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Apr
18

Improve Your Odds of Winning Property Tax Disputes

"Look for release of damages provisions that waive the right to sue if there are surface impairments. Make sure that the property has not flooded in recent years, especially if it's near a stream, lake or low lying area. Flood plain maps are periodically updated, so current information is crucial."

By Howard Donovan, Esq., as published by Commercial Property Executive Blog - April 2011

In ad valorem tax disputes, commercial property owners and their tax counsel often are so focused on rent rolls, occupancy, capitalization rates and other big-picture considerations that they overlook special conditions affecting value. There is "ore to be mined" in less obvious areas, however.

Here are five factors to consider in making sure a tax protest covers all the bases.

  1. Subsurface Conditions. Geology can weigh heavily in determining fair market value. Common examples include old mining activity, limestone formations and sinkholes, earthquake events, flood plains and periodic flooding. The property owner may already have information along these lines, and mining maps, flood plain maps and seismic activity information are generally available. Look for release of damages provisions that waive the right to sue if there are surface impairments. Make sure that the property has not flooded in recent years, especially if it's near a stream, lake or low lying area. Flood plain maps are periodically updated, so current information is crucial.
  2. Environmental Impairments. Obviously, the presence of asbestos, petroleum products or other types of pollutants either in the improvements or subsurface will strongly influence value. Ensure that expert reports are brought current and provided to the appraiser. Reports should address costs of remediation, which can be used to argue that value should be reduced by the costs. Finally, keep in mind the need for confidentiality with respect to this information. See if the jurisdiction will agree not to duplicate reports and to return them after review.
  3. ADA Compliance. Even after 20 years under the Americans with Disabilities Act, many properties fail to comply with the act's provisions. The costs of compliance can be submitted as reason to reduce assessed value.
  4. Easements, Restrictions and Covenants of Record. Every jurisdiction that applies the fair market value standard recognizes that title restrictions, easements and covenants affect value and strongly influence market transactions. This is true not only of the subject property, but also of any property transactions cited by the assessor as comparable sales. Examples include use restrictions, size of the improvements, density, amenities and the accompanied assessments, curb cuts, traffic signals and other factors. Verify that your file includes current copies of such covenants, and that any appraiser is aware of these items.
  5. Personal Property Returns. Most large commercial buildings, malls and shopping centers have associated personal property that is critical to property operations. Yet the personal property tax return is often a forgotten part of the overall value of the property.

Personal property values are generally calculated based on the depreciated original cost method, so make certain that the useful life of the personal property is realistic. Also check to see that the tax return excludes property that has been discarded or is no longer on site. If the real estate is the subject of a recent sale, find out what dollar value was allocated to the personal property and if that number is consistent with the values the tax assessor is showing.

hdonovanHoward Donovan is a partner in the Birmingham, Ala. law firm of Donovan Fingar, LLC, the Alabama member of American Property Tax Counsel, the national affiliation of property tax attorneys. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

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May
24

Valuation Dispute Strategies - 4 Easy Pieces

"These steps enhance your chances for a successful appeal"

By Howard Donovan, as published by Commercial Property Executive Blog, May 2010

When it's tax appeal time, taking the right steps can be critical for winning an assessment dispute. Follow these four steps to make the best case.

  1. 1. Provide current and accurate property information. Review the assessor's property card at least annually and correct any errors. This is also an opportunity to determine if there is reason to dispute the valuation. Consider public records, appraiser credentials, and national cost or capitalization guides. Look for inaccurate information regarding land size or improvements, as well as inaccurate depreciation of improvements.
  2. 2. Make sure the proper party files the administrative protest. In most jurisdictions, only the owner or owner's agent can file a protest or appeal a decision of the administrative board. An agent's authorization by the current owner must be legal or dismissal may result. If there has been an ownership change during the year, determine whether the party filing the appeal is the owner as of the lien date, or as of the payment date. In some states, parties other than the owner can protest, such as tenants or mortgage holders.
  3. Make sure that submitted lease information supports the taxpayer's position as to fair market value. Almost every state requires the assessment of property at fair market value. Not every lease represents the market, however, or results in a proper value calculation.
  4. Make sure that all encumbrances, deed covenants and restrictions, environmental contamination or other impairments are considered in the fair market value determination. Any factor may be considered in determining fair market value, so consider the impact of the state of the property's title, such as easements, conditions and restrictions. Did the assessor compare the asset to similar properties, or to real estate with more profitable uses than those allowed on the taxpayer's property?

These steps enhance your chances for a successful appeal.

hdonovanHoward Donovan is a partner in the Birmingham, AL, law firm of Donovan Fingar, the Alabama member of American Property Tax Counsel, the national affiliation of property tax attorneys. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

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