LTC 039-2008 Impact of Amendment One on the City of Miami BeachR~r~= I~/F[~
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OFFICE OF THE CITY MANAGER
NO. LTC # 039-2008 LETTER T~ COMMISSION
TO: Mayor Matti H. Bower and Members of the City Commission
FROM: Jorge M. Gonzalez, City Manager
DATE: February 4, 2008
SUB~ECT: IMPACT OF AMENDMENT ONE ON THE CITY OF MIAMI BEACH
The purpose of this LTC is to provide the Mayor and City Commission with an update on the
projected impact of Amendment One on the City's property tax receipts.
On January 29, 2008, the Florida electorate approved an amendment to the Florida
Constitution relative to property taxation. This amendment {referred to as Amendment
One) was placed on the ballot by the Florida Legislature at a special session held in October
2007. With respect to homestead property, Amendment 1 increases the current $25,000
homestead exemption by another $25,000 (for property values befinreen $50,000 -$75,000).
except for school district taxes. The new $25,000 homestead exemption does not apply to
school district taxes, resulting in an estimated annual savings of $240 for an average
homeowner. Amendment One also allows property owners to transfer (make portable) up to
$500,000 of their Save Our Homes benefits to their next homestead when they move. Save
Our Homes became effective in 1995 and limits (caps) the annual increase in assessed
value for homestead property to three percent (3%) or the percentage change in the
Consumer Price Index, whichever is less.
W ith respect to non-homestead property, Amendment One limits (caps) the annual increase
in assessed value for non-homestead property (businesses, industrial property, rental
property, second homes, etc.) to ten percent (10%), except for school district taxes. The
Amendment also provides a$25,000 exemption for tangible personal property.
Amendment One becomes effective on October 1, 2008, with the exception of the ten
percent (10%) assessment cap on non-homestead property which becomes effective on
January 1, 2009.
Based on the January 1, 2007 tax roll provided by the Miami-Dade County Property
Appraiser's Office, the initial estimated annual loss of property tax revenues for Miami Beach
is approximately $2,996,275, broken down as as follows:
• $2,058,947 from the additional $25,000 homestead exemption;
• $346,402 from the $25,000 exemption for tangible personal property;
• Determination of the impact of the portability is challenging; however, initial estimates
provided by Miami-Dade County indicate that the impact could be up to $590,926;
• While the 10% assessment cap on non-homestead property will impact individual
properties, it may not have a direct negative impact on overall property tax revenues,
due to the "roll-back" methodology approved by the Legislature.
Letter To Commission
lmpact of Amendment One
February 4, 2008
At this point, additional property tax reform by the Legislature in 2008 is possible, but
unlikely. Media reports indicate that there may be an effort in the House of Representatives,
but statements by Senate leadership indicate that that chamber will not consider additional
action this year. In addition to potential legislative action, a citizens petition has been
circulated around the state to cap the total property taxes on any property at 1.35 percent of
taxable value. As of Tuesday, January 29'h, the group had collected only about 125,000
signatures, out of the 611,000 needed by Friday, February 1 in order to place the issue on
the November general election ballot.
At this point, it appears that the most likely source of additional property tax reform could be
from the Taxation and Budget Reform Commission (TBRC), which has the authority to place
constitutional amendments directly on the November 2008 ballot. However, the approval of
Amendment One has raised questions by some of the members of the TBRC regarding how
that group should move forward.
An update on this issue will also be provided at the February 7, 2008 meeting of the Finance
and Citywide Projects Committee. In the meantime, please do not hesitate to contact me if
you have any comments or questions.
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JMG/K ~
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F:IECON\~A KEVINICorrespondence\LTCslAmendment One Update.doc