The $1.3 trillion omnibus spending bill that was passed last week contained the first expansion of the Low Income Housing Tax Credit (LIHTC) program in more than 10 years. The measure increased HUD’s budget by more than 10% and increased the number of LIHTCs that are available by 12.5%, making a significant impact in states such as California and New York where tax credits are a limited resource. The expansion was particularly welcome as it will help offset the effects of the Tax Reform bill that passed last year.
Amid a great deal of scandal and political fallout, beleaguered incumbent Joe Berrios conceded to challenger Fritz Kaegi Tuesday night in the primary contest for Cook County assessor as vote totals showed him far behind. Berrios has been facing backlash over the past year for reports that found his office unfairly shifted the tax burden from wealthier property owners to the poor and middle class. His ethics were also under scrutiny due to his history of accepting campaign contributions from attorneys who handle property assessment challenges and for employing family members.
According to the Chicago Tribune, if Kaegi’s victory stands — a third candidate filed a legal challenge Tuesday evening — it would also mark a loss for the Cook County Democratic establishment Berrios leads and for his ally, state party Chairman Michael Madigan. With 96 percent of the ballots counted, Kaegi had 45 percent of the vote to Berrios’ 34 percent, according to unofficial election night results. The other candidate, Andrea Raila, had 21 percent.
By Jerry Heaton, Senior Managing Consultant, Dallas
March 2018 Update: The battle between Amazon and bricks-and-mortar retail wages on with Toys R Us abruptly announcing plans to close or sell more than 800 stores across the U.S. The impact of Amazon was the basis for the Toys R Us bankruptcy and will leave many big box vacancies coast to coast, putting pressure on market rents, occupancy costs, and diminishing real estate values. My original article below discusses the impact of these retail chain closures and the long-term ramifications upon tax assessors’ property tax rolls. Shopping center landlords will struggle to fill the massive amounts of big box vacancies as shopping trends continue to shift online and retailers move to smaller format spaces.
By James Sutton, Regional Director - Central South, Dallas
& Bill O’Quinn, Senior Managing Consultant, Dallas
To say the multi-family market in the Dallas-Fort Worth metropolitan area is performing well would be an understatement. Deliveries were up 14 percent in 2017, vacancies were down 4 percent, rental rates were up nearly 7 percent, and cap rates were down almost 20 basis points. From a property tax standpoint, factoring all of these variables into an income approach to valuation would support higher assessed values at the appraisal district level. While this may be the case, there is another valuation method that needs to be considered before giving up on your property tax appeal.
By Carlos Villatoro, Senior Managing Consultant, Dallas
A prominent national industrial REIT client recently asked for a historical summary of property taxes for a distribution warehouse they were considering purchasing. We were alarmed to see the property had experienced seven consecutive years of significant increases and had already budgeted for another increase in the upcoming year. Unfortunately, this trend is not specific to that one property alone. By 2020, I will not be surprised if we will have seen a decade of continual property tax increases for nearly all industrial properties across the Dallas-Fort Worth (DFW) area. In order to minimize and manage these increases as much as possible, it’s crucial to understand why and how they are happening in the first place.
More than 4,000 new apartments are forecast to hit the Los Angeles market this quarter, according to CoStar, as the first wave of as many as 30,000 in the next three years. Much of the construction is concentrated downtown, where it’s easier to build than in other parts of L.A., and almost all the new apartments will be at the higher end of the market. Signs of rent weakness are emerging as construction approaches peak, and L.A. landlords could be facing similar pains as as their counterparts in Manhattan, where a flood of supply has started to drive down rents.