Almost a year ago, I wrote about the devastating fire at the Castle apartments. Located on Central Avenue at about 15th street, the apartments were incredibly well built, had an appealing interior design and finish and were well loved by anyone who has ever lived there.

Although several local developers looked at ways to save the structure and renovate the building, it was demolished this week. The following photos are pictures I took when I toured the property with the owners a few years ago and/or recent photos of the demolition.

KRQE website has coverage of the fire and the demolition.-

All that remains today are the original carriage houses, now car garages to the south of the original structures.

As one of Albuquerque’s finest apartment structures, you will be missed.

This first appeared on one of my favorite gadget blogs, Gizmodo, and then was followed by a posting with more photos on the National Geographic website.

Before my friends in Albuquerque chuckle too much about those crazy places (like California) that seem to suffer from too many of these natural disasters, a few years ago, an Albuquerque sink hole swallowed up a Albuquerque Fire Department truck.

Latest update - we now have video.

Too my friends in the development business, how would you value a site like this?

Thanks to Bob Clark and 770 KKOB for hosting Stephanie Dzur and I last week.

We fielded dozens of calls about the property tax lightning and other property tax issues.

If you aren’t familiar with Stephanie’s name you should be. Stephanie is a local attorney won the case last year against the Bernalillo County assessor’s office that ended with the district court ruling that the law was unconstitutional.

In additional to winning the case, Stephanie was a home owner impacted by tax lightning. She maintains a blog on the issues that can be found here.

Later this week, a complete podcast of this radioshow wil be available on this website.

His fulltime job was as a scientist at Sandia National Labratories, but his interests were in developing computers that the public could use.

His company, MITS, developed the hardware, but he needed a software operating system to make the machine more accesible, and he and heard of a bright young programmer in the Seattle Area, Bill Gates, who might be able to write what he needed. Bill and his partner, Paul Allen worked around the clock from some down and out Route 66 motels to write the first operating system under their new corpoorate name, Microsoft.

This corporate photo, taken in 1978, shows the original Microsoft staff.

Thank you Dr. Edwards for cementing Albuquerque’s role in computer history.

The remaining 32 counties have indicated that this is there mailing schedule:

Our firm offers three options to assist you in property tax protests:
1. buy our 250+ page, fourth edition text book - click here to order for $49.
2. attend our “Understanding NM’s Property Tax System” course on April 15th, 2010 - you can register by clicking here.
3. hire our firm to represent you on a contigency basis - email tclarke@nmapartment.com or call 440-TODD (8633) for more info.

Experience
Experience should include not only how many protests have they successfully completed, but also the kind training and background in analysis and or appraisal for the given property type. Additionally, they should have other experience in your property classification/type. For instance, if they were involved in selling apartments and had access to all of the comparable sales, because many of were sales they had been involved in, then the power of their testimony in informal or formal hearings carries substantial more weight that someone who collected the sales info third-hand.

Approach
There are many approaches as to how a consultant works the protest, for example, some consultants use their political skills while others use their skills of analysis.

Results
Ask the consultant the following:
What are their results?
What was their toughest case?
What was their easiest case? (and did they charge for it?)
Who is their competition?
Have they had success getting a reduction after following competition?

