Tag Archives: william spart

Property Taxes, AZRE Magazine May/June 2011

Property Taxes: Keep A Keen Eye On County Valuation Notices

What if your business was overcharged for its electricity, natural gas, or perhaps new computers or furniture? Most of us would take a look at our bills, determine where the mistakes occurred and then take the needed steps to resolve the discrepancies. But what if your business is being overcharged for its property taxes by thousands of dollars each year? Is there a course of action to fix this potentially costly problem? The answer is yes.

Each year, typically in February, the county assessor releases “postcard” valuations for each property in the county. In some cases, these valuations exceed the properties’ market value. The problem that we see in Arizona is that many people do not take notice of their property taxes until the county treasurer’s office mails its annual tax bill. But in Arizona, you cannot protest your taxes — only the postcard valuation. Therefore, the time to review your property taxes is when your values are mailed in February, not when you receive your tax bills in October.

What does this mean for local business owners?

Without protesting a postcard valuation, a business owner’s taxes may be substantially higher. In many cases, they need not be. If a business owner paid $4M for an office building last year, on average, the owner will owe approximately $100,000 in real property taxes. However, if the county assessor values the property at $7M based on its computerized mass appraisal, and the business owner does not protest, the owner’s taxes may exceed $175,000.

Why would my property be overvalued?

Over the past several years we have seen significant changes in commercial values, with prices quickly rising in 2005 and 2006, and falling over the past couple of years. Today, however, there are signs of hope. According to William Spart, senior vice president of Wells Fargo Bank, “some submarkets and property types, including apartments, are showing signs of firming up.”

These drastic changes in the market over the past several years have made it difficult for county assessors to determine property value. It is not feasible for the assessors to separately analyze the unique characteristics of each and every parcel. Therefore, the assessor must rely on a blanket formulary approach that attempts to classify buildings and land into various categories to produce a valuation.

The positive is that many people, including Pete Bolton, executive vice president and managing director of Grubb & Ellis, says he believe that we are at the bottom of the market. According to Bolton, the “market has definitely stabilized and we are seeing five to seven main groups, including the FDIC, national banks, CMBS special servicers and others slowly releasing property to the market with market values bouncing along the bottom.”

What if I recently acquired my property?

In Arizona, real property is assessed on an annual basis by the assessor’s office of the county, where the property is physically located. Property tax values are released around February prior to the tax year. While existing owners of real property are required to file all administrative protests within 60 days of release of the postcard values, Arizona has special rules for new owners.

Under Arizona law, new owners have the ability to either take over the old owners’ appeal or if an appeal was not filed, they can typically appeal their valuation to the County Superior Court until Dec. 15 of the valuation year. If the prior owner did not appeal the current year taxes (prior year’s postcard values), you may be able to appeal these taxes as well.

For more information about property taxes, visit wwptax.com.

AZRE Magazine May/June 2011

 

NAIOP, AZRE Magazine September/October 2010

NAIOP Roundtable 2010: Q&A With Members of NAIOP

NAIOP Roundtable 2010: Q&A With Members of NAIOP

Members of NAIOP-AZ sat down with AZRE magazine in a roundtable discussion, discussing the state of the local commercial real estate industry.


NAIOP Roundtable 2010NAIOP Roundtable 2010 Participants

NAIOP Roundtable 2010 Participants:

1 — DW: Deron Webb, Managing Principal, Wentworth Webb & Postal5 — BM: Bob Mulhern, Managing Director Greater Phoenix, Colliers International

2 — JB: Jodi Bailey, VP Property Management Services, Transwestern

6 — KR: Kurt Rosene, Senior VP, The Alter Group
3 — WS: William L. Spart, Senior VP & Manager, Middle Market Real Estate, Wells Fargo Bank7 — TH: Todd Holzer, VP of Development, Ryan Companies US
4 — MH: Mike Haenel, Executive VP, Industrial Group, Cassidy Turley/BRE Commercial8 — JD: John DiVall, Senior VP, Liberty Property Trust

Economy

TH: We are more than two years into the so-called “Great Recession.” How much longer will it last? Will Arizona pull out the same time as the rest of the nation? Since the commercial real estate industry is closely tied to the job market, it’s been a bumpy ride.

Q: What is different in July 2010 in our local commercial real estate industry than a year ago?

