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Hospitality
A multi-million dollar hotelier based in the Midwest engaged personnel of Swartz + Associates, Inc. to review the real property assessments for their locations across the country, based upon the economic turndown and lagging revenue per available room.
In particular, the client needed representation on a hotel that had undergone significant changes due to a change in flag. With this change, significant leasehold improvements were necessary, including remodeling of the lobby area; reconfiguration of the rooms and room sizes; change in the reservation system and upgrade of personal property associated with each room.
Once the property tax specialists at Swartz + Associates, Inc. reviewed the changes and expenditures associated with the conversion, an appeal was filed to protest the current valuation. We discovered the county model had increased the estimated room rate revenue based upon the brand name and estimated significant increases in non room revenue such as restaurant income and vending machine income. We initiated a walk-thru of the facility with the county, to show that due to the reconstruction associated with the flag change, the number of rooms actually decreased. Additionally, expenses were greater because of the increase in quality associated with bedding, linens, televisions and other room furniture. Finally room revenue calculations were estimated by the county based upon “rack rates” and not on actual revenue
To date, total tax savings to the client has exceeded $200,000 and Swartz + Associates, Inc. will continue to monitor the valuation annually due to foreseeable stagnation in the hotel industry.
Manufacturing
A five billion dollar energy company based in the Midwest engaged the personnel of Swartz + Associates, Inc. (SAI) to review the business personal property, machinery and natural resources valuation for two of their locations. The client had previously handled all reviews internally, but due to our expertise in this area (one of our specialists spent 10 years with an energy company overseeing the property tax function), they decided to allow our specialists to review two mountain state properties.
The client felt they had a very good handle on the reporting methods of filing to the respective counties. SAI personnel toured the facilities, met with the plant managers and carefully reviewed the client’s methodology. After completing our walk-thru of the facility and gathering detailed information about significant capital purchases for the calendar year, we met with county personnel to discuss the valuation methods and the taxability of certain components reported as personal property. Based upon our review, we were able to identify an alternative method of determining market value for heavy machinery based upon sales of machinery in the secondary market. These sales supported a lower value of equipment than the traditional “Cost Approach” previously employed. Additionally, we identified large capitalizations which were ultimately determined to be associated with the real property or did not add value for business personal property tax purposes.
Total tax savings to the client for the two locations exceeded $600,000 annually.
Retail
The Challenge:
A two billion dollar national retailer based in the Midwest engaged the personnel of Swartz + Associates, Inc. to review the real property assessments for their locations across the country, based upon the economic downturn and lagging sales at their stores. The client had determined in previous years they did not want to appeal the valuations because they felt they should be a good corporate citizen and pay the annual property tax liability without reviewing whether the assessment was equitable.
The Goal:
Reduction of the total amount of property taxes paid on real estate valuations.
The Solution:
Once the property tax specialists at Swartz + Associates, Inc. reviewed the market values of the properties, it became apparent several jurisdictions were assessing unreasonable property taxes to several of the properties. Valuations ranged from $75.00 to $250.00 per square foot during our initial analysis and we met with the client to help establish a reasonable value range for each store, focusing on equitability; not only for the jurisdiction, but in relation to the other facilities.
The Results:
To date, total tax savings to the client has exceeded $2,000,000 and the personnel of Swartz + Associates, Inc. continue to monitor and work with local jurisdictions to insure savings in future years.
Warehouse/Distribution
The Challenge:
A Midwest, privately held warehouse/distribution company with over nine million square feet of storage space engaged the personnel of Swartz + Associates, Inc. (SAI) to review the real property assessment for a particular location. Previously, the client had handled all reviews internally and had not been interested in outsourcing the review of property taxes. Because of our local knowledge at a particular facility, the client agreed to have our personnel review the current assessment and appeal to the local jurisdiction.
The Goal:
Reduction of the total amount of property taxes paid on real estate valuations.
The Solution:
SAI reviewed the profit and loss statements associated with the location as well as market lease rates in the area. Additionally, the personnel toured the facility with the local general manager to inspect the condition of the property. After an unsuccessful appeal to the local board, SAI continued the appeals process to the Court level and ultimately prevailed in lowering the assessment placed upon the property. Due to our persistence and willingness to challenge the assessment beyond the local jurisdiction, the client allowed SAI to review additional locations within their portfolio.
The Results:
To date, total tax savings to the client has exceeded $600,000.
Equipment Valuation
The personnel of Swartz + Associates, Inc. have been involved in the valuation of business personal property for over ten years, assisting real property and business valuation appraisers. We have performed appraisals on all types of equipment including:
• Medical Equipment
• Restaurant Equipment
• Data Processing Equipment
• Leasehold Improvements
• Furniture and Office Equipment
• Manufacturing and Processing Equipment
• Vehicles
Our appraisals are performed for various purposes including, but not limited to, financial reporting; mergers, sales and possible sales; donations as well as market values to determine lease payments. Additionally, we have experience valuing equipment as follows:
Fair Market Value – Installed
Fair Market value – As Is
Orderly Liquidation Value
Forced Liquidation Value
Residual Value/Scrap Value