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Tuesday, August 21, 2007

Tax cuts hurt South Florida home sales, real estate agents say

Potential buyers fear reduced services, increased fees, real estate agents say

By R. Benedick

The scramble is on by cities to cut property taxes, but instead of luring home buyers, real estate agents say it may be discouraging some of them.

"A big question on people's minds is what will happen in terms of public services and does this mean schools will have less money, and what about public hospitals?" said Barry Rothman, sales associate with Lang Realty in Boca Raton. "Are we going to get even less service for our tax dollars?"

That's not what state legislators had hoped would happen when they ordered cities and counties for the fiscal year beginning Oct. 1 to freeze tax collections at current levels and then make an additional cut, ranging from 3 percent to 9 percent.

"People see the tax issue as a bunch of bull, so to speak, because insurance rates haven't gone down, home prices are still high and now interest rates are rising so people who were barely able to get in when prices were down can't afford to buy now," said broker Jeff Kahn, manager consultant with Century 21 Hansen Realty in Fort Lauderdale.

To make up some of the lost property tax revenues, some municipalities are hiking fees for fire protection, garbage collection, water, building permits and parks.

"It's like they're robbing Peter to pay Paul," said Lisa Mays, president of West Park's Miami Gardens homeowners association. "It's becoming a nightmare because you've got fee hikes now and everything seems to be going up, not down."

West Park is considering a 50 percent hike in the fire fee and a 40 percent increase in the garbage fee. Other cities also are weighing drastic actions to cover shortfalls. (Pic left, will school busing cutbacks lead to this?)

Tamarac is laying off 26 employees and may reduce the community bus service for seniors. Pembroke Pines is considering pulling the plug on some preschool programs, senior bus service and the mounted patrol while doubling its fire-rescue fee.

Boynton Beach is eyeing a water tax and Delray Beach may leave five police officer positions vacant and increase business taxes to raise revenue.

Broward County is looking to increase the cost of going to parks on weekends, returning overdue library books and licensing pets. Palm Beach County plans to raise bus fares.

The property tax relief signed into law in June is projected to save the average homeowner only $174 in taxes this year. The biggest savings would come next year if voters approve part two of the tax plan: They can choose to keep their Save our Homes tax cap or a "super" exemption.

Save Our Homes lets homeowners exempt $25,000 off the home's value and caps yearly tax increases at 3 percent. The "super" exemption allows them to shave off 75 percent of the first $200,000 of their home's taxable value and an additional 15 percent off the next $300,000.

If the "super exemption" constitutional amendment passes in January, cities and counties stand to lose millions more in tax revenue, officials said, meaning more cuts in services. (Pic right, neglected roads in South Florida.)

Because of the uncertainty, "a lot of people are waiting to see what happens with the taxes and prices," said Mark Heller, a Realtor and broker-associate at Century 21 Realty in Coral Springs.

His clients, Rivka and Dan Bushel, plan to rent for a year in Coral Springs before making any decisions.

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