As you interview property tax agents you should:
 Ask to see copies of their most recent reports - a protestor who doesn’t file a report, is not likely to get you the lowest possible valuation.
 Fully understand how their pricing for their services work – some have little incentive to do a thorough job to protest your taxes because they charge you a low monthly or annual fee to monitor your values.
 Ask for a copy of their contract – make sure you understand how you pay them and when. For example, some tax consultants charge just for the first years savings while other charge you for every year that value remains in place (it would be better to pay a 35% contingency fee on only the first year savings, than pay a 25% contingency fee on two years savings which would effectively cost you 50% of the savings).
 Ask for a summary report of their average track record for clients. Some tax consultant’s average as little as 8% average reductions, and others that are in the double digits. Don’t fall into the trap of being “sold” on their services when they tell you about their “best” case. For example, our firm lowered a valuation from $9M to $1M last year, an 89% reduction, which hardly represents our average of 24%.
 Discuss with them the process and how hands on they are
 Ask them what documentation they will need from you as owner. While it may be a chore to dig up old paperwork, if they don’t ask you for copies of old appraisals, surveys, and phase I environmental audits, then they are not likely to be extremely diligent in obtaining the lowest value.
 Ask what experience the consultant has in your particular property niche – don’t for example, hire someone who specializes in office buildings and has never done a ministorage protest.
 Ask for testimonial letters from former clients and request their contact info to follow-up.
 If the tax consultant demands an upfront fee to analyze your property, move on! There are many other tax consultants who are glad to review your property and tell you if they think you have a case or not.
 Beware of consultants who imply they have a political “in” with an assessor. The state of New Mexico Tax and Revenue department has an auditing process to smoke out cases that were settled without merit.
 Ask for their resume and look for their additional experience in the market – a tax consultant who has been an active in the real estate community is likely to command more respect at a formal hearing, than an tax consultant who is a virtually an unknown entity in the market.
 Remember – the person you hire is your advocate, if you don’t have warm fuzzy feelings with them, move on to the next tax consultant.

Fee models
Annual flat fee
Some firms, particularly national ones, charge a flat fee to review their client’s valuations and, when they deem necessary, protest them. They generally have no built-in incentive to protest and their compensation is not tied to the degree to which they prevail.

This model works well in states where the property tax owner and assessor often agree on the accurate value for the property.

Contingency fee
This arrangement gives the owner’s agent an incentive to protest, if they believe that they can win, and it makes their compensation proportionate to the reduction in value they achieve.

1. Analysis skill set
2. Additional services offered
3. Methodologies used
4. Since they get paid if the reduce the tax bill, will the consultant be willing to pay if they get the taxes raised?

As always, if you ever need assitance in finding a tax consultant, don’t hesitate to email or call me at (505) 440-TODD or tclarke@nmapartment.com

The animated short film, LogoRama, just won an Oscar!

Having watched it, I can tell you, it is a bit odd that we are so comfortable with the abundance of logos and retail.

Ever wonder why there are more and more Walgreen’s and less and less clothing stores?

It is a reflection of our shopping patterns as more and more of us choose to order online or from catalogues vs. visiting a physical a store - a long tend trend known as bricks/mortar to clicks/flips.

Long term, this indicates a higher demand for industrial/distribution properties, and declining demand for retail.

Thank you Lifehacker.com for the article.

Personally, I believe in supporting the person who has the right ideas over a party ideology– and former Governor King is just such a person – in the early 1970s he had the state constitution rewritten, in part to deal with the inequities in the property tax system (it was common for your political affiliation to dictate how high or low your property taxes are). So whenever I contemplate changes to the property tax law, I think, what would Gov. King look for that would create a fair equitable system.

Although our property tax system has a lot of “fairness” built into it, simple it isn’t. This flow chart shows how the property tax system works and who can influence it.

If I grossly simplify that process, there are four places to influence the final tax bill:

1. The property value
2. The % of that property value that is assessed (current 1/3)
3. Deduction for any exemptions
4. Mill levy (which is calculated by taking the total budget for taxing entities and dividing that by net taxable value for each county’s portfolio)

So simply said, our tax bill is calculated by taking:

Property value x % of assessment – allowed deductions = net taxable value x mill levy.

By having the law focus on only property value, it is possible to have no net change on the tax payers final properly tax bill. For example – if we had a law that said every property would double in value (say to reflect true market conditions) in 2010, then net impact on the tax bill would be no net change. (When you double the values, you halve the mill levy).

So in dealing with the two issues of tax lightning and fairness, my own personal belief is:

