San Diego Mayor Kevin Faulconer revealed plans to overhaul the city's development permit process during his speech at a recent NAIOP luncheon. According to Globe St., Faulconer acknowledged that cities must have incentives, something it never really had in the past, in order to stay competitive and attract the best companies, jobs and development projects. Faulconer wants to expedite the amount of time it takes to get through the regulatory process, establish clear rules and time tables, and prioritize updating community plans.
Gov. Rick Scott's $77 billion budget proposal before the Legislature includes $842 million more for schools, bringing per pupil spending to a record high; but what Scott isn't mentioning is nearly half of the increase would come from higher property taxes paid by homeowners and businesses due to growth in property values. While the property tax rate will not change, many still consider it a tax increase, as property owners will see higher bills next year compared to this year.
In an effort to lure more internet-based companies to Portland, city officials have rewritten a key policy to extend tax breaks to such businesses. The Enterprise Zone ("E-Zone") program offers tax abatements of up to five years on new capital investments for businesses located in specific, city-designated geographies. While similar updates have been made in the past to recruit specific companies, such as Nike, officials say this change was made with no specific project in mind.
By Holly I. Unck Esq., Senior Managing Consultant, Phoenix
Last week, a judge ruled in favor of county and state officials in a property tax lawsuit brought by Walgreens Co., which otherwise could have potentially changed the way commercial properties are assessed and cost Kentucky school districts "hundreds of millions of dollars." The ruling upheld an earlier finding in favor of Fayette County Property Valuation Administrator David O'Neill by the Kentucky Board of Tax Appeals, saying the method O'Neill used to value the property "was not arbitrary or capricious, nor was it clearly erroneous."
In an effort to make Nevada more competitive with neighboring states, Senate and Assembly members held a joint committee hearing on SB93 and AB161, which would expand tax abatements to the aviation industry. The bills have bipartisan support, as the abatements would would quickly create hundreds of good-paying jobs and would bring Nevada in competition with 45 other states that offer abatements or exemptions. During the hearing, industry representatives said aviation companies have avoided doing repairs, expanding their business or headquartering their planes in Nevada because adjacent states offer better incentives.
Although the hotel industry is in the midst of possibly the most successful period in the industry's modern era, some United States hotel leaders are concerned of the effects of reduced oil prices, the strength of the dollar overseas, and supply growth, according to Hotel News Now. When the cost of gas is low, it may give the perception that travel will increase. While this may be the case for some markets, low oil prices are a major concern for others. Some oil and gas companies are already experiencing lay offs due to lack of demand, and local economies that depend the industry are beginning to feel the impact. And hotels in major oil and gas markets aren't seeing a lot of new occupancy due to cancelled projects.
On Monday, Texas Gov. Greg Abbott delivered his State of the State Speech and proposed a budget plan calling for a $2 billion reduction in the business franchise tax and a $2.2 billion reduction in the property tax burden, and includes an appropriation that makes school districts whole for any tax revenue they might lose, according to the Austin Business Journal. In his speech, Gov. Abbott described Texas as "the pinnacle of America's economy," boasting the state's record as the number one job creator in the nation. The state created more jobs in 2014 than any year in the history of Texas, according to Gov. Abbott, and he hopes to continue that trend. The National Federation of Independent Business' survey of small business owners indicates low tax rates and smaller government are the top qualifiers for a "friendly business environment." Abbott has proposed a $2 billion reduction in the franchise tax, which is twice what the Senate budget has proposed. Small business owners are hoping this is the first step of a complete phase-out of the tax.
The performance of Atlanta's industrial real estate market is further indication of the city's rallying economy. According to the Atlanta Business Chronicle, over the past year, developers have bet on increasing demand for warehouses, distribution facilities, and other industrial space — enough to put 16 million square feet under construction across metro Atlanta. Almost 10 million square feet of that pipeline consists of "spec" projects, or those started without leases in place. At the same time, metro Atlanta — which boasts one of the top five industrial markets in the nation — should absorb at least 16 million square feet of industrial space this year, and that may be a conservative number. Vacancy should drop to less than 8 percent, a level Atlanta hasn't seen in 15 years.
In response to controversy surrounding Miami-Dade County Public School's tax collection shortfalls, state Rep. Bryan Avila has proposed new regulations for Value Adjustment Boards (VAB), which hear property tax appeals. According to the Miami Herald, the VAB in Miami-Dade has come under fire for a backlog of appeals that ties up tax payments to local governments like the school board. As a result, the school board doesn't know how much money will come in until well after their budget has been set. The school board says the VAB backlog has translated to $40 million in budget shortfalls.
