Early next month, property owners in El Paso County will receive reappraisal notices from the assessor’s office, and the damage done to property values in the region from July 1, 2008 to June 30, 2010 will be starkly apparent.
Just seeing those dates on paper is enough to make most property owners cringe, and it’s the job of El Paso County Assessor Mark Lowderman to hang a number on the bust.
He projects commercial property values will fall from $7.3 billion in the 2009 assessment period to $6.8 billion this year. That’s nearly a 7 percent drop and a half-billion dollars that vanished.
The good news for property owners (and the bad news for local municipalities) is the corresponding decrease in property taxes for 2011. Still, not everyone will be satisfied with the extent of their haircut, so Lowderman is preparing his office for the appeals period.
“It’s a mass reappraisal,” Lowderman said. “We look at all of the office buildings in one quadrant of town, so unless you returned one of our surveys showing that your building is 50 percent vacant, we have no way of knowing that. That’s the point of the appeals process — we view it as a fact-finding mission. If your net rents are down, let us know — that’s a good way to achieve a value reduction.”
In a normal year the assessor’s office receives between 6,000 and 7,000 appeals. Most are for residential properties, but about 2,000 are commercial. Because the market will have done most of the leg work in devaluing properties, Lowderman isn’t expecting a higher than average number of appeals.
Still, his office will be busy.
“We do individual appraisals on every property that is appealed,” Lowderman said.
“If someone owns an office building, they can bring in their income and expense reports from 2009 and 2010. We’ll take a look at the overall market, the income on the property, what a potential buyer might pay. About 75 percent of the commercial appeals we get will be because of that property’s income-producing capabilities. About 25 percent are owner occupied, so we defer to comparable rents or sales in the area.”
The notices of reassessment go out May 1, and property owners can use the back of that form, go online, call in or stop by between May 1 and June 1 to initiate an appeal. The assessor’s office has until the end of June to respond.
Lowderman estimates about half of the appeals he receives will see some degree of adjustment.
He also estimates that about half of those submitting appeals for commercial property will use some sort of tax consultant as an intermediary.
“My job is to help owners of those properties that are valued too high,” said Property Tax Reduction Services owner Tom Rhue. “We bring in comparable sales and rent data and income numbers and put a case before the assessor’s office. They’ll either agree or they won’t — it’s not a contentious situation. We understand there’s no way (the assessor’s office) can look at every building individually in the reappraisal, that’s why this process exists.”
While Rhue said he didn’t expect a higher than ordinary uptick in business this cycle, he was surprised by the assessor’s initial estimate of a decline in commercial property values of only 7 percent.
“We’ll have to see how it shakes out,” Rhue said. “The assessor was saying a 15 percent drop (across all properties), but Rustic Hills and the Academy Corridor might be down 20 percent. Not all neighborhoods are the same,” Rhue said. “But I would have thought a 10 percent decline (in commercial property) was a conservative estimate.”
Jonathan Easley can be reached at email@example.com or 719-329-5235. Friend him on Facebook, find him on Twitter and follow his blog at www.csbj.com/realestate/