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In this brief, we add our own spin and present a similar rubric, only this time, it is attached to the field of commercial property tax management. The 6 Ps of property tax provide a blueprint as to how to make the function more strategic and how itamlink can help you achieve your strategic goals.
Within the field of marketing, marketers often cite what is known as the 4 Ps of marketing as being the holy grail upon which the field is based. These four Ps refer to product (what the product is), price (the most appropriate price point), place (distribution channels), and promotion (how the product is promoted). At its core, it’s the idea upon which a thousand ships can be launched and has sustained itself as a benchmark since the mid-20th century.
Commercial property tax management doesn’t quite occupy the same rarified air as marketing, and within the business world might be best described as a specific niche industry. As such, maybe it hasn’t quite earned the right to have the same level of profile as marketing, but this should not prevent us from deriving our own spin on this firmly grounded concept.
In an era where assessed values are in a state of contentious flux, it seems intuitive that the volume of appeals will likely rise, and portfolio owners will be forced to take a more sophisticated approach to launching appeals. So, the question then becomes, what does it take to ensure that level of precision is achieved? A good starting point is to consider what we call the 6 Ps of Property Tax Management, which like its marketing-based equivalent, provides a tidy, efficient construct that professionals in the industry can use as a preliminary health check and predictor of how smoothly that process will go.
In this paper, we introduce our readers to the 6 Ps, which can be used to determine the amount of resources to be allocated to the appeals process, and give structure to what can often times be described as a reactive and improvised process. Here are each of the 6 Ps explained:
Generally, this speaks to the composition of the resources an organization will devote toward managing property tax obligations. When the exercise of managing property taxes was more routine and predictable (particularly in terms of estimating property values), there wasn’t perhaps as much contention around the idea of market value. Maybe this was managed by someone on the finance or accounting team, who if tasked with making an appeal, might quickly gather documents, perform a basic analysis, gather the required documentation, and submit.
But for several reasons, things have changed. Perhaps the biggest contributor to this has been the pandemic in the way it has moved a significant number of workers to remote work. Fewer people in the office means lower occupancy, and eventually this impacts income and ultimately value. However, because of the infrequency of assessments in many jurisdictions, disputes over value have become more common.
When this happens, an organization needs to be prepared to launch an appeal that is granular in its approach, and this requires the dedicated resources required to manage the process. The financial impact of an incorrect assessment can be significant; thus, it warrants the need to create a team, or identify a specific individual solely dedicated to managing property tax obligations.
It should also be noted that a key people component within this construct are third party consultants who are typically used when making appeals. One area of value-add they lend is providing valuable local knowledge in areas where portfolio properties may be situated. If a structured methodology can be devised connecting the team to the consultants, it can significantly boost the quality of the end result. Thus, the people become a key P.
This factor is perhaps most relevant in situations where a multi-property portfolio across a wide geographic footprint is involved. In the simpler times described in the introduction when commercial property tax appeals were generally more predictable and simpler, the process might involve taking a decentralized approach where individuals in regional locations gather local information from that particular area. This might include expense records, leases, and utility bills.
As previously mentioned, the old process was one heavily relying upon information gathered from a combination of paper and electronic data. In the new dynamic we have described where that information needs to be consolidated and many more variables need to be considered, centralizing the property tax management into a unified function becomes critical in terms of ensuring accuracy, and avoiding duplication.
To effectively accomplish this, the proper mechanisms need to be put in place for the centralization efforts to be successful. This will involve a greater reliance on tools and data, factors which will be addressed below. Place – an important P in the matrix.
Surprisingly, for the longest time, this had never been a widely considered option, and this is largely due to the lack of electronic tools purpose-built for managing property taxes. If a question such as “what electronic tools do you typically use to manage your property taxes?” was posed to a person charged with this responsibility, the likely response would be the same across the board: “Excel.”
Though Excel is a tried-and-true method used to aggregate property-related data, it is ill-equipped to deal with high volumes of data and information being fed into multiple sources. As the complexities associated with effectively managing appeals increase, it is imperative we change our mindsets are start considering the adoption of tools with the ability to effortlessly ingest large amounts of data and provide flexible functionality.
Given the financial implications of a successful or unsuccessful appeal, using a tool specifically designed to manage property tax makes sense. The field for such tools right now is thin, however, there are some that portfolio managers of large organizations are putting to use and reaping huge rewards.
Excel had its time in the sun, but that sun is now setting, as the dawn of a new era marked by better tools and applications is upon us. The Product P is as critical in marketing as it is in commercial property tax management.
All too often, when property tax administrators try gathering the data and documents needed to mount an appeal, the process of organization and submission can become extremely arduous and labor-intensive. Much of this can be attributed to one thing: a continued reliance on paper documentation.
A common anecdote often referred to around tax time is the chaotic process associated with storing receipts in a shoebox and passing them along to accountants when filing a return for a small business. It is disorganized, labor intensive, and excessively random. The dynamics associated with the ways organizations appeal their assessments are often eerily similar.
