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Property taxes tied to profitability, not density bonuses
By SUZETTE PORTER
Article published on Tuesday, Oct. 9, 2007 |
PINELLAS COUNTY – Fears that approval of new rules increasing density for tourism facilities will drive up property taxes were discussed on Oct. 2 during the first public hearing on a new county ordinance.
Chief Deputy Pinellas County Property Appraiser Pamela M. Dubov responded to a question from Commissioner Karen Seel about how increased density and highest and best use might affect smaller lodging facilities, such as bed and breakfasts, already feeling the pinch from high property taxes.
“The ordinance in and of itself won’t cause property taxes to go up,” she said. “But if the real estate market enthusiastically adopts this, and buyers begin to develop and drive prices up, the property appraiser’s office will look at the increase in sales and value properties appropriately.”
Dubov said there is no such thing as valuation based on highest and best use. She said the whole concept revolves around the theory that investors do not purchase property for any purpose other than to use it to make a profit.
She said increased valuation from increased profitability drives up property taxes, not highest and best use.
She gave an example on a one-acre plot of land on the Gulf of Mexico occupied by a 12-room bed and breakfast. She said that one acre of land could be developed into a 100 unit hotel. She said if a developer purchased that land, the purpose would be to make it as profitable as possible, which is legally permissible.
She said under the current countywide rules, condominiums developers were able to meet profitability expectations for their investments. She said the density change would allow hotel developers a chance for similar profitability on their investments.
She said whether or not smaller tourism lodging owners would be affected by the ordinance would be dictated by the real estate market, not the property appraiser’s office.
“We won’t be going out and re-evaluating properties just because density can do up,” she said. “If the real estate market goes up, property values and taxes will go up. If they go down, values and taxes will go down.”
She said the biggest problem from the standpoint of the property appraiser’s office with the proposed new rules would be the extra work that would be required to value property in areas that allowed the density bonus versus those who don’t.
Investors who purchase property in areas that do not have the bonus with expectations the bonus will be granted in the future also will be a special concern.
“Any increases in property taxes will all depend on what hotel developers pay and the real estate market,” she said.
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Article published on Tuesday, Oct. 9, 2007
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