The Swartz Report: 2016 Highlights…and What To Expect in 2017

Post written by Donald Swartz, President and Principal at Swartz + Associates, Inc. | Lover of Chiefs, Royals and golf | Avid “Cruiser” | Poker Enthusiast

As the 2016 year comes to a close, I thought I would look at the highlights and issues during the year as well as take a look at what may be in store for 2017. I glanced back at my blog written a year ago to see how things turned out. Were we accurate in our predictions?

2016 HIGHLIGHTS

1) Last year I mentioned two separate cases heading to the State Supreme Court. Our case in Iowa was unfortunately reversed by the Supreme Court and the ruling affirmed the county’s initial value. This was a disappointing ruling from a taxpayer perspective and could have a significant influence on single tenant, corporate headquarter office buildings as Iowa prepares for re-valuation of real estate in the 2017 tax year.

2) Our other State Supreme Court case in West Virginia is still pending and the process continues along. This case is definitely challenging the motto, “patience is a virtue” but we’ll stay the course until there is a resolution.

3) We continued to successfully represent special use properties such as big-box retail, theaters and the mining industry. As I mentioned in my October blog, attending the 2016 MINExpo was a fascinating experience and provided us with great insight on the mining industry over the next four years. Changes in technology and the economy will have a dramatic effect on valuations of mining equipment for the foreseeable future and we anticipate being right in the heart of valuation disputes.

4) Our valuation methodology developed in house for properties such as movie theaters and big-box retail found support by unlikely sources…namely county appraisers and assessor’s offices. Due to our implemented strategy we were able to help save our clients millions of property tax dollars as well as develop a more accurate analysis to determine fair market value. Terry Hainje, Senior Real Estate Analyst, was instrumental in creating our concept and we look forward to further developing and refining our methodology.

5) Our midyear hire of David Sukenik continues to pay dividends for the company and our clients. David appears to absorb everything thrown at him while learning the intricacies of valuing commercial/industrial real estate and business personal property. His blend of youthful exuberance combined with our more “seasoned” analysts has created a great working atmosphere that benefits us and our clients.

6) Our database upgrade has exceeded my initial expectations and we continue to modify and expand its capabilities. One goal for 2017 is to create a secure portal so clients will have an ability to review their properties in real time…accessing current values and statuses of appeals as necessary. This is ambitious but necessary to compete in the marketplace.

WHAT TO EXPECT IN 2017

• We anticipate a busy 2017 with re-valuations occurring in Missouri, Iowa and Colorado. Add to fact that several states have the ability to change valuations on an annual basis and that means “GO” time for us.
• News concerning interest rates and the new Trump administration could have a significant impact on real estate values.
• Will real estate remain attractive to investors if bond yields rise?
• How will capitalization rates fare on income-producing properties if there’s a proposed interest rate increase?
• Kansas faces very significant shortfalls in revenue as compared to the annual budget. Will this continue to put pressure on real estate values for property tax purposes?
• A modified income tax plan could put significantly more dollars into corporate pockets. Will companies invest money in equipment and technology?  If so, and the company is located in a state where business personal property is taxable, we could see increases in property taxes on business equipment.
• Will governmental entities continue with exemptions and “payment in lieu of taxes” incentives? What will this do to the existing property tax base?

Questions, questions, questions! While we don’t have the answers today, we’ll be monitoring these items closely as they will impact property tax values over the next several years.

IN CONCLUSION

I’m fortunate to be surrounded by a caring, qualified team and tremendous partners in the appraisal and legal world. I’m very proud of the team we’ve created and I’m confident in our abilities to continue to represent our clients.

Here’s hoping you had a successful 2016 and will create an even more profitable 2017. Happy Holidays!

If you have questions about your property valuations, email me at  or call our office at (913) 766-8777.