Shealy responds to Ford attack

8/9/2019 Shealy responds to Ford attack

1/17

J.RogerShealy

1724SmithDrive

Titusville,FL32780

August27,2010

HonorableJimFord

BrevardCountyPropertyAppraiser

P.O.Box429

Titusville,FL32781

DearMr.Ford,

Ihave

received

your

letter

dated

August

16,

2010.

While

Ihad

hoped

to

respond

and

discuss

your

concernsdirectlywithyou,IwasinformedthatonAugust23,2010youchoosetomakethisapublic

spectaclebypostingyourletteronthePropertyAppraiserswebsite.WhileIfindthatdecision

disappointing,Iwasmoredisappointedbythetoneandtenorofyourcorrespondencewithme. Inall

mydiscussionsandeconomicpresentations,oragendaasyourefertoit,Ihavesoughttomaintaina

highlevelofprofessionalismandthatisexactlywhatIexpectfromanelectedofficial.

Asstatedinyourletter,youassumedthatthegraphwasproducedtotryandalarmtaxpayersand

convincethemthattheirhomeshavebeenvaluedtohighfortaxpurposesforseveralyears.Withall

duerespect,yourassumptioniscompletelyincorrect. ThegraphinquestionistitledWherewill

TaxableValuego?andthatisthesinglepurposeofthegraph.

YouarecorrecttonotethatIoriginallypreparedthisgraphbackin2008. AsacandidatefortheBrevard

CountyCommissionduringthattime,IcarriedalargecopyofthatcharteverywhereIwentonthe

campaigntrailanditwasprominentlydisplayedinemailandonmycampaignwebsite. Ifinditrather

oddthatittooknearlythreeyearsforyoutogatherknowledgeofitsdisseminationconsideringyou

wereonthecampaigntrailtooandourpathsmostcertainlycrossed.

Sinceyouareonlynowbecomingfamiliarwiththegraph,thefollowingiswhatitlookedlikewhen

originallyprepared. KeepinginmindthatTaxableValueistheprimarytaxbaseforourcounty

government;thequestionisrightlyaskedWherewillTaxableValuego? Averylegitimatequestionin

lightoftheburstingofthehousingbubble.

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2/17

YouhaveassertedthatcomparingtheMedianSalesPriceofExistingHomes(asreportedbytheFlorida

AssociationofRealtors)tothetotalTaxableValueofrealpropertyinBrevardCountyislikecomparing

applestooranges.WhileIcertainlyagreeyoucannotcomparethetwoforthepurposeofassessed

value,youmostcertainlycancomparethetwofortrendanalysis. Torestatethepurposeofthegraph,

wherewilltaxablevaluego? Onlytimewilltellthedegreeofcorrelationbetweenthetwo,butsince

theMedianSalesPriceofExistingHomesistheonlydataavailableforsuchanalysis,itisappropriateas

weshallsee.

Pleasenoteaswellthattheinformationprovidedinthegraphisnotastatisticalderivativeorsampling

ofdata. Itiscompleteinformationwithnoadjustmentoralteration.

Includedwithyourletterwasinformationpreparedbyyourofficereflectingthemedianmarketvalue

assessmentforsinglefamilyhomes. Canyoualsoprovidethemedianmarketvalueforvacantland,

commercialproperty,andothernonsinglefamilyhomeproperties? Thisinformation,plusanoverall

medianmarketvalueofallrealproperty,wouldbeextremelyusefultogovernmentalofficialsfortrend

analysisespeciallyifitcanbeprovidedonamonthlybasis. Thisdata,combinedwithpermitsissued,

foreclosurefilings,andunemploymentlevels,canhelpwithmultiyearplanningonthepartoftaxing

authorities.

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AlsoincludedwithyourletterwasaprojectionofTaxableValueoverthenextfouryears. Thoughyou

accusemeofalarmisttacticsforsimplyaskingthequestionwherewilltaxablevaluesgo?your

projectionsmostcertainlysoundanalarmthatthetaxbaseisrapidlydeteriorating.

