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Sinkholes continue to drain economy

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Published:   |   Updated: March 30, 2014 at 11:44 AM

BROOKSVILLE - For years, Spring Hill has led the state in sinkhole activity, with more than 6,000 properties experiencing some kind of void.

Many have unflatteringly referred to Spring Hill as the "Sinkhole Capitol of the World."

Not counting the personal tragedies such events bring, sinkholes also have been hard on the bottom financial line for Hernando County, according to the just-released Comprehensive Annual Financial Report. The CAFR is a state-mandated annual audit that examines in detail the county's economic strengths and weaknesses.

Circuit Court Clerk Don Barbee released the latest report last week. It presents a snapshot of Hernando County for the fiscal year ending Sept. 30, 2013.

The report touches on the problem of sinkholes, which reduce the ad-valorem taxes generated from the property. Since 2005, the cumulative loss of market value due to sinkhole activity is $665 million, according to the CAFR.

That equates to a cumulative tax loss to the general fund of $2.4 million since 2005.

The market (and taxable) value of properties with unrepaired sinkholes are depreciated 50 percent. Once those properties are repaired, the value is increased to 90 percent of its full potential value.

The good news is that sinkhole claims recently have leveled off and there are now less unrepaired sinkholes than repaired sinkholes. That trend is expected to continue, Barbee said.

The CAFR also shows that residential development continues to lag in Hernando County in sharp contrast to the staggering growth rates of previous years. The number of building permits issued in 2012-13 decreased 12 percent from the prior fiscal year, the CAFR states.

Many large residential projects have received the green light from county commissioners during the last three years. Some of them have been approved by the state and some still are in the approval process.

More positively, commercial growth has not suffered as much as residential, and the CAFR points to retail growth along State Road 50 in Spring Hill.

Hernando County used the certified public accounting firm of Purvis Gray & Company to conduct the independent audit report, which shows Hernando County's assets exceeded liabilities by $607 million.

"You're in good financial shape," said Joe Welch, an audit partner with that firm. "I think your biggest issue is the general fund."

That fund sustained a $7.9 million loss during the last fiscal year due to the continued economic slowdown.

"I think your biggest challenge is to reverse that trend," Welch said.

County Commissioner Dave Russell said the CAFR provides staff with a solid economic picture of the county and it will be used for budget purposes and to provide public accountability.

"The public can access the viability of our county government," he said. "It's all there. Facts and figures don't lie."

Overall, Russell called the county's economic picture healthier than it has been in past years and he attributes that to "meaner and leaner" policies and spending habits.

"The comments made by the auditor were very favorable," he said. "More so than in past years when we had some difficult times."

Russell said he believes residential numbers are trending upward and that commercial will continue to improve, which will bring more jobs, add to the tax base and re-invigorate the general fund.

Russell also expects the sinkhole situation to improve thanks to new laws.

State legislators in 2011, recognizing that bogus sinkhole claims were eating away at county budgets, amended existing law to make sure homeowners repair legitimate sinkholes on their property.

Before that, many homeowners pocketed the money and left the homes unrepaired. Worse, some packed up and left, leaving a damaged home on the market and leading to a glut of depreciated homes on the market that affected property values of neighboring properties.

The new law is forcing people to fix up their homes, Russell said.

mbates@hernandotoday.com

(352) 544-5290

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