The District of Columbia collected $6.6 million in back taxes through the sale of liens on 965 properties during its recently concluded tax auction. According to the Washington Business Journal, the annual sale also generated $11.8 million in surplus, as bidders competed for the lien rights to the most wanted properties. The surplus will ultimately be returned to the buyers.
Led by a couple of distribution center projects, the Ohio Tax Credit Authority approved five deals to help create 624 jobs in the Columbus region. According to Columbus Business First, the biggest deal was given to Avnet Inc., who plans to consolidate its three operations into a single 575,000-square-foot facility. The project will retain 350 jobs and a $12.5 million annual payroll while bringing 300 added jobs and an $11 million annual payroll boost to the Columbus-area. In return, the company will receive a 70% tax credit that will save it $1.5 million over the incentives eight-year life.
Hundreds of refunds are on hold for Detroit, Michigan property owners appealing their taxable values as a result of the city's filing for bankruptcy. According to The Detroit News, U.S. Bankruptcy Judge Steven Rhodes ruled that he must OK payouts to property owners who successfully appeal their property assessments, forcing the Michigan Tax Tribunal to hold off on hearings on Detroit cases through next week until it is decided whether those proceedings have to stop because of the bankruptcy. Income tax refunds are not affected, but are running behind.
Detroit's above-average property tax rates for homeowners and businesses are major contributing factors to the mass exodus from the city. With nationwide business property taxes exceeding $229 billion, many municipalities across the country are left dealing with stifled job-creating investments. Detroit experiences this situation to an extreme, as Michigan is one of the handful of states that imposes property taxes on machinery and equipment along with land and structures.
A change to the property tax cap law on commercial residential property in Indiana will benefit apartment complexes at the expense of local government revenue. According to WBAA.org, the common areas of apartment complexes, such as a pool, tennis court or garage, will be defined as residential property, meaning the 2% property tax cap applies instead of the 3% for non-residential commercial property.
While hotel construction remains stagnant, alternative growth plans have been considered by hotel owners to revitalize properties and appeal to new guests. Since 2010, hotel conversions have increased to offset the lack of new hotel supply. In fact, not only are hotel owners converting existing hotels to completely new brands, it is becoming more common for owners to rebrand into higher tiers within the same brand to target a new travel demographic. Due to minimal financing available because lenders are skeptical of the lingering recession, new construction is forecasted to remain low for the next couple of years. Therefore, it is wise for property owners to consider conversions as a means to ensure growth.
The U.S. hotel industry showed mainly positive results in three key performance fundamentals during the month of June. According to data from STR Global, when comparing data year-over-year, overall the U.S. hotel industry's occupancy fell 0.3 percent to 69.9 percent, its average daily rate was up 3.3 percent to $111.27 and its revenue per available room increased 3.0 percent to $77.76.
While class A office occupancy in downtown Louisville, Kentucky did not increase during the second quarter, it remained relatively flat and at dangerous levels. According to the Louisville Business News, the class A vacancy rate in the central business district declined nominally to 16.1 percent at the end of the second quarter from 16.2 percent in the first quarter. This rate is expected to increase once the new 200,000 square-foot Nucleus Innovation Center opens up in the fall.
Detroit, Michigan has filed the largest municipality bankruptcy case in the nation's history, ultimately succumbing to the pressures of massive population loss, a shrinking tax base and financial problems. According to The Detroit News, Governor Rick Snyder justified approving the historic filing by reciting a litany of the city's ills, including more than $18 billion in debt, maxed-out tax rates, the highest murder rate in 40 years, 78,000 abandoned buildings and a half-century of residential flight.
The 2013 Los Angeles County Assessment Roll totaled more than $1.13 trillion in taxable property value, up 4.66% from last year. According to SCVNews.com, from 2007 through 2010, the economic recession and the corresponding real estate market decline resulted in consecutive decreasing assessment roll values, but the 2011 and 2012 rolls saw modest increases, paving the way for this year's significant gain in value.
