Real Estate Disruptors
Let's Disrupt Real Estate. What is Real Estate? Not all markets are created equal. Gulf Coast to Space Coast talks to the leaders in the industry throughout Florida just as if we were sitting across a dinner table. OH! and our hosts and guests change with every episode just to keep you on your toes. We cover the Gulf Coast of Florida to the Atlantic Ocean, think Tampa, Clearwater, St. Petersburg, Orlando, Daytona Beach, Space Coast, Miami. We talk about investing, marketing, staging, and many many more related topics. Start listening to the Real Estate Disruptors and see what Real Estates Past, Present, and Future will bring?
Real Estate Disruptors
Unlocking Property Insights: Navigating FEMA Rules and Appraisal Challenges with Mike Twitty
Join us for a groundbreaking conversation with the Honorable Mike Twitty, the Pinellas County Property Appraiser, as we unlock the mysteries behind the innovative updates to the PCPAOgov site. We promise you'll gain valuable insights into the often-confusing FEMA 50% rule letter, understanding its true origins and how it assists property owners in navigating the aftermath of storms. Discover how this massive three-year project enhances user experience with cutting-edge tools and architecture, especially for residents dealing with storm-induced challenges. This episode is a treasure trove of knowledge for property owners, offering practical guidance on handling property appraisal intricacies and storm-related repairs with confidence.
We also tackle the complex world of FEMA regulations and permitting processes in Pinellas County, drawing lessons from Hurricane Ian's impact. Learn about the critical importance of flood insurance compliance and the potential pitfalls of neglecting FEMA guidelines, as evidenced by Lee County's loss of NFIP insurance discounts. Our discussion shines a light on the crucial role floodplain managers play in efficiently managing the rebuilding appraisal process, ensuring timely permit approvals amidst the bureaucracy. With insights from Mike Twitty, we equip you with the tools to navigate governmental red tape and streamline your storm-related permit endeavors.
Hello everyone and welcome back to the pod. This is the Real Estate Disruptors show launching out in January of 25. I'm here with my co-host, amir. What's happening, amir?
Speaker 2:Hey, good morning Mike. Welcome to 2025.
Speaker 1:Hey, hey, hey. We got here somehow, didn't we? We sure did. 2024 was a hell of a year.
Speaker 2:I'm ready to say goodbye to 24. Oh yeah.
Speaker 1:All right. Hey guys, we have our frequent flyer guest returner on the show today. I think this is three times you've been back on our favorite special guest on the show, the Honorable Mike Twitty, Pinellas County Property Appraiser, is here today to join us and share a little information about what's going on out there. Mike, welcome to the show. I appreciate it. Glad to be back.
Speaker 2:All right. Thank you, Mike, for coming in today. Appreciate it Sure, of course.
Speaker 1:Yeah, and before the show started, amir was talking to you about thanks for jumping on social and calming some people down with yeah, it was great to see you popping on social.
Speaker 2:I mean, some of those next door chat rooms and Facebook chat rooms can get kind of heated with some, well, a lot of misinformation and you know I was like, oh wow, look, mike just popped in there and shut it down. It was really cool. So kudos to you for doing that.
Speaker 3:Thank you. Thank you, I'll keep an eye on them, you know.
Speaker 1:So, mike, I'm sure it's been a slow year. The 2024 was slow, not much going on over there in your department, in your world. I will say that I personally believe that you know you lead the way, and I mean that from the bottom of my heart. You lead the way with the local property appraisers. I don't know much other than you know our local surrounding counties, but you have definitely set the bar and been a pioneer of what you've done. I have your site pulled up right now. Take a quick minute and tell us the site is fully up and running and has been for a little while. But this is your baby.
Speaker 3:Oh, yeah, yeah. So it was about a three-year project to build a new ground up PCPAOgov and you know we we wanted to have all the best of what was in the old site that people loved, but then put it into a modern architectural framework that allows us to grow into the future, put more tools into it. Uh, we've got some exciting tools to talk about today and new processes that we're building into the site as we speak to help our um people that have been impacted by these storms.