1. At the time, (I was on a panel with him when he said this), the original intent of the Santa Fe assessor who wrote the some-what-disclosure & 3% cap law, he did so with the intent to protect the little old lady who has had the same house for 100+ years in Santa Fe – the idea was to keep her property taxes down even when the values were being pushed up by the Hollywood crowd moving into her neighborhood. This could have been handled through an exemption (like we do for Veterans and head of household, etc.), and we wouldn’t have the issues we do now. If the law was turned into the protecting the little old lady law through exemption, but it kept her property value
2. I believe his true intent was to push through sales disclosure. The way the law was written, if an assessor disclosed information that had been disclosed to them, for every incident of disclosure, they were liable for a $1,000 fine, but the tax protest process requires the assessor to provide the protestant with complete copies of info (covered under part of the state statutes that deal with disclosure in court cases) – so I file a protest, the assessor uses 6 comparable sales that were disclosed to them by a property owner and that property owner could sue them for $6,000 – many of the 33 assessor’s were scared of this law and how to protect property info (I know of a county down south where you could “purchase” the assessor’s data set for a nominal amount of money).
3. The 3% CAP was only supposed to protect the little old lady, not the average home owner, and certainly not the large apartment owner (22 counties consider apartments residential, 10 consider them commercial, and 1 just doesn’t know). BUT now that the law exists, I have been able to get my large apartment owners the same protection (no increase in value and a 3% CAP) – and as much as I love my industry, that just isn’t fair for our community.
4. So looking at the law from every angle, there is no piece of the original legislation that provides transparency or disclosure.
5. For residential, the law should be repealed entirely. The 3% CAP distorts everyone’s property taxes (when California passed proposition 13 (basically a limit on property tax increases), that state when from one of the best in schools and infrastructures to one of the worse.
6. The commercial property owner and broker just isn’t paying attention – for example, let’s say you own a property in Rio Rancho – last year the residential property owners (who live in Sandoval County) voted to effectively double their mill rate by taxing themselves for a new college and hospital. The non-voting commercial property owner is now receiving a tax bill for $40,000 instead of $20,000 which has decreased their property value (in the short term at least) by $500,000 (8% CAP rate) or 20% of its original value of $2.5M.
7. Furthermore, as the residential values decrease through the 3% CAP, the commercial property bears the burden of taxation. Although this next example is a different expense item, but it illustrates the unintended changes caused by new laws – in Florida, to reduce insurance costs, the legislature shifted more of the burden from residential to commercial – so much so that a 1,000 unit development project I worked on had a insurance bill as an apartment (commercial) that was 10 times higher ($2M) than if it was a condo (residential) which would have an insurance bill of $200,000. The Caps on increases of value for one property class will cause the same distortion.
8. As it relates to newly developed properties – I have a client who tried to build a 300+ unit new construction apartment on Albuquerque’s Westside – its likely value was going to be lead to a tax bill that was 3.5 times higher than similar properties that had been built in previous years (which were subject to a CAP as well) – so the existing property owner had an unfair competitive advantage that caused this apartment not to be developed. To fix that, I think we would need a system where by new construction is phased in over 3 years to its full value AND we need a system that allows all property’s to be raised to their full value
9. FAs it relates to bond issues, I believe when the voters vote, they need to understand that while their property taxes may (or may not) go up, by declining a bond issue, their property taxes could go down. Said another way if the ballot said “would you vote for a new library knowing that it would raise your property taxes by $40 a year for every $100,000 in value your house had (Y/N).” Then the tax payer/voter could consider the value the said public amenity (road, library, school, hospital, etc) adds to their community. Further consideration would have to be given to whether commercial benefits from every public service (fire/police= yes, library/school-no) and how we accommodate for that.

Finally, to have a fully fair and equitable process, any future laws need to model the impact on values based on the current mill levy, % of value, and property value and the outcome needs to be one where we can:

1. Explain it to a new buyer or developer (for example – your property tax bill will likely be 1% of what you pay)
2. Is transparent in operation (if I showed you the inequities in what we have now, and the loopholes that I as a tax consultant can use, you would be amazed at the lack of transparency)
3. Is as fair as possible (i.e. you could look at your neighbor’s property tax bills and understand why they are similar (in value) or dissimilar (in exemption) as yours)
4. Does it eliminate the abuse of unintended loophole as possible (when I was in China, they had a property tax that said you would only be taxed if your property was 100% complete – guess how many 40 story hi-rises I saw with an unfinished floor?)

Pop Up from abw on Vimeo.

Believe it or not, this office folds flatter than an IKEA flat pack!

