As March draws near, law enforcement is gearing up for the annual celebration that at one time enticed thousands of raucous, college-aged partiers to the white shores of Panama City Beach. This year will be the second in which laws, including a "zero tolerance" alcohol ban on the beach, will be in effect during the entire month of March.

By Zack McDonald | 747-5071 | @PCNHzack | zmcdonald@pcnh.com

PANAMA CITY BEACH — Despite what appear to be "fake news" articles making the rounds on social media, Spring Break laws restricting alcohol on the sandy beach are still in place — and officers are ready to enforce them.

As March draws near, law enforcement is gearing up for the annual celebration that at one time enticed thousands of raucous, college-aged partiers to the white shores of Panama City Beach. This year will be the second in which laws, including a "zero tolerance" alcohol ban on the beach, will be in effect during the entire month of March. While businesses are expecting an even lower turnout than last year's, authorities are preparing as they have in years past — with an option to scale back if expectations ring true.

 >>LINK: 9 PCB SPRING BREAK 2017 LAWS YOU NEED TO KNOW<<

In the lead-up to this year's Spring Break, though, law enforcement encountered a novel factor that could have an impact on attendance — fake news.

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A misleading article had been floating around cyberspace in mid-January, claiming Panama City Beach's alcohol ban on the beach had been lifted. The creator used a News Herald story from April 1 of last year, when the month-long alcohol ban came to an end, to mislead people into thinking the ban itself had been lifted. The Bay County Sheriff's Office and Panama City Beach Police Department battled back, coordinating a social media response of their own to remind people that was not the case.

"I just wanted to get a message out there to educate the kids and anybody else thinking the alcohol ban had been lifted," PCBPD Chief Drew Whitman said. "If they want to come over and abide by the rules, they're more than welcome. To me there would be nothing worse than getting bamboozled with fake news and then getting arrested. "

Whitman said he has officers prepared to patrol the beaches at the same volume as last year and enforce all the city's Spring Break laws with zero tolerance. PCBPD also has contacted surrounding law enforcement agencies, who have in the past lent assistance during high-traffic times. Whitman added that the amount of officers could be scaled back, depending on how the turnout unfolds through March and April.

"We are planning on having plenty of officers out," he said. "If we can cut back, we will, but we're planning for a regular Spring Break."

County enforcement

 BCSO's jurisdiction overlaps that of PCBPD just east of an area known as "the triangle," near the super clubs, which remain a hot spot for visitors. So officials within BCSO likewise have been preparing for the influx of visitors and will be closely monitoring traffic with an option to scale back patrol.

While this is not the first Spring Break of his career, it will be the first in which Sheriff Tommy Ford has been at helm of BCSO. He said this year will be particularly important to show there will be no tolerance for violators. Officers are always left to their own discretion in determining whether to take someone to jail or not, Ford said, but offenders "would have to come to Spring Break from a cave" to get a pass this year from BCSO.

"We are not going to do anything to jeopardize the progress we have made," he said. "We are in a transition period and don't know what to expect. It's more manageable, but to say it's gone away is not accurate."

Ford cited transgressions in other cities last year, saying some softened on enforcement of their alcohol bans. The scenes were similar to that of Spring Break 2015 in Panama City Beach, when an incapacitated woman was sexually assaulted on the beach in broad daylight and seven people were victims of a mass shooting at a house party. Miami had a quick about-face after chaos in South Beach culminated with the deadly shooting of a 20-year-old. Daytona Beach police saw arrests skyrocket and an officer was injured before they had to call in reinforcements from a neighboring county.

"It could turn on a dime if we're not vigilant," Ford said. "We want people to come, but we want them to obey and respect our laws."

Ford said the default for his officers will be the same — arrest for violators in order to send a strong message. Likewise, BCSO will be operating at heightened staff levels with backup on standby. Similar to last year, the mobile booking unit also will be running at the outset, Ford said.

Both agencies said they don't want to deter college students to come to Panama City Beach — they just want them to behave. PCBPD summarized their expectations with one sentence in the response to the fake news story.

"A general rule of thumb we like to use, if it's illegal where you're from, it's illegal here.

