As we conclude 2021, I’m amazed at how quickly the year passed by. It was just yesterday we were contemplating what 2021 would look like from a virtual perspective. Could we really continue to operate in 2021 like we had in 2020? What changes would be necessary in the work environment? How would our relationships with our clients and the county/state jurisdictions survive? How would owners of private railcars continue to survive and thrive and what will be the state of commercial real estate, particularly in the hospitality and entertainment venues?
After months of no travel, I began attending conferences, client meetings and visits to Las Vegas office in June. Previously, blogs suggested traveling was… different. I contend this continues to be the “new normal” and with variants of COVID continuing to rear their ugly heads, I anticipate more of the “new normal” throughout much of 2022.
So, what does this mean in the world of property taxes?
Good question, and we’re definitely looking for clues to guide us. The Federal Reserve recently announced plans to potentially increase interest rates three times in 2022. How will this affect the ability to borrow money or finance commercial/industrial real estate? Will money market rates increase to a level so investors may consider this option over speculative real estate? I don’t believe so, but there could be a slight “cooling off” of real estate transactions heading our way.
Closer to home, Missouri completed the bi-annual reassessment of real estate values. Particularly, the greater Northland area of Kansas City saw tremendous increases in property valuations. Owners of property located in Clay County witnessed valuation increases between 20%-150%. Many appealed the increased values to the local Board of Equalization, but many more didn’t meet the deadline in June to appeal their valuations and were in for quite a surprise when they received their tax bills in late November.
Please remember, taxpayers will have the right to again appeal their valuations in 2022 and at least have the opportunity to achieve a fair assessment for the 2022 tax year before undergoing the re-assessment cycle in 2023. The same theory holds true in the States of Iowa and Colorado. Please contact me if you have any questions concerning these states and what rights you have as owners of property.
While certain sectors are thriving (industrial/commercial warehousing; multi-family and residential), other properties continue to suffer and will to seek ways to create value. High-end hospitality, office space and segments of the commercial retail space are not coming back to the pre-pandemic levels and it will be interesting to see if they’re permanently affected.
Restaurants, theatres and live entertainment venues are re-imagining what necessary steps must be taken to drive individuals to their businesses. All of these factors must be considered when looking at valuations for property taxes. The majority of the states must value property at its true market value on a “fee simple” basis. While jurisdictions love to look at contract rent (or the “leased-fee” aspect), fee simple valuations require these jurisdictions to review the market rents, not encumbered by lengthy, long-term leases.
On the rail car side, owners are excited to see goods on the move.
We filed a significant number of railcars this year with an “idle capacity” or “placed in storage” as many cars were not in service at the valuation date of January 1, 2021. We expect the numbers of cars in service to be much greater as of January 2022 and will be gathering the data over the next 30-60 days.
All in all, a very busy and challenging year. As I embark on my 37th season in the industry (Really???) I’m just as passionate about our clients and their needs as I’ve been in the past. Hop on, it’s going to be an interesting ride over the next 3-5 years.
Happy holidays to everyone and here’s to ringing in a great 2022!