Archive for category: General Information

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.

Looking Ahead

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 37^th 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!

Last month, I discussed the CinemaCon convention I attended in August and thought it would be interesting to compare this conference to the NBAA – BACE at the Las Vegas Convention Center I attended last week.

The differences were striking.

The NBAA (National Business Aviation Association) is the leading organization for companies relying on aircraft to make their businesses more profitable. I was invited as a guest of SkyMark Refuelers (a big thank you to Mike Ellis for allowing me the opportunity to attend.) I knew this would be an excellent opportunity to meet business owners as well as suppliers, fixed based operators and others to discuss the aspect of business personal property taxes levied against various types of equipment. These types of equipment include refueling trucks, maintenance equipment, private jets and the leasehold improvements situated on airport property.

The event was fascinating.

Exhibitors from all across the globe gathered to show their wares in extremely elegant and sophisticated tradeshow booths. While smaller than past years, this was the largest convention gathering post pandemic Las Vegas has hosted with over 18,000 registered attendees. This is roughly 4-5X the number of attendees at CinemaCon and held in the recently completed West side of the Las Vegas Convention Center (as well as aircrafts located at the Henderson Airport).

The feel of the event was completely different. You had to be fully vaccinated to attend and pick up your credentials for entering. This was streamlined by installing the Clear App on your mobile device; downloading a picture of the front and back of proof of full vaccination card; downloading a picture ID of yourself and showing the application at the Registration Area to collect your credentials. After receiving credentials, masks were not required within the Conference Center. It was as close to “normal” as I’ve felt as part of an indoor setting with so many people. Kudos to the event planners for making this happen so efficiently.

While many conventions highlight the social aspects of getting away, make no mistake, these attendees were here to meet up with clients, learn about the latest technologies and most importantly – conduct business!

The tradeshow booths.

Many tradeshow booths were set up for staging areas for the “chit-chat”, while stairs led to 2^nd story conference rooms (within the respective vendor’s booth) for privacy and real work. Additionally, there was a section of floor space dedicated to first time presenters. I spent time meeting with the “first timers” to determine what was the deciding factor to exhibit. Several indicated to me they would recoup their investment as much as 20-30 fold within the next year. I believe anyone would consider that a successful return on investment!

As a summary to these two recently attended conventions, I’m continually reminded of the importance of marketing – Marketing of your company;  your brand; yourself! You can never underestimate the power of marketing. It’s completely exhausting, exhilarating and essential for brand awareness, as well as keeping your name out there. I was surprised by the number of different types of companies attending the conference – now it is up to me to see what happens next.

Happy Trick or Treating!

As always, please respond with any thoughts or comments as they are always read and appreciated.

There’s a saying that you can conduct quite a bit of business on the golf course. I’ve always felt there’s quite a bit of truth to this as you spend approximately four hours on the course (give or take 30 minutes 😊) with one, two or three additional people. While you’re focused on your game, the actual execution of the shot and your score is a rather miniscule time frame compared to the amount of time you spend with the people in your group on the course.

What do you do with all that time?

Certainly, there is discussion about family, vacations, TV shows, possibly religion and politics but inevitably, work can be a driving force.

Now, multiply this by 3X and you have our club’s annual Member Guest Golf Event. For the past two years, I’ve invited the CFO of a long-time client. Mike enjoys knocking the ball around the course as much as I do, and this provides a great opportunity to keep the working relationship strong. More importantly, Mike has become a good friend. Three days for golf, socializing, consuming beverages of all varieties, tremendous eating and maybe a LITTLE wagering… truly another great weekend. While we were technically away from the office, it was hardly wasted time.

The opportunity to meet others during the event is also present. There is no shortage of ways to meet those in the business world, even if takes place in a social, golfing environment. I recently completed a 10-week course through the Kellogg School at Northwestern in Mastering Sales and one should never discount these functions as purely social. As an owner of a business, I am constantly in “sales mode”, even if I don’t realize it at the time. The way you interact with others; the way you carry yourself and your conduct on and off the course is noticed not only by your group but also by others. In fact, a business opportunity may have presented itself with a person I met after we concluded a match. My follow up early next week will definitely be a plan of action and who knows how this may develop.

Speaking of marketing, this week I’m attending my first in-person conference since the Pandemic began.

While a little nervous, I am fully vaccinated and conference attendees must show proof of full vaccination in order to be allowed into the various breakout sessions. I’m excited about the opportunities but definitely cognizant of the surroundings. I am completely comfortable wearing a mask in this setting and curious to see how interactions will occur as well as the number of attendees at the conference. (Sounds like a good story for the September blog!)

As always, I appreciate you taking a few minutes out of your day to read my blog. If you have any comments or suggestions, I would love your feedback by posting a response or emailing me directly – dswartz@swartzaai.com or dswartz@indurantetax.com.

Enjoy the balance of your summer and a great upcoming Labor Day weekend!

As we start our hearings for the 2021 tax year, a question constantly arises from both taxpayers and county appraisers…

How has the pandemic affected the value of business personal property and real estate?

