Originally published on October 24, 2024 by Ginger Meurer for NAIOP.
As developers reduce every possible expense in a tight market, what are overlooked ways to improve their competitive position? Tax attorney Ben Blair, a partner at Faegre Drinker Biddle & Reath LLP, said that while you may not be able to move the building to a better location or put an intensive capital investment into improvements, you can work to lower your tax bill.
During a CRE.Converge conference presentation on property tax mitigation, Blair shared tips for making your case for property tax mitigation.
Any assessment that is based on pre-pandemic data is ripe for challenge. Assessment data is inherently backward-looking while values for income-producing properties are (and should be) forward-looking. Many municipalities are assigning higher values for properties today than pre-pandemic, which Blair said is not reflective of the economic reality.
Absent litigation, you can have conversations with assessors to make certain assessments are a fair representation. Assessors only want hard data when you’re asking for a tax reduction, but how you look at that data is important. In the early stages of a challenging economy, it’s not uncommon for rent rolls to tell one story while reality tells another, especially if those rents wouldn’t be achievable if the property were to hit the market today.