Miami Beach Property Values Increase 3.5% Mainly Due to New Construction

Susan Askew
Susan Askew

Miami Beach Property Values Increase 3.5% Mainly Due to New Construction:

As budget planning is underway, concerns over property and resort tax revenues weigh heavily

The preliminary 2020 property assessment values for Miami Beach show an overall increase in property values of 3.5% year over year but, when broken down, the number reflects only a 1.3% increase in existing property values. The bulk of the increase comes from new construction.
 
In a Letter to Commissioners this week, Miami Beach City Manager Jimmy Morales said the new numbers from the Miami-Dade County Property Appraiser show an overall increase of approximately $1.4 billion in preliminary property values from $40.1 billion in 2019 to $41.5 billion in 2020 or 3.5%.

“This reflects a $519.6 million or 1.3% increase in existing property values and a $866.5 million or 286% increase in new construction values,” he wrote. “Applying the overall increase in values to General Fund property tax revenues would result in a preliminary increase of approximately $5.9 million in property tax revenue citywide.”

Final, certified values come out on July 1 but the difference in the preliminary and certified values “is typically minimal,” Morales said.

Property values in the Normandy Shores Local Government Neighborhood Improvement District increased 5.5% or a total of $12.3 million from the 2019 Preliminary Taxable Value of $223.7 million which reflects a 6% increase in existing property values and a 23% decrease in new construction values.

For comparative purposes, countywide property values increased by 4.6%. In the City of Miami, they increased 6.5%. 

The greatest increases were in West Miami (12%), Florida City (11.2%), Hialeah (9.6%), North Miami (9.4%), Homestead (8.9%), El Portal, (7.8%), Miami Gardens (7.7%), Biscayne Park (7.3%), and Hialeah Gardens (7.1%).

Five areas experienced declines: Bal Harbour (-4.2%), Aventura (-3.2), North Bay Village (-1.5%), Key Biscayne (-1.5%), and Surfside (-0.3%).

Property taxes make up more than half of the City’s General Fund revenue, approximately 54% in FY 2020. The past two years have been challenging as property values began trending downward in 2018 into what City CFO John Woodruff described last year as a “trough.”

Asked how the preliminary report stacks up against his expectations, Woodruff wrote in an email, “I’m concerned. Although the overall number of 3.5% was higher than last year’s 3.1%, it was only because we had a higher than normal impact from new construction.” 

Woodruff will have trend charts available for the Mayor and City Commissioners at a Finance Committee/Budget Workshop on June 16th. Normally City Commissioners gather in May for a full-day budget retreat to discuss the coming year and prioritize programs and expenditures. This year, that retreat did not happen due to restrictions around large gatherings but also to allow the Administration time to perform triage on the current year’s budget as a result of a sharp drop in revenue resulting from business closures due to the coronavirus pandemic.

Woodruff added another observation about this year’s preliminary property tax numbers. “I also noted that several coastal cities had a decrease in property values and we are working with a consultant on analyzing what’s driving that decrease.” Recent reports have suggested the risk of flooding from sea level rise will erode property values 5 to 15% in Florida in the next decade.

While Miami Beach is less reliant on property taxes than other municipalities due to its resort tax, the closure of the City’s restaurants, hotels, and beaches resulted in a sharp decline in resort tax and parking revenues with losses estimated to be $3.6 million per week.

In April, the City projected “likely” revenue losses of $87 million due to COVID-19. The “likely” scenario was based on three months of very low economic activity and three months of “slow growth”. The City’s businesses shut down in mid-March and only began to reopen in the last two weeks with non-essential retail going first on May 20, restaurants following on May 27, and hotels on June 1 but beaches are still closed as the County remains under a curfew due to unrest over the killing of George Floyd by police officers in Minneapolis. Without tourists, many of whom come for the beach and still others afraid to travel, some businesses remain closed and some may never reopen.

Through budget cuts and furloughs, the City expects to close all but $5-6 million of the gap, dipping into reserves to balance the budget. Now the even harder work is happening as the City’s Finance Department works on a proposed budget for FY 2021. The City’s fiscal year runs from October 1 to September 30. By law, the budget must be balanced when it takes effect.

Asked about the impact of the property value number on the upcoming budget, Woodruff said, “Because of the impact of COVID-19 and all the uncertainty regarding its impact to revenues next year, we are only just now making these calculations as best we can.”

He said the anticipated budget gap for the Operating Budget will be presented at the June 16 budget workshop along with a proposed Capital Budget. “The operating budget gap will reflect the impact from a blend of low growth in property values and the estimated impact of COVID-19,” Woodruff said. The Administration’s recommendations for closing the budget gap in the Operating Budget will be presented at another budget workshop on July 17th.
 
Morales’ full Letter to Commission is here.


 

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