John Sebree of the Florida Association of Realtors said Amendment 4 will help stimulate Florida’s economy. (Photo from Florida Association of Realtors video.)

By Ashley Lopez
Florida Center for Investigative Reporting

Real estate agents have raised $4 million to support Amendment 4, which if passed will enact property tax limitations that could shrink the revenues Florida counties and municipalities need for services.


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Agentes inmobiliarios recaudan $4 millones para Enmienda 4

Amendment 4 would cap the assessed values of homes and lower property taxes for investors, businesses, and owners of rental properties and second homes. It will also increase the number of people eligible for homestead exemptions. In their efforts to pass Amendment 4 on Nov. 6, real estate agents have raised more money than any other campaign for or against a ballot measure this year.

These real estate agents say the amendment will improve the state’s faltering housing market, which will in turn boost the state economy.

The primary opponents of Amendment 4 are Florida’s local counties and cities, which are prohibited from spending money to influence the outcome of ballot measures. The leaders of these local governments, concerned they will not be able to fund services properly if Amendment 4 passes, have resorted to passing resolutions opposing the ballot measure — one of the few actions local governments can take against Amendment 4.

Lakeland, Gainesville, Marianna, North Port, and Palm Beach are among the Florida municipalities that have announced opposition through these resolutions.

Public officials in Florida fear Amendment 4 will raise taxes for homeowners who live in their homes year-round and lower taxes for investors and snowbirds — all while resulting in substantial cuts to local government services such as police, fire and waste management.

Bill Horne, Clearwater’s city manager, estimates that Amendment 4 would take more than $414,000 out of his city’s coffers in 2013.

“I can’t tell you where I am going to get savings,” Horne said. “Our only options are to reduce staffing and services.”

Supporters of the amendment, however, believe it will jumpstart the state’s housing market, which will in turn increase tax revenues.

“We may take $40 million out of local government by passing something that benefits a taxpayer, but the true impact of it will be a positive because its spurs economic growth,” said John Sebree, senior vice president of public policy of the Florida Association of Realtors. “It creates jobs. It allows people to spend more money.”

Florida TaxWatch, an independent public policy group in Tallahassee that has not taken a position on the ballot measure, estimated that Amendment 4 would create as many as 383,810 additional home sales over the next decade.

How Amendment 4 Works

If passed, Amendment 4 would cap assessed home values, lower property taxes for investors, businesses, and owners of rental properties and second homes, as well as increase the number of people eligible for homestead exemptions.

Ken Small, a finance expert at the Florida League of Cities, said the impact of these new rules would devastate local governments, because some real estate owners will eventually pay little or nothing in property taxes.

“If the economy picks back up again,” Small explained, “it will take probably decades before the taxable value of counties and cities gets back to a level where they had been, because [this] cap will hold it down.”

While some residents will get new property tax breaks, Small said, others will have to pay more because local governments will be forced to raise millage rates to pay for basic services or find ways to decrease government services.

Cities such as Clearwater, in Pinellas County, have already made cuts in the past few years as the state’s plummeting housing market and struggling economy pushed down tax revenues. These cities have only begun to recover, and Horne and Small agreed that Amendment 4 would likely set that recovery back.

“It’s a frustration when trying to come up with a way to deal with these cuts,” said Horne, Clearwater’s city manager. “We think things are getting better moving forward, but with these amendments, we are going to go back to where we were.”

In Pinecrest, a wealthy suburb in Miami-Dade County, Village Manager Yocelyn Galiano Gomez estimates that Amendment 4 would create a $1.9 million tax loss over a five-year period.

While worried about how Amendment 4 will affect Pinecrest, she is even more concerned about other, more urban municipalities in Miami-Dade County.

“Those cities with larger commercial areas, such as Doral and Hialeah, will stand to lose much more,” Gomez said.

The Big Push

Real estate agents say Amendment 4 will revive the state’s struggling housing market by giving people an incentive to purchase homes.

The Florida Association of Realtors and the National Association of Realtors together have raised $4 million on a pro-Amendment 4 campaign. The ballot measure, if passed, would likely mean better business for real estate agents and property investors.

Mailers sent statewide and paid for by this campaign are promising more jobs, increased home sales and accelerated economic growth if Amendment 4 passes.

Sebree, of the Florida Association of Realtors, said cities would only have to cut services if they plan to spend more in the future than they are spending now.

“I think local governments want to always be able to increase their spending based on a formula,” Sebree said. “You know, they want to spend more this year than they did last year … This isn’t going to cut that — it just puts a cap on assessment increases.”

Conflicting Studies

The net effect of Amendment 4 is debatable because reports and studies conflict.

A June 2012 Florida TaxWatch report estimated Amendment 4 would create 19,483 private-sector jobs over the next decade. A March 2010 report from the same group, however, claimed that tax assessment caps would deliver “fewer jobs” because they are an “impediment to a vibrant economy.”

The state’s Office of Economic and Demographic Research estimates that statewide revenue cuts would be $118 million the first year and swell to $321 million in the third year if millage rates remain the same.

Cragin Mosteller, a spokeswoman for the Florida Association of Counties, said the boon to real estate agents would end up hurting others in the state. She also said county governments are concerned that it will cap the ability for communities to invest in themselves.

“I think the Realtors are trying to sell it as a first-time homebuyer tax cut, but that’s really not fair,” Mosteller said. “It’s a tax cut for our snowbirds and investment property owners — you know, those guys that flip real estate — but it will also be a cost shift to Florida residents.”