Bytheway,itappearsthatusingtheMedianSalesPriceofExistingHomesasaleadingindicatorof

TaxableValueisratheraccurateafterall. Ibelievetherecordisindeedsetstraight.

YoualsoclaimthatIhavenounderstandingoftheadvaloremvaluationprocess. Tocorrectthis

assertion,IhaveattachedareportpreparedbymyselfandothersbackinSeptember2006(see

attachment).Wellbeforeofficialsacknowledgedtheburstingoftherealestatebubble,wewarned

whatcouldhappentoTaxableValueasthemarketvaluebeginstofall. Idrawyourattentiontopage2

ofthe

report

wherein

we

projected

that

a20%

decrease

in

Just

Value

(market)

could

result

in

a14%

dropinTaxableValue. Nearlyfouryearslater,wecantestthisprojectiontoseetheaccuracyofour

understanding. UsingthepropertyvaluationdatayouprovidedforJanuary2008andJanuary2009,we

findthatthemarketvalue(taxrollmedianmarketvalue)decreased19%(from$156,000to$126,750)

whiletheTaxableValuefell13%($38billionto$33.2billion). Indeed,itappearsourassessmentisquite

accurate.

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Lastly,youhaveimpliedthatIhavesetouttoconvincetaxpayersthattheirhomeshavebeenvalued

toohighfortaxpurposesforseveralyears. Ifthatweremygoal,thenIwouldhavechartedthe

numberofpetitionsfiledeachyearwiththeValueAdjustmentBoard(VAB)bythosewhobelievetheir

assessmentistoohighorchartedtheLevelofAssessmentbyCountytocompareBrevardCountywith

othercounties. Indeed,accordingtoyourstatementtheoveralllevelofassessmentinBrevardCounty

hasbeenrelativelylow. Youcontinuebysaying,theassessmentlevelinBrevardCountyhas

fluctuatedbetween92.5%and94.9%. Yetasof2009,BrevardCountystandsata103.4%levelofassessmentthesecondhighestinthestate(seeattachment).

Iwillnotbanteryouwithsnidecommentsorsillyquotes,butinsteadappealtoyourofficewiththe

followingrequests:

1. CanyourofficereleasetheAssessmentRollMedianMarketValueeachmonthforsinglefamilyhomes,vacantland,commercialproperty,andothernonsinglefamilyhomeproperties?

2. WouldyoupleaseprovidemewiththenumberofpetitionsfiledwiththeVABforeachofthepasttenyears?

3. HowhasyourofficequalifiedshortsalesoverthepastthreeyearsandwhatguidancehastheFlorida

Department

of

Revenue

provided

Property

Appraisers

pertaining

to

short

sales?

If

DOR

hasprovidedguidance,whenwasitpublished?

4. Youhaveestimateda17%decreaseintaxablevaluefor2011. Hasyourofficerecentlyimplementedachangeinthesalesqualificationforshortsaletransactions?

Thankyouforyourassistancewiththisrequest.

Sincerely,

J.

Roger

Shealy

cc: BrevardCountyCommissioners

/attachments


5/17

Clerk of the Circuit Court Brevard County, Florida400 SOUTH ST., P.O. Box 999, Titusville, Florida 32781http://www.brevardclerk.us

Scott Ellis, Clerk

September 20, 2006

Scott EllisClerk of Courts400 South StreetTitusville, FL 32781

Mr. Ellis:

Pursuant to your request, we have evaluated real property records to assess the impact upon TaxableValue of real property should Brevard County experience a decrease in aggregate property values.

