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March 6, 2024

Is Fulton County Keeping up with the Property Tax Game? #RethinkTheNews

Atlanta city officials are losing significant amounts of revenue because some contend property owners are receiving an unfair break. Is it really unfair, or is it more a matter of heightened market volatility in uncertain times? Though a forceful argument is made on one side, all angles of the debate require careful consideration.

It seems that the city of Atlanta has found itself in a bit of a lather over an estimated shortfall in revenues that fall squarely at the feet of what some consider, an overly lenient property tax policy that seems to favor building owners. The Atlanta Civic Circle, an online publication dedicated to solutions-oriented reporting and civic engagement, recently published a two-part expose on what it considers a chronic valuation problem at the city, where antiquated rules leave policymakers’ hands tied in the face of widening discrepancies between assessed property values and their market value. The first part discusses the magnitude of the shortfall, while the follow-up conducts a deeper dive into the number of instances where this has occurred, and examples of pronounced shortfalls.

According to researchers at Georgia Tech’s School of Public Policy, there seems to be a pronounced shortfall in projected revenues. As the first article suggests, the city is estimated to be losing out on $290 million per year, representing an undervaluation of 39%. And all of this might be coming at the potential cost of homeowners who might have to shoulder the burden, unless some solution is devised.

Anecdotally, they provide examples in the office sector, where an A-class trophy property, the 41-story Symphony Tower has maintained a fixed assessed value of $193 million since 2018 yet sold in 2022 for $472 million. Similarly, a 12-story office building sold in 2021 for $300 million, yet the following year, its appraisal value was only $103 million.

The articles sound the alarm bell on the need for immediate action on policy to somehow narrow the gap between assessed and market values. From an initial glance, it seems as though the arguments put forth are perfectly valid, but if we carefully peel back the layers, an alternative narrative emerges. The author cites examples of closing dates for the transactions in question taking place between 2021 and 2022. It should be noted that, as we have discussed many times in the past on this forum, this was still a period of great uncertainty in real estate markets in terms of projected occupancy patterns.

Arguably, purchasers during this period still may have been making these transactions near the top of the market. Thus, using these figures as a standard for future assessed values may in fact not be representative of fair assessments going forward.

In this sense, timing as it relates to market volatility is a key consideration, but there might be other flaws in the underlying reasoning presented here. This may include the appraisal method commonly used (remember appraisers often use various methods we have previously discussed in this forum such as cost approach, income approach, or comparative market analysis).

Of course there are other issues that need to be carefully considered to, but the fact is, portfolio owners who might be exposed to what they might consider unrepresentative methods in devising assessed value really need to consider the types of tools needed to not only efficiently manage the portfolio, but tools that can lend significant precision to an appeal. In this regard, itamlink stands alone among its competition as the most robust solution available in the market. It’s wide-ranging functionality and market-leading approach to managing property tax obligations allows it to stand alone amongst its competitors.

Want more control over your property tax portfolio? Sign up for a complementary itamlink demo here.

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© 2023 Rethink Solutions. All Rights Reserved