The Observer LONGBOAT
BUSINESS: Longboat’s Re-opening Enchanted night Florist
The restored Historic Asolo Theater welcomes the future. PAGE 1B
Brian Sullivan grows a new business. Page 1C
SAIL’S UP Open water
Sarasota’s youth sailing program hosts a new generation of mariners.
You. Your neighbors. Your neighborhood.
OUR TOWN PEOPLE, PLACES AND PICS
Thursday, august 3, 2006
development plans by Roger Drouin | City Editor
Benedict estate: $18 million The price tag nearly sets a record. The property is one of remaining vacant parcels. Tampa developer Jason Woods purchased the Benedict estate, one of the last undeveloped parcels on Longboat Key, for $18 million. The sale, which closed July 12, is the second highest in recent history for a multi-family parcel of property on the Key, as calculated by the per-acre cost. Woods, president of Statewide Associates, plans to build up to 30 townhome condominiums the 5.8-acre property, the maximum allowed under town zoning. Ken Mourtons, project manager with Statewide Associates, said the preliminary plan is to build a
series of four-story buildings containing townhomes. Mourtons said the Tampa development firm had been trying to purchase the property — which was originally developed in 1932 by a German-born chemist — for several years. “We’ve been working on it for a long time,” Mourtons said. “We were finally able to acquire it.” The property is located just south of the Islander Club. There are two small homes and a 2,700 square-foot, circa-1935 home overlooking the seawall on the property. It is one of two parcels of
The 5.8 acre parcel offers an $18 million view. vacant Gulf-front land remaining on the island. The other vacant parcel is a 3.5-acre lot located at 5005 Gulf of Mexico Drive. Manatee County property records show that Elise Benedict
Browne purchased the estate from the Benedict family Jan. 25 for $5 million.
See BENEDICT page 9A
BOTTOMS UP + Birthday wish Longboat Key resident Miles Leavitt promised himself a birthday party when he turned 60. Leavitt kept his promise July 29, when 90 friends accepted his invitation for a lobster or steak birthday dinner at Pattigeorge’s. Guests included his brother, Fred, from Portland, Maine, several college classmates, business associates and friends he has made since becoming a Key resident. The evening was informal, with a birthday toast from Fred, a gentle roast from Key friend and author Terry Griffin and warm wishes from all. Leavitt, who will be retiring later this year from the Atlanta-based Cobb Energy, lost a close 2006 Town Commission race against Bob Siekmann.
See OUR TOWN page 4A
Black Tie . . . . . . . . . . . . . . . 1B Bridge . . . . . . . . . . . . . . . . . 4D Key Real Estate . . . . . . . . . 4C Classifieds . . . . . . . . . . . . . . 6D Community calendar . . . . 16A Cops Corner . . . . . . . . . . . 12A Crossword . . . . . . . . . . . . . 10D Opinion . . . . . . . . . . . . . . . . 6A Player of the Week . . . . . . . C9 Weather . . . . . . . . . . . . . . . 5D Vol. 27, No. 53 Four sections www.longboatobserver.com
Sarasota police remove a derelict vessel from Sarasota Bay near the Ringling Causeway Wednesday. The boat had been there for several weeks and the police department attempted to contact the owner before removing it, said Jay Franks, public information officer for the Sarasota Police Department.
VISIONING OUTLOOK by Roger Drouin and Jessica Luck | City Editor and Staff Writer
Leaders focus on tourism options Amid the conversations, one planner envisions a tourism fix, without the Daytona Beach hotel strip. Editor’s Note: This is the second part in a series taking an in-depth look at Longboat Key’s visioning process. The series will focus on the major issues that emerged during public workshops as part of the community process. How does an island replace lost tourism units?
As the resort-to-condominium trend continues and buildable land becomes scarce, that is the question at the forefront of discussion about the future of Longboat Key. Arrington Marlowe, the DeLand-based planning firm hired to conduct the visioning process, released a report July 19 that list-
ed possible approaches to counter the loss of tourism units and boost the future of retail and commercial ventures on the island: “Solutions included incentives to tourism facilities, changes in density regulations to allow redevelopment to existing facilities, changes in town regulations to allow shorter-term rentals during off-season, transportation improvements such as water taxis and trolleys to attract tourists and, in general, creating a more tourist-friendly environment.” The report concluded: “In sum,
participants saw one of the key public policy choices facing the town as the future of tourism on Longboat Key.” But Longboat Key Planning and Zoning Board member Walter Hackett doesn’t want people to conjure images of a hotel strip on the island. “We’re not talking about increasing density,” said Hackett. “We are talking about replacing the units that have been lost.
