October 2009

The state of the industry for apartment buildings continues to decline although at a slower pace than many other commercial properties. County assessors are reluctant to lower assessments for apartments as the number of sales of comparable properties decline and rents are lagging other indicators. The following headline and accompanying paragraph is from the “2009 Survey of Operating Income & Expenses in Rental Apartment Properties” as reported in the National Apartment Association website:

Challenging Times Require Bottom-Line Focus

In a transformational year of bailouts, stimulus programs, deficit spending and financial industry restructuring, in addition to a dramatic decline of home and stock ownership and values, rising unemployment and bankruptcies, the U.S. apartment industry continues to face many short-term challenges. In the face of a prolonged recession, rising cost of living, tax increases, declining rents and a significant decline in both transactional volume and asset values, the apartment industry is placing an even great emphasis on operational basics and performance metrics.

We at California Property Tax Associates-CAPTA couldn’t agree more.  Reduction in County assessments of apartments has been difficult, but not impossible. California property tax law provides the means for assessment appeal but the rules have all changed. No longer is it a simple matter to appraise commercial property and specifically apartment properties for the purpose of property tax assessment reduction.  It requires a fresh approach, a thinking outside the typical appraisal box. It requires CAPTA.

Look at another recent headline:

NEW YORK (Reuters) – The U.S. apartment market in the third quarter turned in one of its weakest performances ever as the national vacancy rate hit a 23-year high despite being propped up by landlords willing to take lower rent to keep tenants, according to real estate research firm Reis Inc.

The U.S. apartment vacancy rate rose to 7.8 percent in the third quarter, its highest since 1986, according to the report released on Tuesday. Vacancies have been rising since the third quarter of 2007, according to Reis.

It is critically important to reduce bottom line expenses.  It may mean the difference between profit and loss.

A recent Client retained CAPTA to work on one of his companies commercial properties. In the course of our investigation we discovered another property was owned by the same company. An apartment complex of over 500 units valued at almost $37 million. When we asked to review this property we were told there was not much hope of a reduction. But we took the property anyway. A review of the income statement showed income to support the value but we followed our established procedure of thinking outside the box and prepared a case for this property. Our work was rewarded with a reduction of over $21 million. The value we agreed upon was a little over $15 million for a tax savings to this client of over $225,000. This took place in the spring of 2009.

How did we do it? We prepare every possible remedy to reduce the value according to the Property Taxes Law Guide, the Revenue and Taxation Code and the Assessors Handbooks.  And we don’t take no for an answer. We always think outside the box with creative techniques and strategies to value property in the absence of good comparable properties. We fight aggressively for the assessed value we want but settle amicably with the appraisers in the County assessor’s office. We maintain relationships but stand firm in our resolve to represent our clients California property tax appeals.

If you own apartments or other commercial property and want to preserve your bottom line, please fill out the form below and we will contact you at your convenience. Better yet call us at the number to the right or in (888) 678-9TAX. But to call now as the deadline is November 30, 2009.

Comments or questions are welcome.

Contact Form

Name:

E-Mail Address:

Property Type

Approximate Value

Office Phone

Cell Phone

Subject:

Message:

CAPTCHA Code: