A Miami houseboat adapts to climate change. The owners might need to adapt, too — to taxes | Editorial

The houseboat anchored off Miami Beach’s Star Island could easily fit into one of Miami’s upscale neighborhoods. It’s a two-story, white rectangle valued at $5.1 million, with vast expanses of glass, a luxury kitchen, two bedrooms upstairs, space for a gym and a patio with, no doubt, a pretty amazing water view.

But the Arkup #1, as it is called, doesn’t just look like a mansion. It’s also now being taxed like a mansion. And that’s where an interesting issue has arisen.

The Miami-Dade County Property Appraiser’s Office has classified the opulent houseboat as a “floating structure,” the Miami Herald reported, not a boat. The office sent a property tax bill of almost $120,000 to the company that owns it and another to the builders, Arkup, for back taxes. Legal challenges are flying, predictably. That’s not necessarily a bad thing.

The Arkup model was originally pitched as an innovative form of housing that will continue to be functional amid rising seas and worsening hurricanes. Inspired by Dutch floating communities, it has adjustable pilings that stabilize it on the sea floor or lift it above the water, like a house on stilts, and is designed as a climate-change housing solution. The Arkup that currently sits in Biscayne Bay is owned by MacKnight International Inc., one of British-born businessman Jonathan Brown’s companies.

Miami and resiliency

If Miami’s future is about resiliency — and there is no doubt it is — we’ll need to iron out new definitions of what constitutes housing and how to tax it. The Arkup is turning into Exhibit A.

Lawyers for MacKnight International say the Arkup is being unfairly singled out because it doesn’t look like a traditional yacht. They point out that it’s registered with the U.S Coast Guard and can motor along at 5 knots per hour.

A yacht wouldn’t be subject to property tax. And, the Herald noted, this is the only “floating structure” being taxed by the appraiser’s office.

“We believe the sole reason our client is in this position — an unconstitutional tax assessment — is because of the shape and the style and the look of this boat,” attorney Ivan Abrams told the Herald.

But the property appraiser’s office, which sent out the tax bills last fall, says the Arkup “was not built to be primarily used as a means of transportation over water.” It looks like a courtroom is the only place to settle this.

We understand that even wealthy businessmen don’t want to pay taxes they didn’t expect. We also understand that this case could spawn others if taxation of liveaboard housing — from mega yachts to sailboats — becomes a consideration in a climate-changed South Florida. This controversy has resonated in part because it touches on two of the key challenges facing our community: affordability and climate change.

We’d like to remind the owners that the whole point of the Arkup is to adapt to change. In South Florida, that can mean constructing elevated roadways. Building houses on higher ground. Installing pumps to keep sunny-day floods at bay. Or perhaps — if you’re very, very lucky — it means paying property taxes on a houseboat so luxurious most regular people could never come close to affording it.

This story was originally published March 29, 2022 at 5:54 PM.