A Tax Break for “Working Waterfronts”

 When you checked your mail a couple of weeks ago, you probably received a sample ballot for the Nov. 4 general election. You also may have been surprised, as I was, to see that there are a number of proposed Constitutional Amendments on the ballot that you may not have heard about. One that really caught my eye was Amendment No. 6, "Assessment of Working Waterfront Property Based Upon Current Use". I realized this was something I needed to educate myself on, as does every voter in Franklin County. There is a lot of commercial waterfront property in our county, and this Amendment could potentially affect every taxpayer. Here is what I learned.

The Taxation and Budget Reform Commission (TBRC) recommended to the Florida Legislature that the constitutional amendment be placed on the ballot. The idea is to make owning working waterfront property more affordable for owners who are using it for commercial seafood, etc. As property values increased over the last decade, and many waterfront properties were converted to developments, the working waterfront owners saw their real estate taxes increase substantially. By assessing their taxable value on the " current use" of their property, as opposed to the "highest and best use," as Florida Statutes currently require, owners could see their tax bill substantially reduced. This would potentially assist in keeping the property in its current use and not developed or sold. It could also help in keeping a lot of waterfront property accessible to citizens and visitors.

The title of the proposed amendment says that "working waterfronts" would benefit from the change. When I think of a working waterfront, I picture the shrimp houses on the Apalachicola River, or maybe oyster houses in Eastpoint and "Two Mile" in Apalachicola. The amendment defines a working waterfront as follows: land used predominantly for commercial fishing purposes; land that is accessible to the public and used for vessel launches into waters that are navigable; marinas and drystacks that are open to the public; water-dependent marine manufacturing facilities, commercial fishing facilities, and marine vessel construction and repair facilities and their support activities.

It seems to me that the definition as stated would apply to many properties in Franklin County that are not necessarily seen as "working waterfronts." Some properties that immediately come to mind are marinas, motels, and restaurants. Obviously marinas and dry stacks are included, but what about the multi-use properties, such as motels and restaurants that also have boat docks and slips? There are a number of these in Apalachicola. Eastpoint has numerous former commercial seafood businesses that are not in operation. Should these properties be included in the amendment? What about all the property along the Carrabelle River?

If deciding which properties are included in the definition of "working waterfront" is not difficult enough, try assessing the value of property based on "current use." Determining a property's value based on "highest and best use" is not all that difficult. Just look at what your current zoning allows. If there is a hotel next to your property, and you could do the same with your seafood house, the value would be what someone is willing to pay for a hotel site. Should the owner of a seafood house have to pay substantially higher real estate taxes based on the fact that they could potentially put a hotel on it?

When trying to assess the value based on "current use," the potential variance among similar properties could be huge. A good example would be an operating marina/dry storage business that sits next to a shrimp house. They would both apparently qualify as working waterfront, but their business use is very different. How specifically will this hypothetical marina be assessed higher due to its commercial business value?

So how would this affect you if passed? If you pay  ad valorem taxes (real estate tax) in Franklin County (as well as the cities of Carrabelle and Apalachicola), you could potentially see your taxes increase. Why? If the values of working waterfront properties are decreased to their current use, as opposed to the current fair market value, the county and cities would see a decrease in their tax revenue collected. The only option to make up the difference would be an increase in the millage rate for all properties. In a nutshell, there would be a tax shift from people owning working waterfronts to all the other property owners in the county. It does not appear that this decrease in value (taxes) would apply to the school district tax levy.

As you can see, there are a lot of unanswered questions regarding this proposed amendment. That doesn't necessarily mean it's a bad thing.  It could potentially have an everlasting affect on the cost of maintaining waterfront properties in our county. In turn, it may help seafood dealers hold onto their property and entice marinas and boat ramp owners to keep their property accessible to the public.

Is it worth a potentially small increase in your property taxes to help maintain our working waterfront? Make an informed decision and vote next Tuesday.

The proposed amendment requires an approval by 60 percent of Florida voters. If passed, it would not take affect until January 1, 2010.

Mark Friedman is local certified public accountant and investment advisor. He can be reached at 653-1523 or mark@friedman-financial.com.