Another Atlantic City, New Jersey casino closure will bring about even greater tax-revenue loss for the already troubled city. Atlantic Club has been public with its financial struggles since 2006, so the resort's closing announcement didn't cause much shock. According to Philly.com, merely 11 casinos will remain in Atlantic City, and the city is already borrowing millions of dollars to pay refunds on casino property-tax appeals because of strained gaming revenue. Since 2008, Atlantic City has lost a third of its tax base because of casino tax appeals, and it must make up for that lost money. As casino income has declined, as well as a certain value, everything else has spiraled downward, too. In fact, some are even making comparison to Detroit, the first major U.S. city to file for Chapter 9 bankruptcy protection.
The three Democratic candidates competing for the vacant Precinct 2 seat on the Travis County Commissioners Court are all making it a point to focus on property tax reform in their campaigns. Property taxes have been an issue for some time in Travis County, with local finance specialist, Dick Lavine, saying, "The systematic undervaluation of commercial and industrial property is apparently a real phenomenon, according to chief appraisers," with one of the culprits being the "lack of sales price disclosure."
The Michigan Department of Treasury has drafted potential changes to overhaul the state's tax appeal process. Some officials are unhappy with the current complicated process and inconsistent results of the Michigan Tax Tribunal, which handles property assessment appeals. The proposal would eliminate the tribunal completely and replace it with a Michigan Tax Court. In an effort to attract high caliber candidates, the new tax court judges and magistrates would receive higher pay (current tribunal members' compensation is significantly below the level of district/circuit court judge). The changes also include creating county tax boards to hear appeals. The proposal has been distributed to attorneys and business leaders for feedback, and legislation is required for the changes to take effect.
In the 2014 Colorado legislative session, the Democratic Party is sponsoring a comprehensive business personal property tax cut bill. Although the Democrats have rejected numerous attempts made by Republicans to cut the tax over the past five years, they are confident the bill will receive a lot of support. According to the Denver Business Journal, State Reps. Dave Young of Greeley and Dianne Primavera of Broomfield will propose a measure that would allow companies to get a refundable tax credit equal to the first $25,000 in business personal property tax that they pay. Republicans are expected to support such a proposal as well, as they have been the primary ones pushing for it ever since an interim committee met to study the issue in 2009.
Back in late 2011, the Internal Revenue Service issued temporary and proposed Tangible Property Regulations, also referred to as “repair regulations.” These changes are especially important to those in the hospitality industry, as they apply to the treatment of expenditures incurred in selling, acquiring, producing and improving tangible assets. Repair and maintenance expenses are now deductible if they are not otherwise required to be capitalized. Many of the regulations become permanent in the 2014 tax year, and it is imperative that property owners begin planning for the transition into the new regulations. In addition, property owners are permitted to apply sections of the proposed or final regulations (after their release) to their 2012 or 2013 tax years which translates into additional savings.
It may be the dead of winter for the rest of the country, but Miami, Florida's hotel market is hotter than ever. There seems to be no end in sight to the city's rate growth, according to Miami hoteliers and owners who have been experiencing sky-rocketing rates and an investment climate similar to New York's. In fact, Hotel News Now and STR report that Miami's revenue per available room was at $135.39 through the first 10 months of the year, behind only New York ($213.86), Oahu Island, Hawaii ($176.13) and San Francisco ($160.10). Hotel owners have seen "remarkable" RevPAR growth year over year, and are optimistic that the trend will continue in 2014. Many believe that the market hasn't even come close to hitting its ceiling, and question if there is one at all.
As the New Year quickly approaches, the Commercial Real Estate industry definitely has something to toast to. Research experts at Jones Lang LaSalle's (JLL) have high performance expectations for the Commercial Real Estate recovery, which is forecast to accelerate in 2014. A heavy weight of capital flowing in the asset class by diversified capital sources, an improving lender environment and investors' willingness to risk movement into secondary markets were a few unexpected benefits from investment sales volume rising in 2013. These factors will likely propel the sector forward in 2014, with strong gains across both primary and secondary markets and sectors. Increasing investor confidence and a positive economic outlook contribute to JLL's prediction that global investment volume will grow 10 percent year-over-year to $550 billion in 2014 (with the U.S. market looking particularly strong.)
While Indiana leaders continue to debate whether or not to eliminate business personal property taxes, Gov. Mike Pence assures his proposed $1 billion tax reform will be beneficial to the state. He has been careful to use the label "tax reform," rather than "tax cut," but has yet to give any answers on how he plans to replace the lost tax dollars. However, Pence argues that phasing the tax out over time would be one of the best ways to to create jobs and enhance Indiana's business climate, especially for manufacturing. According to The Journal & Courier, the elimination of the personal property tax is at the center of a second-year agenda broadly focused on jobs and education. Pence has slowly been rolling out more specifics in events across the state before lawmakers return for their 2014 session.
