Industry News

This section is designed to provide current news and industry articles that impact property taxes across the nation. Scroll down the right side column to select news related to a specific industry segment (i.e. Real Property, Personal Property).

Minnesota Tax Bill Includes Cap on Property Tax Hikes

May 20th, 2013

Several cities and counties in Minnesota will soon see a big increase in their state aid, and in return, they will be required to tamp down property taxes. A wide-reaching tax bill finalized over the weekend includes a one-year limit on local tax levies and is designed to keep rates from rising at a rapid pace for 2014 property taxes.

According to SFGate.com, the cap is somewhat complicated because it bases the limit on the amount of new aid a local government gets. Except in rare cases, new local levies will be held to three percent or less, while many cities will have to freeze tax rates entirely. To compensate for the lost property tax revenue, as part of the bill, cities and counties won’t have to pay sales taxes on purchases for the first time in decades.

Posted in Paradigm Info | No Comments »

Led by Multi-Family, CRE Saw More Deals than Expected in Q1

May 17th, 2013

Commercial real estate performed better than expected in the first quarter of 2013, with excess of $63 billion in transactions taking place nationwide. According to GlobeSt.com, due to anticipated tax increases, there was an eagerness on behalf of sellers to get deals closed at the end of last year, so a lot of volume activity that had been expected for January was pulled to December. This led to the low expectations for the first quarter, but as it turns out, transaction activity remained strong.

To go along with the impressive numbers thus far, experts predict an even stronger second half of 2013. This charge will continue to be led by multi-family, as the sector remains red hot by accounting for $35 billion of the total first quarter sales. Several large multi-family portfolio sales occurred in February, and shallow development in years past should keep the market tight with mid-to-low vacancy rates across core markets.

To read the full article from GlobeSt.com, click here.

Posted in Economy, Multi Family, Real Property | No Comments »

Regions Reliant on Government Spending Take Hits

May 16th, 2013

Sequestration and its $85 billion in federal budget cuts planned for this year will bring significant challenges on the U.S. economy and the commercial real estate recovery. According to the National Real Estate Investor, the forced reductions that began March 1st will have real consequences for the U.S. economy, including eliminated and reduced government contracts, reduced private and public sector jobs and furloughed workers.

The region that will take the biggest hit is obviously the nation’s capital and surrounding states. The District of Columbia, Maryland and Virginia, all of which report 19.8% of economic activity tied to federal spending mainly due to a high concentration of government agencies and federal contractors, are all prime targets for cuts. Hawaii (15.8% federal spending), Alaska (13.3% federal spending) and Kentucky (9.9% federal spending) are also states that will experience difficult times this year.

To read the full article from the National Real Estate Investor, click here.

Posted in Eastern, Economy, Financial Services, Real Property, Sequestration | No Comments »

Overbuilding and Value the Top Concerns in Student Housing

May 15th, 2013

The reoccurring themes at the RealShare Student Housing conference this week in Irving, Texas were concerns about overbuilding and the search for perceived value in the segment. According to GlobeSt.com, panelists at the event were in agreement that students and parents alike are continuing to seek out the best value. This means the properties with higher rents are not going to be as popular as they once were, as the market is wary of adding additional costs on top of tuition.

In terms of overbuilding, even though the sector’s performance remains strong, too much product is being built to go along with the demand at the moment. Presently, while things may seem alright, oversupply isn’t something that’s incremental – rather, it seems to all come online at once. This has led the panelists to predict some future pain in that aspect.

To read the full article from GlobeSt.com, click here.

Posted in Economy, Multi Family, Real Property, Student Housing | No Comments »

Bill Would Tighten Tax Incentives on Pollution in Florida

May 14th, 2013

The Florida Legislature has approved a bill that would cause businesses to no longer receive state tax breaks because of perceived pollution on their properties. According to the Orlando Sentinel, in 2011 and part of 2012, Florida companies received as much as $11 million in Brownfield economic-development tax breaks, even though many of which were building on ground that does not appear to be contaminated. These companies were able to get breaks anyways because the law is currently written in a way that only requires the perception of contamination, not actual proof.

The bill would change the requirements for the incentive to be only for companies who are on or next to property where a pollution-cleanup agreement with the government is in place. On top of that, it would require state economists to conduct more rigorous studies to see what benefits business tax incentives create.

To read the full article from the Orlando Sentinel, click here.

Posted in Eastern, Environment, Green Initiatives, Personal Property, Pollution Control, Real Property | No Comments »

Providence Commercial Tax Rates Highest in the U.S.