What if borrowed and lenders had a prenegotiated arrangement that converted debt into equity a commercial real estate deal? I don’t mean like todays, expensive involuntary conversion that happens through foreclosure, but a more organized rational, prenegotiated, pre-nupital like document that said something like “in the event of a capital crisis, or the mid-term (a average of this property’s value over the last 24 months) value of this asset decreases below the loan limit, borrower shall have mortgage their interest converted into an equity interest, thus unemcumbering the asset of all debt, freeing up cash flow which shall be distributed as follows… (cash flow going to lender, tax benefit going to equity position)… until such time as…”

Certainly debt would cost more, but an equity player might be willing to go into a deal knowing the downside was much lower.

Most people face a future that comprises a combination of Donald Rumsfeld’s known and unknown unknowns. Choosing to buy a house, for example, involves a series of bets on land prices, interest rates, taxes, job prospects, future planning decisions in the area selected and the structural soundness of the property concerned. It is impossible for any buyer to be confident about so many variables. Any decision must be a guess.

Economist’s, Buttonwood:Bribing the Markets.

In less than 90 minutes, we covered technology and how to best make it work for the commercial Realtor.

Everything from making presentations using your iphone and a portable projector, how to find a $200 netbook, take your office into the digital era by going paperless to the best tech tools to travel with.

Currently, local and regional MLS systems have a data sharing protocol to NAR’s national service - one that provides minimal info (for example, one of our fourplex apartment listings shows up as an 8 bedroom house), and some search abilities for buyers.

More and more buyers and agents are demanding the ability to get to information without having to worry about how to find the local MLS provider’s website first.

As you would expect with any large organization (NAR has about 1,000,000 members), they have had a hard time balancing the needs of the consumer, the agent, and the Realtor boards.

At the end of the day, a good friend, mentor and former Executive Officer of the first Commercial Association of Realtors (NM) in this country, once told me - “if you focus on your customers, customers, then your business will prosper”. (Thank you Nelson Janes!)

How about it NAR? Let’s focus soley on the real estate buyer and seller, and let the rest of the chips fall where they may.

If we don’t you can count on someone like Google to.

According to a story in today’s Albuquerque Journal

“Third-quarter data showed the median sale price in the Albuquerque metro area was $183,500 — up from the first and second quarters — but down about 5 percent off the sale price of $193,400 in the third quarter of 2008. “

The Greater Albuquerque Association of Realtors has also indicated that the volume of sales has increased by 40% over this time last year.

One of the things to take into account, is that this does not necessarily indicate that home prices have shifted that much, as local agents will tell you there has been a lot of activity in the under $250,000 price range, and little activity in the over $1,000,000 price range, which is more than enough to cause the median price to decline

Its unfortunate that GAAR and NAR don’t do a same house comparison for appreciation/depreciation.

Good news from the Albuquerque Journal (need I say anymore?)

The not so good news about capital markets in the commercial real estate world, from yesterday’s RealShare conference titled Warning Signs.

The Wall Street Journal had a dour article on the ballooning balance of commercial backed securities.

President Truman once asked an economist his opinion –the economist replied with something like “on one hand it could be good, on the other hand it could be bad” to which Truman quipped “next time bring me a one handed economist”

My continual search for this perfect Teardrop trailer has yielded this trailer -
.

I made a dozen or so trips to China, and can recall many amazing sites and feats that people were able to do on their bikes - from carryring a loady of 2×4s (on his shoulders) to more than one person on a bike - but nothing like the photo above. What do you suppose he does in that trailer? live? rent it out? store his mother in law?

(thanks to Kevin Cyr for taking the photo)

The CCIM instititute
posted today the dates for the Course Concepts Review and final exam for 2010:

Spring 2010 Program - New Orleans, LA
Portfolio Submission Deadline: January 12 CCR/Comp Exam Registration Deadline: March 23
CCR: April 18 - 19
Comp Exam: April 20

Fall 2010 Program - Orlando, FL
Portfolio Submission Deadline: July 13
CCR/Comp Exam Registration Deadline: September 21
CCR: October 19 - 20
Comp Exam: October 21

Some sixty years later, many of our cities resemble that comment.

It is interesting to see how some communities are dealing with this issue by designing parking structures that don’t resemble parking lots…

Thanks to Gizmodo.com for sharing with us this lot from VW and this automated lot in Russia complete with a photo gallery.

Those of you interested in Chris’s book can purchase it here: