Representation without taxation? Spat with Frenchman’s Creek in middle

Frenchman’s Creek Beach & Country Club’s ampersand is causing headaches from West Palm Beach to Tallahassee.

The problem is that while the country club community with 606 homes worth from $500,000 to $5 million, nestled behind lush landscaping off Donald Ross Road, is in Palm Beach Gardens, its comparably luxurious beach club, valued by the county at $6 million, resides in Juno Beach.

That wasn’t a problem until 2012, when Juno Beach Town Council members were sitting around one day discussing tax revenue. One of them asked why the beach club wasn’t at or near the top of the list of the town’s biggest taxpayers. In fact, it wasn’t on the list at all.

They looked at each other and agreed, “‘Wow, that’s a good question,’” Finance Director Matthew Pazanski recalled this past week.

Thus began 2 1/2 years of wrangling between the city, the town, the community and the state Legislature.

The answer to the councilman’s question, researched by Palm Beach County Property Appraiser Gary Nikolits, proved unsettling: Because the facility is legally considered a “common element” of the country club community, its taxable value is attached to the homes 3 miles away, which pay taxes to Palm Beach Gardens.

It’s the law, said Nikolits, whose office keeps tabs on property tax values for 630,000 parcels throughout the county, and who had been unaware of the conundrum.

Now that he knows about it, though, he doesn’t like it. Juno Beach provides police and other municipal services for the club but can make no legal claim to its tax payments.

“It’s absurd. I’ve never heard of such a thing,” Nikolits says.

The arrangement strikes him as unconstitutional but until the law changes, he says, he has no choice but to enforce it.

The city and town tried to work out the issue.

In March 2013, they signed an agreement. The idea was to figure out what the property was worth and have Palm Beach Gardens give the town a check for the appropriate amount. The city paid $5,441.72 the following month, and again the next year.

But along the way it got complicated. The Property Appraiser’s Office, looking at recent sales of comparable property, determined that the beach club was worth far more than previously estimated: $7.2 million, a 281 percent increase from its previous market value of just under $1.9 million.

On top of that, the city and Property Appraiser’s Office concluded it was “practically impossible,” in the words of city attorney R. Max Lohman, to figure out fairly how much should be added to the value of each Frenchman’s Creek home to absorb the taxable value of the beach club.

That meant there was no way to tell how much each homeowner should pay Palm Beach Gardens in property taxes — and how much tax money Palm Beach Gardens should pay to Juno Beach.

The municipalities turned to Tallahassee for help.

Two local lawmakers, Sen. Joe Abruzzo, D-Wellington, and Rep. Patrick Rooney, R-West Palm Beach,filed a bill this year that would allow the beach club to be taxed separately from the community, with those taxes going directly to the community. As a practical matter, the Frenchman’s Creek homeowners association would get a tax bill from Juno Beach and would pay it, presumably out of homeowners dues.

The bill went nowhere.

In the middle of all this is Frenchman’s Creek, which just wants things to stay the way they’ve been for more than a decade.

“Our community believes (the property appraiser’s) position is wrong and imposes a double tax on our residents as the beach club is intrinsic to the value of each home in Frenchman’s Creek,” Fred Stern, president of the community said in a statement emailed to The Palm Beach Post on Friday.

“Our community has an exceptionally good relationship with the Town of Juno Beach, volunteering both time and economic resources to the town and non-profit organizations in Juno Beach each year,” he said. “Frenchman’s Creek has committed to and has assured that Juno Beach and any other beach club service provider will be paid in full for services to our community’s beach club,” he said.

Meanwhile, a provision was attached to another bill in Tallahassee through Sen. Joe Negron (R-Palm City) that supports Frenchman’s Creek’s position.

That wording, inserted into a bill having to do with value adjustment boards, would keep the status quo. The beach club would be considered a “common element” of the subdivision and taxed as part of the subdivision — by Palm Beach Gardens. Each home would be considered worth a little more, because about $3,500 of the beach club’s value would be attached to it, by Nikolits’ estimate.

That bill has made more progress advancing through legislative committees but also is not a sure bet, because of a legislative stalemate about the budget.

Steven Mathison, the community’s longtime attorney, says there are a number of ways to resolve the problem and avoid double tax bills.

For one, the community has offered Juno Beach an annual services agreement, with a formula for calculating how much the community would pay for any services it uses. However, the only town service it uses to any extent is police, and the average annual number of calls to police, he says, is zero.

No one will go unpaid, the attorney says. “Our real commitment is to do the right thing.”

At this point just one thing is certain: that one city, one town, one property appraiser — and Frenchman’s Creek — are frustrated by a turn of events no one anticipated.

But the issue isn’t going away, Nikolits says.

“If these bills fail I’ll just keep doing it the way I’ve been doing it,” he sighs. “But it will be back next year.”

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