Switching to condos
As predicted when the Siam Garden Resort in Anna Maria converted its units to condominiums, more and more of the smaller "mom-and-pop" rental accommodation units on Anna Maria Island are converting to condominiums to avoid the bite of the tax man.
The Anna Maria Island Beach Resort at 105 39th St. in Holmes Beach recently announced that it would convert its units to condominiums. Islander Photo: Rick Catlin
The latest victim to the condo conversion craze is the 11-unit Anna Maria Island Beach Resort at 105 39th St. in Holmes Beach.
Attorneys for the property recently informed Holmes Beach Mayor Carol Whitmore that owners of the "apartment complex" propose to create "a residential condominium" by converting existing units to condominium ownership.
Two months ago, owners for the Anna Maria Island Cottages in Anna Maria City announced the units would be sold as condominiums to private investors.
The conversion of properties to condominiums was predicted last year by Don Schroder, head of Citizens Against Runaway Taxation, a private organization trying to change property appraisal laws that allow hotel and motel accommodations to be appraised at a higher value of condominiums, the "highest and best use" available.
The problem, said Schroder, is that under Florida law, property appraisers can appraise the motels as condominiums because that gives those properties a higher value — and higher taxation rate — than if they were appraised as accommodation units. As condominium values have skyrocketed on the Island the past three years, so have the values of the rental units.
Small motel owners can't afford to pay a tax bill that doubles and triples every year, Schroder said.
"Ultimately, they realize they can't stay in business with that tax bill. They can't double their room rate to pay for the doubled tax bill."
Kent Davis of Siam Garden saw the handwriting on the wall earlier this year and converted his property to private ownership, although the use of the units as accommodation rentals remains the same.
Without a change in the property appraisal laws, conversion of existing mom-and-pop units on the Island to condominiums will only "escalate," he predicted.
Schroder and CART recently went before the Manatee County Commission and received the "go-ahead" for their plan to approach state legislators to change the laws.
But the problem is deep rooted.
When Florida voters approved a constitutional amendment that taxes on homesteaded properties could not increase more than 3 percent annually, property appraisers had to look elsewhere for revenue needed to meet the ever-increasing budget demands of Florida's counties, particularly in fast-growing areas such as Bradenton and Sarasota.
The tax deficiency was solved by the "highest and best use" appraisal, which is allowed by Florida law.
"The tax burden was simply shifted from homesteaded homeowners to business and non-resident homeowners," observed Schroder.
Tax appraisers in Florida are not opposed to changing the appraisal laws as long as they have some other means to increase revenue from taxation.
CART's plan calls for a long-term solution and notes that counties will only decrease tax revenues in the long run with condominium conversion.