Shopping Centers Today

MAR 2017

Shopping Centers Today is the news magazine of the International Council of Shopping Centers (ICSC)

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Page 42 of 59

M A R C H 2 0 1 7 / S C T 43 counterclaim that, yes, Nordstrom closed its store, but it still has three years left on the lease, so rentwise, nothing was lost. You, in turn, have to argue [that] the real losses are coming from the other store operations." In Texas if an appraisal district is using portfolio sales, REIT purchases and leased fee transactions as a basis to set values for shopping centers, "chances are the market value for property-tax purposes is going to be wrong," said Darlene Sullivan, a principal at Austin-based Popp Hutcheson. Many times portfolio sales and REIT purchases include intangible factors that would, if those sales were used exclusively, set the value of the taxable real estate too high. "Here the valuation date is always the first day of the new year, and the tax district takes a snapshot — of property performance, condition, market, et cetera," said Sullivan. It takes a few months to develop the property-value assessments, with the notice of value arriving in April or May. The deadline to appeal is going to be May 31 or, if notice is received in May, 30 days after receipt. "This is the time I tell all my retailers and landlords to be on the lookout for value notices and consider an appeal," said Sullivan. "To assist in the appeal, it is important to compile information to support your protest, such as cost of tenant improvements, leasing commissions, rent concessions and deferred maintenance. For instance, if the rent roll you provided to the assessor in the prior year was at 80 percent occupancy and the current year shows the property at 95 percent occupancy, the assessor may increase your value based on the increase in occupancy, without consideration for the cost to achieve that increase in tenancy. You may be successful in your appeal, however, if you can show the cost and concessions necessary to improve the performance of the asset." What might the new administration in Washington and the president's promises to cut taxes mean for shopping center owners? One view holds that property taxes are a local issue, so no matter what President Trump may or may not do, it will have no great impact on shopping centers. Then again, if anything out of the ordinary happens with the economy, for better or worse, then the property-tax issue may not prove to be so local after all. n

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