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Orlando may feel pinch from falling property values

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Among the landmarks seeking lower assessments — and, the owners hope, smaller tax bills — are the new Paramount on Lake Eola condominium, the Bank of America building, CNL Plaza, even the Orlando Sentinel, records from Orange County Property Appraiser Bill Donegan’s office show.
Owners of the Paramount, assessed at $101.5 million, argue its true value is closer to $80 million. The Bank of America building’s owners want its assessment dropped from $74.7 million to $70 million; Dynetech Centre’s owners say it’s worth $42.7 million, well below its $54.4 million valuation. CNL Center/City Commons owners want its $59.6 million assessment dropped to $43 million, while the Sentinel wants its property and building valued at $25.7 million, down from $42.8 million.
The 10 highest-value buildings that have appealed — they’ll be heard this spring by a special board set up for that purpose — are asking that their assessments be lowered by a total of $97.7 million.
“Even the best of [commercial] properties are seeing their values drop by 20 or 25 percent,” said Randy Anderson, a University of Central Florida real-estate professor and department chair, who cited “soft” demand and tight credit markets as key reasons.
In the short run, lowered assessments would cut property-tax payments to the city, the county and the Orange school district; for every $1 million in lower valuation, owners would save about $20,000 on their tax bills. That includes property taxes received by the Community Redevelopment Agency, or CRA, a special taxing district set up to pay for improvements in the downtown area, including the venues.
The longer-term impact could be even more significant, thanks to a constitutional amendment approved by voters in 2008 that prevents property appraisers from raising the assessment of commercial property by more than 10 percent a year. An amendment on this fall’s ballot would, if passed, lower that cap to 5 percent.
If that passes, the assessed value of these downtown mega-properties could be frozen at recession-era prices, locking in lower property-tax payments for years even if property values rebound strongly.
To illustrate, Donegan released a “growth analysis” of what future downtown-property values could look like. The tax appraiser posited what he called a “hypothetical” 9 percent decline in values this year and a less-severe 4 percent drop-off in 2011, followed by two years of no growth.
After that, Donegan estimated that with a 10 percent cap in place, overall downtown-property values wouldn’t increase by more than about 4 percent a year. At that rate, his analysis showed, Orlando’s downtown would not return to its pre-recession assessed values for nearly a decade.
That means the city, county, school district and special taxing district would go years before their property-tax revenues from downtown buildings would return to the level paid in 2007. The only “new” money would come from new construction, which isn’t expected anytime soon.
“That’s going to have a major impact on the growth of [the] CRA,” Donegan said.
That means additional worries for Orlando and its new $425 million performing-arts center. The city is counting on using revenues from the CRA to pay off at least $130 million in bonds being sold to finance the center.
Orlando Chief Financial Officer Rebecca Sutton said Donegan’s projections would not scuttle those plans, but they did prompt the city to lower its estimate of what the CRA would take in next year from about $22 million to $21.1 million.
And the long-term impacts of capping value increases at 5 percent or 10 percent a year are unclear, Sutton conceded. She said that if voters enact the lower cap, it could force the city to readjust its long-range growth rates on how much tax revenue downtown properties would generate.
“There are going to be hills and valleys,” Sutton said of rise and fall of commercial-property values during the long term. “But if the hills are cut off at the top, it’s going to cut that overall rate.”
The fall in property values, with housing leading the way, has staggered local governments. Resulting steep drops in tax collections triggered layoffs and pay cuts, and stalled capital projects across Florida for the fiscal year that began Oct. 1.
Real-estate experts say that declines in the value of commercial buildings always trail the residential sector by a year or so. That’s now taking hold in downtown Orlando, where more than 20 percent of commercial-office space was vacant at the end of 2009.
In 2007, 75 landowners petitioned for a lower assessment of their properties inside the city’s CRA, an area the encompasses land in the downtown core, parts of Parramore and the areas around Lake Eola and Lake Lucerne.
A year later, as the recession took hold, 285 petitions were filed in the CRA, a 280 percent increase. Last year, a record 474 petitions came, though countywide, such appeals were flat or down slightly in those three years.
David Damron can be reached at ddamron@orlandosentinel.com or 407-420-5311


Orlando’s skyline is falling — in value, that is.

For a second year in a row, record numbers of downtown-office and condo-tower owners are lining up to argue that the recession has lopped millions of dollars off the price tag of Orlando’s marquee properties.

