In April, both Missouri (Senate Bill 149) and North Dakota (House Bill 1089) enacted legislation creating sales and use tax exemptions for new and expanding data storage centers. According to CPA Practice Advisor, Missouri S.B. 149 provides several state and local sales and use tax exemption for machinery, equipment, computers, electrical energy, gas, water, and other utilities, including telecommunication and Internet services, for new or expanding data centers. Purchases of tangible personal property for the construction of a new data storage center facility are also exempt. North Dakota HB 1089 provides a sales and use tax exemption for enterprise information technology equipment and computer software purchased for use by a qualifying business in a qualified data center. The exemption is also available to existing data centers that have undergone substantial refurbishment, with at least 16,000 square feet improved through methods including energy efficiency improvements, building improvements, and the installation of enterprise information technology equipment, environmental controls, and computer software.
By Jerry Heaton, Senior Managing Consultant, Dallas
& James Sutton, Managing Consultant, Dallas
The Florida House passed House Bill 695 on Monday, a bill that addresses property tax appeal reform sought by Miami-Dade County School Board and could protect the the Miami-Dade school system from an anticipated $40 million budget shortfall. The bill would set new regulations for Value Adjustment Boards (VAB), which hear property tax appeals. The Miami-Dade VAB has been under-fire due to a backlog of appeals, preventing the school district from receiving their property tax payments on time and making it difficult to set an accurate budget.
A huge alliance of Yavapai County, Arizona ranchers is appealing portions of a tax court ruling about the value of the county's grazing land. While the judge lowered grazing land values for property tax purposes, values for federal and state grazing leases were not considered. Only 25 percent of the land in Yavapai County is private, according to government statistics compiled by the Western Rural Development Center. The alliance is concerned the increasing tax rates will push ranchers out of business, along with the open space and wildlife waters they provide.
Thanks to a renewed flow of equity capital and low-cost debt financing, new U.S. hotel development is no longer on hold. Los Angeles and New York are being especially favored for new development by investors, as both are experiencing an unprecedented amount of liquidity and have become hot beds for acquisition, development and redevelopment.
By James Sutton, Managing Consultant, Dallas
& Jerry Heaton, Senior Managing Consultant, Dallas
On Monday, Minnesota House Republicans rolled out a $2 billion tax break plan, which featured $539 million in income tax cuts with another $453 million for beginning to phase out the statewide business and cabin property tax. The bill will be introduced to full House shortly, as the final budget and tax bills must be finalized in less than a month.
According to Cushman & Wakefield’s annual U.S. office market overview and three-year forecast released this week, the average asking rent growth across the country is expected to come in at just under 5 percent in 2015 and 2016 and reach 3.6 percent in 2017. Boston office tenants, however, can expect to see a much larger increase — with its expected asking rental rate increase to average 10.1 percent per year during that timeframe, the report said. But despite have the largest projected the rental rate increase in the country, the C&W report anticipates that Boston’s central business district office vacancy rate will reach 7.9 percent by 2017, down from 9.4 percent in 2014.
Last week the Montana House endorsed two major tax bills, one of which will simplify the state's income taxes, while the other would shorten the property reappraisal cycle in an effort to simplify the complicated property tax system. Both House Bills 171 and 157 face a final House vote, but first the House Appropriations Committee will examine their fiscal impacts. SB171, the income tax bill, would revamp state individual income taxes by setting two income tax two tax rates, 4.7 percent and 6.1 percent, as opposed to the seven tax brackets with seven rates ranging from 1 percent to 6.9 percent under current law. Besides simplifying taxes, it also would reduce income taxes by $15 million a year, eliminate some income tax credits, and lower the corporate tax rate to 6.5 percent from the current 6.75 percent rate.
In response to Mayor Nutter's proposed 9.3 percent property tax increase, Philadelphia City Council President Darrell L. Clarke has offered an alternative solution to increase school funding. Clarke introduced a bill that would authorize the city to sell liens on commercial properties, and a news release sent by his staff said that "millions of dollars in new revenue from selling commercial liens could be sent to the School District of Philadelphia annually." The city already has the tax-lien sale option, and has had several similar proposals over the last few years, but has simply chosen not to use it. Clark stated in the news release, "Mayor Nutter is asking for another tax hike from homeowners to fund our struggling school system, but this city cannot say with full confidence that it is doing everything it can to collect from those who owe."
U.S. commercial property values have been steadily climbing for the past decade, and values have now risen 87% since they bottomed out in 2009, and more than 14% from the prior peak in 2007, according to a recent report from real estate research firm Green Street Advisors. Commercial property values in March were 11% above March 2014, and unchanged from February, according to Green Street’s index.
Categories: Real Property
Gov. Kate Brown signed Senate Bill 611 last week, ending the controversial “central assessment” tax of data centers that created years of legal uncertainty for tech companies in Oregon and threatened future growth of the industry in the state. The legislation spiked global interest, as it hopes to trigger a data center boom and attract tech giants such as Amazon, Facebook and Apple to rural Oregon by changing rules for assessing property taxes on telecommunications infrastructure by exempting data centers coveted by local governments for their heavy utility fees. The bill also caps taxes that can be levied on cable TV companies, including Comcast. However, a gaffe in the bill's language has lawmakers pursuing a fix they hope will will attract Google Fiber to the Portland area.
Tax Assessor's Offices across the State of Georgia have begun mailing Annual Notice of Assessments, which property owners should receive in the next few weeks. Hospitality properties in Gwinnett County were hit hard with higher assessment values, and hospitality properties in the metro area can expect to see similar increases.
In an effort to fill the state's projected $600 million budget shortfall for the next fiscal year, a Kansas Senate committee advanced a bill that would eliminate the automatic 10-year property tax exemptions given to companies that build new oil and gas pipelines in Kansas. Enacted in 2006, the pipeline tax abatement went largely unnoticed until construction of the Keystone XL pipeline began and counties and school districts learned they wouldn't be benefiting from the property tax revenues for 10 years.
Baltimore's rebounding economy driving rising property tax revenues has Mayor Stephanie Rawlings-Blake proposing a bigger budget for 2016. The preliminary 2016 budget calls for $1.71 billion in general fund revenue, a 3.8 percent increase from 2015 levels. The year-over-year revenue increase is significant, as it is the largest the city has seen since the Great Recession. According to the Baltimore Business Journal, property tax revenue is a particular driving force, rising 9.2 percent to $72.3 million. Commercial tax revenue has outpaced residential taxes, and commercial properties saw the biggest percentage increases in value across the board. The city expects increased general fund revenue even though the Horseshoe Casino has sharply underperformed its expectations. Video lottery and table game proceeds were initially projected at $13.2 million, but monthly proceeds came in at under $700,000 through the first half of the 2015 fiscal year, budget documents said. The budget anticipates $9 million for the 2016 fiscal year and another $1 million going to a special school construction fund due to minimum payments built into the casino's lease agreement. Going forward, the city is still facing a general fund fiscal gap projected to accumulate to $612 million through 2022.
As oil prices plummeted to near six-year lows over the past several months, some multifamily developers are stalling their proposed projects and development plans in Houston and shifting their focus to other markets instead. Asset Plus Cos., the nation’s largest privately owned apartment and student housing developer, is the most recent company to announce a Houston hiatus due to the oil slump.