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Case Studies

CASE STUDIES

Two Point Royal, 4550 North Point Pkwy; Office building; 123,032 sqft; blt 1997;Highwoods Properties; Fulton Co, GA

-For tax year 2013, the Fulton County Board of Tax Assessors placed a value of $12,312,300 on this property and this value was the same value as in 2012. Prior to the 2013 assessment notices being issued, we had met with our client to review and discuss their portfolio and determine which assets needed to be aggressively pursued in 2013 – Two Point Royal was identified as one of those problem properties.

We filed the appeal and, after informally discussing the property with a County tax appraiser, we felt that little relief would be achieved without formally pursuing the appeal with the Board of Equalization and perhaps even further. The County’s perception of the market was that things were improving and they were no longer going to reduce tax values below prior year numbers.

We moved through the appeal process and at the official BOE hearing, we presented our information, including an income analysis and review and analysis of the more recent and more market related leases. We did our best to keep the discussions on a simple platform and avoid the somewhat confusing minutia involved in cap rate and concession discussions. At the end of the day, the BOE sided with us and reduced the 2013 value from $12,312,300 to $9,827,700 (our target was $9,500,000). This 20% reduction in the tax value generated $34,668 in tax savings for our client and, by increasing the property’s net cash value by that amount, effectively resulted in a approximate $500,000 increase to the property’s actual income value.

580 Joe Tamplin Blvd, Warehouse, 93,000 sqft; blt 2010; Rooker & Associates; Macon/Bibb Co, GA

-This property was owned by the Macon/Bibb Co Industrial Authority and therefore tax exempt. The County had a value of $6,378,007 on the property and that value was based on a cost approach as the property included 28.8 acres of additional developable industrial land. The issue came in 2014 when my client, Rooker & Associates, purchased the building a portion of the land from the Development Authority. At the time of the purchase, the warehouse was 100% vacant and my client was attempting to negotiate a lease with a prospective tenant that would provide a significant cash flow to the property. A major sticking point was the County’s tax value on the property and how that would relate to taxes per square foot that the tenant could expect upon executing a lease and the property becoming taxable for 2015.

Because my client purchased the property prior to the expiration of the 2014 appeal rights, I was able to file an appeal of the 2014 property value. This was somewhat problematic in that my client only purchased the building and 10 acres of land, not the entire tract, thus a parcel split would have to occur but not until 2015. Regardless, the County was not interested in accepting or working my appeal because, in their eyes, the appeal didn’t matter because it was an exempt property and the value being carried for 2014 was not of consequence other than adding value to their overall tax base, which is of benefit in certain state funding calculations.

So, my focus became to convince the County not to just push this appeal along to the BOE but to work with me and quickly because my client needed a reduced value for 2014 so that they could legitimately provide a 2015 tax liability to their prospective tenant that was significantly less than what they were currently estimating. Finally, after several conversations and a sit down meeting with the Chief Appraiser, we will able to not only come up with a significantly lower 2014 value but also an agreement from the County that they would use the same number for 2015, which was key to the tenant. We also were able to get the appeal processed within 10 days which provided the concrete numbers my client needed and, in a time frame that allowed them to successfully complete their tenant negotiations.

The final 2014 value was settled at $2,976,418 and my client signed the tenant.

1265 Oakbrook Pkwy; flex space; 51,200 sqft; blt 1984; Gwinnett Co, GA

-The Gwinnett County Board of Assessors conducted a countywide reappraisal of their flex and warehouse space in 2014 and the tax value on this property increased from $1,000,000 to $1,740,800 – a 57% assessment and tax increase. Upon receipt of the assessment notice, we updated our client and filed a 2014 assessment appeal.

After researching the County records and speaking with the County appraiser, it was determined that the County had picked up building permits on this property in late 2013 and, upon inspection, determined that the property, which had formerly been 50% vacant was not 100% occupied. After discussing this with my client and reviewing the rent roll, it was verified that, although the tenant was physically in the building on Jan 1, 2014, there were actually not paying rent until May 1, 2014. The first 4 months of the lease were in effect free rent.

I went back to the County and convinced the appraiser to agree to take the 2014 value back down to the original $1,000,000 value, due to the fact that the tenant was not paying rent on the 2014 assessment date, January 1, and wouldn’t be paying rent until May 1. The deal was that, for 2014, the value would roll back but for 2015, assuming everything else was consistent, the increased value would go into place with no appeal. My client was very happy with this deal because they, in effect, had no additional taxes for 2014, even though their new tenant was in place as of January 1, 2014. This will give the tenant an additional break going in as well as the owner and the full tax load will come into place in 2015, when the property is 100% occupied and can be completely passed through.