Insurance and Property Taxes:

Two Major Legislative Concerns

by Mike Mayo, Public Affairs Director

Two major real estate/consumer issues have the attention of lawmakers during this year’s legislative session. They include: 1. The availability and affordability of property insurance2. The rising cost and inequities associated with property taxes. There is sufficient anecdotal evidence to suggest that these two issues are of great concern to current and potential homeowners, and that current conditions are affecting the real estate marketplace. At the time this article was drafted, the Florida Senate was considering a 108-page bill that proposes significant insurance reforms. While this is a complex and voluminous bill, the major provisions include: Citizens Property Insurance Corporation—The bill seeks to depopulate and reduce the potential for deficit assessments by:• Making ineligible for coverage homes and other specified residential property valued at $1 million or more, effective January 1, 2007, with certain exceptions.• Requiring rates for non-homestead property to include a 25% surcharge. If Citizens incurs a deficit, non-homestead property owned by a non-resident of Florida would be subject to an additional 25% policy surcharge. • Requiring applications for coverage to have a 10-day waiting period (with exceptions), and be made available for review by agents and insurers. Florida Hurricane Catastrophe Fund—The bill would require that the premiums paid by insurers for coverage from the fund be increased by 25% in order to provide for more rapid cash buildup in the fund. According to the St. Petersburg Times, Florida’s “Save Our Homes” property tax cap has created gaping disparities in what neighbors pay in property taxes. While “Save Our Homes” has arguably kept countless Floridians from being taxed out of their homes, the cap is so valuable that some people can not afford to move (either upsize or downsize) because they would lose their tax discount, creating “captives” in the Pinellas County marketplace. Now, lawmakers want to make changes to the law that are designed to offer some property tax relief to homeowners. One bill would double the homestead exemption to $50,000 in $2,500-a-year increments over a 10-year period, and afterwards rise according to the Consumer Price Index. Another bill would allow homeowners to keep at least part of their tax cap when they move to another home. The bill mandates that all counties allow a homesteader to take $100,000 of their “Save Our Homes” exemption with them if they move within the same county. It also would cap the amount of money that a homesteader can get from Save Our Homes at $100,000 PLUS what they have currently. Being able to move $100,000 would cover about 90% of all homesteaders in Florida. Two other bills were also introduced: one that would ask the voters to limit the amount of growth in expenditures by local governments unless a state of emergency was declared or the electorate approves the additional expenditures, and another that would penalize counties who levy a millage rate in excess of the “rolled back” rate, adjusted by CPI or inflation. By the time you read this article, significant changes may have taken place to these bills as they move through the legislative process. The legislative session is scheduled to end in early May.

PINELLAS REALTOR® ORGANIZATION- May 2006