Challenging Real Estate Taxes Can Impact a Property's Bottom Line

By Andrew Glincher Office Managing Partner, Nixon Peabody LLP | October 28, 2008

Having a lower valuation is desirable for the purposes of real estate tax assessment. The lower the valuation, the lower the property taxes.

At a time when the economy is weak and the hospitality industry is suffering, any cost-saving can be helpful and a reduction in property taxes can sometimes provide a good financial cushion.

Valuation is based on a variety of factors including cash flow and, as we all know, cash flow is down for many properties right now. If that is the case, owners should definitely consider challenging their tax assessment. You may not wish to challenge your tax assessment if you anticipate refinancing soon and want to maximize your leverage.

Every city taxes real estate at different rates and has different procedures for challenging these assessments. But the process usually follows a scenario along the following lines.

When property owners feel they are being over taxed, they can file an appeal or application for an abatement within a specified period of time - in some jurisdictions as little as 30 days from the time they receive their tax bill. Generally, to preserve your rights, you will have to pay their taxes - as billed -and be reimbursed or credited (for future payments) later on if they are successful.

In your appeal, you will need to provide evidence that your property is worth less than the municipal authority thinks it is. Evidence could include a recent appraisal, income statements, a demonstration that vacancy rates are up and room rates are down, as well as copies of leases for retail or other tenants. You could also include sales figures for comparable properties. In some cases if you cannot settle your appeal, you will need to hire a valuation expert.

Hotel Newswire Headlines Feed  

S. Lakshmi Narasimhan
Blake Suggs
Frank Meek
Steven Ferry
Darrell Schuurman
Michael Koethner
Nicole Perrotta
Thomas E. Pastore
Gary Henkin
Christopher  Bolger
Coming up in February 2018...

Social Media: Engagement is Key

There are currently 2.3 billion active users of social media networks and savvy hotel operators have incorporated social media into their marketing mix. There are a few Goliath channels on which one must have a presence (Facebook & Twitter) but there are also several newer upstart channels (Instagram, Snapchat &WeChat, for example) that merit consideration. With its 1.86 billion users, Facebook is a dominant platform where operators can drive brand awareness, facilitate bookings, offer incentives and collect sought-after reviews. Twitter's 284 million users generate 500 million tweets per day, and operators can use its platform for lead generation, building loyalty, and guest interaction. Instagram was originally a small photo-sharing site but it has blown up into a massive photo and video channel. The site can be used to post photos of the hotel property, as well as creating Instagram Stories - personal videos that disappear from the channel after 24 hours. In this regard, Instagram and Snapchat are now in direct competition. WeChat is a Chinese company whose aim is to be the App for Everything - instant messaging, social media, shopping and payment services - all in a single platform. In addition to these channels, blogging continues to be a popular method to establish leadership, enhance reputations, and engage with customers in a direct and personal way. The key to effective use of all social media is to find out where your customers are and then, to the fullest extent possible, engage with them on a personal level. This engagement is what creates a personal connection and sustains brand loyalty. The February Hotel Business Review will explore these issues and examine how some hotels are successfully integrating social media into their operations.