In a time when there’s a crying need for more city revenue, Property Appraiser Jerry Holland has found about $1.9 million during his first nine months on the job.
His office discovered fraud in homestead exemptions — the perk homeowners enjoy by taking a deduction of up to $50,000 off their property’s assessed value. It’s a nice break, but one that means extra ad valorem revenue doesn’t flow into city coffers.
In all, Duval County has 189,000 such exemptions, but not everyone deserves the tax break. Sometimes homes are actually rental properties, other times no one lives in them at all.
Holland heard about the issue when he took office in July and beefed up his compliance department. The results have been noticeable.
His team has issued 485 property liens to owners who have wrongly been receiving a homestead exemption. The total amount of those liens is $1.9 million.
That far exceeds what was found in the nine months prior to Holland’s arrival, when just 87 were issued for $577,000.
The dedicated dive into the issue, Holland said, has revealed the magnitude of the problem.
“Without a doubt, it’s just the tip of the iceberg,” he said.
Noncompliant property owners can be pegged for up to 10 years of violations, with liens incorporating back taxes and penalties.
When paid, the money goes back to the city, not the property appraiser’s budget. And while the lien amounts look substantial, Holland said, the real savings will be in the years ahead when annual property taxes are paid on those non-homesteaded properties.
That’s important for local officials looking to fund basic city services and infrastructure.
Early projections this year show a 3 percent to 4 percent increase in property values, which comes to about $15 million extra for city spending. Yet, with ever-increasing expenditures like pension obligations, those gains are wiped out.
Holland said he thinks further review in the coming years could bring as much as $4 million in liens to the city at its peak, before settling on about $500,000 a year.
Finding violations comes in many forms.
The office has a hotline — (904) 630-7112 — for anonymous tips that are researched.
Others come from the office’s land records department, which many times flags when a homestead property owner has died but an exemption remains.
In recent years, a wave of home rental websites also has led to violations Holland’s team actively investigates.
Take a rental site like HomeAway, where owners can rent out their houses. It’s OK to do that for 30 days in a two-year span.
But anything more than that? Homeowners aren’t supposed to have that property homesteaded — a point Holland’s team has to research before issuing those liens.
That means logging into the sites, checking listings and even utilizing user reviews to make their case.
The same is true for room rental services that have become popular like AirBnB, although the rules differ slightly. Those who advertise or rent a room in their house for more than six months of the year lose only a portion of their homestead.
Holland said when he began as property appraiser, he had his staff talk to offices in Pinellas, Hillsborough and Miami-Dade counties to find out how rampant the problem has been. While Jacksonville has its share of violations, it pales in comparison to others.
“It’s phenomenal,” Holland said of the other counties’ violations.
It’s not uncommon to see Miami-Dade, for example, issue the same number of liens in one month as Holland’s office has in nine months.
He is working on a contract with a firm that can better assist Duval County’s homestead compliance reviews.
The company, Holland said, has databases and resources his office doesn’t.
If the company finds information that leads to liens, it will receive 28 percent of the paid amount.
The city gets the rest — money Holland said his office likely would never find without the outside help.
He estimates that to be another $6 million to $14 million over about five years.
Looking at the issue, Holland said, “We’re way behind.”
He bases that on the high number of liens that encompass the full 10-year maximum, meaning people have gone even longer without being caught.
The goal, he said, is for liens to only encompass a one- to two-year range.
That would mean everything is mostly caught up — and the city is receiving the proper amount of property taxes each year.
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