See VISIONING page 8A
The Longboat Observer THURSDAY, August 3, 2006
UP CLOSE Worldly roots Bowman would never be mistaken for a Longboat Key resident — his accent gives him away. He was born in London but grew up in Rhodesia, Africa. He visits Africa, particularly South Africa, frequently to go on safari. He says he never shoots the animals, though, only watches them. Family Bowman’s wife, Carina, volunteers her time reading to pregnant women who have committed misdemeanors. She teaches them how to read to their children. The Bowmans’ two children are “American by passports, not by birth.” They were both born in South Africa, but Daniel now lives in Boston, and Heidi lives in New Jersey. House hunting Bowman has lived in several places all over the world, including Asia, Britain, Africa and the Middle East. He’s been in America since 1981 and started looking for a vacation home in the late ’80s. He looked all over Florida and said he suddenly came upon Sarasota. “I fell in love with it,” he said. He’s owned property here since 1989 and became a full-time resident on Longboat Key two years ago.
Paul Bowman When Paul Bowman stepped onto Bowman Ranch last Thursday, he was greeted several times by teenaged girls staying at the facility, which surprised him. “I had no idea they knew who I was,” he said. Sonja Schierling, director of residential services, told him, “Of course they know who you are.” Bowman is the namesake of the ranch, and his involve-
ment allows girls in the foster care facility run by the YMCA to have a better chance in life that he feels privileged to have had. He was first asked to be involved with the YMCA after a “Go for the Gold” fundraiser a few years ago, at which he met the president of the YMCA Foundation, Karin Gustafson. She called him a week later to ask if he was interested
in joining the board. He graciously declined. But that changed when she told him about their main cause. “When she said, ‘We look after young children,’ it immediately had my interest,” Bowman said. Three years later, Bowman became chairman of the foundation, a position he still holds today. “It gives me a lot of pleasure to be chairman of the foundation,” he said. “I love this facility, and I see that it does wonderful things.” The ranch currently has 20 girls living on its property, with staff on-site 24 hours a day, seven days a week. There are different activities at the ranch, including talent shows and horses on the
property that provide the girls’ therapy. “Taking care of horses gives kids a purpose to learn to take care of themselves,” Bowman said. The average length of time a resident will stay at the facility is one year to 18 months. The ranch is supported by several members of the community who donate, not only money, but their time, talents and services to help facilitate the caring for the girls staying at Bowman Ranch. “This is a very giving community,” Bowman said. “I’m so impressed with people who want to help. There is a surprising number of people prepared to do that.” — Jessica Luck
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The Longboat Observer THURSDAY, August 3, 2006
lido key by Roger Drouin | City Editor
Residents oppose water-sports rental Enticer Watersports owner George Romano drops Jet Skis from his proposal for a rental operation at the Ritz-Carlton Members Beach Club on Lido Key, but resident opposition remains unified. There are few things that can unify residents as swiftly as the two words “Jet Skis.” During the days leading up to a community meeting July 27, Lido Key residents canvassed neighborhoods and posted notices calling on residents to band together and oppose a water-sports rental operation planned for the Ritz-Carlton Members Beach Club on Lido Key.
The meeting was one of the first steps required as part of the application process for a conditional-use permit that would allow George Romano, owner and operator of Sarasota-based Enticer Watersports, to run a branch operation on Lido. At the meeting held at St. Armands Key Lutheran Church, the Lido Key Residents Association sent a clear message.
Of those present, residents cast a nearly unanimous vote opposing the establishment of a watersports rental operation at the Ritz-Carlton Members Beach Club. Only two residents raised their hands in support of the operation. From the onset of the meeting, a crowd of more than 100 residents bombarded Romano with questions and comments. Romano attempted to calm the crowd by telling them that he would not launch Jet Skis from the Lido location. He revealed a plan to rent kayaks, small sailboats, paddleboats and aqua cycles, which are tricycles that float on water. He
also wants to rent surfboards and wind-surfing equipment, which he cannot rent from his main rental location adjacent to O’Leary’s Bar & Grill at City Marina along the calm waters of Sarasota Bay. Tourists and resort members would not be able to rent and operate Jet Skis at this location, Romano repeated to the crowd. But residents remained unified in their opposition. Resident after resident spoke out against the operation. They listed the following concerns: increased traffic, hazardous
See JET SKIS page 5A
INBRIEF COMMUNITY NEWS AND NOTES
+ T-head opposition
Seventy-one percent of Villa Di Lancia unit owners recently signed a petition calling for the Town Commission to seek an alternative to the proposed solid rock T-head groin project. Villa Di Lancia resident Nick Striglos sent a copy of the petition to the Town Commission last week. In total, 27 of 38 unit owners at Villa Di Lancia signed the petition. In previous correspondence to commissioners, several Villa Di Lancia residents spoke out against the possible adverse impacts of the project on nearby beaches and the aesthetic design of the T-head groins. Striglos said Monday: “We don’t pretend to be engineers. We don’t know what the answer is. But the majority of owners at Villa Di Lancia are concerned that the wrong solution is being considered. We want the commission to consider different alternatives.”
+ Red tide reappears
Water samples collected last week off Manasota Beach in southern Sarasota County contained Karenia brevis, the organism that causes red-tide blooms. Concentrations of the toxic algae ranged from low to medium at several testing locations near Manasota. Multiple reports of fish kills and respiratory irritation from southern Sarasota County south to Collier County have been reported to the Florida Fish and Wildlife Research Institute. Water samples collected in New Pass and Sarasota Bay showed no presence of Karenia brevis.
