That realization may come after the sticker shock.
If a 2,000-square-foot home is billed in the fire fee as a single-family residence, the charge would be $100. As a commercial property, that same home would be billed $270.
Commercial properties will pay about 13.5 cents per square foot of building area under the proposed fee schedule, compared with the four single-family residential flat rates that range between $89 and $132.
In its own investigation, The Ledger identified 179 such properties in the official 2014 county tax rolls that were caught in a mismatch between the two property classification systems used to design and administer the city’s new fee.
Of those properties, a few are businesses operating in converted houses, and about 30 are owned by corporations. But one-third are homes that benefit from homestead and other tax exemptions, and many others are rental properties.
These land parcels were classified as mixed-use properties by the Polk County Property Appraiser’s Office.
More specifically, they were classified under “use” code 1203, meaning the sites had “non-conforming structures” that were at odds with the “highest and best use” of the land, a way to determine the value of the property for tax purposes.
Compared with the more than 34,000 residential single-family dwellings within the city, including mobile homes and duplexes, the number of 1203-coded properties is scant, but those owners would pay significantly more under the different classification while presumably receiving the same benefit from the Lakeland Fire Department as other single-family homes.
In the future, other property owners on the edge of commercial districts could be caught in a similar situation as economic activity throughout the city fluctuates.
The Ledger alerted city officials to the issue last month to determine whether the “edge” cases should be corrected and, if so, how.
City Manager Doug Thomas said the 1203 use code is likely correct in being considered commercial as determined by the fire fee methodology, and any presumed property code misclassification might need to be taken up with the Polk County Property Appraiser.
When notices of the fee go out, the city will create a hotline to manage and direct fire fee issues, Thomas said.
After The Ledger contacted Property Appraiser Marsha Faux, she directed her staff to take a second and sometimes third look at the properties within the group.
More than 30 edge cases were then reassigned, Faux said and records confirm, but the purpose of the 1203 classification stands and it’s solely the city’s responsibility to determine how it wants to charge its residents the special fire assessment.
The problem, Faux said, is that her office and its database exist to determine value for property taxes, “not fire fees.”
Odd house out
To the eye, many of these homes are mismatched with their neighborhoods, surrounded by industrial businesses and commercial markets. Many of the “1203” homes have been standing long before city planners thought to zone the areas for business activity, but are now jetties against economic tides.
While most properties are appraised on-site once within a five-year period, “1203” classified properties are checked more often, said Real Estate Director Mike Hartnett of the county appraiser’s office.
Those properties are in transitioning parts of the city and have been identified in future land-use maps as ripe for commercial development, Hartnett said.
“One house may be a doctor’s office and one house may have someone living in it,” he said.
In those situations, commercial investment may be driving the properties’ value, meaning the land, not the structure, is what investors are after.
“(The code) really is like a flag for us; we need to pay attention to what these things are selling for,” Hartnett said.
One example is a former residential subdivision east of U.S. Highway 98 between Sharon Drive and Lakeland Park Center Drive on the western edge of the Lakeland Park Center. The homes in the subdivision are intertwined with parcels owned by Park Center developer Ramco-Gershenson.
There are 11 cross-classified homes in the block that will be billed at commercial fire fee rates on their single-family homes.
Eventually, those homes may be reclassified under the Department of Revenue code “0100,” the site of a single-family home, if the commercial encroachment ceases and recent sales indicate buyers are seeking houses, not commercial land, in the former subdivision.
That is an unlikely outcome, but it did happen in some areas during the recession, Hartnett said.
In the meantime, they’ll remain 1203s to the county, and under the city’s methodology for assessing the fire fee they will be considered commercial properties.
An imperfect translation
Under Florida law and precedent from the courts, special assessments like the fire fee have to bestow a “special benefit” to the payers.
Fire fees have been magnets for litigation, and the Florida courts have ruled that determining special benefit must be clearly methodical, logical and consistent.
Precedent does not allow, for example, seemingly arbitrary reclassification of properties from one class to another or arbitrary exemptions within property classes.
The city administration has been cautious to avoid modifying the formula prescribed by its consultant, Tampa-based law firm Tindale Oliver, because of the controversial nature of any new government revenue program and long legal battles that have followed more novel approaches to determining special benefit and the resultant fees in other cities.
To determine the special benefit, the city’s fire fee consultant divided property ownership into seven classes: single-family residential, duplexes and mobile homes; multi-family residences; commercial; industrial; government; nonprofit and religious; and vacant land.
It then determined how much of the Fire Department’s resources have been used by each of those seven classes over the past five years so it could determine how much each class had received in special benefit from the Fire Department.
