PROPERTY TAX APPEAL FOR COMMERCIAL PROPERTY

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David Hahn is an MAFF credentialed in addition to CVA, ASA, CCIM, and CM&AA.  

 · Certified Business Valuation Analyst (CVA) credential from the (NACVA)     

· Accredited Senior Appraiser (ASA) credential from the American Sociegty of Appraisers

· Certified Commercial Investment Member (CCIM)    

 · Certified Merger & Acquisition Advisor (CM&AA)    

 · Washington State Designated Real Estate Broker 

 · Washington State Certified General Real Estate Appraiser

David Hahn, our firm principal, is an Master Analyst in Financial Forensics (MAFF) credentialed that is designed to provide assurance to the legal community – the primary users of litigation consulting services – that the designee possesses a level of experience and knowledge acceptable by the institute to provide competent and professional forensic financial support services.  David Hahn testified more than a couple of hundred cases in the Appeals Board Process as well as Economic Damages Expert Testimonies in the District Court and US Court system.  

Property Tax Dispute Consulting and Litigation Support

We provide a number of services related to property tax valuation litigation and disputes. Property tax litigation is among the most specialized of litigation areas, and requires advisors and expert witnesses who fully understand its specific environment and standards. Our valuation specialists are often engaged as fact or expert witnesses related to valuation and classification matters for property tax purposes. In addition, we can directly consult with taxpayers and appraisal district related to both real and personal property valuation disputes.  We offer our clients virtually a full range of analysis as well as expert (or fact) testimonial services. Many of our professionals have qualified as expert witnesses in federal, state, and local courts.

In most counties in Washington, property owners can begin filing 2024 tax assessment appeals starting from July 1 in each county and will end after 60 days either from July 1 or mailing of assessment notice card to all taxpayers with property on the secured roll. 

Not to mention on the current on-going high interest rate induced refinaning risk and underperforming high vacancy factors for office and commercial properties, this imminent default risk has had a major impact across both the real economy as well as in the real estate markets. With such uncertainty as to when the dislocations will resolve themselves, commercial property owners need to begin proactively assessing what this means for the value of their assets, with property tax reduction considerations being a focal point. 

Clearly, most income-producing properties will suffer from negative cash flow financial losses and should pursue assessment reduction.   If this is the case, the fallout of commercial property debacle has the potential to result in reduced real property values, and open the door for tax assessment appeals seeking lower assessed values and property taxes. This is particularly the case for commercial properties under the income approach.

The income approach is the most common method for valuing commercial properties, which values the property as an investment, looking at factors that include income, expenses, vacancy, investment risk and property stabilization. Underperforming commercial property assets has the potential to change the benchmark of what constitutes a “stabilized property” and the material factors in valuing income generating properties. Lower expectations for market rents and occupancy, coupled with increased investment risk, can result in lower assessed values and property taxes due to the underperforming commercial properties.

As a result, many property owners will be required to preserve an appeal to 2024’s assessed value long before they actually experience how COVID-19 impacts them next year. Property owners should begin considering whether their properties are candidates for lower assessed values and property taxes as a result of COVID-19 and high-interest mortgage rate negative impact, and prepare accordingly.

We can help you think through complex valuation topics and associated Property Tax Reduction implications.  Some of the key areas we can help include: net operating review and cash flow analysis, portfolio analysis, discount rates and terminal capitalization rate analysis, and valuations for strategic planning, segregation of tangible assets and intangible assets in the bundle of going-concern value.

Especially, we can provide the Property Tax Reduction Appeal services  for the heavily impacted property types as the following:

Hardest Hit:

•      Hotel, Resort, Lodging, Hospitality 
•      Office Buildings
•      Healthcare  Facilities, Senior Housing
•      Regional Malls and Large Retail Shopping Centers
•      Student Housing
•      Food Service Facilities

Less-Significant Hit:

•      Self-Storage Facilities
•      Industrial Facilities
•      Data Centers

Other Commercial Properties:

• Oil and Gas Participants
• Logistics/Distribution
• Transportation Companies
• Hospital and Healthcare Facilities
• Retail & Wholesale Distribution
• Technology Research & Development
• General Office Buildings
• Commercial Buildings
• Education Facilities
• Resort Communities
• Country Golf Clubs

Diminution of Value Damage Caused by Catastrophes

In most States, property owners are eligible for property tax relief, resulting from damage or destruction caused by a calamity, such as fire, earthquake, or flooding not caused by the owner. Most County jurisdictions, have adopted measures to reappraise or reassess damaged/destroyed properties and assure rebuilt properties retain their prior assessed values.

To qualify for property tax relief, owners must file a claim with their respective county assessor within the time specified by the county ordinance or 12 months (some jurisdictions up to 36 months) from the date of damage or destruction, whichever is later. The loss must be at least $10,000 of current market value to qualify for relief. The property will be reassessed according to its damaged state, and property taxes will be adjusted accordingly. Relief is available to owners of real property, business equipment, and fixtures. After an application is processed, the county assessor issues a notice of proposed new assessment, and a supplemental refund will be made based on the amount of reduction.  

Destruction Damages Caused by Civil Unrest Protests

As the protests continue across the nation, commercial and retail areas that were working to recover from COVID-19 are once again suffering another devastating blow as a result of the unprecedented destruction of their properties.  Same Application to Reassessment procedure mentioned above can be utilized. 

Burden to Prove is Up To The Property Owner

The income approach is the most common method for valuing commercial properties, which values the property as an investment, looking at factors that include income, expenses, vacancy, investment risk and property stabilization. COVID-19 has the potential to change the benchmark of what constitutes a “stabilized property” and the material factors in valuing income generating properties. Lower expectations for market rents and occupancy, coupled with increased investment risk, can result in lower assessed values and property taxes due to COVID-19.