Palm Beach:Property values +21%.

What's driving 21% property value surge?
Property values in Palm Beach County have registered another record year, soaring by 21 percent over the 2005 tax roll, to $158 billion.
But even as the county added $28 billion to its tax base, Property Appraiser Gary Nikolits cautioned Thursday that the just-released tax roll estimate reflects last year's property sales and appraisals. He said recent trends portend the close of an era of record-breaking real estate appreciation.
"It's the end of the rainbow," Nikolits said, citing rising interest rates and foreclosures.
Next year's increase will be 8 percent to 9 percent, he predicted. "That's more in keeping with what it should be. That's a significant slowdown, but it is still going to be an appreciation."
Palm Beach County Administrator Bob Weisman said he would recommend that county commissioners reduce the property tax rate because of the 21 percent increase in property values. Weisman attributes the increase to three factors: new and expensive construction, a large number of used homes sold last year, and commercial property not protected by the Save Our Homes cap on annual tax increases for residences.
Weisman agreed that the hefty increases of the past few years are probably over.
"All the evidence suggests there will be a substantial drop-off," he said.
Among municipalities that saw the largest increases in 2005 were tiny Cloud Lake, 42 percent; Palm Springs, 36 percent; Lantana, 33 percent; Palm Beach Shores, 32 percent; and Lake Worth, 31 percent. In some cases, annexation or construction increased cities' tax bases. In other cases, home values simply went up.
Palm Springs saw a big increase in its tax base through a six-year-long push to annex commercial properties along Congress Avenue, Lake Worth Road and Forest Hill Boulevard, Village Manager Karl Umberger said.
"The 36 percent was welcomed," Umberger said. "It's probably a little more than I expected."
Cloud Lake is so small that all it took was construction of one or two homes to push its tax base 42 percent higher than last year, the property appraiser said.
Lantana's increase came in large part because an 11-acre waterfront development called The Moorings was completed, with a mix of 378 condos and townhomes, shops and boat slips at the site of an abandoned boatyard.
City Manager Paul Boyer attributed Lake Worth's boost to development and to annexation of the Park of Commerce, a 100-acre industrial and commercial tract between Lake Worth Road and 10th Avenue North, west of Interstate 95.
In West Palm Beach, Mayor Lois Frankel said the city's 25 percent increase in property values probably comes from continued redevelopment in the north part of town and condo development downtown.
Even with much slower appreciation in the future, the city's projects and services won't be compromised, she said.
"When we project our future income, we use a 4 percent inflationary rate," she said. "We like to be on the conservative side."
The tax roll figures released Thursday present local officials with increased property tax revenue for their municipalities — and heavier burdens on property owners — unless officials lower tax rates, Nikolits said.
In the case of Lake Worth, whose officials expected a 15 percent increase, the 31 percent figure will shave $1.2 million from a projected $5 million budget deficit if the city holds its tax rate to 8.4 percent, City Manager Paul Boyer said.
"This is the best news we've had in weeks," Boyer said. "It certainly makes it an easier ball to juggle."
Construction played a key role in building up the values in several cities.
Palm Beach Gardens saw a $717 million boost to its tax rolls from construction. Wellington registered $420 million, Jupiter $372 million, West Palm Beach $320 million, and Delray Beach $253 million.
Larger cities in the south county area gained much of their value from homes and businesses added in blighted neighborhoods targeted for revitalization.
Boca Raton's tax base grew 17 percent, Delray Beach's 27 percent and Boynton Beach 29 percent. Last year, Boca claimed $722 million in new construction after incorporating Town Center, Boca Raton Mayor Steve Abrams said, so the $207 million added in 2005 shows a drop.
Delray Beach Mayor Jeff Perlman said growth there was not surprising because the Community Redevelopment Agency has created value by replacing blighted homes with affordable housing.
Perlman said he is worried about next year. As the market slows, the city faces higher bills with construction costs and property and health insurance increases, which could make for challenging times in 2007.
Nikolits' prediction of a drop-off came in stark contrast to his exuberance last year at this time. "It's just been gangbusters all over the county," he said then.
This time, he said: "We're seeing evidence, through the first quarter of this year, of a noticeable slowdown," although not of the bursting-bubble scenario predicted in some real estate markets across the country. The slowdown is caused by rising mortgage rates and by overbuilding in some condo markets, he said.
Real estate investors may find good deals toward the end of 2006 as slow-selling condos are offered at price reductions, he said. That will draw buyers away from single-family houses, weakening house price appreciation, he said. If interest rates keep inching up and pass 7 percent for 30-year mortgages, many potential buyers will drop out of the market, he added.
For local officials, the message is caution: "It's not going to happen next year. If you created new programs and expect it to continue, this is it."