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RESOLUTION NO. R 08 - OOb
A RESOLUTION OF THE CITY COMMISSION OF THE
CITY OF BOYNTON BEACH, FLORIDA, FINDING
THAT THE EXPENDITURE OF MONEY FOR
INFORMATION OF THE PROPOSED
CONSTITUTIONAL AMENDMENT SERVES A PUBLIC
PURPOSE; PROVIDING THAT THE DISSEMINATION
OF INFORMATION CONCERNING THE IMP ACTS OF
THIS AMENDMENT ON THE CITIZENS OF THE
COUNTY AND THE CITY OF BOYNTON BEACH IS
ESSENTIAL TO THE HEALTH, SAFETY,
PROTECTION AND WELFARE OF THE CITY OF
BOYNTON BEACH AND ITS CITIZENS; PROVIDING
FOR EFFECTIVE DATE.
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WHEREAS, the Florida Legislature has placed an amendment to the State
onstitution on the January 29, 2008 ballot; and
WHEREAS, the City of Boynton Beach desires that its citizens be fully informed as
o the impact of this proposed amendment; and
WHEREAS, the City Commission believes that it is a duty of local democratic
ovemment to assist its citizens in understanding issues of great importance to them by
roviding information in order that they may make an informed choice; and
WHEREAS, the City Commission believes that such municipal leaders have a duty
nd a right to offer their opinion as to which course of action they think would be best for the
ity of Boynton Beach and its citizens, and that such use of their offices is clearly for a
ublic purpose.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COMMISSION OF
HE CITY OF BOYNTON BEACH, FLORIDA, THAT:
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Section 1.
The foregoing "WHEREAS" clauses are true and correct and
31 ereby ratified and confirmed by the City Commission
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Section 2.
The City Commission finds that it is necessary and 9in the public
33 terest of the citizens of the City of Boynton Beach and the City, and essential to the health,
34 afety, protection and welfare of the citizens of the City of Boynton Beach for the City to
35 xpend public funds and resources, to utilize the time of its employees, and to utilize its
:\CA\RESO\Legislative ActionsExpenditure of money is public purpose.doc
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various methods of communication (including but not limited to television, print, and internet
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~ommunications) in ordered to communicate to the public concerning the proposed
l[eferendum question which is attached hereto as Exhibit "A" and the impact it will have on
e City of Boynton Beach and its citizens.
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Section 3.
That this Resolution will become effective immediately upon passage.
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PASSED AND ADOPTED this ~ day of January, 2008.
CITY OF ~ACH, FLORIDA
?::ry?y C#~
(:9.y~r - rry T'r-
COm]SSiOner - Ron.~el an
._ .:."m09l'er - W oodrowL 0"7
7~?J~-/~
Commissioner - Marlene Ross
.A~
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OTY OF BOYNTON BEACH
Proposed Constitutional Amendments for Property Tax Reform
Impact Analysis
December 17,2007
In an effort to study the impact of the proposed property tax reform, the City of Boynton Beach
analyzed the following three (3) elements of the proposed constitutional amendments that will have
an actual estimated or potential loss of future property tax revenue to the City.
I. Tangible Personal Property Exemption
2. Double Homestead Exemption
3. Portability of Save Our Homes (SOH) Benefit
SUMMARY OF ESTIMATED LOSSES
Based on our analysis and assumptions, the following summarizes our calculations.
· Estimated loss of current revenue Tangible Personal Property
Double Homestead Exemption
Total (About 7% of City 2007-2008 General Fund ad valorem tax revenue)
$ 386,944 (Pg 2)
$ 2.336.562 (Pg 3)
$ 2.723.506
A Itemate Portability of SOH Benefit calculations:
. Potential reduction of future property
tax revenue gain Portability of SOH Benefit
(Assuming 12.5% SOH sales transactions annually)
$ 1.475.748 (Pg 7)
. Potential reduction of future property
tax revenue gain Portability of SOH Benefit
(Assuming 5.0% SOH sales transactions annually)
$ 590.299 (Pg 9)
The source of data and the methodology used to calculate each of the three elements follows.
SOURCE OF DATA
The data bases used were provided by the Palm Beach County Property Appraiser's Office:
1. Certified Assessment Administration (AA) Tax Roll File - 2006 (The title of this file may
vary among Property Appraiser's offices throughout the state - the file contains basic tax roll
information: PCN, Owner's Information, Assessed Values, Market Values, Taxable Values.
Sales Data, etc.)
2. Tangible Tax Roll - 2007
3. Homestead Residential Property Worksheets - 2007
The City typically purchases the AA Tax File from the County for approximately $400. To obtain
this file call Ms. Clarice Bethel-Laing at (561) 355-2358.