As Millennials are opting to live in urban areas over the suburbs or rural communities, the changing demographics is causing a shift in retailer demand from regional malls, grocery-anchored strips and outlet centers to street retail. As such, investors are beginning to focus their interest on street retail, and those that have owned this type of asset for a while are increasing their allocation to it.
In response to recent Indiana Board of Tax Review decisions favoring Meijer and Kohl's, which will result in major value reductions during the upcoming spring assessment cycle, Sen. Brandt Hershman is trying to advance legislation that would shore up county assessors' valuations of big-box stores. In these cases, the big box stores argued their property values should be compared to properties that have been vacated and sold, referred to as the "dark store theory," rather than based on the current condition of the business. Assessors are concerned other big box retailers will follow suit and "overwhelm" them with appeals.
Both the El Paso City Council and County Commissioners Court passed resolutions on Monday calling for Texas legislators to reform property tax laws to increase transparency on real estate transactions. Appraisal districts across the state have long been fighting for sales disclosure, arguing that they cannot provide accurate property appraisals of commercial real estate without sales price information and counties are losing out on millions of dollars in tax revenue due to commercial property owners not paying their "fair share". While no property appraisal reform bills have been introduced in the 84th Texas Legislative Session, the goal of the resolutions is to bring attention to the issue and show that El Paso is one of the areas supporting the reforming of property laws, according to the El Paso Times.
During his State of the State speech last week, Gov. Bruce Rauner unveiled several pro-business measures to "turn Illinois around," including a two-year freeze on property taxes. While businesses and homeowners welcomed the proposal after enduring some of the highest property taxes in the nation, local officials whose schools and government operations rely on property taxes are concerned they won't have the necessary funding if the freeze were to take place. Because Illinois is such a diverse state with a complex tax system, passing any major tax law will be difficult. However, Rauner explained how the property tax freeze could work.
Assessment offices across the state of Maryland will soon be sending out Commercial Property Income & Expense requests to properties whose value exceeds $5 million. Each year, one-third of the properties in Maryland are reassessed, however all commercial property owners with income producing properties must turn in an Income & Expense form by May 15th. Failure to do so will result in a $100/day fine and up to 1% of the value of the property. For these filings to be accepted as evidence for future appeal work, they must be signed and dated by the property owner and turned in by the deadline. It is crucial that every allowable expense is reported, so be sure to review thoroughly before submission. To shorten the process for clients with multiple properties in the same county, property owners can sign this document one time for all of their properties in the county and attach 2014’s Income and Expense Report. For new clients, however, 3 years of Income and Expense information is required for the current appeal.
After building his gubernatorial campaign around tax cuts and business issues, Maryland Gov. Larry Hogan used his first State of the State yesterday to address these issues, calling for millions of dollars in tax breaks. Hogan proposed cutting personal property taxes for small businesses, repealing stormwater management fees or the "rain tax" , eliminating automatic gas tax hikes and doing away with taxes on retiree income. If all tax cuts were enacted in the upcoming fiscal year, it would cost about $27 million, which the Hogan administration says could be paid for using a $47 million surplus under the governor's proposed budget.
New York City's 421a property tax program, which allows developers of rental apartments to reduce their real estate taxes on new projects for 10 to 25 years, has come under scrutiny as the June 15 expiration date draws nearer. The de Blasio administration is expected to propose a plan to reform the 40-year-old program, as it cost the city $1.1 billion in forgone tax revenue in the fiscal year ended in June 2014 and is by far the biggest tax break the city offers. The 421a program is expected to be renewed, but with changes making it less generous to builders.
The Pittsburgh school district is cracking down on developers who have been taking advantage of loopholes to avoid paying deed transfer to taxes when buying properties Downtown and elsewhere for the past several years. In the city, the transfer tax, paid on all property sold, is 4 percent, with 2 percent going to the city, 1 percent to the school district, and 1 percent to the state. However, there have several high-profile cases over the last four years in which buyers took advantage of loopholes to escape paying millions of dollars in deed transfer taxes.
In an effort to create a more open and fair process for Washington taxpayers disputing tax assessments, Sen. John Braun introduced Senate Bill 5449, which would establish an independent tax appeal forum within the state’s judicial branch. According to Forbes, the tax appeal division would be part of the Washington Court of Appeals and would replace the board of tax appeals. The tax appeal division would include a main department with judges, and a more informal commissioners’ department. Generally, independent tax tribunals are staffed by judges or administrative law judges who are knowledgeable on tax issues and write impartial opinions. It should lead to a more transparent tax system in which the state’s tax laws are more consistently applied and opinions are more readily published, providing accountability in ensuring that similarly situated taxpayers are being treated the same.