We obtained Real Property Tax Roll data directly from the Property Appraiser as of September 13,2006. The data file included, but was not limited to, just value, appraised value, and taxable value for allreal property in the county. The data is summarized as follows:

Brevard County - Real Property Tax Roll

Source: Property Appraiser

Just Value Assessed Value Taxable ValueAll Real Property $ 62,875,492,474 $ 47,761,260,314 $ 36,979,660,614

Just values and assessed values are determined by the Property Appraiser. The taxable value is theassessed value reduced by applicable exemptions made available to the property owners. In reviewingthe data, we noted the following regarding records where the assessed value is equal to the just valueand where the assessed value is within 10%, 25%, and 50% of the just value:

% of % of % of

Just Value All Assessed Value All Taxable Value All

All Real Property $ 62,875,492,474 100% $ 47,761,260,314 100% $ 36,979,660,614 100%

Assessed equals Just $ 31,280,729,204 50% $ 31,280,729,204 65% $ 24,140,073,154 65%

Assessed within 10% of Just $ 32,117,429,434 51% $ 32,065,353,634 67% $ 24,840,446,004 67%



In spite of the shield provided by Save Our Homes, it is surprising to see such a large amount (65%) oftaxable value held in properties where the assessed value equals the just value. Should Brevard Countyexperience a decrease in aggregate property values, the effect upon taxable value will be most dramaticand immediate for these properties. Since 65% of the taxable value is made up of properties where

Page 1 of 3


6/17

assessed value equals just value, Brevard Countys taxable value is subject to a great degree of marketvolatility. Most surprising is the number of Single Family Residences (41,526) where the assessed valueequals just value.

% of % of % of

Just Value All Assessed Value All Taxable Value All

Single Family Residence $ 8,649,834,360 14% $ 8,649,834,360 18% $ 8,320,799,550 23%

To project the effect declining property values would have on Taxable Value, many factors must beconsidered and certain assumptions must be made. Factors include the difference between assessedvalue and just value for personal residences qualifying for protection under Save Our Homes. Thisamount, described as the Homestead Assessment Differential (HAD), has grown significantly over thepast six years from $649,598,050 in 2000 to $14,525,783,970 in 2006 (see Exhibit 1). While the justvalue of these homes has increased dramatically over the past few years, the assessed value, under SaveOur Homes, has only increased 3% per year. Should just value decrease, the assessed value may stillincrease if the reduced just value still exceeds the assessed value (such increase in the assessed valuewould be limited to 3%). Other factors include exemptions (new applications made and current

exemptions terminating) and the time lag between decreasing property values and the decrease reflectedby the Property Appraisers Office.

Analysis methodology and assumptions were as follows:

1. Thejust value, assessed value, and taxable value for each tax account were taken directly fromthe property tax rolls, tax account by tax account;

2. The exemption was calculated by subtracting the taxable value from the assessed value;3. The new assessed value for every property was calculated by increasing the current assessed

value by 3%;4. The new exemption was calculated by either a) keeping the old exemption amount if the

assessed property value was previously greater than or equal to $25,500; or b) increasing theexemption when the old assessed value was less than $25,500 up to the allowable exemptionamount;

5. The just value decreased was calculated by taking 95%, 90%, 85%, and finally 80% of thecurrent just value, tax account by tax account; and

6. The new taxable value was calculated by subtracting the new exemption from the lesser of theassessed value (after being increased by 3%) or the new just value (after being decreased by 5 20%).

Results are summarized as follows:

PercentDecrease inJust Value

Estimated TaxableValue

PercentDecrease inTaxableValue

Tax Loss Due toDecline in Taxable

Value

Required %Increase InRoll Forward

Millage

Required MillageTo Equal Current

Tax Revenue

5% $36,220,955,439 2% $4,380,942 2.10% 6.0475

10% $34,946,893,836 5% $10,952,355 5.80% 6.2680

15% $33,089,496,061 11% $24,095,180 11.80% 6.6198

20% $31,755,640,816 14% $30,666,593 16.50% 6.8979

Page 2 of 3


7/17

To further demonstrate:

Should Just Value decrease by 5%, the Taxable Value is projected to be $36,220,955,439. This result is adecrease in Taxable Value from the current level of $36,979,660,614. The result of declining tax valuecurrent aggregate millage would result in a decrease of tax revenues of $4,380,942. To maintain the curlevel of tax revenue would require a 2.1% increase in aggregate millage. This would increase the mill6.0475.

