Revved-up real estate market helps Longboat property values rebound

It appears Longboat Key’s year-to-year taxable property values will rebound after falling last year for the first time since 2013.

The Property Appraisers Offices in Sarasota and Manatee counties provided the town with its annual June 1 preliminary estimates and they have rebounded from an unexpected tumble in 2020. 

Compared to 2020, Longboat Key’s 2021 projections show a 5.37% increase in combined taxable values between Sarasota and Manatee counties.

“I think when you compare the numbers this year to last year, it’s really good news because we were very surprised last year when the decrease in our tax base occurred on the Sarasota County side, which pulled down our entire tax base on the island,” Town Manager Tom Harmer. “There’s a financial component to that, but there’s also a long-term concern.”

Final values are not due until July 1.

Documents from the May 18 budget workshop show the town expected to collect about $12,895,472 in ad valorem taxes (property taxes) in fiscal year 2022. It makes up 76.27% of the total revenue the town is projected to collect in the upcoming fiscal year.

Based on changes in the valuations without increasing the millage rate of 2.1144, the town is also projected to make $663,752 more in ad valorem property taxes from fiscal year 2021.

Florida Association of Realtors chief economist Brad O’Connor spoke about how the state’s coastal communities have seen an influx of out-of-state buyers.

“Any beach community in our state, they’re all experiencing much [of] the same thing, which is a huge surge of interested buyers who are interested in having properties near the beach,” O’Connor said. “That’s a pandemic response, but also a response to these low-interest rates that have made it very affordable to buy a second home here in Florida.”

Plus, O’Connor mentioned how statewide luxury sale prices are up compared to previous years. Second homes are not subject to Florida's homestead exemption, which means those properties can be taxed at close to their full appraised value. Also, Florida's Save our Homes provision caps the amount a home's assessed value can rise each year. But once it sells, the value reverts to the full assessment.

“Florida Realtors track the statewide median sale price, and that's up over 20% year over year right now, but part of that is because we’re seeing a lot more sales in the luxury segment than usual and that’s pulling that median up, so it's more of a math thing than an actual home value increase,” O’Connor said.

For example, Longboat Key’s Serenissima estate sold in November 2020 for $16.5 million, which is the most expensive residential property sale ever in the region.

Earlier this month, a single-family home at 5965 Gulf of Mexico Drive sold for $10.15 million. It marked the highest sales price this year for a residential property on Longboat Key.

The town hired JTA President John Tuccillo, an economic and real estate expert, in October 2020 to address why last year’s property tax values dropped.

Tuccillo conducted a report that concluded Longboat Key’s older condominiums, traffic issues and mainland competition forced the decrease on the Sarasota County side of the island.

When asked about the difference between this year’s initial valuations and last year’s, Harmer mentioned new developments on the island and how coronavirus-related issues have subsided.

Crews are continuing work on the beachfront luxury condominiums known as Sage at 4651 Gulf of Mexico Drive and on the St. Regis developments at 1620 Gulf of Mexico Drive. New homes continue to be built, often in place of older properties.

“That signals activity and new product coming, but I also think it’s kind of COVID-related in that we’re seeing this in migration from individuals either in the northeast or the Midwest or other areas where they’re recognizing the quality of life here,” Harmer said. “And it’s not just Longboat Key, it’s Sarasota, it’s Florida and we’re just seeing a great amount of interest that we didn’t see to this level in a number of years that is driving some of it.”

Last month, Planning, Zoning and Building Director Allen Parsons said the P&Z Board won’t consider proposed changes to the St. Regis development until September. Among the new changes proposed, two of the 69 units in the condominium portion of the property would be available for occupancy for less than 30 consecutive calendar days or one calendar month, whichever is less. The number of hotel units remains at 166.

Also, the St. Regis developer wants to reduce the number of residential units in the facility from 78 to 69 units. The plan also calls to increase the size of the remaining units.

Harmer plans to update the Town Commission about the early numbers during the June 21 workshop meeting. By law, the Property Appraisers Offices in Sarasota and Manatee counties provide their final values no later than July 1.

The Town Commission will then establish its maximum millage rate during its July 2 regular meeting.

The town’s base millage rate of 2.1144 has remained unchanged since the 2017-2018 budget.

Town staff is set to have the fiscal year 2022 recommended budget ready by Aug. 1. The Town Commission is then set to hold the first reading of the budget on Sept. 13. A second reading and budget adoption are set for Sept. 27.