The Tangible Tax Roll and the Homestead Residential Property Worksheets have been prepared by
the PBC Property Appraiser's Office specifically for PBC municipalities.
The following pages utilize this data to develop the methodology using alternative assumptions to
arrive at our estimates for each proposed amendment affecting future City property tax revenues.
TANGIBLE PERSONAL PROPERTY EXEMPTION
Pro/Josed Amendment: A $25,000 exemption is provided for each tangible personal property
return. This exemption will allow businesses to receive a break on the taxes they pay on
equipment. This provision applies to all taxes.
Source: PBC Legislative Update, 11/2/07 by PBC Legislative Affairs Office, Mr. Todd. J. Bonlarron, Director.
Da ta File
Using the County's Tangible Tax Roll, filter the data to separate all properties and taxable values into
two Groups; one valued at $25,000 and below and the second valued above $25,000. Determine the
property count for each Group.
Assumptions. Methodolo1!Y and Calculations
We make no assumptions of the change in total assessed value of tangible personal property from the
base year used for these calculations or the effective date of the amendments if passed by the voters.
The City will lose illl tax revenue on the tangible personal property on accounts up to $25,000. For
properties above $25,000, the City will lose tax revenue on $25,000 value of each account.
Boynton Beach Calculation
Step I. Calculate the taxable value on the tangible personal property
on accounts up to $25,000 as follows:
Total taxable value
Less taxable value of accounts in excess of $25,000
$ 287,252,832
$(250,634,792)
$ 36,617,040
Step 2. Multiply the total property count (933) times $25,000 for all
properties assessed at $25,000 and above because each account
above this amount will have a $25,000 exemption.
Total loss of taxable value from personal property exemption
23.325.000
$ 59,942,040
Step 3. Multiply the loss of assessed value by the City's 2007-2008
General Fund millage rate
x 0.0064553
Estimated loss of current revenue from Personal Property Exemption
$
386.944
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DOUBLE HOMESTEAD EXEMPTION
Proposed Amendment: An additional $25,00() homestead exemption is provided for the value (~r
homestead property above $5(),OOO. This exemption does not apply to school taxes.
Source: PBC Legislation Update. I ] /2/07 by PBC Legislative A ffairs Office. Mr. Todd. J. Bonlarron. Director
Data File
Use the attached Homestead Residential Property Worksheets that sort the AA Tax File of
Homestead properties into four (4) groups having values in the following ranges.
1. $0 to $25,000
2. $25,001 to $50,000
3. $50,00 I to $75,000
4. $75,00 I and greater
Assumptions. Methodoloe:v and Calculations
We make no assumptions of the change in the market and assessed values of properties from the base
year used for these calculations and the effective date of the amendments if passed by the voters.
Nothing changes for all properties with a value up to $50,000 (Groups I and 2). There is 110
additional loss of revenue for the City other than current $25,000 homestead exemption for these
properties.
The additional $25.000 exemption starts to apply for properties assessed at more than $50,000. To
calculate the revenue loss on these properties requires three (3) steps as properties assessed from
$50.001 to $75,000 will become eligible for only a part of the second $25,000 exemption. For
example. a property assessed at $60,000 would only qualify for an added $\ 0,000 exemption.
See the chart on the following page (Sample Impact of Double Homestead Exemption) to illustrate
the application of the double homestead exemption at various levels of assessed property values.
Bovnton Beach Calculation
Step 1. Group 3 properties ($50,00 I to $75,000) total assessed value -
Less the property count in this Group (3,404) times $50,000
since the total value includes the first $50,000 assessed value.
$ 217,610,333
$(] 70,200.000)
$ 47,4]0.333
Step 2. Group 4 properties ($75,001 and greater) multiply the total
property count in this Group (12.582) times $25,000 because
this is the additional amount of assessed value subject to the
full additional $25,000 homestead exemption.
$ 314.550.000
Total loss of assessed value from double homestead exemption
$ 361.960.333
Step 3. Multiply the loss of assessed value by the City's 2007-2008
General Fund millage rate
x 0.0064553
Estimated loss of current revenue from Double Homestead Exemption
$ 2.336.562
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Samole Imoact of Double Homestead Exemotion
Assessed Property Value First Homestead Second Homestead Total Homestead
Exemption Exemption Exemption
$10,000 $10,000 0 $10,000
$ I 5,000 $15,000 0 $] 5,000
$20,000 $20,000 0 $20,000
$25,000 $25,000 0 $25,000
$30,000 $25,000 0 $25,000
$35,000 $25,000 0 $25,000
$40,000 $25,000 0 $25,000
$45,000 $25,000 0 $25,000
$50,000 $25,000 0 $25,000
$55,000 $25,000 $5,000 $30,000
$60,000 $25,000 $lo:oQQ $35;000
$65,000 $25,000 $] 5,000 $40,000
$70,000 $25,000 $20,000 $45,000
$75,000 $25,000 $25,000 $50,000
$80,000 $25,000 $25,000 $50,000
$85,000 $25,000 $25,000 $50,000
$90,000 $25,000 $25,000 $50,000
$95,000 $25,000 $25,000 $50,000
$1 00,000 $25,000 $25,000 $50,000
Prooertv Aooraiser's Web Site
The Palm Beach County Property Appraiser's web site www.co.Dalm-beach.tl.us/papa. PAPA
(which stands for Property Appraiser Public Access) contains a brief description of the four
components of the tax relief proposal.