+ Plea for state funding
Lido Key residents Blayne Thompson, Jim and Pat Ludwig and June Moore listen to George Romano’s point of view. Earlier in the meeting residents bombarded the watersport business owner with questions and comments.
POLICE TECH by Roger Drouin | City Editor
System will make officers’ job quicker, easier
The police department purchases 10 new laptops to be installed in police vehicles. It takes a Longboat Key police officer five to seven minutes to write a traffic ticket. A plan to install 10 new laptops in police vehicles could cut that time in half. Officers will be able to use the computers to enter a driver’s information, check background and vehicle information and print out a ticket. Deputy Chief Martin Sharkey said the new system will make the officers’ job easier and quicker, allowing them to do spend more time patrolling and responding to calls than filing paperwork. “Officers can do their jobs in less time,” he said. Sharkey and Capt. Judd Jensen have spent several years testing different computer sys-
tems and working to get the newest technology into patrol cars. A test laptop has been installed in one patrol car, and last week Sharkey ordered nine more computers to install in each of the department’s police vehicles. Sharkey estimates that the entire system will be functional within two months. The idea for the project was conceived more than four years ago, during former Police Chief John Kintz’s tenure. “It’s been a long time in the making — years and years,” Sharkey said. “It was put on hold because technology at the time had not been proven. We wanted to make sure the system was tried and true.” While Sharkey and Jensen
were tinkering with different laptop brands and cellular carriers (the computers send data via cellular signals), other police departments were purchasing systems that didn’t have all the bugs worked out. “Other departments have spent hundreds of thousands on systems that are junk,” Sharkey said. “They just didn’t work. “We could have jumped on this two years ago, and the system could have failed, and we would have wasted taxpayer money,” Sharkey said. The Town Commission approved $170,000 to be used for the computers. Once the new computers are installed, it will take some time for officers to get comfortable using the system. The computers will allow officers to access state and national databases to check driver records, criminal backgrounds and car-registration information.
The computer can also be used to fill out electronically filed reports and print out traffic tickets. The portable computer can be used at the scene of a crash or crime to make notes and draw a map of the area. Sharkey said the Explorer computer that the department chose is a well-tested system that has been installed in thousands of patrol cars and tested in harsh conditions. A future upgrade would allow officers to use the computers to wirelessly file reports back to the dispatch center. Sharkey said that as soon as the current system is up and running, he expects to see an increase in traffic-related citations. Sharkey said: “Some people say we spend all day running tags. We are out there, and we’re very visible. This is going to increase.”
The Sarasota/Manatee Metropolitan Planning Organization (MPO) directed its chair to send a letter to Gov. Jeb Bush and state representatives, requesting additional state funding for slated road improvement projects. The letter, sent July 5, highlights 13 slated projects in Sarasota County that will cost a balance of $518 million. If funding is not increased, it will take 97 years to fund these projects. In Manatee County, there are five projects that are estimated to cost $258 mil-
Briefs cont. on page 5A NUMBERS IN THE NEWS
— number of new laptops purchased by the Longboat Key Police Department.
345 — number of sailors
who participated in the 2006 national finals regatta of the U.S. Optimist Dingy Association, hosted by the Sarasota Youth Sailing Program.
103 — number of Lido Key
residents who voted to oppose a proposed watersports rental operation at the Ritz-Carlton Members Beach Club. The overall vote, recorded by a show of hands, was 103 to 2.
4A Our town
The Longboat Observer THURSDAY, August 3, 2006
OUR TOWN continued from page 1A Vol. 27, No. 11
+ Little help from friends
You. Your Neighbors. Your Neighborhood. The Longboat Observer was founded in July 1978 by Ralph and Claire Hunter and daughter Janet in a one-room office with two typewriters. Since then, and through today, The Longboat Observer has served as the leading source of community and neighborhood news and information for Longboat Key, St. Armands Key, Lido Key, Lido Shores and Bird Key. In March 1995, the Hunters sold The Longboat Observer to the families of David and Ruth Beliles and Matt and Lisa Walsh. And they have kept up and built on the tradition of providing the most comprehensive coverage of news, people and events on Longboat and surrounding keys. Throughout the year, The Longboat Observer averages 18,000 net circulation, the highest penetration on Longboat Key of any print medium in the market. History of the Longboat: Since The Lonboat Observer’s founding, the newspaper has used a rendering of a “longboat” as one of its identifying symbols. According to historical accounts, when Juan Anasco, scout for Spanish explorer Hernando De Soto, anchored off the coast of Longboat Key in 1538, Anasco and his crew used “longboats” to get through the pass from the Gulf of Mexico to Sarasota Bay.
send us your news No news is too small! If it happens in your neighborhood or involves you, your family or neighbors, let us hear about it — news, birthdays, anniversaries, achievements, engagements, marriages, milestones. Or send us photographs. To contact us:
+ Dear Dexter
Dexter, a purebred English mastiff, has been a huge part of the Landau family for the past eight years. He recently died, just short of his ninth birthday. Leonard and Susan Landau adopted Dexter as a 3-month-old puppy; he weighed just 35 pounds then. The “gentle giant” eventually grew to his full adult size, weighing 174 pounds. He didn’t have a mean bone in his body, and his lovable personality made him an integral part of his communities in Cincinnati, Ohio, and Longboat Key. The Landaus have lived here since December 2002. He will be missed by all who loved him.