Results are graphically presented as Exhibit 2.

While we cannot project the likelihood of a decrease in aggregate property values, or the amount of sdecrease, the year-over-year change in median sales price of existing homes in Brevard County for July 200summarized below:

Brevard County - Residential Sales

Source: Florida Association of Realtors

Year-over-Year Percent

July 2005 July 2006 Change Change

Existing

Home Sales 794 488 (306) -38.5%

Median Price $ 239,800 $ 220,300 $ (19,500) -8.1%

This follows a similar decline reported for June 2006 and is establishing a trend line for aggregate propvalues to follow.

The effect of decreasing taxable values will be most profound on voter approved special taxing districts whtax revenue streams are bonded. Should taxable values decrease, these special districts could see a signifireduction in tax revenue jeopardizing the cash flow requirements needed for debt service. Depending onpercentage of current tax revenue dedicated to debt service, a decrease in taxable values could lead to inability to meet debt service requirements. In such case, the County will be required to use General Frevenues to cover the shortfall. In many of these special taxing districts, the tax revenue is generated to fdebt service and pay for maintenance and operations. In the event that tax revenues are insufficient to cdebt service, the maintenance and operation costs of the special districts must be funded elsewhere.

Submitted by:

J. Roger Shealy, CPATrudie Infantini, CPAEric Munzenmayer, MBA

Exhibit 1: Historical Brevard County Real Property ValuesExhibit 2: Taxable Value with decrease in Just ValueExhibit 3: Taxable Value to Total Ad Valorem TaxesExhibit 4: General Fund Ad Valorem Tax RevenuesExhibit 5: General Fund Reserves and Unreserved Fund BalanceExhibit 6: 2007 Tentative MillagesAddendum: Additional Considerations

Page 3 of 3


8/17

$0

$10

$20

$30

$40

$50

$60

$70

Billions

Tax Year

Historical Brevard County Real Pro

HAD Homestead Assessment Differential (Just Value less Capped Value) 649,598,050 972,325,990 1,865,651,670 3,160,228,270 5,365,736,420

Widow, Widower, Disability, Blind Exemptions & Homestead Reduction for

Parents/Grandparents

104,303,010 116,463,010 127,047,050 169,228,250 194,666,970

Agricultural Classified Differential (Just Value Agricultural less Classified

Use Value of Agricultural)

257,757,110 258,419,090 258,665,110 258,973,150 259,406,730

$25K Homestead & $25K Additional Senior Homestead Exemptions 3,304,453,970 3,440,361,270 3,580,103,970 3,700,257,160 3,814,211,570

Economic, Government, Institutional, Energy Exemptions & Lands Availablefor Taxes

4,735,040,420 4,951,943,690 4,990,630,480 5,249,273,672 5,443,010,580

Taxable Value for Operating Millages 15,099,317,545 16,378,638,457 17,717,727,250 19,806,754,088 23,023,038,730

2000 2001 2002 2003 2004

Exhibit 1


9/17

Exhibit 2

Taxable Value with decrease in Just Value (JV

$15.1

$16.4

$17.7

$19.8

$23.0

$28.7

$

$15

$20

$25

$30

$35

$40

2000 2001 2002 2003 2004 2005

Billions

Historic Taxable Values 5% Decrease in JV 10% Decrease in JV 15% Decrease


10/17

Exhibit 3

Taxable Value to Total Ad Valorem Taxes

$15,9

56,7

88,3

03

$16,9

87,1

15,2

27

$18,3

16,3

71,4

54

$19,7

43,3

08,0

09

$22,0

87,4

35,9

19

$25,3

34,959,3

40

$31,0

60,2

4

$113,407,120$120,432,958

$143,040,090

$157,858,225

$176,269,210$188,688,707

$210,54

$10,000,000,000

$15,000,000,000

$20,000,000,000

$25,000,000,000

$30,000,000,000

$35,000,000,000

$40,000,000,000

$45,000,000,000

$50,000,000,000

2000 2001 2002 2003 2004 2005 proj. 2

Year

Taxable Value Ad Valorem Tax (ALL)