Speaker 1:And that's definitely what we're going to focus on today. I know Amir actually found this I don't know well, over a month ago when a lot of people were wondering about this whole FEMA, fema 50 thing and they were all confused after the storms and he said, look, mike's got it right here on his site. So if you go to your site, we've got. I just pulled it up and I'm looking at it right now. You've got the Storm Damage FAQs. Guys, I would definitely go on there. You can help yourself become knowledgeable and you can certainly sell that information with your clients. But we're going to go over some of these FAQs with you today. If that's all right, that's great, and have you totally expound on what you got here? The first one that I want to talk about is this how do I find my FEMA 50% slash 49% rule letter? Talk to us about that and how you came up with that. Yeah, sure.
Speaker 3:So first I want to talk a little bit, debunk some myths with that. Fema 50% letter because people get confused over that. So, first of all, fema does not produce that letter. Secondly, we do generate that. It's been around for over a decade. My predecessor actually started it back when Biggert Waters was rearing its head in the flood insurance realm.
Speaker 3:And they were stripping talked about, you know, stripping away discounts and taking everybody to full risk rate back. You know, 15, 16 years ago so that's when the FEMA letter came into existence on our website and it was really there to help people that had to deal with 50% rule compliance and to give them a max repair number for their homes in a convenient way without necessarily having to go out and get a third party appraisal. It was really. It was really designed more for substantial improvement than substantial damage. So substantial improvement is just, you know, I'm putting a new roof on, replacing my doors and windows, making some plumbing changes or electrical changes, and that mechanism worked pretty well. It was never really designed for substantial damage.
Speaker 3:So now, boom, we have substantial damage and unfortunately, some of our citizens are coming up a little short when they look at that letter. The way to find that is to go to your parcel and once you've searched, pulled up your parcel, you're in our little toolbox off to the right-hand side. You'll see a series of buttons and one of those says FEMA slash WLM letter and that stands for win-loss mitigation, because that letter actually does two different things. But we're just going to focus on the FEMA piece right now and FEMA really wants me to change the name of that letter. They don't like me using putting their name on there.
Speaker 1:They don't like that. You delivered their bad news Right.
Speaker 3:But I said well, what's a better name for this? They said, well, call it an SISD letter or whatever I go. Well, nobody knows what that is. So I said, when you come up with something better and when you consider being more friendly to Floridians when they elevate their homes and giving them a more appropriate rate on their flood insurance when they've elevated via risk rating 2.0, then we can talk about it.
Speaker 1:Yeah, leverage them right back a little bit. Yeah, I like it.
Speaker 3:Right. So I said I'm not changing horses midstream and relabeling it when that's what people are used to right now.
Speaker 1:They wouldn't know where to find it Exactly, yeah.
Speaker 3:Awesome. So again, what that letter does we take? And people get confused over whether it's the whole value of their property or-.
Speaker 1:Right, you want to break that down real quick for us.
Speaker 3:So the way FEMA and NFIP look at that, it's just your structure, so just your building value, so it's your primary structure on that property. If you have multiple structures you have to look at each one of them independently. You can't aggregate them and we'll talk about condos later. They're a whole different beast when you get into that. But so if it's a home, it's the structure only, doesn't include your other site improvements. You know, your pool, your doc, all the, all those types of things do not, do not get rolled up into that value. So structure only. And then 49 or 50% of that number is what you're not able to equal or exceed.
Speaker 1:And is that number the 49% or 50% of the replacement cost of that structure when it was built? Did I hear that somewhere? How's that Is?
Speaker 3:it a replacement of today's current. No, it's depreciated structure value Depreciated structure Okay. So FEMA calls it market value of the structure. So market value would be depreciated.
Speaker 1:I gotcha. So you know. When people think, oh you know, I just got an estimate for a hundred grand or 200 grand, no problem, I'm way under my assessed value, that's certainly not the case at all.
Speaker 3:Right, and that's why they have to go in and look at the letter, see what that number is, and you know it comes up short on a lot because a lot of these homes are older. You know a lot of them. They had haven't had much of a permit history of activity. You know some of that because they haven't done anything and some of it because maybe they've done some things without a permit permit. Our job is not to be the permit police. We look at what's there and we put it on the roll or don't put it on the roll, based on its physical existence.
