Zoning subtleties essential to new law's success
By: Terry Sheridan
A new state law requires county appraisers to consider what zoning, concurrency and building permits would be necessary to develop a property to its highest potential before assessing it at maximum taxable value.
The goal is to help owners in seeking lower tax assessments on their developable vacant land, said Gaylord \u201cJay\u201d Wood, former attorney for the Broward County property appraiser\u2019s office; his office now represents 12 county appraisers statewide.
Appraisers said the law merely codifies professional standards they already follow. But they believe the change may bring more confusion than clarification, and will likely result in more tax-assessment challenges by property owners.
House Bill 909, signed last month by Gov. Charlie Crist, takes effect Sept. 1.
It requires county property appraisers to consider the legally permissible use of a property when establishing its highest and best use. That includes \u201cany zoning changes, concurrency requirements and permits necessary to achieve the highest and best value,\u201d the law states.
Since 1963, property appraisers have been required to base their assessments on a property\u2019s current use and its highest and best use in the immediate future.
The law is considered by some to be friendly to those commercial property owners unable to immediately develop or redevelop their property who want to challenge higher tax assessments.
\u201cThis should be helpful when challenging property tax assessments on land that might require substantial expenditures before it can be developed for its highest and best use,\u201d said tax attorney Marvin Kirsner of Greenberg Traurig in Boca Raton.
But appraisers believe the law doesn\u2019t require much new of them.
\u201cThe [prior law] referenced zoning and land use, but not as clearly as the new one does,\u201d said Ron Gunzburger, general counsel to the office of Broward County Property Appraiser Lori Parrish. \u201cLori believes this provides a better indicator of value. It\u2019s not about hypotheticals that don\u2019t exist. The idea isn\u2019t to squeeze every penny out of property owners\u201d by assessing their property at its highest value, he said.
Parrish and Palm Beach County Property Appraiser Gary Nikolits disagreed in 2006 over tax-assessment strategies after Nikolits was criticized for assessing Palm Beach County marinas at their highest and best use as potential sites of condominiums during the height of the real estate boom.
The Palm Beach Yacht Center in Hypoluxo\u2019s assessment became an example of appraisal concerns when the marina\u2019s taxes rose from $6 million in 2005 to $28 million in 2006.
But Nikolits said Monday the criticism was unjustified.
He denied he assessed marinas as condo sites and said they were assessed based on sales of comparable properties.
\u201cWe didn\u2019t assess them as if [condo projects] had already happened,\u201d he said. \u201cWe said the comparable sales used were for other properties that ultimately were being converted to condos, and that would likely be the scenario for these properties as well. But they were being assessed as raw land without zoning approvals in place.\u201d
Parrish had said she disagreed with Nikolits\u2019 valuations after being asked about them during a marine industry trade group meeting.
Loren Levy, attorney for the Property Appraisers\u2019 Association of Florida in Tallahassee, said the legislation was controversial from the beginning because of a misunderstanding of the \u201chighest and best use\u201d legal standard.
Appraisers determine a property\u2019s highest value on a four-test professional standard: if a use is physically possible, legal, financially feasible and allows maximum productivity of the site.
But court decisions dating to the 1970s have added other aspects to consider, Levy said.
\u201cA classic example from one of the cases is a piece of property zoned residential in an area that had undergone significant transition and rezoned commercial,\u201d he said. \u201cThe highest and best use would be to rezone it to commercial and build on it. But the appraiser is not allowed under Florida law to foresee some future use. They still have to assess it as residential property.\u201d
The new law targets the second standard \u2014 if a property\u2019s highest and best use is legal \u2014 which includes zoning, concurrency and building permit requirements, said Sarasota County Property Appraiser Jim Todora, former president of the Florida Association of Property Appraisers.
\u201cI\u2019ve told my staff to redouble their efforts to understand the zoning of property,\u201d he said. \u201cIt is the subtleties now that become more important.\u201d
An area zoned for retail use might require properties to have access to roads or setbacks, but that doesn\u2019t automatically affect two adjacent properties the same way, he said. One property might accommodate an access road and another couldn\u2019t. That means their \u201chighest and best\u201d uses differ.
Todora figures the new law\u2019s requirement that appraisers consider building permits in calculating the highest use will face the most challenge.
\u201cIf a property is zoned for a high-rise office building, does that mean the owner must have a building permit for a specific building? I don\u2019t think so,\u201d he said.
\u201cAn appraiser may value the land [at its highest use] as a site for a high-rise office building and the owner \u2026 may not have a building permit for that use,\u201d he said. \u201cThe law [refers] to building permits necessary to achieve the highest and best use. It means you can\u2019t value the land at that use\u201d without the permit.
That, Todora said, could create turmoil.
Terry Sheridan can be reached at (954) 468-2614.
Gary Nikolits photo by Melanie Bell