This probably doesn’t come as a surprise, but there’s much chaos unfolding on the retail landscape, and the implications on property tax couldn’t be more pronounced. For the last several years, as consumers become more accustomed to the idea of online shopping, the traditional places where they went to shop (think about malls and strip plazas) have gradually lost their appeal and utility, particularly when we consider pronounced shifts in demographics as younger generational cohorts who have grown up online see no need to leave the comfort of the screens on their phones to make their purchases.
The impact of this seems predictable as more and more big box retailers leave their bricks and mortar behind, and a trail of dark stores. Obviously, the implications of disruption on this scale will eventually work its way down to property taxes. It’s no secret that municipalities are feeling the crunch, as they are being impacted by both sales tax revenues (which have declined) and property assessments and tax appeals.
In this regard, they have now entered a heightened period of contentious disputes between municipalities and property owners over assessed values, as the latter group often cites empty or ‘dark’ stores, which in turn lower the values of the underlying assets. So depending on the location of the assets in question, a particular retail plaza may have some occupied and some unoccupied assets, which within the industry is referred to as a checker board retail which is characterized by stores that have closed as well as those that continue to thrive (usually large, big boxes with national recognition).
The following article from earlier this year which appeared on the governing.com website lays out the dynamics that lead to disputes. At its core, this is a philosophical dilemma. From the city’s standpoint, the question the fairness of a big box retailer riding on the assessment coattails of those whose assets are depressed, whereas from the big box perspective, the value of income being derived from a location is not a fair estimation of the value of the underlying real estate.
It's a topic that likely won’t see any resolution in the near future, but still provides another reason why it is a good idea to make appeals as precise as possible. Manual practices and familiar methods of appeal, which are often inefficient, need to give way for more sophisticated tools. itamlink can elevate your organization’s approach to appeals.
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