Miami Property Appraiser In Denial

Monday, August 17, 2009  -  We have a number of major challenges facing the real estate market in Miami. It is difficult to say which pill is the most painful to swallow, but property taxes are certainly represent the big white elephant in the room.

Unlike his peer, Broward County Property Appraiser Lori Parrish, Miami’s Property Appraiser, Pedro J. Garcia, finally stated his position on foreclosure sales. According to an article in the Miami Herald this past weekend “Garcia has decided to disregard foreclosure sales — homes sold off by banks after foreclosing on the previous owner — when determining a neighborhood’s taxable values.”

His explanation for this decision is that “foreclosed homes are almost always stripped of appliances and fixtures or otherwise vandalized, and consequently, they do not reflect the true value of better-kept homes in the neighborhood.” Excuse me while I pick my jaw up off the floor.

I don’t think that Garcia has ever visited Ikea or Home Depot to determine the cost to install a brand new kitchen.  Even if you make an adjustment of $10,000 for a NEW kitchen and appliances, and $5,000 for NEW bathroom fixtures, how is it possible to justify placing a valuation of $320,000 on a single family home that recently sold for $180,000 to a willing and able buyer in Miami Shores. Now add to that equation that in the past 12 months, over 80 percent of sales in the neighborhood have been foreclosure or short sales.

This basis for valuation is ludicrous and just more of the same of cronyism that we need to get rid of in our city. Clearly, nobody wants to take responsibility, say it like it is, and then make real decisions based on the facts.

Miami’s Preliminary 2009 Tax Roll

This week the Miami Dade County Property Appraiser published the 2009 Preliminary Tax Roll. So now it’s official, the countywide taxable value of existing properties has declined by 13 percent, to $222.1 billion. With an adjustment of $8.4 billion in new construction value, this represents a net decline of $23.4 billion or 9.5 percent over the the previous year’s taxable value.

For those of us in Miami’s real estate circles, this announcement is very disappointing. Miami’s Property Appraiser, Pedro J. Garcia, was appointed to office just a few months ago. With Garcia’s promises that the “department will take a look at comparable sales, foreclosures and short sales in a community to establish the right value of properties in each market area,” he has fallen way short of this commitment.

Let’s consider the Appraiser’s taxable value percentage changes from 2008 to 2009 - 

• Miami Beach declined 8.2 percent
• The City of Miami declined 6.4 percent
• Miami Shores declined 13.5 percent
• Sunny Isles Beach declined 2.6 percent
• Homestead declined 24.7 percent

When I posted the blog titled Property Tax Front Lines earlier this year, it was this exact outcome that I feared. I don’t suppose our elected officials have attempted to quality a first time home buyer that is interested in purchasing a bank owned property lately. 

Let’s consider the example of the bank owned, single family residence located at 11205 NE 8 Ave in Biscayne Park, with an asking price of $179,500. With a 2008 assessed value of $299,921, annual property taxes in the amount $9,455.97 and monthly tax payments of $788, how are most people supposed to feel comfortable taking on this huge tax liability? There is no clear directive that a foreclosure sale will be considered a market sale, so I assume they just expect us to convince the buyer to take a swing and hope for the best.  

While our elected officials do not want to deal with reality, the rest of us have to swallow the dreaded real estate tax pill to support crony capitalism. Please, make your voices heard!