What it takes to reverse the decline of Key Biscayne property values
The primary responsibility of any government is to protect its citizens’ life and property. As evidenced by the fact that Key Biscayne was named the safest municipality in Florida in 2018, and notwithstanding a few scary but anomalous events lately, the Village and our public safety officers have been doing an excellent job.
However, while excellent public safety is a defining characteristic, our lofty tax base has become less so. Since 2017, Key Biscayne has lost almost 5% of its aggregate property value, amounting to a roughly $400 million net decline in assessed value, after taking into account new construction, based on a 3.1 mills municipal tax rate. This has depleted our local government’s annual tax revenues by some $600,000. At the same time, property values in Miami-Dade County as a whole have increased by 5.4%, making Key Biscayne an outlier as the only municipality to lose value in the past 2 years.
The decline in property values in Key Biscayne stands in stark contrast to the tax base in other affluent communities. For example, during the same two year period in which Key Biscayne dipped by 5%, property values increased in Miami Beach by 6.4%, in Coral Gables by 7%, in Bal Harbor by 2.9%, in Bay Harbor Islands by 26.7%, in Pinecrest by 4.3%, and in Palmetto Bay by 7.9%. These numbers, taken from the County records, have been adjusted by removing the value of new construction to get a fair comparison.
Why is Key Biscayne the only municipality in our County experiencing sinking property values? It is not because Key Biscayne is unappealing. To the contrary, this is a great community in a beautiful setting. Rather, the case can be made that our values have dipped because our local real estate market has become too dependent on property buyers from countries whose economies have suffered and whose currencies have depreciated, in many cases substantially.
If our Village was run like a business with declining revenues, we would target new, more profitable markets with more prosperous potential buyers. This way buyers with means would stabilize and then rejuvenate local real estate values, boosting the tax base in the process. Key Biscayne would naturally attract the same type of buyers who have been drawn to Miami Beach, Bal Harbor, Bay Harbor and other desirable communities, in Miami-Dade, Broward and Palm Beach. My suspicion is that many of those buyers do not give Key Biscayne a look because we’re not top of mind. The lost opportunities are doubtless compounded by the large influx of Northeast Blue State families seeking to move to Florida to escape state and local tax burdens resulting from the 2018 Tax Reform Act.
At the last Village council meeting I suggested that the Village should begin the process of burnishing our local brand and restoring our property values by contributing $50,000 to the Chamber of Commerce for public relations and marketing. If successful, the investment would yield lasting dividends, replenishing our tax base and hopefully catalyzing a vibrant local market, adding value to our community into the future.