To do this, it analyzed the Lakeland Fire Department calls-for-service database, which classifies structures it responds to under the National Fire Incident Reporting System, or NFIRS.
The most common NFIRS code used in Lakeland was “419,” meaning firefighters responded to a “one- or two-family dwelling.”
Once the relative ratios of payment between classes were determined, the property appraiser’s database was used to figure out the cost to individual property owners within the seven broad classes.
Tindale Oliver recommended the city use the Florida Department of Revenue use codes the Property Appraiser’s Office assigned to each parcel to determine which of the seven classes it fit into.
In the DOR use code system, the first two digits of the four-digit code are determined by state administrative law. In this system, “01” is the code for single-family residences; “0100” is the classification sent to state records.
The second two digits of the DOR use code are for local sub-classifications that may indicate the size of the parcel the home is sitting on or whether it borders a golf course.
Properties like the 1203s and other mixed-use properties are defined as “store and office or store and residential or residential combination,” according to the Florida Administrative Code.
When asked for clarification from the Florida Department of Revenue, a spokeswoman for the agency responded with a verbatim citation from the Florida Administrative Code.
“There is no other ‘grading manual or rubric the state puts out to county appraisers,’?” spokeswoman Renee Watters said, referencing The Ledger’s question.
In a perfect translation between the two systems, every NFIRS code 419 would be classified as a DOR code 0100, but because these code systems do not match up exactly, The Ledger was able to identify multiple instances where an NFIRS code 419 property in the Fire Department database had a DOR code 1203 in the appraiser’s records.
So, for the purpose of determining how much each ownership class owed the Fire Department, the homes were considered single-family residences.
For the purpose of handing out bills, the homes are commercial.
One example is a home on the 700 block of South Florida Avenue. In 2013, the resident called for fire service and the database entry indicates the response was made to an NFIRS code 419 building, a one- or two-family dwelling.
As the home sits along the Florida Avenue commercial corridor, it is considered out of sorts with the surroundings, warranting a 1203 DOR use code, according to the appraiser.
The homeowner benefits from both homestead exemptions and a widow’s exemption, and paid $114 in property taxes to the city this year. Had the fire fee been in effect last year, she would have paid an additional $209 as a commercial-classified property owner, compared with $100 as an equivalent-sized residence.
Lack of communication
Faux said she stands by the mixed-use code classification on these properties.
“The rest of them are right, and the reason they are is because they are in commercial park land and they are just non-conforming structures,” she said.
While she is sympathetic to the taxpayers affected, she reiterated that fire fees do not fall within the legal obligations of an appraiser’s office in Florida.
Services her office renders to help Polk County or municipalities administer the fee are purely contractual and an attempt to reduce the overall cost of government, she said.
As they have become a trend in municipal finance throughout the state, fire fees are a hot topic in meetings of the Property Appraiser’s Association of Florida, a group that includes the majority of elected county appraisers, Faux said.
“At meetings, they all think I’m crazy I do this because they don’t bother with it, but it’s about the taxpayers. It would cost the taxpayers more money if I didn’t offer that,” Faux said.
She’s never had a tax roll questioned or rejected by the Florida Department of Revenue, Faux said, and changing property codes to suit a municipal tax would be irresponsible.
“The Department of Revenue would probably turn my rolls out,” she said.
Lake Wales and Winter Haven also are contemplating a fire fee.
Unincorporated Polk County, Bartow and Haines City already collect one. With each there have been issues, Faux said.
To minimize those issues in Polk County’s largest city, Faux said she offered to have her staff members meet with the city and the city’s consultant.
“We offered it,” she said, but “nobody has asked.”
‘Catch as catch can’
With the deadline for nailing down the particulars of the fire fee looming, the city administration is primarily concerned with getting the vast majority of assessments correct, Thomas said.
The city will be sending notices this week to property owners about the fee and the projected amount they would pay if it is approved by the City Commission. As of Friday, city staff members were finalizing the letters.
At this point it’s unlikely the city will reclassify 1203 properties as residential, Thomas said, out of concern for causing other problems.
“It might be easier to deal with them on a catch-as-catch can basis,” he said.
If residents do have concerns about their fire assessment, the letter will include contact information for city employees who will help address the concerns or work with the Property Appraiser’s Office.
The goal is not to wedge property owners between two intractable government agencies, Thomas said.
[ Christopher Guinn can be reached at Christopher.Guinn@theledger.com or 863-802-7592. Follow him on Twitter @CGuinnNews. ]