Speaker 1:So just to clarify for the listeners out there the depreciated values if I had a structure that, let's say, was assessed at 200 grand, that's 20 years old, and you're doing a straight 39 year depreciation or they're doing a straight 39 year depreciation off that, that's basically half the value, right, am I?
Speaker 3:on base here. Yeah, we're using a longer life than 39 years okay, yeah, okay we're using.
Speaker 2:It depends on what it's made out of, but okay, so that can be a moving time yeah, frame or or block okay, yeah all right, did not know, how that worked and if you're, you know when you, when a consumer pulls up this letter and you know they're looking at their values, their structure value, and then what their um, you know, uh, what their repair improvements can exceed. If they are not, they feel that that number is low. What, what, what can they do? Is there, is that the end of the road for them, or can there be something? It's really a first stop.
Speaker 3:So so that's, that's the freebie. Quick look If, if that number works for you, you, you know that's what the building department's going to use they're going to pull it up right off our site and and you bring in your, you know your repair numbers and if you're under that number then they're going to issue your permits. You can move forward. Yeah, go ahead. So the other and some of this gets down to the methods that are approved by the various jurisdictions and what they've put in their flood ordinances. So it can get down in the weeds when you have 24 different cities and the unincorporated county, but but most of them will say some form of market value of the structure in their, in their thing. So another alternative is to get what's called an actual cash value appraisal. It's a specialized specialty product. They're basically going right at depreciated cost of the improvements. They're even using typically a longer depreciation schedule because they're removing obsolescence from it. It's just straight physical.
Speaker 1:No functional obsolescence is factored in there, so you're a lot of times you're.
Speaker 3:they're able to use 150 year life. Okay, so that helps soften the depreciation some. So you're going to get a different, you're going to get a higher number with a private appraisal doing, doing a ACV appraisal, as opposed to what we were going to have, cause our number has obsolescence in it. It has, you know, other things and we don't have. We don't put that super long scale on a little more conservative.
Speaker 1:Yeah, you guys have to base yourself on doing mass appraisals.
Speaker 3:And now something we have rolled out because, as this was unfolding I knew in our market we didn't have a lot of appraisers that had the experience to do ACV appraisers, appraisals, and I knew they needed to get up to speed. We have had some some courses in recent years to help educate them, get them up to speed. We have had some some courses in recent years to help educate them, get them up to speed on that. But not all of them have gotten on board yet. Now they're starting to jump in because residential market's been slower. So they've had a good incentive to to learn how to do these and jump over and serve, fill that need.
Speaker 3:But I was worried people may get backlogged a month or more with some of those and you know, obviously they cost money too, and so I said there's gotta be a way we could produce something that Give another free look. You know, if people can come in with documentation mostly photographic or contractor invoices the last couple of years, things like that that shows that we can justify a factual change because we don't see the inside of most houses Right and they may have done, you know, $100,000, $200,000 remodel really extended the life of that home might allow us to adjust the effective age on that property some. So we rolled that out, rolled that out to my team, proposed it to them. They embraced it. We figured out how to do it. We stood up a different database just to deal with these. We're calling them BVRs building value reconsideration. So we're going right in looking at it. Pre-storm, so we put an effective date value on that pre-storm, based on whichever event it was.
Speaker 1:Okay.
Speaker 3:And and we do a relook. So the team goes in, they look at the documentation submitted. It's really easy to do right through the website. There's a, there's a portal or something. There's a fillable PDF form. They they fill out and it launches an email and they can attach their documentation on there. We're building out a more interactive web form that will hopefully be out soon, where it will be even easier for them to engage direct through and do their attachments.
Speaker 2:And can they do that without getting the private appraisal?
Speaker 3:Yes, okay. Would you recommend that be the?
Speaker 1:first step. Mike didn't mean to interrupt, but before they get a private appraisal, yes, okay, yes, so they can Would you recommend that be the first step? Mike Didn't mean to interrupt, but before they get a private appraisal, let's see if you guys can it's certainly.