While the web site is not designed to provide a methodology to calculate the overall tax impact to
the City of Boynton Beach, it does provide a good understanding of the proposals for each of the
proposed components.
PORTABILITY OF SAVE OUR HOMES BENEFIT
Pro/Josed Amendment: Homestead property owners will be able to transfer their Save Our Homes
benefit (up to $500,000) to a new homestead within two years of giving up their previous
homestead. If the just value of the new homestead is more than the previous home's just value, the
entire differential can be transferred; if the new homestead has a lower just value, the amount of
the accumulated benefit that may be transferred is proportional to the value of the new homestead.
(For those who gave up their homestead in 2007 before the amendment was passed, the differential
may be transferred if they apply for a new homestead January I, 2008 or January I, 2009.) This
provision applies to all taxes, including school taxes.
Source: PBC Legislative Update, 1\12/07 by PBC Legislative Affairs Office, Mr. Todd. J. Bonlarron, Director.
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Assumptions. Methodolol!v and Calculations
The extent of impact of portability on the future taxable value of in any given city or county is very
difficult to estimate with any level of confidence. Two major elements influence the portability
impact:
I. The number of SOH sales transactions in a given period which is heavily influenced by the
overall real estate market and the availability of financing.
2. The amount of "new" SOH benefit brought into the City as a result of each sales transaction
and its effect on the taxable value of the property after the transaction. This effect depends on
the SOH benefit of the buyer compared to that of the seller and whether or not the seller has a
SOH benefit. For example. portability will not apply to the following types of sales
transactions:
· Buyers coming from out of state/country.
. First time home buyers.
· Those changing the status of the property from a homesteaded residence to an
investment property or second home.
The only element known is that without portability, the future taxable value would probably increase
when a homesteader with a SOH benefit sells the property. In that case. the property would normally
reset to a higher taxable level.
Therefore, for each estimated sale transaction, we calculated the potential reduction of the future
gross taxable value increase. This is based on the entire amount of the taxable value on which the
City would collect taxes without the portability in effect. In reality, the potential reduction may be
substantially lower and will depend on the characteristics of each particular transaction.
To determine the amount of the impact of portability. we used two steps.
I. Estimating the number of home sales and
") Calculating the potential reduction of future gross taxable value increase.
Estimatinl! the N urn ber of Home Sales
As noted, the number of sales transactions In a given period is most difficult to estimate. \Ve
considered two methods.
I) A method proposed by the City of Pembroke Pines, utilizing a mortgage-backed security
analysis. You may contact: Mr. Rene Gonzalez, Finance Director, at (954) 435-6515.
This method assumes homeowners move every eight years and thus J 2.5% of all properties
will sell in a given year.
2) A method prepared for the Florida Legislature, Office of Economic and Demographic
Research that utilizes data obtained from a University of Florida / Florida State University
report. The report of the Property Tax Study is accessible at www.edr.state.fl.us.
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The method in this report estimates what the probability is of home sales by county. Estimates
are based on the amount of property owners' SOH savings (e.g., taxes that a person would
have paid on the difference between the market value and the assessed value of their
property). In other words, the higher the savings, the stronger "lock-in" effect there is on sales
and the lower the probability of sale. To estimate the number of transactions, we have used
the probability of sale coefficients for zero savings (most likely to sell) for Palm Beach
County:
Table 111-20: Probability of Sale: Palm Beach County
(No. of Homes = 216,903)
Single Family Homes Other Residential
Percentage Percentage
Probability Change in Probability Change in
of Sale Probability of Sale Probability
of Sale of Sale
Save
Our
Homes
Savin2s
$0
$1,000
$5,000
$10,000
$20,000
$30,000
$50,000
$100,000
$200,000
$500,000
0.0912 0.1108
0.0912 -0.02 0.1106 -0.16
0.0912 -0.07 0.1 099 -0.63
0.091 I -0.09 O. 1 091 -0.79
0.0909 -0.17 0.1073 -1.58
0.0908 -0.17 0.1056 -1.59
0.0905 -0.35 0.1023 -3.18
0.0897 -0.87 0.0942 -7.87
0.0881 -1.74 0.0796 -15.57
0.0835 -5.17 0.0458 -42.40
Using the above table, you can apply 10% (a number between 9. J 2% for single-family homes and
11.8% for "other" residential properties). You can also use any other number you think would be
appropriate for your municipality. Remember, the actual number of annual transactions for the SOH
properties that you have in your AA File is the number of transactions with the "lock-in" effect of the
SOH program. Also, the market conditions should be taken into consideration.