After a July 27 turtle hatching of 94 hatchlings on the north end of Longboat Key, 15 turtles were not able to get out of the nest. With permission from Mario Mota, senior biologist with Mote Marine Laboratory’s sea turtle conservation and research program, volunteers with the Longboat Key Turtle Watch Program released the remaining hatchlings from the nest at sunset July 28. The hatchlings were carefully carried to the water’s edge, and each one successfully crawled straight to the Gulf of Mexico and began swimming.
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Starting August 3rd
The Longboat Observer THURSDAY, August 3, 2006
JET SKIS continued from page 3A
Free n tio Installa
NEW TECHNOLOGY NON-ELECTRIC
confrontations between kayakers and swimmers, irresponsible renters, equipment left on the beach during turtle season, loud beachgoers using private condominium pools and blocked views of the Gulf of Mexico. John Kirker, a board member of the Lido Key Residents Association, said that allowing Romano to set up the operation would clear the way for him to rent Jet Skis in the future. He urged the association to send e-mails to city commissioners to show their opposition. The room full of residents loudly applauded his comments. Another resident suggested that Romano set up his operation at the public beach, and not near private condominiums. The audience again applauded. Sandy Bower, president of the association, said after the meeting that residents were concerned that the operation would impact the natural
BRIEFS continued from page 3A
beauty of the beach and impact wildlife. “This is a fragile barrier island and we need to protect it for generations to come,” she said. Longtime Lido resident Nancy Laudando was one of only two residents who supported Romano’s plan. “I’m sick of not having anything for young people to do,” she said. “This area was originally designed as a vacation paradise and we keep passing rules and regulations that take a lot of the fun away.” City Commissioner Mary Anne Servian said that the City Commission could stipulate that no motorized vessels were to be rented. She also said that if there were complaints about the business, the city could revoke the permit. “Conditional use means they can only use it if the City Commission agrees to it, and the permit can be revoked at any time if in violation,” she told residents. “This is not a foot-in-the-door thing. We
can stipulate during the legislative process that they do not rent out motorized vessels.” But residents remained convinced that the decision would clear the way for Jet Skis. The day after the meeting, Romano said he thought residents would be more open to having a rental operation there that did not include the rental of motorized watercraft. Romano said he has to talk things over with the Ritz-Carlton general manager before he decides what to do next. From his standpoint, Thursday’s meeting revealed the clash between retired residents and the area’s tourism interests. Romano said: “They don’t want change. But they don’t represent everyone. We’ll have to look at some statistics, such as how many people vacation here. “Everyone should be able to enjoy the water, the sand, the beach,” he added. “Not just them because they live there.”
KINETICO QUALITY WATER SYSTEMS
+ For the birds The Longboat Key, Lido Key, St. Armands Key Chamber of Commerce is putting on a benefit for Pelican Man’s Bird Sanctuary called “Hot August Night” Aug. 22. The fundraiser will include a silent auction with prizes such as a four-night stay in Costa Rica including airfare, two nights at the Ritz-Carlton, Sarasota, sculptures and gift baskets. Sangria is providing the food. The food and entertainment for the evening have all been donated to the cause. “We are delighted to have the Longboat Key Chamber dedicate themselves to us,”
said Jeffrey Dering, executive director of Pelican Man’s. “It’s great to have community awareness in the Longboat Key area.” Depending on the success of the evening, the chamber might host several other benefits for sanctuary, but needs community support behind it. “What we need is for residents to come and to attend,” said Gail Loefgren, president of the LLSA chamber. “We are raising much-needed funds.” Proceeds from this event will be split between Pelican Man’s and the chamber. The cost to attend is $25 per person. Whole Foods Market in Sarasota currently donates its leftover fruit to the sanctuary so it can give a tasty treat to their birds. For the fundraiser, Whole Foods is doing the same for people — but most assuredly the fruit will he fresh. “This should be a fun little event — hot — but fun,” Loefgren said. For more information about the fundraiser or for reservations, call 383-2466.
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lion. It would take 43 years to funds these projects, if state assistance is not increased. “These are not projects needed in 20 or 30 years; these are projects needed yesterday and today,” Lawrence Bustle, MPO chair, writes in the letter. None of the listed projects is planned for construction on Longboat Key or neighboring barrier islands.
