by David Chapman
Staff Writer
For 30 years, Bill Proctor was instrumental in the education of thousands of students as president of Flagler College in St. Augustine.
But now, Proctor serves as state representative for a large portion of Northeast Florida, yet he still educates. His new students are Realtors, industry members and council groups, and his lessons are about two important and current topics – property taxes and wind damage insurance.
Proctor represents parts of rapidly growing Clay, St. Johns and Flagler counties and can speak to the situations that are now affecting, and will continue to affect, the real estate industry statewide, such as property tax reform.
“Property taxes are a problem,” said Proctor, “but essentially, it’s a political problem. It’s within the public domain and the public policy can be changed.”
Proctor said he has not yet seen a groundswell of reaction from builders, Realtors or homesteaded-property owners regarding the current property tax immediate statutory relief bill, House Bill 1B, that he says gives everyone relief – businesses, homeowners and renters.
“From a business standpoint,” he said, “I think it’s a good measure. Up until now, businesses had no protection from taxes.”
With the statute in effect, he does have advice for Realtors and businesses with questions and concerns.
“The statute is in place,” said Proctor. “Study it carefully and understand it. It should benefit everyone to some extent.”
Though the statute is in place, the constitutional amendment that will face a statewide vote in January to further reform Florida’s property tax system is another question to many. If passed, the ability for homesteaded homeowners to choose between Save Our Homes and the “super exemption,” Proctor believes, should help Realtors.
“It should be a lot easier to sell with the super exemption,” he said. “Homebuyers, especially those first-timers, will be getting a break and it could lead to more sales.”
While property taxes may be getting more publicity right now, Proctor believes there is a much more challenging industry issue on the horizon – wind damage insurance.
“Wind damage insurance is a double whammy,” he said. “We need to harden homes to mitigate damage, which costs, but you also have to provide affordable housing.”
Another problem, he said, is that unlike the property tax issue, the public cannot control the factors that lead to the wind insurance problem.
“National catastrophes cannot be predicted,” said Proctor. “And the coastal buildup will continue. In real estate, it’s location, and the coast is where people continue to move.”
With a large portion of the private insurance market leaving or already having left areas of Florida, the problem of costs and availability of insurance has become an issue.
“Hurricane Andrew in 1992 was a wake-up call,” said Proctor. “But we didn’t really wake up.”
Rates have risen and the affordability and availability of obtaining wind damage insurance have decreased in some high-risk areas. With the private market largely declining, the state legislature in 2002 expanded Citizens Property Insurance to “offer property coverage to Floridians without private insurance options,” according to Citizens’ Web site.
According to its Web site, as of the end of June 2007, Citizens had policies on almost 419,000 high-risk properties and just over 878,000 total residential properties. On top of that, Proctor said, the reinsurance industry that used to help protect insurance companies from enormous losses is being offshored and unregulated. Getting both the private sector and the state back into re-insurance is vital, he said, and he has an idea on how to possibly accomplish that.
“You must recruit the private market back in the state,” said Proctor. “While companies must have the capital to cover their policies, they should carry a certain percentage of high-risk areas.”
He also noted that while curbing the “cherry-picking,” companies could set their own rates and create a competition-based marketplace. If more capital is needed to ensure solid business, he offered that subsidiaries could be an option.
As it stands now, he said, the current state of the private market, the fact that Citizens is the primary insurer in Florida and without a couple years to accrue capital, a sudden storm in the near future could be catastrophic.
“In a sense,” said Proctor, “we’re gambling and keeping our fingers crossed that the winds don’t blow.”