Yesterday the Austin City Council voted unanimously to file a petition challenging the Travis Central Appraisal District’s valuation of commercial properties. The decision comes after a report that showed commercial properties were undervalued by an average of 47 percent from 2012 to 2014 was released last week. While it appears the city is ready to move forward with the challenge, the state’s Appraisal Review Board has 10 days to set a hearing. Before that, the city has the option to back out of the challenge. Although Texas does not have a sales disclosure law, filing the challenge allows the city to share data it has collected that shows commercial property has been undervalued in appraisals
By Gordon Mazur, Southern California Area Leader, Los Angeles
Property owners in energy producing Kansas counties are either facing property tax hikes or cuts in local government services as gas prices continue to decline, according to the Topeka Capital-Journal. Energy-rich western counties and those along the Oklahoma border will be hit the hardest and suffer from the greatest revenue loss. As county commissions across Kansas begin their budgeting process for next year, those which heavily depend on taxes from oil and gas production in their counties are facing some difficult decisions in the coming weeks. In Morton County, 70 percent of the county’s tax valuation is based on oil and gas. Officials there expect their tax valuation to fall by one-third next year. Meanwhile, Ellis County officials are scrambling to close an anticipated $2 million budget shortfall.
The Los Angeles Assessment Appeals Board faces a backlog of about 25,000 appeals, but a new county budget proposal may help property owners who have waited up to three years for their tax bills to be appealed finally get some relief. The backlog of appeals was created by the Great Recession when the value of about 500,000 properties in L.A. County plummeted, and the changes made in the assessors office due to the arrest of former Assessor John Noguez three years ago on grand theft and embezzlement charges made matters worse. Assessor’s agents and property owners' attorneys would often settle appeals informally, which quickened the process. But the informal, unstructured practice came under fire after the Los Angeles County district attorney alleged Noguez and two deputies accepted bribes in exchange for reducing tax bills.
In an effort to increase local government revenues in communities with a high number of tax-exempt properties, the Connecticut House passed a bill yesterday that would require hospitals and private colleges to pay property taxes. While several schools and hospitals have testified against the bill due to the financial burden, supporters of the legislation say the large entities are "nearly indistinguishable from traditional private sector businesses." House Bill 6965 is now headed to the Senate and then to Gov. Dannel P. Malloy, and if approved, towns with a lot of student housing could see a significant revenue gain.
Last week, the Austin City Council met behind closed doors to discuss a possible challenge to the Travis Central Appraisal District's commercial property values. The city council considered a similar challenge last year, but due to a time constraint to file the petition, instead voted to undertake a study of commercial appraisals that could serve as the basis for a “targeted” challenge in 2015. Despite the city council previously announcing they would not release their value study’s findings from 2014, since a challenge could lead to a lawsuit, they released the analysis of TCAD's commercial valuation this week, which found that Austin's commercial values overall are significantly undervalued. The city council has until June 1st to file a petition, but says they are interested in challenging the appraisals of just two categories of commercial property, not including multifamily properties. Those categories total about $30 billion in value.
New York's property tax cap isn't set to expire until June 2016, but Gov. Andrew Cuomo, homeowners, and business groups are already pushing to make the cap permanent. Enacted in 2011, the cap limits school districts' and local governments' annual tax levy growth to 2 percent or the rate of inflation, whichever is lower. While local governmental bodies and school districts have opposed the spending limits, and the state's teacher's union even deemed the cap unconstitutional in a recent lawsuit, a coalition of business groups utilized historical data to issue a report in defense of the cap. The coaltion, which includes the state Business Council and tax watchdog Empire Center, found that the cap has saved New York taxpayers an estimated $7.6 billion just in school taxes since it first took effect. The business group focused on school taxes because they typically account for two-thirds of many property tax bills.
By Holly I. Unck Esq., Senior Managing Consultant, Phoenix
Over the past decade, a generous property tax exemption program has helped spur a rapid expansion of wind farms in Oklahoma. The state incentive program exempted local property taxes for five years, and wind developers claimed $32 million in property tax exemptions in 2013, according to the Oklahoma Tax Commission. The same incentive program also helped a power plant boom in Oklahoma after 2000, but lawmakers dropped power plants from the program in 2009. Senate Bill 498 was passed on Friday, which will end the 5-year property tax exemption for wind farms after 2016 if signed by Gov. Mary Fallin. The bill’s passage would allow projects already under development to qualify for the incentive before it ends on Jan. 1, 2017.