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THE LONGBOAT OBSERVER
THURSDAY, AUGUST 3, 2006
our view “If we are to build a better world, we must remember that the guiding principle is this — a policy of freedom for the individual is the only truly progressive policy.” Friedrich Hayek “Road to Serfdom,” 1944
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Repeal Save Our Homes
Sometime in the next two weeks, a Gov. Bush-appointed committee will begin meeting to figure out what, if anything, should be done to change Florida’s infamously discriminatory Save Our Homes amendment — the amendment that is driving property taxes beyond tolerance for nearly 70% of Longboat Key’s property owners. The conclusion and recommendations should be clear: It should be repealed. In its place Floridians should adopt what Colorado did with much success: a cap on the increase in annual government spending at the state and local levels. All spending. This, of course, is wishful thinking. But it would be a fairer alternative for all property owners — year-round, part-time and commercial owners alike — than what exists. And it would accomplish what Lee County Property Appraiser Ken Wilkinson wanted when he devised and led the campaign for Save Our Homes in 1991 and 1992. (The amendment was adopted in 1992 and went into effect in 1994.)
+ How it came about
At the time, Wilkinson’s intent was noble and path-breaking, especially for an elected government official. As Lee’s appraiser, he saw in the late 1980s that many fixed-income widows and retirees were being forced to sell their longtime homes because they couldn’t afford to pay their constantly increasing property taxes. They were being victimized by two factors seemingly out of their control: • The attractiveness of Florida, booming population growth and new development increased the value of nearly all Florida real estate at rates that were greater than the growth in retirees’ Social Security and interest income. • Though driven by growth, the public’s demand for more government services and counties’ previous policies of ignoring growth, local government spending also was rising faster than population growth and inflation combined. Wilkinson devised what appeared to be an ingenious plan that would solve both of those growing problems: Save Our Homes. The amendment would save Florida’s fixed-income, homesteaded widows from losing their homes by limiting their property tax increases to no more than 3% per year or the rate of inflation, whichever was less. Likewise, Wilkinson figured, if property-tax increases were capped on homesteaded residential properties, this would force local governments to restrain their spending. It makes sense: Limit the amount of money flowing to government, and you’ll limit how much it spends. Florida voters approved the constitutional amendment 53% to 47%.
+ What went wrong
But as with all laws that bestow favors, unintended consequences followed. Indeed, the Save Our Homes amendment mirrors one of Milton Friedman’s irrefutable laws of government — that what you give to one you must take away from another. In hindsight, everyone should have realized Save Our Homes was really just a tax shift that dumped on a voiceless minority. It shifted a greater tax burden for local government spending onto businesses and non-homesteaded property owners — neither of which receives the benefit of the property-tax 3% cap. If assessed values rise, say, 15% in a year in a Longboat Key condominium building because of some high-priced sales, every non-permanent owner in that building is likely to see his taxes rise at the same rate. Indeed, many Longboat Key seasonal residents have absorbed double-digit tax increases from Manatee
and Sarasota counties in three of the past four years. Another unintended consequence: Neither Wilkinson nor anyone else foresaw the effects of the Federal Reserve Bank’s monetary policies and the lackluster stock market on real estate values and property taxes. With the Fed expanding the money supply to make credit easy and its holding down of interest rates at historically low levels, borrowers suddenly could afford big mortgage payments. They rushed to buy, and prices rose. As we all know now, this forced property appraisers to adjust their tax assessments upward just as fast. And that, in turn, generated over the past three years windfall profits for county and city governments.
+ The negative domino effects
The ill-effects of this are spreading like a cancer: 1. Most notably, Florida has an unfair two-tiered tax system that is getting worse by the year. How does it make sense that two property owners with identical square footage in the same condo building pay property taxes that differ by 100%? 2. Instead of what Wilkinson hoped, Save Our Homes was for government spending what lighter fluid is on a charcoal grill. The town of Longboat Key’s actual and budgeted operating expenses, for instance, rose 20% in two years, while population growth and inflation combined rose less than 10%. Longboat Key’s growth in spending is among the norm. 3. Florida’s business climate, although considered robust because of population growth, is becoming increasingly less competitive vis-à-vis other states and tourist destinations. Businesses don’t get the benefit of Save Our Homes on their
property taxes, so as property values have risen, Florida businesses are either forced to absorb the higher cost or raise prices — both instances making them less competitive. This negative effect on businesses also has fueled the demise of Florida’s independently owned beachfront resorts. Unable to absorb the rising property taxes, small resort owners have sold to condo developers. This certainly has hurt Longboat Key’s tourism, restaurant and retail industries. 4. Rising tax rates on non-homesteaded properties and businesses also have contributed to the shortage of affordable housing. Indeed, carry out the trend: The rising tax burden on businesses will discourage new businesses from moving here from elsewhere if competing with out-of-state businesses is crucial to their operations. Those businesses that do operate here, however, will pass along their increased costs to consumers, adding to rising prices for all goods and services and making Florida become more and more like another California — too expensive to buy a home.
+ Sum of the parts
There’s no question that Save Our Homes has been good to the 50% of Florida’s homeowners who benefit from it. Homesteaded, fixed-income widows and retirees indeed have benefited, as have millions of other homesteaded property owners. But they have done so at the expense of the voiceless other half, which is carrying 65% of the propertytax burden. Unless this amendment is repealed, its deleterious cancer cells will continue to spread. All Floridians will be adversely affected — if not in their property tax bills, in the rising costs of goods and services and the never-ending growth of government spending.
