A memo from Miami-Dade County Manager George Burgess warns of a budget shortfall of up to $400 million caused by fallen property values.

Property Watch

Miami-Dade County Releases Troubling Property Tax Income Figures

By Eleanor McCulloch

On July 1, the Miami-Dade County Property Appraiser is expected to confirm what many homeowners and real estate market watchers already know — home values across the county have plummeted. Estimates of the official taxable value of all four county tax districts show unprecedented drops in home values, which is expected to result in a county budget shortfall of up to $400 million.

According to a memo sent to commissioners from County Manager George Burgess, the official certification indicates that “the taxable roll values for the Countywide, Unincorporated Municipal Service Area (UMSA), Fire Rescue, and Library taxing districts declined by 9.18 percent ($22.55 billion), 9.21 percent ($7.078 billion), 10.0 percent ($14.86 billion), and 8.95 percent ($19.98 billion), respectively.”

Burgess also said the figures could have been worse if not for new construction that was added to the property tax roll as of Jan. 1, 2009.

“In order to give perspective as to the magnitude of this loss in property taxable value, staff looked at our property tax roll since 1985 and found that the only year the tax roll actually experienced a decline during that 24-year period was in 1993 as a result of the property damage caused by Hurricane Andrew,” Burgess said. “Even in 2008, when we absorbed the impact of doubling the homestead exemption from $25,000 to $50,000, the property tax roll was relatively flat. These losses in property tax roll values are unprecedented.”

As a result, and in light of the economic slowdown, the county is bracing for a huge deficit.

“Our property tax-subsidized operations will be facing a budgetary gap of $350 million to $400 million,” Burgess said. “We are working diligently to prepare a proposed budget for FY 2009-10 that to the extent possible, preserves essential services and minimizes service impacts to our residents; however, closing a budgetary gap of this size will require some very difficult decisions.”

Rain, Rain Go Away

Wet weather may to blame for an expected lull in July 4 tourism. Miami and Miami Beach were bumped to a disappointing 44th rank on Priceline.com’s sixth annual survey of the 50 most-popular travel destinations for the upcoming Independence Day weekend.

According to the online hotel reservation service, the survey, based on more than 30,000 room booking requests made by customers using the site, is more accurate than many other poll or vote-based surveys because it’s based on actual credit card sales.

So Miami Beach residents may be able to take a breather and enjoy Miami Beach’s fireworks display at Eighth Street and Ocean Drive rather than sharing it with tourists — if the weather holds.

So who’s No. 1?

“The big surprise this year is the emergence of New Orleans’ downtown area as the No. 1 July 4 destination,” said Priceline.com’s Brian Ek, in a release this week. “This is the first time New Orleans is in the top spot for the holiday and could signal the completion of the city’s comeback as a tourist mecca following Hurricane Katrina.”

Ek also commented that he felt the results of the survey were reflective of the economy as well.

“The list is heavy in destinations that are reachable by car for large segments of the population. Given the cold, wet weather in the eastern half of the country, I was a bit surprised to see so many beach destinations on the list. However, a blanket and a good book do make for a cheap getaway, assuming the weather cooperates. With some smaller communities not being able to afford fireworks this year, the big cities with their free or low-cost holiday events are indicating strong turnouts.”

Coming in at No. 2 and 3 were Las Vegas and Chicago, followed by New York City at No. 4.

Miami Beach-Style Renovation of Fontainebleau Las Vegas Goes Belly Up

Court proceedings continue in Fontainebleau Las Vegas LLC and two of its affiliates (Fontainebleau Las Vegas Holdings LLC, Fontainebleau Las Vegas Capital Corp) voluntary petitions to reorganize under Chapter 11 bankruptcy, filed earlier this month.

The company decided to file for Chapter 11 after some of lenders refused to honor their contractual commitments to provide nearly $800 million in construction funding for the $2.9 billion resort-casino project, which is 70 percent complete.

“It is unfortunate that our lenders forced us to take this step. By reneging on the revolving credit facility, they effectively shut down the project and put thousands of people out of work,” said Howard Karawan, Chief Restructuring Officer of Fontainebleau Las Vegas, last month. “Our goal now is to secure funding to complete this world-class project and restructure our existing debt.”

The Las Vegas arm of the Fontainebleau family reached an agreement with a group of its non-defaulting lenders for the use of their cash to pay for its bankruptcy case, and is still attempting to obtain the cash to continue the project.

Fontainebleau Las Vegas also withdrew its $3 billion lawsuit in Las Vegas against Bank of America, JPMorgan Chase Bank, Deutsche Bank Trust Company Americas and refiled the case in the U.S. Bankruptcy Court in the Southern District of Florida, Miami Division, where the Chapter 11 petitions were filed.

However, owners of Fontainebleau Miami Beach, a separate legal entity, maintain the Miami Beach hotel will not be affected by the filing. The Fontainebleau Miami Beach and Turnberry West Construction Inc., the project’s general contractor, are not included in the court filings, although owner Jeff Soffer hads admitted to having personally guaranteed some of the funding. The legendary Miami Beach hotel went through a $500 million renovation just seven months ago.

The withdrawal of the funding sources forced the project to halt nearly all construction, and has resulted in the loss of more than 3,000 union construction jobs in Las Vegas.

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