Commercial properties are valued on, of course, what people would pay for them, but also on income. We still have quite a bit of vacancy in most counties in California in the office market, which is causing most rental rates to stay lower than most landlords would like. If you’ve got vacancies, you’re probably lowering your rent to attract tenants. If you lowering your rent, you are certainly lowering the value of your building. I think it could be a misconception that the commercial market is comparable to the residential market when it is not. There is just a lot of office product out there and tenants have a lot to choose from. It is very competitive for the tenant which makes it fairly challenging for the landlord to fill space with quality tenants that pay a high rate. The same is true in the R&D and manufacturing markets. Rental rates may be climbing, but they haven’t fully recovered from the go-go days of the dot com era.
Why would working with a professional such as yourself increase a property owner’s chance of success in the appeals process?
Bill: Since we work on a contingent basis, we are motivated to achieve the largest property tax refund possible. But I think most important is that I have been a CPA for 30 years and have negotiated hundreds of deals and provided advisory and tax reduction strategies for a wide range of clients. We know how to provide customer service. If we handle an appeal we babysit the property value and tax and make sure it not over assessed every year. We’ll keep an eye on it and make sure you are paying the lowest amount possible.
I’ve had experience with clients that have filed their own property tax appeal and they have come to me and said that they didn’t think the reduction was large enough. So they hired us and we were able to get a larger reduction. We had an office building in Santa Clara County that was reduced from $3.1 million to $2.4 million by the county appraiser. They asked us to file a formal appeal and we eventually agreed to a valuation of $1.5 million. By hiring us, that $900,000 additional reduction resulted in a refund of $12,900. That was for one tax year. We are still working for that client on the subsequent year, to get the largest refund possible.
I think that says if somebody like me is contesting the county values, with the experience and resources that I have, then I think I will be able to argue the lowest amount possible. People that do this on their own generally don’t have the resources. I just don’t think county appraisers or appeals boards are going to compromise and get you the kind of reductions that we can get.
Important information for every California commercial property owner to know. Thanks for your time and insight today Bill.
Bill: You’re very welcome.
Bill Snyder can be reached directly at Shannon and Snyder by calling 408-241-8700. Their business website is sscpa.com.