HOW TO CREATE A FAIRER FIELD • Repeal the Save Our Homes amendment. This would take a sales job of capital proportions from the state’s elected leaders — a good campaign for outgoing Gov. Jeb Bush, whose political stock is golden. • Require local governments to start their budgeting at the “rollback rate.” This means that at the beginning of each budget cycle, local governments would be required to propose budgets that show spending at the same dollar level as that of the current fiscal year and at a tax rate that would be adjusted downward to provide the same dollar amount of property tax revenues as in the current fiscal year. Governments never do this now. They simply increase spending based on an increase in assessed values. If more money is needed, governments should make a convincing case — not just take the windfall from higher assessed values as they do now. • Adopt a cap on state and local government spending increases equal to inflation and the population growth rate. Statists, political scientists and the elected government classes will reject this as bad policy, saying governments need flexibility in times of emergency and that we elect our representatives to make tough decisions about spending. But for all of our adult lives we have seen the restraint of our elected leaders, and it is pathetic. Motivated to be re-elected, they cannot stop themselves from forever increasing the size of government. This is why property taxes keep rising. What’s more, it is also a well known fact that no amount of government spending will ever create
more wealth. • Let the market continue to determine property values, and let property appraisers determine their assessed values on the basis of market values, as they do now. • As for the disparity in tax assessments, in which side-by-side, identical properties have far different assessed values, let these differences be evened out over time with property sales. Take the condo building on Longboat Key with identically sized units, but far different assessed values — $1 million vs. $2 million. If, say, sales in that building cause values to rise 10%, then all units would see a 10% rise in their assessments. When and if the $1 million unit is sold, then its assessment would be brought up to the level of other units when the new buyer takes possession. • Finally, eliminate the $25,000 homestead exemption altogether. This is an anachronism. The Legislature adopted it before there was air-conditioning — an enticement to move to this mosquito-infested state. Obviously, it’s no longer needed. Everyone should be treated the same. But instead of making everyone pay higher property taxes to account for the elimination of the homestead exemption, simply enact a one-time $25,000 reduction in assessed values for every property in the state. Ken Wilkinson had it half right with Save Our Homes. But he also had it half wrong. Capping government spending would get it 100% right — for everyone, not just for the widows and poor retirees.
The Longboat Observer THURSDAY, August 3, 2006
MARKET WATCH by George Rauch
Conservative investing remains the right choice In October 2005, Market Watch published the first article pertaining to Dr. and Mrs. Millhalf, who had just moved here full-time, with $500,000 to invest. Their goal is to leave $1 million to their grandchildren. Every few months, Market Watch sits down with Dr. and Mrs. Millhalf to try to answer their questions. Initial investments were made Oct. 28, 2005. Pfizer was added in early July. Dr. Millhalf: Not to be picky, but this 14% annualized return appears to be behind the 15% we are looking for. Is 15%, maybe, too of a GEORGE much stretch? RAUCH Market Watch: Fifteen percent remains obtainable. Our goal remains to buy A-rated, well-managed, undervalued stocks that pay a dividend exceeding 4%, and that sell at a price-earnings ratio of less than the Dow Jones historical average of 14.4 times earnings. This portfolio is building nicely. We just added a $50,000 investment in Pfizer, the largest producer and distributor of drugs in the world. Mrs. Millhalf: I see Pfizer is valued at $53,987, not $50,000. Didn’t we just add this a few weeks ago? Market Watch: Yes, we did. Pfizer has gotten so cheap, and is such a well-managed company, that it met your criteria for purchasing additional stocks to add to your portfolio. Mrs. Millhalf: The gain of $3,900 in only a few weeks must mean this stock is going to the moon. Market Watch: Not really. Pfizer may yet get to a price below your purchase price, however, Pfizer, like other stocks in your portfolio, was purchased at the right price. Over the long run, Pfizer should do well. Dr. Millhalf: This portfolio, however, is still lagging our market return goal of 15%, isn’t it? Market Watch: If you look at
the short-term, tax-free bonds, and the yield thereon, you are saving income taxes in your tax bracket of 30%. Because of the tax-free status of part of this portfolio, you and Mrs. Millhalf are enjoying an annualized return in excess of 15%. Mrs. Millhalf: This is a much greater return than we are getting on our other investments. Should we liquefy our other investments and do this? Market Watch: It is important to become comfortable with the system first. This system is very simple: We buy only A-rated, well-managed, dominant companies in their industries. They must have high cash-dividend yields, and they must be selling at historically low price-earnings ratios. This system is not for everybody because it is extremely conservative. Investors want their portfolios to fly to the moon. But the dirty little secret that Wall Street doesn’t want you to know is that most people don’t make money in the stock market Dr. Millhalf: Don’t these large brokerage houses have a lock on research and knowing which stocks are going to move? Market Watch: Not at all. Wall Street firms are marketing companies. They have sold the public on the concept that they are the true market experts, and that their judgment is better than yours. With the Internet, all sorts of information are available on every company. Investors who do the best in the market tell their stockbrokers to buy stocks, like you and Mrs. Millhalf are picking, to build their portfolios. Most stockbrokers are pushing stocks their research departments suggest they sell. There are huge conflicts of interest in these recommendations because most of the recommendations are commission driven. Mrs. Millhalf: Shouldn’t this be illegal? We don’t know anybody that has done really well in the stock market. Market Watch: It never works
Letters TO THE
To send in your letters please e-mail them to lburke@ longboatobserver.com or mail them to The Longboat Observer, 5570 Gulf of Mexico Drive, Longboat Key, 34228. The Longboat Observer gives priority to letters of local interest and about local issues. The Observer will print all letters to the editor if it feels they are of general interest, but only if the letter is signed and the author’s street address and phone number are given. the editor reserves the right to condense letters.
