Tax Assessment Question

[Terrel L. Shields]

WM got rid of the CGs

When family were succeeded by non-family they have to perform at unbelievable levels. SO....you get that. They hire thousands annually and fire every spring about the same number. No one reaches retirement age.

 

[Tiffany Gibbons]

When family were succeeded by non-family they have to perform at unbelievable levels. SO....you get that. They hire thousands annually and fire every spring about the same number. No one reaches retirement age.

Those CGs are now working for the assessors. At least at the county I worked at for 10 years. Turnabout is fair play, especially since "Dark Store" theory has been shot down in various states. Yeah, poor Wally World,

 

[Mark K]

This is why Wal Mart likes the "Dark Store Theory".

A friend is on the county PTBOA (property tax board of appeals for those unfamiliar).

For a while they fell for the 'dark store theory' but soon changed their minds. In this county there are probably 90-100 large warehouse/distribution buildings, 400K to 1M+ sq.ft. Not to mention the abundance of normal commercial properties. The owners would come in pleading their case every time they went empty.

These days, they get assessed at MV based on sales and there are a lot of sales showing anywhere from about $40 to $80/sq.ft. No more 'dark store' assessments.

 

[Terrel L. Shields]

No more 'dark store' assessments.

No different than the methods used to value hotels. Rushmore v Business Enterprise method.

I sat a board for a year and so I went into the sales of all industrials and found that not one single solitary vacated industrial building in the county sold for as much as it was appraised for - not one. In fact, the difference was somewhat over 50% and less than 80% typically. Reality is that the assessor is including a business enterprise value (BEV) - blue sky, if you will, while denying it. The same for a poultry farm. They are valuing the contract not the buildings worth. So what is the "proper" value?

Don't forget - the same assessor was adding the value of the equipment, phone system, computers, desks, etc on the "business valuation" as well.

As all classes of property gets more and more complex the time is coming when valuation is rendered rather meaningless without context. The dark store concept in a recession lessens the tax take. To value is if on-going concern (which is in reality what is happening) justifies destroying an older building simply to avoid excessive taxes - which is a waste without real benefit to the county.

Frankly I would love to see guestimates by assessors abolished and taxes raised simply by a sales tax on each mortgage and deed filed. Only gifts of property between relatives should be valued, and those be valued by certified appraisers of the county and contestable from a licensed appraiser. Walmart's reaction, like many other large companies is to fight back because it was obvious that many assessors saw such big box stores and warehouses as bottomless money machines that they could extort to their liking.

If the big megawarehouse that came before the board I was on, Walmart brought the actual cost of construction and a 1,100 page appraisal including megawarehouses from Atlanta, Denver, and elsewhere. The assessors appraiser argued their SF value was correct but they had used a 1980s Marshal & Swift (this was in 1998) manual adjusted up for time (from where?) AND since that book didn't yet have a megawarehouse category they subtracted 10% from the regular largest warehouse category. At this point the appraiser for Wally's mouth dropped.

edit - Nothing has changed. This building was the old Pet Milk plant later used by Laz E Boy and then Ozark Electronics which folded and a Bank took it over. They exposed it to the market for 3 years - a 1946 building with little else going for it, and sold it for $1.2MM, while it is currently appraised for $1,600,000. Which number is the "right" number since it was offered for a long time in an orderly disposal.

 

[Elliott]

KK asked: Shouldn't it be all land be removed for the tax assessment also?

Tax payers love to compare land values, so the assessor is most likely to develop a consistent land value based around a 100% location for an area, and then adjust down from there. For trending (annual adjustments) purposes the assessor develop a land percentage increase and a commercial improvement percentage. Consistency is the hobglobin of assessment. Tax payers are most likely to complain more about what the next guy is assessed than complain about their property tax bill (most people are ok with paying their 'fair share' of taxes).

 

[Amy Perkins]

So I have looked at commercial appraisals before but an interesting thing came up for my tax assessment and figured I would ask cause it doesn't seem right to me or mostly makes me wonder. On the commercial appraisals I have seen it was fairly straight forward for the market/sales approach. An adjusted average sq ft value times the sq ft for the subject property, and that will give you a final value for everything there. For the tax assessment there its broken up, land and improvements/buildings. So for the tax assessment it was somewhat the same but at the end only some of the land was subtracted out. Not the total amount of land. Only some of the land and it was explained that it is only for the land used for the structures for tax assessment purposes. On a commercial appraisals, at least the ones I have seen included all land and it was just the final value like I have described above. Shouldn't it be all land be removed for the tax assessment also? Or is there rules, code, guideline that says only the used portion of land is to be removed and rest stays? Thanks.

Excess land is not needed to support the improvements and it can't be sold off like surplus land. Perhaps it is located in an easement or encumbered in some way or is unusable for reason?

 

[Tiffany Gibbons]

Excess land is not needed to support the improvements and it can't be sold off like surplus land. Perhaps it is located in an easement or encumbered in some way or is unusable for reason?

Amy, that is backwards, excess land can be subdivided and sold off, surplus land is not necessary to support the improvements and can't be subdivided or have a separate Highest & Best use. The way I remember is Surplus land starts with an "S" for s ucks.

 

[Terrel L. Shields]

The way I remember is Surplus land starts with an "S" for s ucks.

Sucky surplus, excellent excess.

All land should be valued as if vacant and available for its HBU. All land and improvements are taxed. Assessors rarely address functional or external obsolescences. Just saying.

 

[Tiffany Gibbons]

Sucky surplus, excellent excess.

All land should be valued as if vacant and available for its HBU. All land and improvements are taxed. Assessors rarely address functional or external obsolescences. Just saying.

Yes, they do. If it gets appealed or questioned, if a legitimate easement or flood plain or something (rock quarry, industrial, railroad tracks, power lines), etc., it can be adjusted in the land model. That overide usually doesn't come off unless parcel is split or combined. Not all land and improvements are taxed. There are exempt properties (city or county owned, church, public utilities, etc.). Now all land and improvements are "assessed", not necessarily "taxed". The property assessor appraises property for ad valorem tax purposes. The assessor does not "tax" the property. In Tennessee, at least.

 

[Terrel L. Shields]

Yes, they do.

It was my experience on the BOE and seeing over 500 appeals, (out of 3,000) I think I saw 2 properties that the assessor applied a functional adjustment. Probably 20 or 30 should have. None applied it to the improvements but to the overall property when land is not impacted by functional obsolescence. And I don't think I saw any adjustment for quarries, land fills etc.