Speaker 3:It's yes, especially if they're close. You know, if they're close and they know they've done stuff and we've had cases where so a year ago we had Idalia yeah. So a bunch of people got impacted by Idalia. Well, when it came around January 1 of this year, their house was still tore apart. They were putting it back together for Idalia. They didn't complete it until mid 2024. So their number on our site is drastically low because we wrote down their improvements because of the damage they had sustained. So they are very likely candidates.
Speaker 3:They're going to get pretty major movement if they've if they've repaired their home prior to Helene hitting them. So that's a good example of where it's definitely going to help you.
Speaker 2:Yeah, definitely. And then if, if they're going that route, you know they want to try that before they do, you know, hire a private appraiser, Is there benefit for that owner to reach out to their local realtor to maybe get a pre-hurricane comp report to be able to provide to you guys?
Speaker 3:Well, when we're doing those, we're not using sales.
Speaker 2:Oh, okay, yeah, Gotcha.
Speaker 3:So we're doing it. We are, but we're using last year's sales. They're already in our database. We're running it through our same system that we valued for January 1 of 2024. But we're moving that date to capture any of the factual changes Understood.
Speaker 1:Yeah, so, mike, digressing back to something we said about five, six minutes ago, I think you said 24 different municipalities, is it 24, 27 different, 24. In his Pinellas County. So you've got to deal with the city of St Pete and Madeira, and then the counties as well, and Madeira and then the counties as well, kind of. Maybe give everybody a quick explanation as to how it's working with FEMA. Putting you know they have their, they're putting pressure, so to speak, on the governments and municipalities to enforce these code restrictions on the rebuild, because that's how they get their reinsurance correct. I'm butchering that I understand, but please clarify for me.
Speaker 3:Sure sure. So you're referring to kind of the substantial damage process that people are having to navigate and it's very, very tricky, very confusing. We know there's a lot of misinformation floating around out there and a lot of the slow progression that's happening with our county and our cities is because of what happened in lee county um, fort myers area right. So some of the cities and and unincorporated county down there, so they they've gotten. Uh, one of them is already under what are they in?
Speaker 3:I'm trying to remember what they called it, but they're in a probationary period.
Speaker 1:Okay.
Speaker 3:Which means they've lost their NFIP discounts. So they had a 25% discount on their NFIP insurance. Well, that's gone.
Speaker 1:Okay.
Speaker 3:Because they could not come into compliance. They had FEMA inspectors coming in on the ground after Hurricane Ian and finding that people were building back without permits.
Speaker 1:So this is a function of the government's not enforcing and that would become a function of code enforcement. I guess finding people doing this after the fact.
Speaker 3:Yeah, ultimately.
Speaker 1:Okay, so what would be the normal? If there is a normal discount that you're getting for being in compliance with the flood programs? You know where I'm going with all this is. We can't handle any more insurance rate increases and it looks like if these municipalities and governments aren't enforcing this properly, they could lose it like Lee County did. Right.
Speaker 3:Well, so it's all based on what's called their community rating system, or CRS rating, and Pinellas unincorporated Pinellas actually is a number two now, so that's as high as.
Speaker 1:It's a good rating. That's a great rating. That's not a bad rating. That's a great rating.
Speaker 3:So it means their discount's substantially higher. I'm trying to remember what the actual discount is.
Speaker 1:Do you guys have to get together, Like when they come in and talk about this? Which branch of government or which department of government is completely responsible for this, or do you work in conjunction? I know you're not your state constitutional office, but where does that lay? Whose feet does that lay at?
Speaker 3:So the floodplain administrators have to work with federal, so with NFIP and FEMA. But then you also have the state layer with Department of Emergency Management, have the state layer with department of emergency management and then you've got so each jurisdiction, like I said, it's the, it's the building departments in conjunction with the floodplain managers working together. They're the ones that that have to kind of control this substantial damage process. Fema is just there to be that federal oversight, Like hey, make sure you follow our guidelines, because we're going to come back in after the fact and audit.
Speaker 3:And you need to make sure you can justify what you're doing. Okay, gotcha, gotcha.
Speaker 1:So, yeah, I get a little anxious hearing all these government bodies involved in making this decision and, wow, that could be a lot of red tape if we're not careful. Now, that could be a lot of red tape if we're not careful and if we lose this discount. I hear that we're not with Pinellas County, but it really comes down to the enforcement branch of the county making sure that we don't build back like they did in Lee County, is that?