TALLAHASSEE, Fla. – Feb. 9, 2017 – Looming ratings downgrades for six to eight Florida-based property insurers could affect about 250,000 policyholders statewide, forcing some to find new insurers, according to sources familiar with an advisory issued this week by ratings agency Demotech.

The company, whose Financial Strength Ratings (FSNs) determine which insurers are acceptable to lenders of mortgages backed by Fannie Mae and Freddie Mac, also announced that two state Supreme Court rulings that went against insurers in 2016 prompted it to suspend the standards by which it rates 57 Florida insurers.

The rulings, along with increased claims costs blamed on the Assignment of Benefits (AOB) repair clause, have "revised claims procedures, practices, and protocols from the industry standards that previously existed to a 'Florida only' standard," Demotech said in the Feb. 6 advisory.

The Ohio-based national ratings firm said it will continue to analyze and rate companies as in the past, "but we will need to do so with a focus on the carriers' responses to the challenges faced by AOB and the [two Supreme Court cases] in the execution of their business plans."

The advisory also stated that Demotech asked some companies to "infuse additional capital." Those that don't before Feb. 28 "face potential [ratings] downgrades," Demotech said.

Insurance companies are allowed to secure capital – through debt, asset sales or reinsurance buys – before Feb. 28 and apply it to their balance sheets as if they had it in place prior to the end of the previous year. The additional capital would show up in the companies' 2016 financial reports.

Downgraded companies would lose the 'A' ratings required by federal lending agencies Fannie Mae and Freddie Mac, potentially forcing their customers to find new carriers to comply with the lenders' requirements. according to two insurance industry officials.

They said they have conducted discussions with Demotech's CEO about the issue. Demotech is introducing a new rating of B++ that will replace its previous "S" rating, one of the officials said.

Customers who will have to find new carriers could be force-placed by their lenders – raising their policy costs – or have no choice but to purchase policies from state-run Citizens Property Insurance Corp., the so-called insurer of last resort, the two officials said.

Demotech CEO Joseph Petrelli declined a request to be interviewed for this story, deferring further explanation to conference calls open to interested parties at 2:30 p.m. and 4:30 p.m. on Friday.

In a Feb. 7 story posted on the website of the trade publication Insurance Journal, Petrelli said 10 to 15 companies could be downgraded in March.

Yet the two industry officials who said they've communicated directly with Petrelli said they were told the number of downgrades range from four to eight.

Locke Burt, president of Ormond Beach-based Security First Insurance, said he expects downgrades to affect four to eight companies with 250,000 to 300,000 policies – roughly five percent of homes in Florida.

Jay Neal, president and CEO of the Florida Association for Insurance Reform, said he was told downgrades are looming for six to eight companies with about 250,000 policyholders.

But Neal said he doesn't expect lenders to take immediate action against downgraded companies. A more likely scenario would be for the downgraded companies to spare the policyholders by rapidly merging with or being purchased by companies with healthier balance sheets.

"The market is due for mergers and acquisitions activity," Neal said. "Some companies will be acquired by companies with capital to bring them into the rating [Demotech CEO] Joe [Petrelli] wants. Others will be folded into smaller carriers."

Burt said he knows of "several companies that are for sale. They are looking to either merge or find new investors."

Neal and Burt both said they have good ideas of which companies are in danger, but don't want to name them. Neal said the companies are not concentrated in South Florida but have policies spread throughout the state.

Insurance companies sustained considerable losses in 2016, they said.

Demotech's advisory noted insurers were impacted not only by increased Assignment of Benefits claims, but also by severe weather that "hammered the Sunshine State" throughout 2016. Those events included a tornado striking Cape Coral in January 2016, Hurricane Hermine striking the Florida Panhandle in early September and Hurricane Matthew's track along the eastern coastline in October. Numerous companies paid losses from all three events, Neal said.

Burt, whose customers are concentrated in northern and central parts of the state hard hit by Matthew, said "financial reports of Florida-based companies are going to be awful when reported at the end of the month." He said his company borrowed $60 million to shore up its 2016 bottom line.

Demotech's advisory stated that all insurers survived events of 2016, and Neal pointed out that a ratings downgrade does not mean an insurer is failing. He contended that the downgrades will ultimately strengthen Florida's market by enabling Demotech to distinguish the strongest companies from the merely healthy companies.

