A property tax overhaul is in the works in Baltimore, Maryland after major mistakes were made in managing tax breaks. Consistent tax bill errors have caused the city to lose out on revenue. For the past four years, the city has undercharged three large commercial properties. According to The Baltimore Sun, Baltimore has under-billed a downtown office tower owned by Orioles majority owner Peter G. Angelos by $390,000 in property taxes since 2011, government officials say — the most recent example of mistakes emerging from the city's Finance Department. In total, the three properties have cost the city more than $700,000 in errors by city and state officials in calculating tax breaks.
For hoteliers, how you meet the travel needs of tourists and business professionals is a determinant of success. And as within any industry, the hospitality industry is subject to a number of uncontrollable variables that affect those involved in management or ownership of hotels, restaurants and other hospitality establishments. These uncontrollable factors include local and global economics, population shifts, and legal changes. It is crucial to be aware of these variables and monitor trends to ensure their impact on your business is a positive one.
After years of lax real estate property assessments, Philadelphia, Pennsylvania has decided to take on a comprehensive reassessment of all 579,328 of its properties. The last partial reassessment by the city was in 2004, while many properties haven't been reassessed since the 1980's. This has created major disparities between similar situated properties, which have had very different assessments and tax burdens.
Hotel owners and investors are finding that the current economic environment and market conditions are perfect for buying and selling. According to Hotel Business, the number of hotel transactions is up by more than 50% for the first 6 months of 2013 over the comparable period last year, and is expected to top $18 billion for 2013. It has also been reported that the sales transaction volume of hotels is now intersecting its 22-year moving average, and that hotel values will continue to grow at an average of 12% for each of the next 3 years (less than the past couple of years, but still a nice increase in value). Although every market and situation is unique, 2013 and 2014 brings about a lot of opportunity for hotel transactions. Factors contributing to this include:
During the 19th annual Lodging Conference, held last week, hotel industry leaders met to discuss trends and prospects for the coming year. One session panel titled "Owners and lenders forum," addressed concerns facing hotel lenders and owners, which include possible overbuilding, rising interest rates and the cost of unionization. Several panelists stressed their worry of overbuilding, especially in midscale and upper-midscale markets.
The Michigan Legislature passed Senate Bill 257, sponsored by Sen. Mike Kowall (R), which expands "business improvement zones" and allows larger businesses with more capital to potentially force smaller companies into paying higher taxes and gives them the ability to control the process.
Baton Rouge, Louisiana lawmakers are encouraging the Louisiana Tax Commission to improve their oversight of property taxes, after an audit determined their review by parish tax assessors was inadequate. According to SeattlePI.com, Charles Abels, administrator for the commission, said the office was doing its best with their $3.8 million budget and available manpower to ensure assessors were accurately setting property taxes. But he wouldn't say that any changes were in the works since the July audit was released.
For the first time since 2006, Daytona Beach, Florida property owners will experience a tax hike and go above the rolled-back rate. City commissioners voted 5-2 Wednesday night to raise the property tax rate 11.6 percent. Mayor Henry and the commissioners in support of the increase said the only reason they supported it was to maintain city services, ensure the two new community centers were fully staffed and to provide all city employees with a 2 percent raise. However, opponents believe the decision was a costly mistake that will put a burden on existing businesses and will be detrimental to expansion.
Despite seemingly vast public support, and recent polls indicating 60 percent of Californians support of a "split" tax roll, an overhaul of California's Proposition 13 has yet to materialize. Assemblyman Tom Ammiano's (D-San Francisco) efforts to make major structural changes to Prop 13 by authoring AB 448, which address changes in ownership interests of corporations owning commercial real estate, was held in the Assembly Revenue and Taxation Committee. The bill has been placed in suspension for an indefinite period.
The Allegheny County, Pennsylvania Controller's Office found that the countywide reassessment was much harsher on homeowners than commercial property owners, who got a larger tax cut upon appeal. Commercial building property values saw a 21 percent cut on average, while residents only saw an average of a 9 percent reduction on their properties, and thus a greater burden on their tax bills. This disparity in the 2012 reassessment is raising concerns of fairness and transparency.
