Group: 363 Lake Worth homeowners pay no property taxes

Article Courtesy of The Palm Beach Post
By Willie Howard

Published September 13, 2011

— A vacant home on South E Street has an assessed value of $22,629.

Because of a homestead exemption, its owner pays nothing in property tax.

The home, in a neighborhood where abandoned and foreclosed homes are common, is one of 363 residential properties in Lake Worth that have zero taxable value, meaning their owners owe nothing in property tax.

That's one of the findings of an analysis of Lake Worth property by Government Services Group, the consulting firm hired to help the city to develop a per-building fire assessment that the city plans to impose during the budget year that begins Oct. 1.

Owners of one-third of the city's residential properties pay tax on $25,000 or less - meaning they pay very little to the city, Palm Beach County Fire Rescue, the school district and other taxing authorities for services, the analysis of property appraiser records shows.

Nearly half of the city's residential properties have market values of $60,000 or less.

The large number of low-value homes stems partly from the city's history. When Lake Worth was platted in 1912, home lots were 25 feet wide. They were given away as incentives to those who bought farmland. Today, those small lots hold small homes with low values.

Residential values in Lake Worth soared during the real estate boom, but have fallen to 2002 levels, said Harvey Millstein, a broker associate with Illustrated Properties.

Mayor Rachel Waterman said she does not expect Lake Worth's property values to slide further.

"The people in real estate I talk to tell me they're already seeing positive signs," she said. "No one thinks property values will continue to sink."

The city's Community Redevelopment Agency is buying and refurbishing foreclosed homes - including several along South D, E and F streets - using money from a $23.2 million federal grant.

The large number of homes with low taxable values is one reason the city is proposing an annual assessment of $60 per dwelling, as well as per-square-foot assessments on commercial property, to cover most of the cost of firefighter pensions.

The city commission is scheduled to hold a public hearing and vote on the fire assessments during a meeting at 6 p.m. Sept. 22 at city hall. The assessments are expected to raise $1.4 million, enough to cover most of the $1.8 million annual cost of firefighter pensions.

City officials say the per-building assessments represent a fairer way to charge for fire-related services because they spread the cost to all users of fire protection.

Under the proposed $60 per-dwelling assessment, 77 percent of the city's residential property owners will pay more toward firefighter pensions than they do through a property tax levy that raises the same amount of money, a city analysis shows; 23 percent will pay less.

Commissioner Scott Maxwell cast the only vote against the assessment, saying the city should reduce the property tax rate by the amount raised through the assessment.

"All we've done is found a way to create new sources of revenue," Maxwell said Tuesday during a discussion of the proposed tax rate. "Folks are looking for a net decrease in the cost of government."

Office of Management and Budget Manager Ed Fry cited audited figures to show the city needs money to balance its budget.

The city spent more than it raised through taxes and other sources of revenue in all of the budget years from 2006-2010. The biggest deficit was racked up in fiscal 2008-09, when city spending outpaced revenue by $15 million.


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