After lobbying by commercial real estate groups, Florida’s Department of Revenue spiked a plan that could have imposed more taxes on business leases. For complete article…..
Thankfully the Department of Revenue decided not to pursue further this job killing double tax.
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For any interested parties, this is the letter sent to the members of the Florida Gulf Coast Commercial Association of Realtors (Please take a moment to contact your legislators):
FROM GOVERNMENT AFFAIRS COMMITTEE: Please read and take action to defeat this proposed tax.
Dear Interested Party and Fellow Brokers;
The Department of Revenue is trying to impose sales tax on Tenant Improvements.
This includes any and all real estate that incorporates tenants. This tax is in addition to the sales tax paid on the materials to build the tenant improvements and the real estate tax paid on the improvements.
Please assist us in defeating this tax on tax. A form letter is printed below, listing who to send it to, and who to copy it to. Attached is a list of our legislators, too. Please spend a few minutes assisting us in defeating this outrageous attempt to double tax our industry. We need your help.
Receipt deadline is October 20 so it must be sent by October 15, 2011 to safely reach Tallahassee. If so inclined, feel free to change the wording.
Also feel free to call any politician you know and voice your opinion on this issue. Get involved and thank you in advance.
Sincerely,
FGCAR, NAIOP, BOMA, CBA,
FR and othersAny questions? Feel free to call Bob Zegota at 813-263-4867 or Avi Adler at 813-463-3618
Letter to DOR:
French Brown
Deputy Director, Technical Assistance and Dispute Resolution
Department of Revenue
PO Box 7443.
Tallahassee, Florida 32314-7443Dear Department of Revenue:
On September 21, 2011 a workshop was held to determine whether to charge Sales tax on tenant improvements for commercial real estate projects.
According to the State Statute 212.031 (2) (b):
(b) It is the further intent of this Legislature that only one tax be collected on the rental or license fee payable for the occupancy or use of any such property, that the tax so collected shall not be pyramided by a progression of transactions, and that the amount of the tax due the state shall not be decreased by any such progression of transactions.This proposed rule is not only in conflict with the law as stated above, but also bad for small business in Florida for the following reasons:
- It is double taxation or pyramiding as referenced in the statute.
- Tenant improvements are 2 components, materials and labor. Materials are already sales taxed. Labor is taxed in many other aspects of government. Given the current economic climate, some landlords do not have capital to perform improvements on behalf of potential tenants. So the tenants do it to improve their business climate. They too then would experience double taxation. In this market, profit margins are marginal. A 6-7% variance of costs to a tenant or landlord can make or break a deal.
- Once improvements are made, the Property appraiser reassesses the property to include tenant improvements in property taxes. Your proposal taxes this tax resulting indouble taxation. Tenant improvements are tenant specific. Once a tenant vacates, the tenant improvements have little, if any, residual value to the property. The lease itself is already taxed at 6-7% including CAM charges which are also made up of taxes and insurance and are normally tax exempt. Many leases include the costs of tenant improvements amortized over the life of the lease.
- Cost of government and add on taxes have already devastated the commercial real estate industry. CRE is sales taxed, property taxed, corporate taxed, utility taxed, income taxed, license taxed, and so on. One more tax could bury an already struggling industry.
- Taxes are already running amuck. Attempting to add another tax to items that are either already taxed or in other instances exempted, places an unfair burden on a narrow segment of the business population in our state. Our Governor promised no new taxes. Why would you attempt this in these trying times?
I wish to go on record as a person who adamantly opposes any new tax of any sort, especially those taxes which are nothing more than double taxation.
Sincerely,
Cc: Governor Rick Scott
My Legislator=================================================
Information Sheet
Send your letter to:
French Brown
Deputy Director, Technical Assistance and Dispute Resolution
Department of Revenue
PO Box 7443.
Tallahassee, Florida 32314-7443
Email: Rulecomments@dor.state.fl.us
In subject line include 12A-1.070 Workshop 9-21-11And:
Office of Governor Rick Scott
State of Florida
The Capitol
400 S. Monroe St
Tallahassee, FL 32399-0001
(850) 488-7146
His e-mail:
Rick.Scott@eog.myflorida.comLegislators: See Attached
Please copy any letters, emails or anything else to DORchallenge@gmail.com
This is to insure they receive everything and that we can track who and how many are involved. Your information will not be used for anything but this task
and will be kept otherwise confidentialDEADLINE FOR RECEIPT
BY DOR IS October 20,2011.
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This Retail Site is located on busy, US Highway 19 in unincorporated Pinellas County. The area is a strong retail corridor adjacent to Shopping Centers, Clearwater Airport, and three incorporated cities. With 100 feet of frontage on Hwy 19, the visibility to average daily traffic counts of 78,000 cars provides maximum exposure to travelers in the St. Petersburg/Tampa market. A broad commercial zoning {11-321} allows Strip Stores, Office, Convenience Store, Bar, Restaurant, and many other uses.
The building features strong, concrete-block construction with I-beam and steel joists supporting a second story office. Currently, four bathrooms, four electric meters, and four entrances allow flexibility for up to four users. The 8,000 sf fenced and paved lot provides parking for approximately 50 cars or up to eight semi trailers. An existing double-sided sign (+/- 70sf) and awning (+/- 400sf) provide direct advertising exposure to Hwy 19.
The area is undergoing significant redevelopment with major improvements to US 19 north of this site. Highway construction has already been completed at this location. Weingarten Realty is building the new Largo Town Center mall at the intersection south of this site. The project will include 445,000sf of upscale Retail, 260+ Townhome residences, a county Transit Center, and community amphitheater. At 280 square miles, Pinellas County is the second smallest Florida County in land area yet ranks sixth in population with an estimated 942,000 permanent residences (2004). There are 35 miles of sandy beaches and 588 miles of coastline. While it i the most densely populated and most densely developed county in Florida, 31,000 acres remain devoted to parks, open space, and natural preserve.