MH: The two biggest differences today compared to a year ago, are that tenant demand is on the rise and there are limited distressed industrial real estate opportunities available for sale. It’s important to note that, because we have not seen the oversupply of distressed real estate hit the market, values are higher than we thought they would be given the overall market conditions. This has translated into a significant and noticeable increase in tenant demand.

JD: It is marginally better. As part of the Arizona NAIOP, I wish I could say substantially better, but it’s not. There is more activity, but rates are still depressed, and we are now in the summer doldrums. We are clearly experiencing a jobless recovery. With no new construction on the horizon, we should gradually absorb space and improve.

WS: There are more lenders jumping into the market. We are seeing conduit, CMBS, life and other banks. A year ago we did not see much activity.

Q: How would you compare our Metro Phoenix commercial real estate market to other major markets throughout the Western U.S.?

BM: Phoenix’s metro commercial real estate market has been hit harder than most Western cities, with Las Vegas being the exception. At the end of the second quarter Phoenix vacancies for office (29 MSF/22.5%), industrial (41 MSF/17.7%) and retail (28 MSF/13.3%) were all in historically high ranges, and they remain significantly higher than other Western cities such as Denver (6.7% industrial/14.8% office), San Diego (8.7% industrial/16.2% office), and Los Angeles (not including Orange County and the Inland Empire — 5.0% industrial/12.7% office). Most of the basic fundamentals that draw people to the Valley are still in place, but the lack of job growth, coupled with the depressed residential housing market, are continuing to act as detriments to a commercial real estate rebound. Recognizing these realities, it should be noted that multi-family sales, for which purchase financing is available, are very strong, and that foreign investors, especially from Canada, are entering the market and helping create some velocity in the private client sales market.

JB: Phoenix is a very dynamic commercial real estate market with a highly skilled labor force, an abundance of labor because we are a right-to-work state with competitive wages, and reliable, lower cost energy sources for large users. Ultimately, this means that we attract a wide variety of users from semiconductor manufacturers, biotech/life science laboratories, aerospace and Department of Defense manufacturing, as well as back office and data center occupiers of space. Each building occupier has their reasons for choosing Phoenix over other markets, but we find ourselves to be very competitive as compared to other regional markets.

TH: Phoenix is in the infamous Bermuda Triangle of both residential and commercial real estate, which also includes Las Vegas and the Inland Empire of California. Because of the housing market dive, cities in this area went into recession mode before the rest ofthe nation, and the drop in our economy has been greater than most. Los Angeles, San Francisco and Seattle keep their economy above water due to Pacific Rim trade. Denver has energy and high tech, and Salt Lake City was not overbuilt. Texas has fared well due to energy and the George W. Bush presidency. It will be a long and difficult struggle for Metro Phoenix to pull out of the tough times it finds itself in.

Q: How are the boycotts and state public policies affecting our industry?

BM: I have not heard one comment about the boycott in our offices or from any of our clients, which is an indication to me that the boycotts, though serious issues, do not rank high in the commercial real estate priorities of concern. Shrinking rents and occupancies are a much bigger issue these days.

Regarding public policy, the inability of the federal and state governments to implement policies and programs to stimulate job growth is prolonging our recession. There will not be a jobless recovery so, until jobs are created, our industry is continuing to experience high levels of tumult.

Public policy toward banks is also prolonging our recession as the de-leveraging process is being allowed to be spread over time, preventing the painful, but inevitable total market reset necessary to stabilize the real estate market and allow it to begin to create some positive momentum.

TH: The boycotts are affecting the convention and tourist sector, but I do not believe that they have affected the office and industrial markets here in Arizona. Companies choose to come here due to the ease of doing business and quality of life, not due to our state’s policy on immigration. That being said, our state needs to make job creation and business attraction a primary focus. We need the Legislature and the governor’s office to make jobs our No. 1 priority. I suggest a formal jobs bill from our legislative leadership should come forward that includes a lower tax burden on hiring businesses and commercial property owners.

DW: After the initial national “knee jerk” reaction of higher deficit spending and dubious stimulus policy, leaders underestimated the outcry and we did not do a good job of getting the message out nationally. Projects have been stalled and some major players are taking a wait-and-see attitude. Any time there is substantial disturbance, those active in the market cool.