11/17

Exhibit 4

General Fund Ad Valorem Tax Revenues

0

20

40

60

80

100

120

140

160

FY1991

FY1992

FY1993

FY1994

FY1995

FY1996

FY1997

FY1998

FY1999

FY2000

FY2001

FY2002 2

Millions


12/17

Exhibit 5

General Fund Reserves and Unreserved Fund Balance

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

2000 2001 2002 2003 2004 2005

Millions

Year

Total Expenditures

Budgeted Reserves Fund Balance


13/17


14/17

ADDENDUM

Additional Considerations

Factors that would increase the taxable value of real property for operating millages:

1. 3% annual possible increase in tax assessment of homesteads;2. Step-up in basis upon transfers of ownership of homesteads presently under the 3% annual cap;3. Loss of exemptions of any type, or expiration of tax abatements;4. New construction;5. Change in classified use values of agricultural property; and6. Upward reassessments of real property uses (other than homesteads, agricultural, or the totally

exempt) in an otherwise declining market, due to special circumstances in a particular market sector.

Factors that would decrease the taxable value of real property for operating millages:

1. Declining just values in general;2. Demographically/economically based applications for the $25,000 senior low-income additional

exemption;3. Pending HJR 353, Increased Homestead Exemption, for constitutionally increasing the maximum

additional homestead exemption for low-income seniors from $25,000 to $50,000 effective 1-1-2007;4. Issuance of tax abatements on commercial or industrial real property; and5. Petitions to the VAB to lower property assessments.

Discussion of Increases:

In 2005 there were 149,917 actual homesteads per the PA Office. Note that the upward trend in number hasbeen leveling off. The step-up in basis effect, upon transfer of ownership of homesteads, probably has beensignificant in the recent past. Significant future increases in assessments from this effect is doubtful, astransaction volume has slowed due to buyer resistance to high prices, taxes, insurance, etc., and most recentlyseller obstinacy to falling prices. Furthermore, if legislated, SOH portability would lessen step-ups in basis of realproperty assessments on homestead transactions.

Tax Year: 2000 2001 2002 2003 2004 2005 2006

Estimated TotalHomesteads

132,178 135,773 139,926 143,009 147,103 149,439 150,854

$25k HomesteadExemption $3.304B $3.394B $3.498B $3.575B $3.678B $3.736B $3.771B

Loss of exemptions, such as a widow or widower remarrying, or a private purchase of government or institutionalproperty, or the expiration of tax abatements issued as economic incentives, would not be a significant factor.There are 32 companies in Brevard with currently active tax abatements at different levels, all expiring within thenext 10 years. New construction, on the other hand, has been very significant in the past, growing from $0.3B in1996 to $1.5B in 2005. From the CAFR:


15/17

Agricultural economics and world events, e.g. the price of Brazilian frozen orange juice concentrate, can in theorycause changes in the classified use values of agricultural property and thus the agricultural classified differential,but this would not be a significant factor as the total agricultural just value is only $0.7B. The effect of upward

reassessments of real property uses (other than homesteads, agricultural, or the totally exempt) in an otherwisedeclining market, due to special circumstances in a particular market sector, would be at this point speculative.

Discussion of Decreases:

The effect of declining real property just values in general, as the independent variable, could also be calculatedat a few points under 10% to demonstrate the most instant consequence.