An assessment is received, and those tasked with responding to that appeal often enter into panic mode and haphazardly attempt to retrieve documents that might help further a case. Apart from the difficulty associated with assembling and organizing endless reams of paper, it then becomes necessary to somehow transform these paper records into an electronic form, which more times than not means inputting it into an excel spreadsheet.
This provides just one dimension. Think for a moment about the additional complexities associated with managing a multi-property portfolio from several locations. If manual paper records are still part of the process, there needs to be some way in which all this data is somehow consolidated.
As the landscape becomes more sophisticated, it becomes more important to strive for another critical P: a paperless environment, a goal often easier said than done.
One of the primary challenges in maintaining the integrity of data is consistency. In recent years, large organizations have been trying to address the issue of scattered data by seeking strategies intended to establish a single source of truth. Regardless of industry, the following scenario is all too familiar. A team is tasked with maintaining critical data to be used for multiple purposes whether it is for reporting or formulating policy, but very soon that team discovers multiple sources of data. What source is correct?
Because of the dispersed nature of operations, this data is often gathered and aggregated in different locations. When it comes time to consolidate this in one place, it can quickly become outdated if additional information is inputted in one of these remote locations. Most of the time, the tool used to gather this information is a spreadsheet program like Excel.
The problem occurs when a property management lead needs to consolidate the data into a uniform record to be used as a final product. If this is coming from multiple places, it’s a process that can quickly be fraught with error. In fact, it is an organizational ailment with its own name, regardless of industry: ‘spreadsheetitis’.
Across many real estate organizations, there are efforts underway to identify that magic single source of truth, but to make property tax appeals effective, particularly in cases involving multi-property portfolios, finding a way to establish a single source of truth is never easy. It is important that the issue of clean data is addressed, as it ultimately drives accuracy when submitting appeals.
The preciseness in how an appeal is formulated can make or break its eventual outcome. As the field of property tax management becomes more sophisticated, many more variables are added into the mix of consideration, but this can only be as effective as how that data is ultimately packaged and presented. The traditional approach relies on using a combination of documents (consider a report in Word for instance), and data inputted into spreadsheets.
But to increase the effectiveness in approach, providing the information is important, but also the way in which that information is presented. In this regard, dashboards present an elegant and powerful way to present data and comparative metrics – a strategy that aligns precisely with the end-goal of launching a powerful and successful appeal.
It is also important to keep in mind how sophisticated comparative analysis can go a long way in providing validation to the appeals process. How might one set of data correlate with another? If there is a reasonable amount of deviation between expected correlations, and outliers, it provides all the more fuel required to put forth a strong case for appeal.
Of course this can’t happen on its own, and requires sophisticated tools that can be easily deployed to the project. Thus, precision becomes a critical P.
As a purpose-built specialty software specifically engineered to make the commercial property tax process seamless, itamlink can really help teams manage property tax, and meet the goals specified in the 6 Ps of Property Tax Management.
Though it can’t physically assemble a team, once that team is assembled, itamlink can be deployed to all stakeholders to ensure accuracy and precision to the appeals that are made. It also provides a powerful tool to consolidate all data that comes in from third party consultants.
The ease with which data can now be centralized and repurposed for tasks such as reporting or strategy development when using itamlink allows property tax operations to be conducted from a central location. As the way records are compiled and managed through a powerful capture functionality, the days of relying on paper documents are over.
The underlying purpose of itamlink is to create a product from which an entire organizational function can change. The definition of a product or tool used to manage property tax prior to itamlink was Excel, but this can often be overwhelmed by the amount of data required to be ingested, as well as multiple versions that can be created by several stakeholders. The issue of product is efficiently addressed with itamlink.
Often, when electronic solutions are adopted in work environments, one of their core purposes is to replace the use of paper. Paper can be difficult as it required manual filing, sorting, retrieving and organizing. If that’s not enough, in a property tax environment, it also demands consolidating, and often from several jurisdictions. itamlink addresses these solutions in a snap. Our electronic solution makes paper a thing of the past.
One of the keys to maintaining perfect data integrity is by using a mechanism that consolidates the data in one place, ensuring a powerful single source of truth which immediately addresses the issue of not being certain in the accuracy of the data. itamlink gives order and structure to your data, making it pristine and giving property tax management the confidence to use that data to supercharge the proptax process.
Finally, how can be assured that they have the inputs required to mount a perfect property tax appeal. Appeals can be mounted on a rudimentary basis, but by taking a more sophisticated approach based on pristine data and how it can be repurposed in several ways (think about comparative analysis for instance), the probability of being successful in that appeal increases. If you want greater success in appeals, be sure to used a tool specifically designed for this purpose.
The 6 Ps of property tax are a simple rubric to use if you are committed to enhancing the way you manage commercial property taxes within your organization. The amount of money that can be saved with successful property tax appeals can be staggering, so if your organization is committed to adopting a a more targeted, strategic approach, itamlink should be marked as a high priority. To see how itamlink addresses your 6 Ps, sign up for a demo here.
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