The Boston, Massachusetts Redevelopment Authority (BRA) will vote to approve a controversial $7.8 million property tax break for Boston Properties and Delaware North Cos.' proposed $950 million redevelopment of the former Boston Garden site next week. The project will include 45,000-square-foot lease for a Star Market, as well as a 600-foot tower among the three-building complex. The tower prompted many vocal protests from the neighborhood; however, because it is located in a designated "blighted" area, the 15-year tax deal was confirmed. Mayor Thomas Menino's administration pushed for the deal to “secure the critical tenant (Star Market) and create tax certainty” during the first phase of the 1.87 million-square-foot mixed-use project, according to the Boston Herald.
New York Gov. Andrew Cuomo's tax commission released a report of recommendations for tax reform on Monday. Their plans include $2 billion in tax cuts and rebates, with the primary focus on property taxes. The commission rejected a proposal to accelerate a personal income-tax cut; instead Mr. Cuomo wanted to stick to his goal of reducing real estate and business tax burdens. However, according to the Wall Street Journal, this complicates New York Mayor Bill de Blasio's task to raise city income-taxes on single people and families making $500,000 or more. The tax increase, which requires approval by the state Legislature and Mr. Cuomo, would pay for education programs. But as the election year approaches, Mr. Cuomo pledges to cut taxes, and insists that good budget planning the last 3 years gives the state an opportunity to give back to New Yorkers.
Thanks to Proposition 13, California property owners will barely see a rise in property taxes in 2014. Under the measure, county tax officials can only increase a property's assessed value each year by 2 percent or the inflation rate--whichever is lower. Yesterday, the 2014 California Consumer Price Index was announced: 1.00454, an increase of .454 percent from last year. This is only the eighth time in the last 35 years that the inflation rate has been lower than 2 percent.
Exxon Mobil Corp. is boosting its Houston, Texas presence even further, and Montgomery County Commissioners have approved two 10-year, 100 percent tax abatements for one and a half office buildings and an 11-story parking garage. Exxon plans to occupy about 480,000 square feet in Hughes Landing in the Woodlands, consisting of a 317,052-square-foot building, which will be 12 stories with an 11-story parking garage, and half of a 331,840-square-foot, 12-story building. November 2015 is the projected completion date.
In November, construction employment and spending reached their highest levels since 2009. The industry has added 178,000 jobs in the past year, and 17,000 jobs in November alone. In fact, the construction unemployment rate has decreased from 12.2 percent in November 2012, to 8.6 percent today. Despite the positive gains, however, employment figures are still about 1.9 million below peak levels hit in 2006. According to Albuquerque Business First, although the figures are very encouraging, growth remains uneven by segment, region and time period and continued variations in growth between residential, private nonresidential and public sector are likely. Construction employment totaled 5,851,000 in November.
The County Board of Equalization in St. Louis, Missouri has authorized St. Louis County Assessor Jake Zimmerman to re-examine all tax-exempt properties across the county. Whether Zimmerman, or any other authority, has the power to revoke exemptions is still unclear, and this is the first time the county will review a tax exemption after it has been granted. While Zimmerman conducts the "periodic reviews," his primary focus includes upscale nonprofit senior living complexes in Kirkwood, Webster Groves and other communities.
Competition among Suffolk County, New York Industrial Development Agencies (IDAs) is heating up, and expanding businesses are reaping the benefits. The growing property tax breaks are concerning some local governments, who fear it will lead to revenue shortfalls. Last month, Islip Town's IDA approved a policy change that allows it for the first time to cut or freeze a company's current property tax bill over a number of years, according to Newsday. Previously, the IDA could only limit tax increases. Islip's move is similar to a policy change made by the Suffolk County IDA in June 2012. William G. Mannix, executive director of the Islip IDA, said it chose to offer more lucrative tax breaks because a half-dozen businesses in the town have done deals with the county IDA rather than Islip in the past year and a half.
North Dakota Gov. Jack Darymple formed a 14-member task force to study permanent property tax reform. According to Minot Daily News, the oil-rich state boasts a near $1 billion budget surplus and the lowest unemployment rate in the nation. North Dakota has had about $1.5 billion in local property tax reductions since 2009, and while speaking at the state Capitol, the governor said it's been a period of historic tax relief but now is the time for "lasting property tax reform." Darymple said there is a lot of room from improvement and simplification in North Dakota's property tax system, which will yield greater results for taxpayers.
Whether or not there is equity in property tax abatements has been a rising concern for Texans, especially when the tax breaks are at the expense of existing residential and commercial property owners. It's easy to see why local governments offer tax breaks to new companies-- new high-dollar projects in the area, the promise of new jobs and long-term benefits from future property taxes that will be paid. But while the new companies receive 100% tax abatement for as many as 10 years, is the burden on existing property owners growing even larger?
As we approach the end of 2013, commercial real estate lenders are eager to find out whether they have reached or exceeded their goals in providing funding for real estate transactions. According to the Commercial Observer, one thing is certain: CMBS investment bankers have exceeded last year’s output, yet it is not certain if the Wall Street shops will reach a $100 billion in gross lending. There are also the traditional savings and commercial banks, mortgage REITs, private equity funds and insurance companies, as well as new players in town who joined and/or increased their volume of financing this year.