Some businesses being taxed out of existence
PANAMA CITY BEACH (AP) – The small motel is sandwiched between two sandy yellow towers. The two-story salmon structure often is shrouded in the shade cast by its neighbors, the 25-story yellow and teal Wyndham Vacation Resorts to the west and the 23-story Ocean Reef Condominiums to the east.
A small sign juts out over Front Beach Road; red letters spell “PEEKS” against a blue backdrop.
The “K” and the “S” lights fade occasionally, leaving the owners with an undesirable alternative to the motel’s actual name.
Peek’s Motel is a throwback to Panama City Beach’s past, a small family owned place like the many that once dotted the shoreline. James and Florence Peek moved from Montgomery, Ala., and opened it in 1953, and their son, Jerry, 55, took over 13 years ago.
But Jerry Peek is in trouble.
His property taxes have soared this decade, and he hasn’t been able to keep up. Peek owes more than $166,000 in back taxes, and if he doesn’t pay by this fall, he probably will lose the motel.
Peek isn’t alone on Bay County’s delinquent tax rolls. Released this month, the rolls are 25 percent larger than they were last year, just another effect of the overheated real estate market that helped to topple Florida’s economy and set off the current global economic crisis.
“It’s reaching the point where I’m about to throw some tea in the bay, and I’m sure I’m not the only one who feels that way,” said Peek, who estimated his business has dropped off 30 percent over the last few years while his taxes continued to spike.
“It’s a slow death spiral,” he said.
The delinquent tax rolls, released every May, list parcels on which taxes are owed for the previous year. There are 10,366 parcels on this year’s rolls, nearly 25 percent more than the 8,389 parcels last year. The rolls, representing almost $21.5 million including penalties and fees, span 76 pages of newsprint.
Bay County Tax Collector Peggy Brannon called the larger list of delinquencies “a sign of the times that is magnified throughout the state” when the list was released earlier this month.
Gadsden County Tax Collector Dale Summerford is the lead collector in the Florida Tax Collectors Association for property tax matters. In April, the association con- ducted an informal survey that 27 counties responded to, showing increased tax rolls across the state, ranging from 4 percent to as high as 22 percent. None showed increases as high as the 23.6 percent in Bay County.
“This is the worst that I’ve seen it,” Summerford said.
These larger rolls could mean trouble for local governments that count on that money.
“The thing that’s going to be the real telltale proof for the local governments is how successful will the tax certificate sales be,” Summerford said.
The certificate sale is under way on the tax collector’s Web site. Investors, typically representing larger companies, bid on the interest they will receive when the taxes are paid.
The bid is conducted reverse-auction style, starting at 18 percent. The lowest bidder wins and pays the property tax owed plus 3 percent for the certificate, which essentially is a lien on the property. When the property owner pays the taxes, he or she also pays the interest, so the certificate holder gets the tax money back, plus the interest.
Tax certificate sales usually come close to selling out. But like anything else in this economy, they have slowed recently.
Bay County sold all but 148 certificates in 2005, but 361 went unsold in 2006, followed by 771 in 2007, requiring a second auction.
“The money is just not out there for these investment firms to buy those certificates,” said Summerford, who noted investors are shying away from development properties in delinquency. If a developer goes bankrupt, the certificate-holder doesn’t see a return on investment.
Pasco County held its certificate sale earlier this month, and a record $2.6 million in certificates was left over.