Speaker 1:what I'm hearing Right right without following the proper steps. And that's part of the frustration that we're hearing with the delayed permits and the timeliness of everything. Because I know I had a call from a friend yesterday and talked to him a long time and he thought I might have some insight on on permitting had nothing to do with the storm damage, but he was in a situation where he was doing an addition to his house and he was like this is just you know well, yeah, so in any blue sky, permitting like what he's dealing with is put on the back burner because storm permitting has been moved to the front.
Speaker 1:Aha, gotcha, I'll have him call you tomorrow. No, please don't.
Speaker 2:Permitting is not my specialty Building and permitting department there.
Speaker 3:I basically hear myths and rumors about the building department.
Speaker 1:Yeah, gotcha, gotcha.
Speaker 3:And every one of them is a little bit different in how they're handling it.
Speaker 1:That's what I find From. Madeira Beach might be different from Indian Rocks, and Indian Rocks could be different from City of Clearwater and that could be different from the county.
Speaker 3:Now the county has contracts with seven municipalities To handle their permitting To handle building and permitting.
Speaker 1:I have found that the counties are pretty consistent and a little more user-friendly for the public out there Pinellas County anyway. So that's been my experience.
Speaker 3:Just to tie back into the FEMA letter or the whatever word whatever you're going to call it later at some point in time, the new name.
Speaker 2:So if somebody has to hire an appraisal, provided they're able to get the appraisal done within. I don't know, let's just say they order it, they get the appraisal back and then they present able to get the appraisal done within. I don't know, let's just say they order it, they get the appraisal back and then they present it to do. They present it to you, they present it to the floodplain manager.
Speaker 3:Yeah, so basically they'll end up submitting it to their respective building department and it'll get. It'll get. It'll either end up getting a review by the building or the floodplain manager or some of the subcontractor team that they've brought in. So because of the shortage of man, people power to support all this, they've used some government contract third-party vendors to come in and help support that substantial damage process. So they have inspectors in the field, both within anincorporated County and with it working directly for engaged with some of the cities.
Speaker 3:Then they're putting that data in what they call it a substantial damage estimator tool, which is actually a FEMA software package. They're plugging data base, cost data in that they actually get from our office to run through so that it's apples to apples on on when they do the repair costs compared to our values on our FEMA letters. It allows those things to match up better so that they don't use overblown repair numbers. And but that's still so. So they go through that process. That's that initial brush to determine all right, you know they're they don't meet, that they're under the threshold, they can get a permit, or they're over the threshold and we're going to have to send them a substantial damage letter. So that's what they're going through right now. Those SD letters have been coming out of the county I think they've probably sent out, probably in the neighborhood of about 800 that I'm aware of.
Speaker 1:So substantial damage letters.
Speaker 3:Well, so that's total letters, but the last number I heard was that only about 15% were actually getting a true SD letter.
Speaker 1:Okay, that's better news than we initially might have heard.
Speaker 3:Now I can't, I can't, I don't know exactly where those properties were located. So you know, and what fashion they're navigating through their grids to send those out.
Speaker 1:So if you get and I know you're not in the building department, but you're a very knowledgeable guy and you certainly have some insight If you get the substantial damage letter, what are your remedies for that? You either have to raise it the existing structure which I'm not so sure that's always the best way to go or you've got to demo it and build up correct.
Speaker 3:Right, so you can relocate it. If you can put it on a truck and take it somewhere, you can elevate it.
Speaker 1:That doesn't work real good on a slab, does it no?
Speaker 3:And elevating even on a slab is tricky. It can be done but it's tricky. And then people have to weigh that out whether it makes sense to do it. But some of the grants that are available out there, that's really their elevation grants. So they really want you to retain that old home to be able to qualify. So those get tricky. That is tricky. Plus, you're going to have to wait many years before you ever get those funds. So I don't think that's really a practical solution. In most cases you can also abandon your first floor and build on top Right. That's an option. You know you turn the lower level into uninhabitable space.
Speaker 2:A big garage, man cave, yeah no no, don't close it in no living space. That's right You've got to have those breakaway walls.