A preliminary figure from the PA is 6,267 for existing low-income senior additional $25,000 homesteadexemptions in 2006 in Brevard County. This exemption has not been granted by all taxing authorities, appliesmainly to the general fund, and as a maximum may not be fully utilized by all applicants if their assessedhomestead value is less than $50,000. The same would apply to Pending HJR 353, intention which is to increasethis additional homestead exemption for low-income seniors from $25,000 to $50,000 the case then being themaximum exemption not fully utilized if the assessed homestead value is less than $75,000. The impact of thislikely would be less than the current $142M in property exemptions (reduction of about $0.6M in tax revenue) andtherefore not significant, even should the numbers of qualifiers increase for demographic or economic reasons.

Tax Year: 2000 2001 2002 2003 2004 2005 2006

Estimated Senior Exemptions 0 1,842 3,278 5,001 5,465 5,646 5,669

Additional Senior $25kHomestead Exemption

0 $46M $82M $125M $137M $141M $142M

The issuance of new tax abatements on commercial and industrial real property Im estimating wont be material,

as future proposals to lure for businesses to a weakening economic climate may be overshadowed by thegrowing issues of fairness and effectiveness. The Supreme Court might rule on the legality of these tax credits(Daimler-Chrysler).

Across the state, the number of petitions to VABs to lower property assessments is up sharply; however, at thistime the local quantitative effect is unknown.


16/17

For the last five (5) years, the overall level of assessment in Brevard Countyhas been relatively low. It has fluctuated between 92.5% and 94.9%. TheDepartment of Revenue allows some tolerance and this figure can fluctuateeach year between 90% and 100%. Maintaining a level of assessmentbetween 90% and 95% helps to ensure that few, if any, properties are over-assessed and still complies with minimum State requirements.

Click here to view the 2009 Level of Assessment by County.

Page 1 of 1Appraiser's Job

8/27/2010http://brevardpropertyappraiser.com/mainhtml/appraiser_job.asp


17/17

2009 Level of Assessment by CountyReturn to Appraiser's Job Page

COUNTY NAME PERCENT METHOD COUNTY NAME PERCENT METHOD

Alachua 94.6 I Lake 99.4 I

Baker 98.7 I Lee 90.8 N

Bay 96.5 N Leon 94.4 N

Bradford 94.8 I Levy 102.2 N

Brevard 103.4 N Liberty 93.8 N

Broward 102.9 I Madison 93.9 N

Calhoun 91.5 N Manatee 97.3 I

Charlotte 99.7 N Marion 99.9 N

Citrus 98.9 N Martin 95.1 N

Clay 98.5 N Monroe 96.1 I

Collier 98.1 I Nassau 93.1 I

Columbia 96.3 N Okaloosa 98.8 N

Dade 95.8 I Okeechobee 92.6 NDesoto 103.7 I Orange 97.8 I

Dixie 98.6 I Osceola 100.7 I

Duval 97.6 I Palm Beach 91.9 N

Escambia 92.1 I Pasco 99.2 I

Flagler 95.4 I Pinellas 98.9 N

Franklin 99.6 I Polk 98.2 N

Gadsden 92.3 I Putnam 97.3 N

Gilchrist 93.8 N St. Johns 92.6 I

Glades 101.8 I St Lucie 93.3 N

Gulf 102.4 N Santa Rosa 92.5 I

Hamilton 96.9 I Sarasota 95.4 I

Hardee 96.8 I Seminole 98.5 N

Hendry 92.9 N Sumter 97.7 I

Hernando 102.3 I Suwannee 95.5 N

Highlands 103.3 N Taylor 100.5 I

Hillsborough 98.2 N Union 95.4 N

Holmes 93.3 N Volusia 90.4 N

Indian River 96.4 I Wakulla 94.7 I

Jackson 94.0 I Walton 94.0 I

Jefferson 100.3 I Washington 98.4 I

Lafayette 97.6 N

2009 Statewide (Weighted) Average Level of Assessment is 96.8 *

Methods:I = Current Year In-Depth Study Results ..........................35N = Net Assessed Value Results ....................................32* : This estimate is subject to slight change as revised recaps (including finals) are received

Source: Florida Department of Revenue

Page 1 of 22009 Level of Assessment by County

Shealy responds to Ford attack

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