The rash of appeals reflects the plummeting value of office buildings, where occupancy is down, and downtown condos that haven’t sold. And the outcome of these appeals for lower assessments could affect local governments — not to mention funding of Orlando Mayor Buddy Dyer’s $1.1 billion downtown-venues plan — for years.

Among the landmarks seeking lower assessments — and, the owners hope, smaller tax bills — are the new Paramount on Lake Eola condominium, the Bank of America building, CNL Plaza, even the Orlando Sentinel, records from Orange County Property Appraiser Bill Donegan’s office show.

Owners of the Paramount, assessed at $101.5 million, argue its true value is closer to $80 million. The Bank of America building’s owners want its assessment dropped from $74.7 million to $70 million; Dynetech Centre’s owners say it’s worth $42.7 million, well below its $54.4 million valuation. CNL Center/City Commons owners want its $59.6 million assessment dropped to $43 million, while the Sentinel wants its property and building valued at $25.7 million, down from $42.8 million.

The 10 highest-value buildings that have appealed — they’ll be heard this spring by a special board set up for that purpose — are asking that their assessments be lowered by a total of $97.7 million.

“Even the best of [commercial] properties are seeing their values drop by 20 or 25 percent,” said Randy Anderson, a University of Central Florida real-estate professor and department chair, who cited “soft” demand and tight credit markets as key reasons.

In the short run, lowered assessments would cut property-tax payments to the city, the county and the Orange school district; for every $1 million in lower valuation, owners would save about $20,000 on their tax bills. That includes property taxes received by the Community Redevelopment Agency, or CRA, a special taxing district set up to pay for improvements in the downtown area, including the venues.

The longer-term impact could be even more significant, thanks to a constitutional amendment approved by voters in 2008 that prevents property appraisers from raising the assessment of commercial property by more than 10 percent a year. An amendment on this fall’s ballot would, if passed, lower that cap to 5 percent.

If that passes, the assessed value of these downtown mega-properties could be frozen at recession-era prices, locking in lower property-tax payments for years even if property values rebound strongly.

To illustrate, Donegan released a “growth analysis” of what future downtown-property values could look like. The tax appraiser posited what he called a “hypothetical” 9 percent decline in values this year and a less-severe 4 percent drop-off in 2011, followed by two years of no growth.

After that, Donegan estimated that with a 10 percent cap in place, overall downtown-property values wouldn’t increase by more than about 4 percent a year. At that rate, his analysis showed, Orlando’s downtown would not return to its pre-recession assessed values for nearly a decade.

That means the city, county, school district and special taxing district would go years before their property-tax revenues from downtown buildings would return to the level paid in 2007. The only “new” money would come from new construction, which isn’t expected anytime soon.

“That’s going to have a major impact on the growth of [the] CRA,” Donegan said.

That means additional worries for Orlando and its new $425 million performing-arts center. The city is counting on using revenues from the CRA to pay off at least $130 million in bonds being sold to finance the center.

Orlando Chief Financial Officer Rebecca Sutton said Donegan’s projections would not scuttle those plans, but they did prompt the city to lower its estimate of what the CRA would take in next year from about $22 million to $21.1 million.

And the long-term impacts of capping value increases at 5 percent or 10 percent a year are unclear, Sutton conceded. She said that if voters enact the lower cap, it could force the city to readjust its long-range growth rates on how much tax revenue downtown properties would generate.

“There are going to be hills and valleys,” Sutton said of rise and fall of commercial-property values during the long term. “But if the hills are cut off at the top, it’s going to cut that overall rate.”

The fall in property values, with housing leading the way, has staggered local governments. Resulting steep drops in tax collections triggered layoffs and pay cuts, and stalled capital projects across Florida for the fiscal year that began Oct. 1.

Real-estate experts say that declines in the value of commercial buildings always trail the residential sector by a year or so. That’s now taking hold in downtown Orlando, where more than 20 percent of commercial-office space was vacant at the end of 2009.

In 2007, 75 landowners petitioned for a lower assessment of their properties inside the city’s CRA, an area the encompasses land in the downtown core, parts of Parramore and the areas around Lake Eola and Lake Lucerne.

A year later, as the recession took hold, 285 petitions were filed in the CRA, a 280 percent increase. Last year, a record 474 petitions came, though countywide, such appeals were flat or down slightly in those three years.

This article provided via David Damron, Orlando Sentinel
David Damron can be reached at ddamron@orlandosentinel.com or 407-420-5311.



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