Related story: Atlantic Avenue business sales drive Delray’s value increase
By Mary Hladky
As the housing market collapse fades into memory, the taxable value of Palm Beach County properties has risen to within striking distance of the historic high set in 2007.
Estimates released by Property Appraiser Gary Nikolits’ office on May 27 show that taxable values have increased for the fifth year in a row.
Countywide, the amount grew by 7.85 percent from 2015 to 2016, to $164.5 billion. That is just short of the record high of $169.5 billion, and well above the low point of $124.4 billion in 2010.
Delray Beach bested other cities and towns in south Palm Beach County, with taxable values rising 10.1 percent. Boynton Beach jumped 7.7 percent and Boca Raton rose by 6.7 percent.
The county and its 38 cities and towns could soon completely wipe out the losses of the recession, Nikolits said.
“It is probably within the next couple of years. We are practically there now,” he said. “We will be back to where we would have been if we had not gone through all the upheaval.”
Local governments will use Nikolits’ estimates to calculate how much property tax money they can expect in the coming year and to set their annual budgets and 2016-17 tax rates.
A preliminary tax roll will be submitted to the state on July 1, and governments then approve new budgets and tax rates — a process that ends in about mid-September before the start of the new fiscal year on Oct. 1.
An increase in taxable values means that the county, cities and towns will collect more money from property owners if they keep their tax rates the same as last year.
While elected officials can increase the tax rate, most typically are loath to do so and anger residents. They also can reduce the tax rate any amount or enough that the new rate will bring in the same amount of tax revenue as last year.
“It is a double-edged sword,” Nikolits said of the rise in taxable value. “It is good news for the property owner. It is bad news for the taxpayer, who is usually the same person, because it affords the taxing authorities the ability to take in even more tax revenue. It is a very rare taxing authority that won’t take advantage of that.”
Indeed, only seven of the county’s cities and towns lowered their property tax rates enough to avoid tax increases last year.
Boca Raton was among those that did not do that. But Mayor Susan Haynie notes that the city has the lowest tax rate of any “full service” city in the county, meaning a city that does not outsource any of its municipal services. The current property tax rate is $3.67 for every $1,000 of assessed property value.
“The important thing is we are able to provide world-class municipal services at the lowest tax rate in the entire county,” she said.
Delray Beach City Manager Don Cooper said his city’s gains in part reflect development in the central business district. The projects fall within the Community Redevelopment Agency area and, as a result, any additional tax revenue generated will remain within the CRA rather than benefiting the city as a whole.
Cooper said it’s too early to predict next year’s property tax rate since the 2016-17 budget is still being worked on. The current rate is $7.33 per $1,000 of assessed property value.
“We certainly are not going to go up,” he said. “We will stay the same or drop.”
Boynton Beach officials declined to talk about the tax rate. It currently is $7.90 per $1,000 of assessed value.
Taxable values increased by 7.3 percent in Briny Breezes, 5.5 percent in Gulf Stream, 6.5 percent in Highland Beach, 9.1 percent in Lantana, 9.9 percent in Manalapan, 7.5 percent in Ocean Ridge, and 7.9 percent in South Palm Beach.
While estimated taxable values have gone up, the property appraiser’s numbers show growth has slowed in recent years. Taxable values jumped 9.7 percent countywide last year. In just two other examples, Boynton Beach was up 10.1 percent while Boca Raton increased 7.6 percent from 2014 to 2015.
Before the real estate crash, a 4 percent to 7 percent increase “was considered a normal market,” Nikolits said. “What we are seeing over the last two years is that we are returning to a more normal market — not double digit (increases).”
The average increase for all cities was 8.22 percent.
Realtors have noted that increases are slowing.
“Sales prices for high-end properties in the coastal communities have regained ground lost during the recession and then some,” said Pascal Liguori, a broker associate with Premier Estate Properties. “Now prices are beginning to level off, reflecting a more normal rate of appreciation.”
Yet the market remains very active, he said. “It always goes back to the fact that there is more demand for property in the coastal areas than there is supply,” he said.
Jack Elkins, an agent with Fite Group, agrees demand remains strong in the coastal communities, although values now are edging up rather than skyrocketing.
One change he is seeing that bolsters business is that instead of buying vacation homes, more out-of-staters in the market for luxury homes are opting to become Florida residents. As a result, he said buyers are willing to pay more for a permanent home than a vacation property.
While not certain why this is happening, he posits that changes in tax laws up north are making it more expensive to live there. Florida has low taxes and owners can homestead for additional tax savings.
Michelle Quigley contributed to this story.