DR. AND MRS. MILLHALF’S (Ret.) PORTFOLIO July 26, 2006 Security BAC GLD UST PFE
Amount 1,1,60 shares 1,050 shares 1,300 2,150
Current price $51.00 $62.00 $49.53 $25.11
Value $59,160 $65,100 $64,389 $53,987
Short term tax free bonds Total portfolio value: very well to try to regulate financial markets. It’s better to educate yourself, and make your own decisions based upon a common sense, conservative system. For every investor that takes a flier and makes $1 million, there are thousands who lose money. It is of note, however, that Wall Street’s record bonus last year of $21.5 billion roughly equaled the total increase in the value of the stock market in 2005. The profits went to Wall Street. If you check around with your friends, you’ll find that most people either lost a little bit of money last year, or made nothing. A lot of trading occurred, and a lot of commissions were earned in a record Wall Street year. Dr. Millhalf: If all that activity were illegal, wouldn’t the public at large enjoy the gains instead of Wall Street? Market Watch: Theoretically, yes. But it is not going to happen. Just try to remember that for investors as a whole, their returns decrease as activity in their accounts increase. For the average investor, buying and selling his securities benefits Wall Street. It does not serve the best interests of the investor. Mrs. Millhalf: With all the uncertainties and economic dislocations pointed out by Market Watch, might we be better off to be completely in cash and bonds? Market Watch: That would be the most conservative place to be, without a doubt. But this is a good time to start building a portfolio. As the well-managed, dominant companies become priced more reasonably by the market, it pays to purchase them and add them to your portfolio. While the market is still overpriced, it is much cheaper than it was six years ago, when there were no attractively priced stocks available. As previously pointed out,
Research needs conclusions Dear Editor: I watched “Global Warming” with Tom Brokaw last evening, and I was completely let down. Also, Al Gore’s research leaves much to be concerned about. Why doesn’t anyone who conducts all this research tell us when Miami, New York, and Longboat Key are going to be under 6 feet of salt water? I was born 74 years ago in Miami, and, to this day, Miami, Coral Gables and Biscayne Key are still at the exact level with the Atlantic Ocean and Biscayne Bay. Do we have another 74 years before they go under water?
$306, 335 $549,971*
DOW JONES INDUSTRIAL AVERAGE 10/28/05 7/25/06
At initial purchase Most current
(*)DJIA increase = 6.8% & Millhalf Portfolio Increase = 10% ($549,951 ÷500,000 = a 10% increase in value). The 10% increase in value is 8.5 months from the initial investment. Annualized, the return would be 14%.
groups like banks, drug stocks, and tobacco stocks are currently depressed to the point where they are selling at their all-time relative lows. There is little risk in the bestmanaged companies purchased at the right price. If we stick by our goal of purchasing stocks that pay at least a 4% dividend or better, the growth, for your grandchildren, could be excellent.
Conclusion Buyers in this market should remain cautious. Big money makes the major trends. Big money is still primarily in cash and shortterm debt securities. And big money is accumulating stocks like the Millhalfs own. Accumulation (demand) is why these stocks are going up in price. There continues to be difficult economic factors influencing the market. Retail sales are down. The housing market has slowed down significantly. Consumer discretionary spending, which represents 70% of our GDP, is decreasing, and the $750 billion borrowed against their homes in 2005 by consumers is not being borrowed at the same pace in 2006 as it was last year. The price of oil and gas remains high. Inflation continues its uptrend. (Since the Federal Reserve System was founded in 1913, our money has lost 98% of its value.) We have $50 trillion of debt in this country and only a $13 trillion GDP. The Dow is still selling at 19.8 times earnings, 38% above the Dow’s historical average price-earnings
Also, these same experts say Katrina was the worst hurricane to hit the United States. Any hurricane, of any force, would have been the worst if it hit New Orleans. After all, New Orleans was built below sea level. My parents moved to Miami in 1926. The hurricane that year was one of the worst to hit the U.S. — if not the worst. It blew large ships onto the main streets in downtown Miami. As a matter of fact, one large ship was made into an aquarium and remained there for some 20 years. Emmet Weber Longboat Key
ratio. The Dow cash dividend yield is 2.4%, about half of its historical cash yield of 4.3%. Our trade deficit continues to set records. The U.S. government budget deficits remain at high levels adding to our future interest-payment obligations. Foreigners continue to increase their ownership of U.S. assets while we Americans continue to reduce our percentage of the world’s assets. This means that we will pay out more of our income to foreigners in the future than will be received in income from them. The key to Dow theory is understanding values. There is tremendous wealth in the United States, and much more wealth will be created over the next 50 to 100 years. In spite of our economic dislocations, it’s important to look favorably upon the fact that we are the tail that wags the economic dog of the world. In one year, we still produce 30% of the world’s goods and services — an astounding figure for only 4.5% of the world’s population. Selective purchases of stocks, purchased when each stock is a value, is most likely to produce nice capital gains with a minimum of risk. Caveat Emptor. Editor’s note: To access the Millhalf history, log on to www. gwrauch.com. George Rauch, Longboat Key, is chief executive officer of Bradenton-based General Propeller and a former Wall Street investment banker.
