Concord commercial property owners seek tax abatements
The majority of tax abatement applications in Concord this year have come from commercial property owners, after the city’s total assessed value for commercial properties increased for the first time since 2008.
Friday was the deadline to file for abatements on 2012 property assessments. By the end of the day, the assessing office reported that it had 184 tax abatement applications. Of that number, about 150 are commercial properties.
More abatement applications will arrive in the mail this week, said Kathryn Temchack, the city’s director of real estate assessments.
Most years, the city receives between 225 and 275 tax abatement filings, Temchack said, and she expects this year’s total will be comparable.
“Yes, there are more commercial (and) industrial property owners appealing, and I’m not surprised because that’s where the increase in value came,” Temchack said. “It’s like that every year.”
The overall assessed value for commercial and industrial properties increased 13.77 percent in 2012. That change came after the assessing office updated its data with costs, income, expenses and vacancies for commercial properties for the first time since 2010. The 2010 data had focused on expense reports from 2008 and 2009, according to the assessing office.
“Since that time vacancy rates have gone down and building costs have increased,” Temchack wrote in a report to the mayor and city council in October. “All of these factors contributed to the increase in the values.”
Last year, the city received 177 total abatement applications, but Temchack called that number unusually low. Few residential property owners have applied for tax abatements this year; the total assessed value of residential properties decreased 2.64 percent from 2011 to 2012.
A number of commercial property owners have expressed frustration over their assessments, and have participated in meetings organized through the Greater Concord Chamber of Commerce to discuss the assessment and tax abatement process.
Jeff Bart, who owns Granite State Candy Shoppe, applied for a tax abatement on his building at 9-17 Warren St. The building holds his candy shop and residential apartments.
“Yes, I’ve absolutely applied for a tax abatement because I felt as thought my property was inequitably assessed, given comparable sales data and net operating income of my property and others of comparable properties that have sold in the past couple years in and around downtown,” Bart said.
Bart, a former city councilor, said a third-party assessor believed the property is assessed nearly $200,000 more than its actual value. The city assessed his property at $979,200; his assessor said it is worth $780,000.
Property owners are able to file a proposed value for their properties, but Temchack said the Concord Board of Assessors will not necessarily use that number when granting abatements.
Property owners who file for tax abatements will receive a letter requesting more information, and a representative from the assessing office will visit the property for an inspection. After the inspection, Temchack said the assessing office will make a recommendation to the board of assessors, which will decide whether to grant or deny the abatement. If they grant it, they will settle on a final amount for the assessment.
It will take time for the city to process abatements because many were filed in the past week, Temchack said.
The Board of Assessors will not have reviewed every case by July 1, when property owners can begin to file appeals with the state Board of Tax and Land Appeals or Merrimack County Superior Court. The deadline to appeal the city’s decision is Sept. 1; those who have not heard a decision from the city by July 1 can move forward with filing an appeal.
Developer Steve Duprey is seeking tax abatements for the office building at 2 Pillsbury St., the Courtyard Marriott on Constitution Avenue and the Residence Inn on Hall Street. He said he hires an expert to review assessments each year and file abatements if necessary, but he’s never had to appeal a decision.
“They’re very careful, and we also they find that they’re very reasonable,” Duprey said of the city’s assessing office.
Duprey said he chose not to fight the increased 2012 assessments at most of his properties. The Grappone Conference Center, for example, has done well and the expert found that a substantial increase was appropriate.
At the Pillsbury Street office building, Duprey said he believes the city miscalculated the number of square feet in the space, so he’s seeking an abatement. He said the assessments for his Marriott hotels also appeared too high.
The Residence Inn is “a relatively new hotel, and still what they call ramping up into its full occupancy,” he said. “So I believe that the expert just believed that the assessors’ view of our occupancy rate was not accurate.”
Temchack said the review and inspection process before the case goes to the board of assessors is the property owners’ opportunity to show why they feel an assessment is inaccurate.
The city assesses properties based on cost and income because there are few commercial and industrial sales compared with residential properties, Temchack explained at a meeting for property owners in January. With a cost-based approach, she said the city assesses how much it would cost to replace or rebuild the structure, then subtracts value based on condition. An income approach is based on how much income a property can generate.
Ralph Keith, who owns an office building at 16 Centre St., said he disagrees with the city’s method of assessment. He applied for a tax abatement by providing evidence of sales of other properties. Similar properties sold for much less than his assessed value, he said.
“I did it on the basis of comparable sale of comparable property in Concord,” Keith said. “Comparing the value of what that actually sold for versus my property in terms of the appraised value.”
At the Smokestack Center on North State Street, property manager Titus Cramer said the company is “just going through the process, just hoping that we can get some sort of relief.”
The assessed value of the Smokestack Center increased by nearly 99 percent between 2011 and 2012. Cramer had been shocked to receive the new assessment, but he said this isn’t the first time Smokestack Realty has applied for a tax abatement.
“We’ve done it several times over the years, so it’s just part of dealing with the property,” he said.