If policyholders are displaced by the downgrades, nearly all would be courted by other private insurers, or go to Citizens if necessary, Neal predicted.

Demotech said its future ratings criteria for Florida companies will be influenced by whether the state legislature takes action this year to reduce losses from Assignment of Benefits abuses.

An assignment of benefits is an affidavit that repair companies often require from homeowners that transfers benefits of the homeowners' insurance policies. Insurers say contractors use assignments to file inflated claims and costly lawsuits. Contractors say assignments protect their interests and allow repair work to begin right away.

State insurance regulators are helping to develop a legislative bill to stem AOB losses, Neal said

Amy Bogner, spokeswoman for the Office of Insurance Regulation, said Demotech's advisory "underscores the importance of legislative reforms to address the abuse of AOBs, provide consumer protections and promote a stable market for consumers in Florida."

© 2017 the Sun Sentinel (Fort Lauderdale, Fla.), Ron Hurtibise. Distributed by Tribune Content Agency, LLC.   

Where's Your Mother? 
Family Jokes
Submitted by outward

I walked into my sister's kitchen and found my nephew having a snack. "Where's your mother?" I asked.

"She is upstairs, said she was going to take a shower. Hang on, let me check."

He stepped into the nearby bathroom and flushed the toilet. A second later a sharp yell came from upstairs.

My nephew walked back out and said, "Yep, she's in the shower."

WASHINGTON – Feb. 3, 2017 – The small-scale owners of millions of rental homes, parcels of investment land and income-producing commercial and business real estate might not know it, but one of their key financial planning and tax tools is in danger of disappearing on Capitol Hill.

House Republicans are working on a major tax reform proposal that, as part of an overall streamlining of the Internal Revenue Code and reduction in tax rates, may eliminate or seriously restrict the use of tax-deferred exchanges – property swaps – under Section 1031 of the code. President Trump has identified tax reform as one of his top priorities, and legislation is expected to move quickly in the new Congress.

In a tax-deferred exchange, owners can postpone recognition of gains on investment real estate when they swap one property for another of "like kind." The capital gains tax that would otherwise be due gets deferred until the owner sells the replacement property and receives cash.

Under Section 1031, which has been part of the tax code since 1921, a rental house in Santa Barbara, California, might be exchanged for an investment duplex in suburban Chicago. Oklahoma farmland could be exchanged for rental condos in Washington D.C., Boston or Miami. Exchanges are also used to further environmental protection objectives, such as through swaps involving conservation easements to preserve habitat and prevent future development.

To qualify for tax deferral, exchanges must follow a detailed set of IRS rules specifying the timing for identifying replacement properties and transaction closing deadlines. An entire industry of "qualified intermediaries" exists to facilitate exchanges by escrowing proceeds and administering transactions to comply with IRS rules. Fixer-upper houses and other real estate held for short periods and then flipped to new purchasers do not qualify for tax deferred exchanges nor do owner-occupied residences.

Loss of the ability to use an exchange would be a significant blow to "Mom and Pop" and other small-scale realty investors. According to a study posted on the website of the National Rental Home Council, there were 15.7 million rental homes in the U.S. as of 2015, and 99 percent of them were owned by non-institutional investors. A study by professors at the University of Florida and Syracuse University estimated that most exchanges involve relatively small properties; in 2011, 59 percent had a sale price of less than $1 million.

Bill Horan of Realty Exchange Corp. in Gainesville, Virginia, told me about recent transactions that illustrate some of the objectives of tax-deferred property swaps. In one, a rental property owner exchanged it for two Dollar General stores. The owner "didn't want to be a daily landlord anymore," which involved hands-on management duties and liabilities, Horan said. By rolling his rental housing gains and equity into "triple net" leased retail properties, where the tenants essentially are responsible for everything, he was able to simplify his life, diversify his portfolio and potentially make greater gains in the future with retail real estate.

Another small investor swapped a rental home in Virginia for a rental condo in Ft. Myers, Florida, where he intends to move for retirement.

"He wanted to own property near where he's going to live," said Horan. Since the Ft. Myers unit cost $412,000 and the rental home he relinquished was valued at $525,000, the investor ended up paying a modest amount of capital gains taxes.

Exchanges have been on congressional tax writers' hit lists before, in part because they generate tax "expenditures" – losses of otherwise immediately collectible revenue for the federal government. In December 2015, the congressional Joint Committee on Taxation estimated that during fiscal 2017, exchanges would generate tax expenditures of $11.7 billion attributable to corporations and $6 billion attributable to individual taxpayers. For the same year, by comparison, revenue losses caused by deductions for mortgage interest and local property taxes by individual homeowners were much larger – $84.3 billion and $36.9 billion, respectively.

Exchange proponents, such as Suzanne Baker of Investment Property Exchange Services in Chicago, argue that most of the deferred taxes ultimately are collected when properties get sold for cash, and that exchanges stimulate economic activity – redevelopment and upgrades of properties for example – that would not occur if owners faced immediate taxes on their gains and therefore simply sat on them.

Bottom line: If you own investment real estate, and have contemplated a Section 1031 exchange, be aware: There's a significant possibility that tax reform could knock your plans off track. Keep a close eye on what's happening, because it could happen fast.

Copyright © 2017 Chillicothe Times-Bulletin, Ken Harney. All Rights Reserved.

PANAMA CITY BEACH - With Spring Break only four weeks away, hotel reservations are down from last year, hoteliers say.

Claire Pease, who owns a company that rents out condos on the Beach and sits on the Bay Tourist Development Council (TDC), said spring breakers are not renting out rooms this year. Efforts to rent Beach condos to visitors attending religious events in a new convention center space in Laketown Wharf are not producing satisfactory results.

The RoadTrip - Spring Break 2017 Christian concerts have been scheduled for March 8, March 15 and March 22 at Laketown Wharf, which is putting the finishing touches on 28,000-square-foot of convention center space below its parking garage for the concerts. Pease said people who have been inquiring online about the events are ending up using Google to investigate Panama City Spring Break, and they don't like the negative news coverage of the celebration.

"Unfortunately, we put the words 'Spring Break' in the name of our Christian 'Spring Break,' " Pease said.

Julie Hilton, whose family company owns the Holiday Inn Resort and Days Inn Oceanfront, said reservations at the properties for March are way behind where they were last year at this time, but she didn't have an exact percentage. "We just have to accept what we cannot change," she said.

She said spring breakers no longer want to come here, and city and county officials who passed the Spring Break laws have "accomplished what they've intended."

"The city has effectively told students they are not welcome, and they've heard that," Hilton said.

When Spring Break was flourishing, she said, their properties had their highest average daily rate of the year in March. Now, rates have been substantially slashed for the month, and as slow as business was last March - bed-tax revenues were down 40 percent - this year is setting up to be worse because Easter was in March last year.

Clonable HTML 12/05/16

To try and soften the expected blow on the local economy, TDC officials have organized new events at Aaron Bessant Park in March this year. The TDC has organized a new boat show at the park in March, a second annual Emerald Coast Cruizin' car show, and the wine and gourmet show "UNwineD.

David Demarest, a spokesman for the TDC, said tickets are selling fast for the UNwineD festival, scheduled for March 24-25, and he expects all 7,500 to be sold.

Dan Rowe, executive director of the TDC, said they are "excited about the work being done by our new ad agency, Lucky & Co., and their ability to target a specific market that can travel during that (spring) time of year."

"This is in addition to the special events," he said. "We're focused on creating compelling advertising that shows Panama City Beach as a dynamic destination that's moving forward into a very bright future."

But Sparky Sparkman, the owner of Spinnaker Beach Club, one of the popular Spring Break superclubs, said he's not pleased the TDC is helping to market events that are competing with private-sector businesses like his. Sparkman said the new Spring Break laws decimated his business last year and he's expecting no improvement this year. He is instructing his managers to hire the bare minimum employees.

Sparkman said after speaking with people in the know about Spring Break, he is convinced it is going to be a dud.

"We are right next door to Summit. They are reporting nothing" in reservations, he said. "That is the death knell to our March business."

Rebecca Edwards, the front desk manager for the Chateau Motel, said that motel used to fill up quickly with spring breakers. Last year, it was not even half full during March, she said. And reservations for March are down again this year, she said. Room rates have been reduced 20 to 25 percent.

"We are getting some families," she said. "Maybe at the last minute everyone starts booking. With families we're offering a free night stay if they stay a certain number of days."