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Key Insights to help you consider if your business is prepared
What conclusions can we draw from these
examples, and from our experience overall?
First, the process of appealing assessments is
almost as variable as assessments are in the first
place. Even nearly identical properties in close
proximity or in similar municipalities can diverge
dramatically in the savings they produce. This
is a product of the broadly local circumstances
involved - not merely highly localized market
conditions, but highly localized assessment
procedures as well.
Second, this high variability, which usually works
in favor of local and state governments, can be
turned in favor of diligent businesses. Cases of
successful appeals make manifest the reality that
the property tax system obscures: businesses
know their properties better than assessors,
especially when combined with data that spans
regions and industries. What remains is to bridge
the gap between this knowledge and the focus
of the municipality. Deep understanding of
the particularities of one’s own property must
be contextualized with research on similar
structures in the local market, knowledge of
industry-specific tax circumstances, and careful
consideration of the assessor’s methodology.
It may take meticulous research into public
records to accomplish this, but the results are
very frequently worth it.
What Can Be Done?
Is it worth it to file a property tax appeal? The
answer should be clear. In fact, property tax
reviews can be one of the swiftest methods for
significantly reducing annual corporate expenses.
There are, however, many considerations when
analyzing this expense. Here are some guidelines
COMMERCIAL PROPERTY TAX REVIEWS | PAGE 5
to take on this project, or if you should seek
experienced help:
• Engage in a thorough review of current local
and state tax codes. If you are leasing, review
your lease in detail with your CFO and counsel.
• Contact your local assessor and determine
the criteria they use to determine property
values. Are they working based on sale value
or replacement value? What structural aspects
of the property are they interested in? When is
reassessment scheduled? Ultimately, these are
public officials and departments performing
public responsibilities. They are very frequently
accessible and relatively open about their
practices.
• Use public records to thoroughly research
all properties you view as comparable to yours
in terms of use, scale, structure, and land. Of
course, take the opportunity to review your own
assessment in detail; often, it will include keys to
the data assessors have used in their valuations,
and against which you can formulate arguments
or demonstrate discrepancies.
• Thoroughly review any functional obsolescence
that may exist in the property, such as add-on
construction or out-of-date design. These may
show cause for lowering valuations.
• Be open to the possibility of mobilizing
external resources if you need to focus attention
elsewhere. Because of its potential to yield
large and long-term savings, evaluating and
addressing property tax expenses should be
made a priority. Reputable third-party expertise
will help make this project feasible, especially by
not charging until real savings are produced.