This week, the Tax Increment Financing (TIF) Commission of Kansas City approved TIF assistance for the $138 million Commerce Tower mix-use redevelopment project. The approval was a major relief for the developers, as they lost out on roughly $5 million for hard costs they had anticipated in state brownfield tax credits. While state offices did offer an explanation why that would no be receiving the assistance, some sources assume it is due Missouri's effort to support the new $1 billion riverfront football stadium in St. Louis in hopes of keeping Rams owner Stan Kroenke from moving the NFL team to Los Angeles.
Last June, the Austin City Council was urged by some activists and homeowners to file a petition challenging the value of commercial properties, which would have gone before a Travis Central Appraisal District board. While the council ended up not filing the petition citing a lack of time to compile detailed evidence, it could have resulted in the reappraisal of all commercial properties or ended up as a lawsuit in district court that could have pressured state legislators to enact reforms. Proponents of the petition argue that commercial properties are appraised below market value and say the state law unfairly allows commercial property owners to win reductions in value, shifting the tax burden onto Texas homeowners. The Travis County Commissioners Court also considered challenging the commercial property tax roll last year, but decided not to file a petition.
The Pennsylvania House approved a property tax reform proposal yesterday that would would shift $4.2 billion of the school funding burden that property owners now bear to an increased state personal income tax and sales tax rate. The state House is set to vote today in what some describe as the as the most significant property tax vote in decades, if not longer. While many believe the proposal is good progress to the state's property tax issues, critics argue it doesn't do enough to prevent property taxes from climbing back up.
By Domingos Santos, Managing Consultant, Phoenix
U.S. hotel prices were just one percentage point short of their pre-recession peak in March, according to Moody’s/RCA Commercial Property Price Indices (CPPI) report. According to the National Real Estate Investor, Moody's report found that hotel prices rose by 33 percent over the past 12 months, as property fundamentals improved and more and more investors flooded into the sector. In the first quarter, investment sales of U.S. hotel properties rose 68 percent, to $12.9 billion, according to Real Capital Analytics (RCA), a New York City-based research firm. Cap rates in the sector averaged 8 percent, 36 basis points below those recorded during the first quarter of last year, while the average price rose 47 percent, to $199,462 per unit. In the first three months of 2015, at least four hotels sold for more than $1 million per key, RCA researchers noted.
A newly formed coalition of public employee unions and other liberal groups, including many churches, launched a campaign Thursday to put a revision on California's 2016 ballot that would remove Proposition 13's protections from commercial properties. Under current law, dating back to Prop 13’s passage in 1978, property taxes are only reassessed upon transfer of ownership or, if title is held in a legal entity, change of control (obtaining a greater-than-50% ownership interest) in the legal entity. Once re-assessed, values cannot increase more than 2% annually. The proposed measure would remove Proposition 13’s limits on what the organization considers to be commercial property – industrial, retail and office complexes, mostly – while leaving them in place for owner-occupied homes, residential rental properties and agricultural land.
The North Carolina House voted to bring back the state's Historic Property Tax Credit program, which aided rehabilitation of designated historic buildings and homes and mill and warehouse buildings by lowering the tax bills of the developers based on their development costs. The program expired Jan. 1, and developers banned together to stress how important the program is to North Carolina, arguing that the credits make are a tool that preserve history, promote economic development, generate jobs and often spur development in economically depressed areas of the state where developers would otherwise avoid. In addition, supporters say the tax credit is needed to make the projects financially viable, as it it generally costs significantly more to rehab an old building than to build a new one.
In an effort to increase funding for schools, roads and government services, two state representatives introduced a bill that would lift Washington's 1 percent cap on local property tax levies. Because the cap can keep property tax revenue growing at slower rate than annual inflation, King County maintains it has caused budget cuts to law enforcement services and road maintenance.
Important Notice Concerning RPIE Filing Requirements Due June 1, 2015
Investors are pouring money into student housing properties, as new buyers, including high-net worth individuals, private equity fund managers and institutional investors, continue to enter the market. And now that REITS have returned after a short hiatus due to some bad earnings hurting stock prices, property prices for student housing assets are climbing even higher, making it a great time to be a seller.
Property values across the Denver-metro area are seeing large jumps in value, and county assessors are warning taxpayers to expect much higher tax bills. The city is fully recovered from the recession and continues to grow tremendously, and property values reflect that growth. While it benefits local government revenues, property owners are left facing higher property tax bills.