Speaker 3:Right, right, or obviously the rebuild is the cleanest and probably you're going to get the best improvement there and you're going to be more resilient to storms in the future.
Speaker 1:So my simple mind goes to here I got the SD letter and I've got to rebuild and I don't like the first two options and I just knock the place down and build, which is I would do. Now my simple mind says didn't I just flood my neighbors? Because I'm up to you know my elevation today and what is the infrastructure in place to handle these? You know, let's say we've got a community with 500 homes and 25 of them now are significantly higher than the other. Isn't that causing damage still to the community, to my neighbors, possibly on a flooding?
Speaker 3:event. Well, it depends if you're filling the site at all, I mean, if you're leaving the site at you know, leaving the natural grade, the impervious soil Right, and there are some jurisdictions where they're trying to do some floodplain compensation.
Speaker 1:Have you heard any issues with this? What I'm talking about? Yet?
Speaker 3:I've heard more about that before the storm.
Speaker 1:Okay.
Speaker 3:Just with some people that were wrestling with things, where they tried to put some structural fill on their site and actually raise it up a little and then it sheds water under their neighbors.
Speaker 1:Yeah.
Speaker 3:Yeah, so there are issues there. Water under their neighbors, yeah, yeah, so there there are issues there. Um, but generally, if you, if you build it on on piers or piles and get it up in the air and the water comes through, in an event and it just sheds across the island and goes away.
Speaker 1:Yeah, you know it was this. Uh, we were talking earlier. With these storms we had, we really had the trifecta. You know, with these storms you get surge, you get freshwater flooding and you get wind. Well, between all of them, we had all the events. It was an interesting time to be here, all right. So listen, we have a lot going on with Mike. We've got a lot more to cover. We are going to bring him back to hit you guys with another podcast. Yeah.
Speaker 3:One thing I wanted to throw in. So they do have that opportunity to to come back for a reconsideration under what they call it a reassessment. So if you get that SD letter, I want to let people know that that's not the death sentence. No, no, it's not. It's not the end, right, that just means that the inspectors were out. They may. No, it's not. It's not the end that, right. That just means that the inspectors were out. They may not have even seen the inside of your home.
Speaker 3:They, um, they had to gauge off watermarks. They're using damage percentages based on water lines for the different structural components within the FEMA software, and so that was the initial determination. You can request a reassessment process, which means then that's when you either get that BVR, that building value reconsideration from us, or you get an outside ACV appraisal, you bring that in along with your permit package and all your repair costs from your contractor and basically say, hey, my numbers work. You know I'm not substantially damaged. They'll review that. There'll be another team that looks at that with building and floodplain, and then they'll issue a reassessment determination.
Speaker 1:Okay.
Speaker 3:So then, so you may pass there. If you still don't pass there, the county I know is going to actually put a true appeal process in which will go before a special magistrate.
Speaker 1:Okay, kind of like when we appeal our taxes that you assess us for.
Speaker 3:That's kind of how they came to me to talk to about that and I said, yeah, I can. I think the way to do that is you leverage the special magistrate process that the clerk of the court already manages. So they took that and ran with it and that's what they're setting.
Speaker 1:So, basically, you've got some recourse, you get the letter, you've got the BVR through you and then there's one more formal appeals process that they're going to be able to employ before they just go ahead and start looking at other options.
Speaker 3:The one thing I can't guarantee right now. I don't know how the cities are going to do, if the cities are going to offer a true appeal, so I don't know if they're going to offer that last step. That's something they have to work out with the county.
Speaker 2:So it's more for unincorporated Pinellas and the cities that contract with Pinellas, but everybody has that opportunity for that reassessment.
Speaker 1:Guys, I hope you're all listening. By the way, on his site, what he just talked to you about is this independent appraiser. He's got two sources listed right here under question four. I would jump all over that if I were you. We're going to come back on another podcast with Mike and I'm going to ask hey, do I get a break in my taxes? Should I get some kind of discount or something? So, guys, tune back in. We appreciate you all. Thanks, mike for coming and we'll catch you all next time.
Speaker 2:Thanks, for having me.
Speaker 1:Take care guys.