New York Governor Andrew Cuomo started a new push in support of his plan to freeze local school and property taxes. Because some state lawmakers voiced their opposition of the proposed freeze, Gov. Cuomo launched his "No Excuses" effort on a website, which offers links for taxpayers to write legislators and provides a networking platform for supporters. According to Capitol Confidential, such outreach efforts have long been used by special interests on the other side of the issue including public sector unions, affiliated school funding advocates and other related progressive groups who fought the existing tax cap and are now battling the proposed freeze.
By Dan Swift, Managing Consultant, Boston
The Kansas House advanced a proposal that would provide millions of dollars in property tax reductions to two southeast Kansas cement plants, whose property tax assessments have escalated since since the state exempted certain commercial industrial machinery and equipment from property taxes. The exemption began in 2006 in hopes it would spur new business investment and growth in the manufacturing industry. However, cities and counties ended up losing millions in revenue. As a result, county appraisers increased the companies’ taxes by reclassifying what was formerly equipment and making it real estate and subject to taxes.
By Alan Schultz, Senior Managing Consultant / Principal, Silicon Valley
The pace of commercial real estate is improving, but it's also slowing, according to the National Association of Realtors' (NAR) quarterly forecast. NAR reports that fundamentals are still on an uptrend; and growth in commercial real estate sectors continues at a moderate pace from a very slow pace of absorption, despite job additions to the economy. Companies are hesitant when it comes to adding new space. Only slow, gradual improvement is expected for the office sector. Demand for retail space is benefiting from improved household wealth, while industrial real estate is stable with increasing international trade, which requires warehouse space, according to NAR. Of course, the apartment market fundamentals are the strongest, as nearly all of the new household formation in the past 10 years has come from renters, and not homeowners.
More than year after a vote to repeal Michigan's industrial personal property tax, Gov. Rick Snyder's administration, the business community and local government groups have developed a 10-bill package that would provide 100% reimbursement of lost revenue to local communities. The Michigan Legislature repealed the business property tax during the lame duck session in December 2012, which consisted of 10-year phase out of the tax on businesses with industrial personal property. However, it will only take effect if voters approve a ballot measure in August that allows the repeal to take place.
As Nashville, Tennessee continues to attract more and more residents, the commercial real estate market continues to thrive. Investors are drawn to the city's rising rents and prospering historic country-music industry. Office and apartment sales in the area soared to record highs last year, combining for $1.7 billion in transactions and outperforming the U.S. average, according to Real Capital Analytics Inc. Millennials are drawn to the young and vibrant city, and developers are taking risks to meet the predicted urban demand.
By Jeffrey Graham, Managing Consultant, Atlanta
As the national aerospace industry gets more and more competitive, Colorado lawmakers are considering tax breaks to keep up with other states. In an effort to help aerospace companies stay and grow in Colorado, House Bill 1178 (which cleared the finance committee last week) would give sales-and-use-tax exemptions for spaceflight property with minimal impact on Colorado's tax revenue. HB 1178 was introduced by House Speaker Mark Ferrandino (D-Denver) and House Minority Leader Brian DelGrosso (R-Loveland) because they believe Colorado has become uncompetitive, since several other states already have the tax incentives in place.
Kansas City, Missouri – Paradigm Tax Group is proud to announce the recent acquisition of Pence & Associates, Inc. Jeffrey Pence founded Pence & Associates in 1997 in Kansas City, Missouri to focus on providing property tax review and appeal services for commercial real estate clients in Kansas and Missouri. Jeff has more than 30 years of experience in the property tax consulting and assessing industry.
By Mark Parmisano, Senior Managing Consultant, Los Angeles
San Antonio's industrial real estate sector posted record-breaking numbers in 2013. According to a year-end analysis by real estate firm REOC, the industrial market was sitting at a vacancy rate of 6.8 percent as of the fourth quarter of 2013, which is an all-time low. Leasing activity led to the absorption of nearly 2.5 million square feet of space last year, far exceeding the previous absorption record of 1.5 million square feet set in 2007. Unfortunately, the recent industrial boom may not continue into 2014, as a lack of new space restricts positive growth, creating a major challenge for the market.
In her State of the City Address on Monday, Baltimore Mayor Stephanie Rawlings stated that she wants to make a tax credit that has been used to spur apartment development downtown available citywide. The proposal would offer a 10-year tax credit for apartment projects anywhere in the city. The current 15-year tax credit, which went into effect last year, not only helped developers meet rental unit demands, but is projected to generate $40 million in new revenue for Baltimore over the next 20 years.
A range of measures that would tweak Oregon's tax code have been proposed, however, lawmakers are wary of making any changes that would be effective this year. Lawmakers proposed changes to property taxes, corporate taxes and a small business tax cut passed in a special session last year, but if reelected, Gov. John Kitzhaber plans to launch a comprehensive tax reform that would take place in 2015. Because of this, many lawmakers expressed skepticism of making any notable tax code changes during the 2014 legislative session, indicating that few could be enacted this year.
Last week, the Florida House and Senate filed bills that would extend property tax exemptions to commercial properties for renewable energy projects, such as solar panels. The bills would encourage business owners to utilize renewable fuels without penalizing them on their property tax bills. The legislation would help to improve Florida's business climate by offering business owners the same opportunities for tax abatements on renewable energy improvements as residential homeowners.
By Seth R Krchmar, Consultant, Atlanta
For the 2014 tax season, the Washington, D.C. Office of Tax and Revenue is implementing changes to simplify the filing process for Commercial Property Income and Expense Reports. Beginning this year, property owners will be able to utilize a new electronic filing system. (Property owners may still submit a written form this year only, if preferred.) There will be separate forms available online for apartments, hotels and other commercial properties. It is crucial that property owners report all expenses in full, as the submitted form will be used in appeal hearings. The deadline to return the Commercial Property Income and Expense Report is April 15th. If the report is not received by the due date, property owners will be charged a 10% penalty. You can find D.C.'s Commercial Property Income and Expense Report here.
By Brett Walker, Senior Managing Consultant, Dallas & Adrian Dekker, Senior Managing Consultant, Atlanta
CoStar, a leading commercial real estate information company, reports that a strong interest from overseas and domestic capital is projected to spur a growing number of U.S. hotel sales in secondary markets in 2014. Hotel properties can expect another year of strong investment activity, thanks to high demand, improving room rental performance and a large supply of capital from REITS and private equity sources. Jones Lang LaSalle predicts an abundance of equity and debt capital should drive a 5% to 10% increase in global hotel transaction volumes in 2014.
Due to slim returns, real estate giants in New York City are seeking opportunities outside of Manhattan and pushing toward the outer boroughs. Since the commercial real estate market has recovered from the recession, investors are forced to fight over the few Manhattan properties that become available. Highly reputable firms such as RXR Realty, which owns large office buildings located at 75 Rockefeller Plaza and 340 Madison Ave, have had to alter their investment strategies. In fact, RXR has plans to spend $1 billion buying properties such as industrial warehouses in the Bronx, office buildings in Long Island City, Queens, and retail and residential space in St. George, Staten Island.