Link to Complete FOR SALE Listing >>>>>> Click HERE!
Link to Complete FOR RENT Listing>>>>>>Click HERE!
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Tampa
Tampa fared the worst in the second quarter posting negative absorption of 296,000 square feet because of closings by major retailers. Small shop leasing helped, however, posting positive absorption of 26,000 square feet.Despite the net absorption, the vacancy rate in Tampa stands at a relatively low 7.7 percent. Average asking rents fell 3.2 percent to $14.67 per square foot from the first quarter.
Click for the full report at Retail Traffic magazine
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Highlights from Report:
Results of the second quarter survey indicate that the Florida commercial real estate market continues to
stabilize near or at the bottom. However, given the significant uncertainty that continues to hang over the general economy and particularly the state economy, most respondents believe we will hover along the bottom for the next several quarters.
Tampa-St. Petersburg
- Cap rates in the Tampa-St. Petersburg area are, on average, equal to that of the state, and range from 8.0% (Apartments) to 12.2% (Condo Conversion).
- Cap rate changes were mixed over the past quarter across property types, with the largest changes occurring in Warehouse (-0.47% change) and Flex Space (+0.42% change).
- Cap rate outlooks indicate that rates are expected to remain stabile across most property types in the next quarter.
- Required yields for Tampa-St. Petersburg are slightly higher, on average, than that of the state, 12.54% compared to 12.51% statewide.
- Required yields are highest for Condo Conversion at 20.4% and lowest for Office: Class A at 10.7%.
- Required yields increased across most property types last quarter. The largest shifts in required yields occurred in Condo Conversions (+3.44% change) and Free Standing Retail (+1.93% change). The largest decline occurred in Retail – Large (-0.85% change).
- The investment outlook is neutral to positive across property types, with the most positive outlook occurring in Apartments and the most negative outlook is in Condo Conversions.
- The outlook for Land Development appears to be neutral to negative for all land classifications with the exception of Land with Residential Entitlements which has an outlook of neutral to positive.
- Future occupancy is expected to remain stable for all property types except Free Standing Retail which is expected to decline further.
- Rental rates are expected to increase slower than inflation across almost all property types over the next quarter.
Comments: Certainly from our perspective, the market is stabilizing. A relatively new occurrence is the emergence of the national and region retailers back to the market. Doing deals? Hmmmmm, not so much, but they do seem to be out sniffing the periphery of the market and testing what types of deals can be had. This is a stark contrast to the same period last year, in which national and regional retailers were noticeably absent from our market and what little activity there was in the market involved primarily local-based, single location tenants seeking better deals or taking advantage of reduced rents by upgrading space.
While the office market appears to be stabilizing, high unemployment in the Greater Tampa Area will continue to be a drag. Sub-lease offerings continue to weigh on the market, though new sublease offerings appear to have slowed to a trickle. Displaced attorneys tend to be the most active in small spaces in the Downtown Central Business District (CBC). Space that is close to the court house and or caters to the legal profession can be successful in attracting tenants. Landlords must be open minded and creative in their efforts to attract tenants. It is our understanding that there is a substantially sized sublease space in the CBC that will come off the market shortly. Expect further word in the near term.
Though not a scientific study, tracked in-bound, unsolicited requests in to our office from potential tenants/buyers seeking assistance with site location have increased noticeably this year compared to last. It should be noted however, before landlords become too excited that the market is set to take off, that it would be near impossible for there to be less representation requests than 2009, which was a shockingly poor year. We are cautiously optimistic moving forward, along with some teeth gnashing over longer term effects that the BP oil spill might have in our market. All things considered, we have escaped relatively unharmed in the Greater Tampa Area, although hotel operators would probably strongly disagree. Activity has increased and buyer/tenants are beginning to dip their toes in the market. In the mean time, we will keep our fingers crossed and hope there is some carry through.
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Kearney Construction, one of the oldest, largest and most respected developers in the State of Florida, filed Chapter 11
Source:kearneydev.com
bankruptcy today. We never intended to make this blog a corporate obituary site, but, unfortunately, we have had to give a fair share of our Internet real estate to discuss these issues of late. In just the last six months, we have seen venerable companies such as Opus, Heidt, GVA Advantis and now Kearney, one after another, file bankruptcy or close their doors. It is not surprising really that this is happening, but all of my professional life, I have known nothing but these industry stalwarts dominating the local development scene. The development and building industry in the Tampa Bay area will eventually emerge from its current morose state, but the landscape will be markedly different when it does.
Source: Tampa Bay Business Journal
Kearny Construction Co., LLC, one of the oldest and largest site developers in the Tampa Bay area, is seeking to reorganize under Chapter 11 of the U.S. Bankruptcy Code.
The company, founded in 1956, estimated its liabilities and assets at $10 million to $50 million in its bankruptcy petition filed Wednesday.
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It was reported several days ago that GVA Advantis would close its Real Estate Services Company, but the Tampa Office would remain open, providing a hub for the construction and development arms. That decision has now been reversed, as the Tampa Bay Business Journal reported on Friday, and the Tampa office has, in fact, been closed.
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Source: Tampa Bay Business Journal
GVA Advantis is Tampa Bay’s 9th largest real estate broker. It is not surprising to see firms throwing up their hands and walking away from the brokerage business in the current environment. This is undoubtedly the worst downturn of this generation and the firms in the middle feel the squeeze. It is unclear at this time how the Tampa office will be affected.
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