The pandemic has hit Palm Beach Gardens in the pocket book.
The city’s 10 most valuable properties, worth more than $1 billion, lost $35 million in value as of Jan. 1, as determined by the Palm Beach County property appraiser.
Chief among them is the city’s largest single taxpayer, the Gardens Mall. Its valuation dropped from $360 million to $340 million, figures shared with the city reveal.
While the top 10 dipped, overall taxable property values rose in Palm Beach Gardens by 3.56 percent to $13.5 billion, keeping Gardens as the fourth most valuable city in Palm Beach County.
The 5.8 percent drop in valuation at the Gardens Mall is good news for Forbes/Cohen, the Michigan company that pays the mall’s tax bill — $7.3 million last year (nearly $2 million of that to the city).
But it ever-so-slightly shifts the burden for paying for city services to remaining taxpayers.
The bulk of Gardens taxpayers, owners of single-family homes granted homestead exemptions, are likely to see a 1.4 percent bump in their appraised value, the most allowed under state law.
That means even if the city sets the same $5.55 per $1,000 of valuation tax rate that it has set for the past five years, those homeowners will pay slightly more.
The city council will set the tax rate this summer based on Property Appraiser Dorothy Jacks’ final valuations delivered Thursday.
Countywide, valuations are up 5.8 percent to $222 billion. Valuations went up in all 39 towns, ranging from the county’s newest city, Westlake, rising 62 percent, to Palm Beach Shores, a town of 1,250 residents whose $635,000 valuation is overly dependent on two timeshare hotels. It rose by less than 1 percent.
Several north county cities grew by a higher percentage than Palm Beach Gardens, headed by tiny Jupiter Inlet Colony’s 9.88 percent growth.
North Palm Beach grew by 8.09 percent, Lake Park by 6.05 percent, Riviera Beach by 5.94 percent, Tequesta by 5.63 percent, Jupiter by 4.99 percent and Juno Beach by 4.36.
Initial estimate worried city officials
The 3.56 percent increase in Palm Beach Gardens is actually slightly higher than last year’s pre-pandemic 3.35 percent increase. Among large cities, it’s less than the increases in Lake Worth Beach, West Palm Beach, Jupiter, Delray Beach and Boynton Beach but greater than Wellington and Boca Raton.
Only Boca, West Palm Beach and Palm Beach are worth more than Palm Beach Gardens.
Gardens added $165 million in taxable property this year, fourth most behind the top three cities, with Riviera Beach a close fifth with $162 million.
The property appraiser’s initial estimate of the city’s rise, 3.21 percent, worried city officials when they first heard it in late May.
“We don’t think it’s right,” City Manager Ron Ferris told the city council on June 3.
He told the council that he thought the appraiser backed off values on some commercial properties out of fear of losing appeals before the independent Value Adjustment Board.
That caught the council’s attention.
“It seems like such an arbitrary thing to do,” Council Member Mark Marciano said. “You’re setting a rate in order to protect yourself? … That doesn’t seem like a free market system.”
Ferris urged council members to reach out to Property Appraiser Dorothy Jacks. Mayor Rachelle Litt did so and set up a meeting, held June 22, with Jacks, Ferris and their respective staffs. Ferris said through a spokeswoman that he came away satisfied with the city’s valuation after the meeting.
The appraiser’s office said they weren’t lowering valuations out of a fear of being overturned, Chief Appraiser Tim Wilmath said in an interview.
However, with COVID hitting stores, restaurants, hotels and other commercial properties particularly hard, Wilmath conceded that the appraiser had to be cautious.
“Look, you can raise commercial properties significantly but the Value Adjustment Board is just going to reduce them down if you’re wrong,” Wilmath said of the board made up of county commission and school board appointees. “The reality is we have to factor in the effects of the pandemic or else the numbers will come down during appeals season.”
PGA National Resort drops 21 percent
And that would make life harder on cities, which have to make tax decisions now based on the property values released Thursday.
In Palm Beach Gardens, property taxes generated $69 million of the city’s $97 million in revenue last year, nearly three-fourths of the total.
The property value determined as of Jan. 1 each year is critical to how much landowners pay in taxes, not just to the city but to the county, school board and other bodies. The higher the property value the higher the tax payment.
Aside from the Gardens Mall, big Palm Beach Gardens taxpayers also hit by the pandemic include The Quaye, an upscale apartment complex and the city’s second-most valuable parcel, which dropped to $100 million from $105 million; the Legacy Place shopping center, which dropped $5 million to $95 million; and PGA National Resort, which dropped to $71.8 million from $90.9 million, reflecting the pandemic’s effect on hotels.
Avenir doesn’t count yet
The city hasn’t increased its tax rate since 2011, when property values shaken by the Great Recession went down. It has reduced the tax rate twice since then while it’s valuation has risen by 74 percent.
The biggest factor holding values down, not just in Palm Beach Gardens but in every city in the county, is the state-mandated cap on homesteaded properties.
The appraiser calculated that home values in Gardens grew at a 6.5 percent clip but the cap limited the increase to 1.4 percent for those with homesteads. Sixty-three percent of the homes in Palm Beach Gardens are protected by the cap, Wilmath said. A homestead must be an owner’s permanent residence and they must live there on Jan. 1 to qualify, a definition meant to exclude snowbirds and renters.
Overall, the city’s 21,431 residential properties went up by 4.8 percent.
And new construction, which hit a high of $666 million two years ago in Gardens, came in at about $165 million, showing little impact from rapid growth in giant upscale communities Alton and Avenir.
That’s because only homes finished by Jan. 1 go on this year’s tax rolls. In Alton, at Donald Ross Road and Interstate 95, that meant a mere 67 homes and 63 townhomes, out of a planned 2,000. None of the 4,000 homes planned in Avenir, west of the Beeline Highway off of Northlake Boulevard, were done in time to make this year’s tax roll.
© 2021 Joel Engelhardt. All rights reserved.