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Longboat Key Monday, Oct. 19, 2020 1 year ago

Longboat Key property values decrease for first time in seven years

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The Sarasota County side of the island saw a decrease in taxable property values, while Manatee County properties rose in value.
by: Mark Bergin Staff Writer

Overall, Longboat Key property values have decreased for the first time since 2013.

Compared to the previous year, the tax base on Longboat Key declined in the Sarasota County portion of the island, while it increased on the Manatee County side, according to the taxable values calculated by the counties in late spring.

“This was a bit of a surprise to us this year,” Town Manager Tom Harmer said. “As you look at Sarasota County in general and all the other municipalities in Sarasota County, they all saw growth, in some cases pretty significant growth in their tax base.”

Harmer mentioned how Longboat Key does not have the new construction growth in other nearby areas like North Port.

Of the town's $16.32 million budget for fiscal year 2021, about 76% of its revenue comes from ad valorem property taxes.

The town hired JTA President John Tuccillo, an economic and real estate expert, to present a nine-page report to commissioners on Monday afternoon. Tuccillo served as the chief economist for the National Association of Realtors from 1987-1997.

“Clearly, the most important data is that relating to condominiums since that’s the largest part, by far, of your real estate stock,” Tuccillo said. “Let me start out by saying that I think that this particular episode is a one-off. You may linger a little bit because of COVID, but clearly, this is not a trend. It’s more of an anomaly.”

Tuccillo identified three issues that are responsible for the town’s decrease in property values.

1. The condominium housing stock in Longboat Key is the oldest of any major jurisdiction in Sarasota County.

Tuccillo’s report found only 1% of the condominiums in Longboat Key have been built since 2002.

“Only Siesta Key comes close to having as old a housing stock,” Tuccillo wrote. “These numbers may seem insignificant, but the demand for high-end condominiums is largely a demand for new construction, so even small differences in the age of the housing stock can mean large changes in demand and thus valuation.”

2. Problem of accessibility to and from the city of Sarasota.

Tuccillo said he believes the roundabout at U.S. 41 and Gulfstream Avenue, leading to the John Ringling Causeway, is “ill-conceived.”

For years, commissioners have voiced their concerns to area leaders about how mainland transportation plans impact the barrier islands.

“[It has] made it very difficult to get on and off the Key, and that invariably is going to lead to a diminishment of the attraction of the Key,” Tuccillo said.

Tuccillo said town residents and snowbirds struggle to get to other attractions in Sarasota County outside of Longboat Key with the amount of construction going on.

3. New construction in other Sarasota County municipalities is a strong competitor to condominiums in the town of Longboat Key.

“That new construction on the mainland, again, is competing with purchase availability on the Key and is more attractive,” Tuccillo said.

Tuccillo said the new construction on the mainland becomes “old” once construction is done on the St. Regis Hotel and Residences as well as Sage Longboat Key.

As of Oct. 7, more than half of the 69 condominiums at the planned St. Regis Hotel and Residences on Longboat Key have been reserved with deposits.

“The St. Regis, whether this is [public relations] or the truth, appears to be selling extraordinarily well even though it’s still a couple of years before we see anything,” Tuccillo said. “So that particular drawback becomes remedied somewhat.”

Using Realtors Property Resource data from June 30, Tuccillo found Longboat Key's market had a decline in median list prices (-8.54%) and median sales prices (-22.9%) during the last quarter. The total number of condominium sales in Longboat Key has remained steady with 381 sales in 2019 and 406 sales in 2018.

District 1 Commissioner Sherry Dominick said she has noticed people are choosing to move to barrier islands with a lower population density, citing her experience as a Realtor for Michael Saunders and Co. Specifically, Dominick mentioned a potential turning point in the market when Florida started to reopen in September.

“It’s almost a reversal we noticed of what had been going on in the prior year, and I think that would help somewhat,” Dominick said. “Also, we really shifted into a sellers' market and we’re getting multiple-offer situations, a lot of full-price or over-priced contracts, so I would certainly hope that that would help in next year’s valuation.”

Tuccillo said that while the statistics are not yet available to back Dominick’s claim, he is confident Longboat Key’s lower property values this year are a “one-off.”

“Most places around the country, it is a sellers' market,” Tuccillo said. “That will invariably reverse what’s happened, so I think what you say is correct.”

Tuccillo wrote in his report that a decrease in the inventory of properties will likely drive up prices, which would increase valuation.

While there is little the town can do to address property values directly, Tuccillo suggested commissioners take an indirect four-step approach to adjust to lower property valuations:

1. Implementing a two-year planning cycle to smooth out real estate cycles;

2. Assist aging properties by providing a practical way to redevelop;

3. Increased transparency in the permitting process by increasing the data provided to the Sarasota County Property Appraiser’s Office; and

4. Maintaining and even increasing the town’s economic uncertainty fund. The fund currently has about $1.3 million in it.

 

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Mark Bergin is the Longboat Key Town Hall reporter for the Observer. He has previously worked as a senior digital producer at WTSP, the CBS affiliate in St. Petersburg. Mark is a graduate of the University of Missouri and grew up in the Chicagoland area.

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