The answer is both simple and complicated. If business has suffered (think hotels, movie theatres and restaurants, to name just a few) due to the pandemic, is it the business value that has diminished or does it also include a decreased value in the business equipment as well as the “sticks and bricks”? County offices are constantly asking taxpayers to show market sales to support the claim the pandemic has had a detrimental effect on real estate. Business owners aren’t willing to sell their assets during this time, arguing the market is too depressed. If a sale does occur, is it truly a market value transaction? In other words, exposed to the market with neither party under duress to buy or sell?

In the cases we’ve had before the local Boards, another question invariably is asked…

Did the taxpayer receive PPP money?

I’m not sure how that relates to the value of real estate or business personal property. This money is primarily intended to support the payroll of a company, again, focusing on the business side of the equation and not the tangible asset side. However, the respective Boards believe if PPP money has been received, the businesses are surviving and therefore, the value of the equipment and the real estate remains unchanged.

I see the purpose of the argument. However, many types of commercial real estate (and the associated business personal property) are directly tied to the income it can produce. Investors look at types of real estate for the income potential. Office buildings, hotels, theaters, malls, multi-family… These are all in existence because of the rents they can collect from their tenants. If the tenants fail to make rent or worse, close due to a lack of business, the real estate becomes less valuable to an investor. Granted, the investor is not looking at a snapshot in time when purchasing real estate (the investor should be looking at stabilized income over the life of the property) but the role of the assessor’s office is to value the property as it sits on a specific valuation date. In most jurisdictions, this is January 1^st. As a result, we’re forced to look at the property at this “snapshot in time” and as of January 1, 2021, various sectors of the market were disproportionately disturbed.

Many counties have been proactive in their valuations.

Some have offered 20-30% reductions in value before the appeal process. However, this is not widespread, and those counties not proactively offering relief to the taxpayer can expect to see a surge in the number of appeals. Boards and State Courts or Commissions are already back logged due to the closure of the courts during the pandemic these past 15 months. Add the potential of new cases as a result of the pandemic; we may not have resolution for 2021 appeals in some jurisdictions until late 2022 or early 2023. The effects are long lasting and challenging for all sides.

We will keep representing the interests of taxpayers to ensure they’re paying their fair share.

If you have any comments or suggestions, please share by responding to the blog. You may also reach me directly at dswartz@swartzaai.com.

A belated Happy Earth Day to everyone. 🙂 I hope you’re doing your part to make the planet a safer place for us and future generations.

While we tend to get so busy wrapped up in our daily work activities, it’s good to take a moment and reflect on the “awesomeness” of our world. We cannot lose sight of how many things are “right” around us, even when we constantly see and hear the troubling issues immediately staring us down.

Speaking of “awesomeness”, I would like to share three examples of how staying connected and doing things the right way can benefit you years later.

Example #1

We recently signed a new client with a nice portfolio in central Iowa. There was nothing extraordinary about the deal itself, but how the situation played out reflects the value of relationships. We have a long-time client who is a single tenant on a property. While not the owner of the property, they’re responsible for the property tax liability.

My client gave me the name of the property owner and I reached out to the ownership group. The owners were interested in potentially having us review their portfolio in addition to the property I had inquired about. As I perused the email string, there was a contact name for someone I’d worked closely with while she was at another company whose portfolio we handled in 1994 (and still handle today!)

I have not been in touch with her for almost 10 years, but as soon as I recognized the name, we immediately touched base and it was if we had been working together throughout. She is the property manager for the new client’s portfolio. I’m convinced our prior relationship, and the positive results that began 25 years ago, had a positive effect on the decision to work with us.

Example #2

We have another long-time client who owns property managed by a property management firm. We’ve worked closely with the management firm for the past several years. But this year, the property management firm reached out to us independently to see if we would be interested in handling their own portfolio as well as other owners of property they manage.

Why? I believe it’s partly due to the relationships we’ve developed over the years with our clients and the property management company. Our results help seal the deal, but I’m convinced it’s the relationships we’ve maintained over time that created the opportunity for the consideration in the first place.

Example #3

Another property management firm reached out to me last week. The individual was also someone I’d worked with over 20 years ago with another company. He reached out to me and asked if we were interested in representing the portfolio he managed. He also wanted to know if we were taking on new clients. We have a call with the ownership group and the property management team this week. Hopefully we will secure the deal!

Bonus Example

We have another development on the Indurante side where an individual worked with us, but recently started a new position with another company. He has reached out to us in hopes we will be able to assist in the railcar property tax compliance component for his company beginning next year.

What does this all mean?

Never underestimate the power of relationships; the power of communication and the positive effects of staying in touch. While you may not see the tangible results in the short term, the long-term results may be incredibly rewarding. The situations described above represent an additional $100,000,000+ in property values to be reviewed in 2021.

Thank you so much for continuing to read about our journey. As always, if you have questions, comments or concerns, please reach me at the following… dswartz@swartzaai.com | dswartz@indurantetax.com

Stay safe, stay healthy and get vaccinated when the opportunity presents itself.