These days, there is certainly no love lost between Miami developers and the county’s Property Appraiser’s office. Increasingly, the groups are battling it out in court over assessment values.
Take, for example, the case of a North Miami Beach strip mall located at 14750 Biscayne Boulevard. In December 2015, the mall’s owner convinced the Miami-Dade County Value Adjustment Board that the previous year’s property assessment of $15.2 million was too high. The board slashed the market value given to the 107,000-square-foot property by nearly half, to $7.6 million. As a result, Arena Shops, the company that owned the shopping center, was owed a significant property tax refund.
But Miami-Dade Property Appraiser Pedro Garcia was not happy with that outcome. On May 16, he sued Arena Shops in Miami-Dade Circuit Court to reinstate the original assessment, claiming that the Value Adjustment Board had violated state law by granting the strip mall owner such a generous property tax break. The gambit appears to have worked, at least up to a point. On August 24, Arena Shops, which is controlled by a South Carolina real estate investment fund, agreed to a new 2014 assessment of $11.5 million.
Normally, property owners appeal tax assessments to the Value Adjustment Board, an independent body that uses special magistrates to settle appraisal disputes. These magistrates base their decisions on the actual market value of the property on the first day of the new year and sales in the surrounding area for the previous year. Then that’s the end of that.
Not so during Garcia’s reign.
Since reclaiming the property appraiser’s seat two years ago, Garcia has filed nearly two dozen civil lawsuits to undo adjustment board decisions that significantly lowered the market value of prime pieces of land throughout Miami-Dade County. In May alone, Garcia filed 12 lawsuits against 141 property owners, including the one involving Arena Shops, to reinstate a combined $250 million in nullified assessments from 2014. By way of comparison, Garcia’s predecessor, Carlos Lopez-Cantera — who is now lieutenant governor — did not initiate any lawsuits against property owners who won appeals before the Value Adjustment Board during his year in office.
Garcia was Miami-Dade’s first elected property appraiser, serving from 2008 to 2012. He was elected property appraiser again in November 2014. The appraiser did not respond to an interview request regarding the spate of lawsuits. Victoria Llerena, a staff attorney in the property appraiser’s office, said it doesn’t generally comment on litigation matters. “The decision to file lawsuits are based on the particulars of each case,” she said. “We follow thresholds established by Florida law.”
Miami-Dade Property Appraiser Pedro J. Garcia.
According to experts, Garcia’s vigorous legal challenges are an indicator that the property appraiser is determined to make sure owners of signature properties are paying their fair share in a post-recession market.
“The appraiser’s office is zeroing in on the cases they believe they are right on,” Miami-based real estate and land use attorney Alfredo Gonzalez told The Real Deal. “In some of these cases, the [adjustment] represented a 60 percent drop in value. In terms of the appraiser’s mission of assessing land for tax collection, the dollar amounts are substantial.”
Other property owners caught up in the lawsuits include Resorts World Miami, the company that owns the waterfront site of the former Miami Herald headquarters; Fortune International Group and Château Group, the developers behind the Ritz-Carlton Residences, a 52-story, 212-unit tower in Sunny Isles Beach; and the owners of 132 condo units at the Setai Miami Beach tower.
This last lawsuit includes members of the Nakash family, which built the Jordache jeans empire; with its ownership of several iconic hotels, it is now a major Miami Beach real estate player. In the lawsuit, filed in May, Garcia claims that the Value Adjustment Board erred in slashing a combined $163.7 million in property assessments for 132 units at the Setai Miami Beach, including several Setai units owned by the Nakashes. The property appraiser is looking to reinstate his original 2014 assessments totaling $409.7 million. The lawsuit does not include the Setai hotel, which the Nakash family purchased for $90 million in 2013.
According to the May 24 lawsuit against the Ritz-Carlton developers, Garcia contends his office’s initial $17.6 million assessment of the Sunny Isles Beach property represented “just values” in 2014, and that the $6.8 million figure adopted by the Value Adjustment Board, which represented a reduction of more than 60 percent, violates state law. Garcia also argued the lower amount “will impact subsequent years’ determination of assessed value.”
A spokesperson for the developers of the Ritz-Carlton Residences said that it is fairly common for the property appraiser to file lawsuits challenging reductions to the office’s initial annual assessments. She declined further comment.
But the law goes both ways, and property owners are now suing Garcia’s office with more frequency to overturn his assessments. During the previous appraiser’s tenure, the property appraiser’s office was sued four times, according to Miami-Dade court records. In 2015, 26 lawsuits were filed challenging Garcia’s assessments. And from January 1 through September 5 of this year, Garcia has been sued 19 times by property owners seeking reduced assessments for 2014 and 2015.
The rising number of lawsuits and countersuits comes as Garcia released data showing 2016 is going to be a record year for property values in Miami-Dade. The county’s total taxable real estate surged to $251.3 billion as of July, marking a $5 billion increase in values since they last peaked before the crash in 2008, according to a July report by the appraiser’s office.