Remembering Dr. Albee Dear Editor: George W. Albee died peacefully on July 8 after a brief illness. My heartfelt thank you to all of you for your well wishes, cards, letters, flowers, condolences and comfort food. A memorial service will be held in the Waterman Building at 11 a.m. Sunday, Aug. 20 in the Memorial Lounge, University of Vermont. Margaret Tong and members of the Albee family
The Longboat Observer THURSDAY, August 3, 2006
VISIONING continued from page 1A Possible changes Sandy Gilbert, chairman of the planning and zoning board, said the board could consider two possible changes to boost struggling businesses on the Key. Before policy changes are implemented, the board will wait to see the results of a town-wide survey and hold several public meetings and possibly an educational outreach program. One option involves changing the way the town restricts the development and redevelopment of hotels and resorts. Current zoning limits new construction on tourism sites to six units per acre. When this legislation was passed in 1984, the law required approval by referendum of a majority of voters before the density quota was amended. Under current zoning regulations, new
construction in a tourism zone is limited to either three or six units per acre. If a developer wanted to build a mid-size hotel, such as the Hilton, it would have to lobby for a density change, which has to be approved by voters. Gilbert said one possibility is to delete the word â€œdensityâ€? from the zoning code and regulate hotels and resorts by the buildingsâ€™ physical characteristics. â€œIâ€™m not saying we are going to recommend that,â€? Gilbert said. â€œBut we are certainly thinking about that. And we want to know what people are thinking about that.â€? The main question: What kind of zoning changes would voters be willing to accept? â€œWhat are we going to do to ensure that people can live out there and itâ€™s not like Casey Key, where residents donâ€™t have shops to go to?â€? Gilbert asked. â€œResidents
are aware of the problem.â€? Andrew Hlywa, owner of The Market grocery store in Whitney Beach Plaza, said that he thinks tourism will continue to dwindle if the current six-unit-per-acre zoning remains. He said he thinks tourism property to the west of Gulf of Mexico Drive will eventually convert to condominiums because the land is worth much more as residential. But he recommends a higher density for tourism property east of Gulf of Mexico Drive, where a small-resort developer can still buy land at a cost that makes running the resort possible. â€œIf all you have is T3 and T6 (zoning), all you will ever have is condominiums,â€? Hackett said. â€œPeople need to know what the impact will be if it stays at 3 and 6.â€? Another possibility is the formation of an overlay area or tourism district to promote the development of resorts or hotels. â€œIâ€™m not talking about Daytona Beach,â€? Hackett said. â€œWith a 25,000 density cap, we will never be a Daytona Beach or Fort Lauderdale.â€?
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No one is disputing the fact that hotels and resorts have a major economic impact on the islandâ€™s commercial and real-estate market. But there are differing viewpoints about whether the town should change zoning policies and other regulations to promote an increase in tourism to make up for recent resort-to-condo conversions. â€œWe donâ€™t want to be like Daytona Beach,â€?
said John Sommers, a Longboat Key resident. â€œThatâ€™s not what people want.â€? Sommers thinks that most residents moved here to enjoy retired life in a tranquil setting â€” something that an increase in nightly rentals could change. On the other side of the issue, people like Don Schroder, chairman of the Anna Maria Island Chamber of Commerce Board of Directors and broker/associate of Re/Max Gulfstream, says that without preserving tourism, many businesses on the island would be forced to close. Schroder points out that for every $1 tourists spent nightly on hotel rooms, they spend $3, on average, in the community, in restaurants and shops. â€œThe whole key to the future of tourism is the preservation of beds,â€? Schroder said. Under current conditions, the island will see more condo conversions and an absence of new hotels, said Andrew Vac, owner/broker of Re/Max Excellence. Vac said the solution to the problem of the loss of nightly rentals has to be a combination approach. He cited zoning codes, rental restrictions and sign codes as three key components that the town must look into because all three work together. â€œWe need tourism,â€? Vac said. Next week The Longboat Observer reviews what some other towns have done to promote tourism in a resort-to-condominium market.
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