DOES YOUR PROPERTY TAX ASSESSMENT REFLECT COVID-19’S LONG-TERM CHALLENGES? Here are a number of approaches to defending against excessive tax assessments. By Aaron Vansant, Esq. C ountless companies have seen their top and bottom lines deci-mated by COVID-19-related shutdowns, travel restrictions and changing consumer preferences since the start of the pandemic. Yet for many taxpayers, property tax values have changed little, or even increased. Many of these taxpayers have been surprised to receive property tax bills that do not refl ect the real and linger-ing economic challenges that the retail, hospitality, offi ce and other industries have, are and will continue to face. These taxpayers — and even those in industries better-suited to weather the storm — should give special attention to ensuring they receive fair and rea-sonable assessments. Aaron D. Vansant Partner, DonovanFingar LLC Observe Valuation Dates, Notices and Appeal Deadlines With a large percentage of employ-ees working remotely, together with an inconsistent postal service, it is more important than ever to have dedicated employees and knowledgeable prop-erty tax professionals reviewing prop-erty value assessments annually and fi ling timely protests when warranted. Failure to receive a tax valuation notice rarely excuses a missed protest dead-line, so it is vital to know and comply with applicable deadlines. Many property tax bills issued in 2020 were based on statutory valua-tion dates that preceded the emergence of COVID-19. For instance, assessors working under a valuation date of Oct. 1, 2019, or Jan. 1, 2020, were quick to tell taxpayers to “wait until next year” before assessments could refl ect any impact from COVID-19. Not surprisingly, some assessors are now arguing that the pandemic was temporary and that its worst effects have passed. In some jurisdictions, assessors simply carried forward the prior year’s cost-based value with no adjustments to account for additional depreciation or functional and eco-nomic obsolescence. In other cases, as-sessors have relied on pre-pandemic sales during the relevant tax cycle to justify increases over the preceding tax year. Many locales had few sales in the early stages of the pandemic, and in these cases, the assessor may down-play or entirely ignore the actual im-pact of COVID-19 on market values. In contesting assessments in each of these cases, it is helpful to not only demon-strate the immediate diffi culties that began in March 2020, but also the pan-demic’s lingering effects on the taxpay-er’s current and future operations. Although the pandemic has affect-ed all industries, certain sectors face unique challenges that will persist well beyond the initial virus surges and vaccine rollouts. These include, but are not limited to, brick and mortar retail-ers competing with ever-expanding e-commerce, offi ce buildings competing with fl exible work options including remote work and hotels competing for elusive business travel in a cost-cutting environment. Some of these challenges are trends that began long before the pandemic, such as the slow death of enclosed malls as consumers increas-ingly favor lifestyle centers and online shopping. COVID-19 Infl uences by Property Sector work-from-home opportunities. In light of the Delta variant’s spread, many large companies have delayed their anticipated returns to the offi ce, with Google now postponing its return until at least January 2022. Although some of the pandemic’s effects on of-fi ce occupancy have already occurred, the full impact will continue to play out as leases expire and companies re-evaluate the volume and design of of-fi ce space they require. Hospitality. The hotel and travel in-dustry suffered some of COVID-19’s most immediate and devastating fi -nancial casualties. Leisure and busi-ness travel ground to a near halt, with hotel stays and fl ight counts falling to once-unimaginable lows. Corporate travel has yet to make a meaningful recovery and remains at a fraction of pre-pandemic levels. Throughout the country, corporations are cutting back on travel budgets as they weigh its costs and health risks against alterna-tives such as video conferencing. Business travel and events are un-likely to return to pre-pandemic levels until 2024, according to a recent Ameri-can Hotel & Lodging Association sur-vey. Although the leisure travel indus-try benefi tted from pent-up demand during the summer of 2021, the Delta variant has undermined that tempo-rary resurgence. And even with the re-cent increase in leisure travel, airplane traffi c is still well below 2019 levels. These are just a few of the industries that will continue to see COVID-19 weigh down their businesses and property values. Property and busi-ness owners should closely review their property tax values to make sure assessments adequately refl ect the spe-cifi c challenges affecting their prop-erties, especially the pandemic’s im-mediate, ongoing and future fi nancial impact. Aaron D. Vansant is a partner in the law fi rm DonovanFingar LLC, the Alabama member of American Property Tax Counsel, the national affi liation of property tax attorneys. He can be reached at adv@donovanfi ngar.com. Retail. Since the early 2000s, e-com-merce’s share of total retail sales has increased each year. The pandemic ac-celerated that trend, arguably by years, when people who had long resisted shopping online no longer had the same in-store options, and experienced online shoppers became more comfort-able buying things like groceries and large-ticket items online. These evolving shopping habits cer-tainly affect the desirability and value of retail real estate, especially of those buildings constructed before the scope of today’s e-commerce world could be contemplated. Landlords must now think outside the box when re-tenant-ing shopping centers, often fi lling va-cancies with restaurants, service and entertainment concepts. These uses can create parking, zoning and other challenges for centers built for tradi-tional retail. In the case of big box stores, com-panies such as Walmart are looking at converting portions of existing stores to warehouse or fulfi llment space for e-commerce. All these changes to keep up with the rapidly evolving market-place shine a light on the functional and economic obsolescence present in many retail properties. Offi ce. Offi ce landlords are also fac-ing rapid market evolution, including an accelerating trend toward more re-mote and fl exible work options. The pandemic made Zoom meetings ubiq-uitous and gave employees a taste, and perhaps a future expectation, of more Architectural dog park products WATER FOUNTAINS FUN AGILITY PLAY EQUIPMENT WASTE STATIONS GymsForDogs.com sales@GymsForDogs.com 800-931-1562 www.REBusinessOnline.com Southeast Real Estate Business • October 2021 • 25
Southeast Real Estate Business October 2021: Page 25
