more than we can deliver.”

By contrast, the Social Security squeeze is a simple problem to fix because Uncle Sam knows what it has promised to pay retirees, he said.
 

Copyright © 2007 The Palm Beach Post, Fla., Jeff Ostrowski. Distributed by McClatchy-Tribune Business News.

Lawsuit: Save our Homes tax cap under fire
TALLAHASSEE, Fla. – March 19, 2007 – Four Alabama residents are using Walton and Okaloosa counties’ taxing agencies as the catalyst for a class-action lawsuit challenging the constitutionality of Florida’s Save Our Homes amendment. 

The plaintiffs, who have homes in Santa Rosa Beach and Destin, claim they are paying a disproportionate share of property taxes compared to Florida residents with homestead properties.

“There is a mindset in Florida to transfer your burden to other states,” said Birmingham attorney William Slaughter, lead counsel for the homeowners.

Slaughter’s wife, Diana, is named as a plaintiff along with Jerome and Joyce Lanning of Birmingham and Marlow Reese of Montgomery.  The lawsuit was filed Feb. 22 in Leon County.  In the past four years, more than $8 billion in taxes has been diverted from Florida residents to out-of-state residents, Slaughter said.  The suit asks to refund nonhomestead property owners with taxes they’ve been assessed since 2003 above what they would have paid as full-time residents.

“The hope is to put things back on an equal basis,” Slaughter said.

Florida voters approved the Save Our Homes amendment in 1992 to cap increases in assessed values on homestead properties at no more than 3 percent a year.

Slaughter said it’s “totally unfair” for a person who has part-time residency to pay more for infrastructure than a fulltime resident.

“He’s not there all the time. He doesn’t send his children to school (in Florida),” he said.

But John Dent, a Sarasota attorney representing the Okaloosa County Property Appraiser’s office, said, “It’s not a discrimination against out-of-state residents.”  States have a history of “preferential treatment for resident homesteaded properties,” Dent said.

The lawsuit names as defendants Gov. Charlie Crist and all Okaloosa and Walton taxing authorities, including property appraisers, county commissions and school boards.

“The issue that has come up is not something that is under the control of the school district,” said Walton County Superintendent of Schools Carlene Anderson. “We don’t make the 3 percent cap rule.”

Okaloosa County Property Appraiser Pete Smith recognizes that the cap has “created tremendous inequities among the different types of properties.”  But Smith pointed out that voters approved the measure. “They went to the polls and passed the amendment,” he said.

Dent said he’s taking the lawsuit seriously. But he believes the court will follow precedent and rule in favor of the state’s rights.

“I understand the concern. It’s an issue that’s in the forefront right now,” he said.

Slaughter maintains that all Americans are “national citizens” and should be treated as such.

“If the hunting is good in Montana and not so great in Wisconsin, the Montana officials cannot limit hunting licenses to those in Montana,” he said.
 

Copyright © 2007 Northwest Florida Daily News, Fort Walton Beach, Rachel Kyler. Distributed by McClatchy-Tribune Business News.

 

Posted in:General
Posted by Ron Mastrodonato on March 21st, 2007 8:15 PM

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