Large retailers, such as Lowe's and Home Depot, have created a lot of controversy in Lansing, Michigan for exploiting property tax "loopholes". Due to ambiguity in the statutory language, the Michigan Tax Tribunal ruled in favor of the big box stores' appeals, which significantly reduced their property tax assessments.
The Austin, Texas City Hall gave J.W. Marriott developer White Lodging Services Corp. a Sept. 19 deadline to repay more than $688,000 in waived project fees. The more than two-year long battle started when the City Council withdrew over $3.8 million in incentives granted to White Lodging for construction on a 1,000-plus room Marriott hotel. The city council and workers groups argued that the company didn't compensate the construction crew in accordance to their agreement, while White Lodging insisted they were in compliance with the terms.
In the Virginia race for governor, Terry McAulliffe (D) and Attorney General Ken Cuccinelli II (R) are battling over the state's tax policy. McAulliffe argues that Cuccinelli's plans to cut state taxes would inevitably raise property taxes. Cuccinelli accuses McAuliffe of using "faulty logic" and a series of major assumptions to determine the effects of his proposal.
Florida will have a budget surplus in 2014, and Gov. Rick Scott plans on giving the money back to the taxpayers via tax breaks. Scott met with business leaders in Broward and Palm Beach counties on Tuesday to get their ideas for tax cuts he should propose to legislature. Rising personal property taxes and insurance costs were the main concerns, because it affects businesses moving to the state or start-ups trying to grow.
Lincoln, Nebraska lawmakers released "options" to update the state's tax code for the public to review before hearings are held throughout the state. The Tax Modernization Committee is working to make the Nebraska tax code more fair, balanced and stable and will be holding public hearings in September and October. The committee is to provide a recommendations report by mid-December for Legislature to review in January.
The Los Angeles County Treasurer and Tax Collector, Mark J. Saladino, has suspended the Electronic Funds Transfer (EFT) Program, effective immediately. Since 1991, taxpayers who made an aggregate payment of $50,000 or greater on the two most recent secured tax roll installments could be required by County Tax Collectors to make payments through an EFT, after an amendment was made to the California Revenue and Taxation Code. Los Angeles County implemented this requirement several years later; however, after a review of the EFT program's efficiency and effectiveness, Saladino decided to suspend the program. It was determined that the enrollment and remittance requirements were cumbersome and not constituent-focused.
The Miami-Dade, Florida Property Appraiser's Office has mailed TRIM notices, or "Truth in Millage," to the counties property owners. The notice includes important information that will affect their property tax bill: proposed tax rates of the local cities, school board, county and other agencies, homestead exemptions and other tax breaks, and budget hearing dates for cities and boards. An informal assessment review form was also included for property owners to complete if they think their assessed property value is too high.
Vineland, New Jersey commercial property owners are upset with the city's valuations and are joining together to pressure City Hall for tax relief and to research legal action against the city, according to The Daily Journal. Although the businessmen are loosely organized and aren't in full agreement, one thing is for certain: they plan to work together to combat their property assessments and tax burdens that greatly increased this year.
Construction spending hit a four-year high in July, according to an analysis of U.S. Census Bureau data compiled by the Associated General Contractors of America. The Kansas City Business Journal reports that construction worth $901 billion was done over the last 12 months, making it the most active 12 months for spending since June 2009.
Thanks to a recovering economy, commercial real estate is also experiencing a revival. Many vacant shopping centers and office buildings are being used again for the first time since the Great Recession. Commercial spaces have experienced a steady incline in rent, increasing 2% this year and expecting an average 2.35% rise in 2014. The slow, but steady recovery resulted in almost three years of consecutive monthly job creation. While it isn't enough for a construction surge, it's sent business owners on a search for warehouse space to make room for increasing inventories in order to meet consumers' demands.