Tis The Question Ellen M Hutchinson Esq PRELIMINARIES Knowledge of your overlay account Knowledge of number of cases Number of new abatement applications and pending ATB cases ID: 907811
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Slide1
To Abate or Not To Abate-T’is The Question
Ellen M. Hutchinson
,
Esq.
Slide2PRELIMINARIES:
Knowledge of your overlay account
Knowledge of number of cases
Number of new abatement applications and pending ATB cases
Knowledge of legal budget
If have one: How much?
If not: How easy or difficult is it to get one?
Slide3Create Processes and Procedures
Check jurisdictional information first
Categorize abatement applications –what works for you
SFR and Multi-family residential
Small Commercial and Industrial (< $1,500,000 assessment)
Mid Range Commercial and Industrial (> $1,500,000-$10,000,000 assessment)Large Commercial and IndustrialOther
Class
Group 1
Group 2
Residential
SFR
MFR
Comm/
Indust
Small
Not Small
Other
Claimed Exempt
Non Exempt Other
Slide4Single Family Residental: Get to Root of Problem
Problem with PRC?
Comparative Assessment?
Lack of Understanding of Market? point here
Slide5Multi Family: Income and/or Sales
Small MFR: 2-3-4 units
Use Comp Sales
Income and Rental Rates May Not Reflect Market. “Don’t rock the boat rental rates
Slide6SMALL COMMERCIAL AND INDUSTRIAL:
Who Signed the Abatement Application?
Did the Applicant specify an estimate of FMV?
“Quick Hit Application?” Esp. With Very Small Assessment
Make Them Do The Work. Make Them Prove Overvalued.
Small Commercial Infrequently Progress to Trial
Slide7SMALL COMMERCIAL AND INDUSTRIAL:
Know Your Market; Know Your Sales
Know Your Income Approach Parameters for That Sector
Rental rates for industrial buildings vs. warehouse vs retail
Vacancy Rates: Many small assessment
bldgs are owner occupied
Cap Rates
“One Size” does not fit all!
Slide8MID RANGE COMMERCIAL AND INDUSTRIAL:
Know Your Market; Know Your Sales
Sale of Building vs. Sale of Guaranteed Income Stream
Should Have “Database” of Rental Rates via Information Requests
If No, Send Out Request For Income and Expense Data
Critical Data: Rental Rates AND Dates of LeaseRental Rates w/o Date of Lease; Total Income w/o Rental Rates and Date of Lease---Not very helpful
Slide9MID RANGE COMMERCIAL AND INDUSTRIAL:
Should be able to determine tight range of FMV to gauge legitimacy of application
Can be difficult to settle at abatement stage—Attorney may be willing to wait, stack cases; makes potential appraisal and trial more financially feasible
Don’t finance ATB appeal by granting abatement without waiver
Slide10LARGE COMMERCIAL AND INDUSTRIAL:
Don’t get in over your head!
Will rarely settle at abatement application. Attorney will stack cases for multiple years; makes trial /appraiser more financially feasible.
Want opportunity to get as much information as possible—Use AA period to request information: rent rolls, profit and loss statements,
Visit the property---information from a concentrated view
Spend time with information: data will always tell a story
You’ll likely deny AA, especially if previous pending cases
Slide11LARGE COMMERCIAL AND INDUSTRIAL:
After TP files at ATB: Go get more information
Malls: 1000 pages of documents: tenant and lease histories; historical capex; occupancy data; occupancy cost ratios; historical tenant reimbursements for CAM and for Real Estate Taxes
Request copy of any and all appraisals or estimates of value.
For large cases---check on latest ATB decisions for that sector—latest cap rate; rental rate; vacancy rate---good guides.
Slide12SETTLEMENT, MEDIATION OR TRIAL:
“TRY YOUR GOOD CASES; SETTLE YOUR BAD ONES”
Settlement: All about leverage. Willingness to go to trial (or appearance of such willingness); Willingness of Appellant to go to trial or lack thereof). What is your estimate of
fmv
and how does that compare to the assessment? What is the dollar difference between the parties?
Settlement: know what your bottom line number is
Settlement: Can you trade a higher number now for a lower number in a future fiscal year?
Settlement: Too politically hot: Do you need the ATB to make the decision?
Slide13SETTLEMENT, MEDIATION OR TRIAL:
MEDIATION: ATB mediation services
Agree to Mediate: sends signal of GREAT willingness to settle. Can walk away; but difficult to do so.
Slide14THE DECISION TO GO TO TRIAL
IS DIFFERENT FOR SMALL, MID RANGE OR LARGE CASE
Small /Mid Range
Cost factor is different
Don’t necessarily need an appraiser
Length of trial shorterMay not need court reporter
Prep time is less
Potential loss is less
Can send a strong signal to other taxpayers in the city /town
Slide15THE DECISION TO GO TO TRIAL
IS DIFFERENT FOR SMALL, MID RANGE OR LARGE CASE
LARGE CASE
Cost factor: Appraisal fee; appraiser testimony; legal costs,
cort
reporterPossible outcomes? Total victory? Big loss? Middle ground?Probability of likely outcomes.
Abatement costs of outcomes;
Interest costs ( with stacked cases and 1.5 -2 years for ATB findings)
Slide16THE DECISION TO TAKE AN APPEAL
APPEALS ARE RARE
EXPENSIVE!
USUALLY NEVER FOR SMALL OR MID RANGE CASES –THOUGH SOME SCREAM FOR APPEALS (SOLAR; YOUTH HOSTEL CASE)
IDEA: ATB ERRED IN ITS DECISION. LEGAL ISSUES.
APPEALING PARTY MUST CONVINCE APPEALS COURT
OUTCOMES: ATB DECISION AFFIRMED; ATB DECISION IS VACATED WITH DECISION FOR ASSESSORS; ATB DECISION IS VACATED AND REMANDED BACK TO ATB
Slide17Ellen M. Hutchinson, Esq
Law Office of Ellen M. Hutchinson
100 Cummings Center
Suite 207-P
Beverly, MA 01915
978-867-7660