May 13th, 2013

Providence, Rhode Island property owners paid the highest commercial property tax rates in any of the nation’s 53 biggest cities in 2011. According to the Lincoln Institute of Land Policy and the Minnesota Taxpayers Association, cash-strapped Providence slapped a tax bill of $4,975 on commercial property worth $100,000 – $69 more than the second-ranked Des Moines and $75 more than third-ranked Detroit.

Providence Mayor, Angel Taveras, has proposed a seven-year freezing of the commercial tax rates, but City Council members are skeptical that the proposal may raise commercial taxes even higher. In addition to the commercial rates, Providence ranked 11th-highest for homestead property taxes, and 9th and 10th-highest for industrial property taxes on machinery, equipment, inventories and fixtures.

To read the full article from WPRI.com, click here.

Posted in Eastern, Economy, Real Property | No Comments »

Tucson All-In on Downtown Business Incentives

May 10th, 2013

Tucson, Arizona City Council has voted in favor of an incentive that when finished will waive property taxes for a multi-million dollar downtown development. According to Inside Tucson Business, the deal, a Government Property Lease Excise Tax Incentive, would exempt the developer of the 196-unit downtown student housing development The Cadence from paying property taxes for eight years. Costs of the development are estimated to be around $34 million.

The backbone of the agreement will give the city ownership of the properties during the eight years in which it will be exempt from property taxes. The ownership would be strictly for tax purposes, where the management and care of the property would still be the responsibility of the developer. The short-term benefits for the city should come in the form of new jobs and a spike in sales tax due to retail activity, and the long term should bring increased value in the properties that would provide greater property tax revenue in the future.

To read the full article from Inside Tucson Business, click here.

Posted in Construction, Economy, Multi Family, Real Property, Student Housing, Western | No Comments »

Hotel Industry Expected to Heat Up over the Summer

May 9th, 2013

Hotels are reporting a significant year-over-year increase in advanced bookings for the summer months. According to HotelNewsNow.com, not only is demand up, but most hoteliers say pricing power has returned and they are finally able to push rates without experiencing consequential declines in occupancy. Over June, July, and August, occupancy, average daily rate, and revenue per available room are all expected to be up from their 2012 levels.

Consumer confidence and business confidence are coming back strong and significantly helping out with the new found demand for occupancy. In addition, the Dow Jones closed at above 15,000 for the first time, a factor that will lead more businesses to feel comfortable about sending their sales force on the road. Increased faith in the economy is also leading to a lengthening of stays, as vacationers and retirees are feeling more comfortable about their savings.

To read the full article from HotelNewsNow.com, click here.

Posted in Economy, Hospitality, Hotels, Real Property | No Comments »

Georgia Governor Signs Fulton County Property Tax Cap Bill

May 8th, 2013

Georgia Governor Nathan Deal has signed House Bill 604 this week which would prohibit Fulton County from raising property tax rates for the next two years. According to The Atlanta Journal-Constitution, if a court doesn’t overturn it, the Bill will require approval by a supermajority of county commissioners for tax increases after January 2015. Many believe that this measure is a long overdue check on the County’s spending.

Those in opposition however believe that the Bill is an illegal intrusion into local government affairs. They are claiming that lawmakers are too eager to take a roll in local government and this specific item is an overreach due to the fact that the County has recently cut spending and haven’t raised property taxes since 1991.

To read the full article from The Atlanta Journal-Constitution, click here.

Posted in Eastern, Economy, Personal Property, Real Property | No Comments »

High Leverage in Commercial Real Estate Becoming a Concern

May 7th, 2013

According to the National Real Estate Investor, commercial properties are taking on larger and larger loans relative to their stabilized income – and that could mean trouble down the road. A first quarter review by Moody’s Investors Service of CMBS found some initial signs of credit slippage, but also discovered that the currently low interest rates are strengthening property fundamentals, making it easier for owners to make their mortgage payments.

Still, those properties that remain highly-leveraged can expect to have trouble refinancing their debt when the loan ends and the balance come due. The amount of loans with an interest-only period reached 42% in Q1. With the average interest-only period lasting 57 months, borrowers generally have paid very little of the principal by the end of the terms. The risk here lies with the fact that commercial property prices will someday fully rebound to the levels of the income they generate.

To read the full article from the National Real Estate Investor, click here.

Posted in Economy, Financial Services, Real Property | No Comments »

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