Property Tax Appeals: Old School Finance Tactics for Existing Green Buildings

Even in the  green economy, you can still go retro to maximize your project’s performance during an economic downturn.

When we deliver integrated financial services to sustainable real estate engagements, we don’t overlook the everyday financial strategies like property tax appeals because they can potentially deliver lots of value.

This type of assessment can be particularly valuable if the property has experienced increased vacancy and the owner is considering implementing a green retrofit program during the time when there are fewer tenants in the building — and is worried about whether the retrofit program will really pencil out. The reduction in property tax expense from a successful tax appeal is an additional boost to NOI over the other savings in operating expenses from going green, once the retro-commissioned building leases back up!

Here are links to two recent articles reminding landlords about the value of property tax reassessments during an economic downturn:

Item 1: Multifamily Guide has written their recommendation for landlords to obtain a property tax reassessment more regularly during an economic downturn.

Item 2: A recent Globe Street article advising landlords about obtaining a reduction in property taxes by claiming economic obsolescence.

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And here’s a related issue for another day… Of course, filing a property tax appeal due to economic obsolescence is one thing these days. It doesn’t happen to that many buildings as a percentage of the total building stock in any given market. But how will the property tax appeal business look in a few years when the number of green buildings in a given market increases substantially? Could a certain increase in the volume of economic obsolescence driven property tax appeals signal a tipping point towards a more defined “green premium” (or brown penalty) that everyone’s predicting?

Here’s a parting quote for your Friday:

“You don’t pay taxes — they take taxes.”

-Comedian Chris Rock

Check out our green finance interview on Sustainable Land Development Today

Lisa Michelle Galley talks about the current state of the green real estate capital markets within the article “Oases of Capital”, published by Sustainable Land Development Today.

An excerpt here:

“Galley favors the concept of responsible property investment — the triple-bottom-line approach — which is socially and environmentally progressive while generating market rates of return for investors. But the concept is new space for most people. It is a space literally forming before their eyes.”

Key points for the sustainable real estate community:

• In tough economic times, sustainable real estate sets itself apart in the eyes of institutional investors and communities because it delivers socially, environmentally and economically.

• An integrated finance strategy streamlines execution, reduces risk and boosts returns on sustainable real estate by combining real estate and  tax structuring know how with funding sources from incentives to tax strategies.

Finally, we recommend that you take a look at Sustainable Land Development Today, a very progressive publication for like-minded sustainability professionals. Tell them that we sent you!