Calculatine the Potential Reduction of Future Property Tax Revenue Gain
To determine the potential reduction of gross taxable value, we used two methods that result in the
same potential lass.
J) City of Pembroke Pines.
2) Palm Beach County.
For the purpose of these calculations, we did not adjust either
· The assessed values of the SOH properties by the 3% ceiling cap or
· The market values of the SOH properties in Boynton Beach.
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Data File: Use 2006 Certified AA Tax file for either method.
The City of Pem broke Pines Method
Bovnton Beach Calculation
Using the certified AA Tax File for all of the SOH properties, we performed the following steps.
Step I. Calculate the sum total of the "Market Value" column
Subtract the sum total of the "SOH Value" column
Difference between market value and SOH value
$ 3,876.521.051
$(2.047.639.059)
$ 1.828,881,992
Step 2. Multiply the above difference by the assumed percentage
of SOH sales (assumes SOH homes sold every 8 years)
Estimated loss of taxable value
x 12.5%
$ 228.610.249
Step 3. Multiply the estimated loss of taxable value by the City's
2007-2008 General Fund millage rate
x 0.0064553
Potential reduction of future property tax revenue gain from
portability of Save Our Homes benefits
$
1.475.748
Please note that applying 12.5% to the values assumes that the transactions occur with equal
frequency across the value distribution. In other words, this assumes that there are a similar
number of transactions in lower valued properties as in higher valued properties.
The Palm Beach County Method
The County uses an estimate of an average SOH benefit per SOH property. Overall, this method uses
the same difference ($1,828.881,992) between market value and SOH value as calculated on page 7.
Bovnton Beach Calculation
Using the certified AA Tax File for all of the SOH properties, we performed the following steps.
Step J. Calculate the sum total of the "Market Value" column
Subtracted the sum total of the "SOH Value" column
Difference between market value and SOH value
$ 3.876,521.051
$(2.047.639.059)
$ 1,828,881,992
Step 2. Multiply the above difference by the assumed percentage
of SOH sales (assumes SOH homes sold every 8 years)
Estimated Joss of taxable value
x 12.5%
$ 228.610,249
Step 3. Divide the above by the City's SOH sales transactions
(total SOH parcels = 17,533 times 12.5% as above)
A verage SOH benefit for SOH properties
$
2.1 91
104,341
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Step 4. Multiply the above by the number of SOH transactions
results in the same loss of taxable value
2.191
$ 228,610,249
Step 5. Multiply the loss of taxable value by the City's
2007-2008 General Fund millage rate
0.0064553
Potential reduction of future property tax revenue gain from
portability of Save Our Homes benefits
$
1.475.748
Determinin Alternative Levels of Potential Reduction of Future Pro er Tax Revenue Gain
We consider the 12.5% transaction figure on the aggressive side for the number of SOH property
sales transactions in terms of market recovery for 2008. Given the current real estate market, we
selected a range of alternatives in declining sequence from the 12.5% to 10%, 7% and 5%.
Bovnton Beach Calculation
Calculating alternative potential losses of future revenue increases for the near term, we
performed the following steps:
I) Select each assumed percentage of SOH property sales annually.
2) Apply the above percentage to the total SOH benefit of $1 ,828,881 ,992 (see pages 7 & 8)
resu fting in the estimated loss of taxable value.
3) Multiply the estimated loss of taxable value by the City's 2007-2008 General Fund
millage rate of 0.0064553.
4) Compare the alternative potential losses of future revenue increases using the range of
alternatives as follows.
· 12.5% x $1,828,881,992 == $228,610,249 x 0.0064553 == $1.475. 74~ potential loss
· 10.0% x $1,828,881,992 == $182,888,199 x 0.0064553 == $1.180.598 potential loss
· 7.0% x $1,828,881,992 == $128,021,739 x 0.0064553 == $ 826.419 potential loss
· 5.0%. x $1,828,881,992 == $ 91,444,100 x 0.0064553 == $ 590.29~ potential loss
Applying the average SOH property benefit of $104,301 (Palm Beach County method) to the
above transaction percentages resu Its in the same potential losses of future revenue increases.
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