For the fourth straight year, historic tax credits levied out in the state of Missouri remained flat in the mid-ninety million dollar range. According to the St. Louis Post Dispatch, the credits, which reimburse one-fourth the cost of rehabilitating historic buildings, have been a boon to redevelopment in St. Louis during the last decade, helping fund conversions of downtown buildings and renovations in neighborhoods across south St. Louis.
A recent court decision in Wisconsin could have a significant impact on the property tax assessments of business owners and operators who have large investments in computerized equipment. According to BizTimes.com, in 2008, the Wisconsin Tax Appeals Commission ruled that certain categories of computerized medical devices are exempt from property tax, a decision that was recently affirmed by the Dane County Circuit Court.
Early last summer, the Maryland assessment agency acknowledged making several miscalculations on certain tax breaks for big Baltimore commercial properties. The errors cost the city over $1.5 million in potential tax revenue. According to The Baltimore Sun, more than a year later, the city Finance Department says it has not issued any revised bills to correct the errors, and has offered no explanation of how they plan to address the issue.
For the past two years, some Florida low-income housing developers in Orange County have been able to take advantage of a tax break originally meant exclusively for nonprofit housing groups benefiting the needy, such as Habitat for Humanity. The Legislature was put into effect to give a tax relief for nonprofits developing larger-scale apartment projects in addition to single-family houses. However a “loophole” was discovered, indicating the law allowed for-profit businesses to receive the same tax break by simply transferring their interests to nonprofit partners, which removed them for local tax rolls.
After a significant year-over-year rise in property values, San Francisco, California property owners should expect to see increases in their property taxes this year. According to CBS SF Bay Area, the City and County of San Francisco's property tax roll value grew to $177 billion, an increase of 4.6 percent from the previous fiscal year.
In Colorado, demand for investment properties and lease-able space is currently outpacing supply. According to DenverPost.com, buyers of commercial real estate in the state are competing for a limited number of available properties, creating a perfect storm for sellers, with a lot of capital chasing a very limited supply of product. This is also leading to increased rents and a tight, tough market for tenants.
The devastation of Hurricane Sandy is responsible for reducing property values by $4.3 billion in New Jersey, with the majority of the loss based in Ocean and Monmouth Counties. The total value base plummeted by $3.6 billion in Ocean County and $511 million in Monmouth County. According to The Press of Atlantic City, the reductions were made in the months after the storm, when the Division of Taxation created a system for tax assessors in the hardest-hit communities to use that would help track losses to ratable bases.
The U.S. office market continued to slowly recover as occupancy increased 7.2 million square feet last quarter, lowering the vacancy rate to 17%, down from 17.6% in mid-2010. A lack of white-collar jobs hurt the market, keeping the recovery fairly stagnant and vacancies, while improving, at historic highs. According to Reuters, demand for office space has been stunted because even as the job market has improved, banks, law firms and other companies in professional services industries continue to cut jobs or hold back on hiring.
At this moment, apartment developers shouldn't be too concerned with over-supply as demand seems to be keeping up in the nation's hottest apartment markets. According to the National Real Estate Investor, demand for apartments is likely to continue to be strong and healing for-sale markets pose little threat to multifamily. That being said, slow income growth still is a problem and over-supply may be seen in certain markets.
The Harris County Appraisal District has levied significant increases in valuations on Houston, Texas commercial real estate for 2013. According to the Houston Building Owners and Managers Association (BOMA), the increases over one year, up as much as 58% for downtown properties, are absurd, and more than a little disturbing. Overall, high-rise office building values increased 48%, and low-rise properties were up 23%.
In an effort to relieve homeowners' property tax burden, several commercial buildings in the Chicago, Illinois central business district will see million-dollar plus property tax hikes in the mail. According to the Chicago Sun-Times, tax bills with double-digit percentage increases could be commonplace this year for downtown office buildings, hotels and stores, with nine buildings seeing increases topping $1 million each, and another seventeen seeing a jump between $600,000 and $1,000,000 this year.