To be held at GAAR offices on Thursday, October 2nd, 2014
Cantera Consultants and Advisors has just finished its analysis of the NM Real Estate Commissions mandatory course and E&O programs.
The findings and recommendations can be found here –
This hands on course includes simple to use spreadsheet tools to help you in analyzing investments using the basic measures of investment performance including:
– Cap Rate
– Cash on cash
and you will walk away with a sound understanding of the major investment benchmarks and tax benefits of owning real estate.
Both courses are hands on and its strongly encouraged that you bring your excel or numbers based laptop, tablet, smart device, etc.
Example of the financial analysis tool used in this course:
Register for this or any other course at www.canteraconsultants.com/cca2015 .
Additional information about your international award winning instructor can be found at www.toddclarke.com
The following is a quick update on property tax issues from 2013 and a preview of what we can expect in 2014 and 2015.
As you may recall, I did not expect 2013 to be a year that we would see much in the way of reductions. I did encourage some of my clients to file protests, because we had a new assessor and the top commercial appraiser had moved from Sandoval to Bernalillo. Unfortunately for us, that top commercial appraiser moved back to Bernalillo county mid 2013.
The reductions we were able to get in 2013 were a result of squeezing a bit more from the stone, rather than a new approach or philosophy.
Bernalillo and Sandoval county are aggressively reappraising right now – in fact, you can monitor Bernalillo countys progress here -http://www.bernco.gov/Assessor_Canvass . Remember, they are required to obtain the most accurate and correct information, and its been my experience if you are helpful on the front end (i.e. let them into your building, hold the other end of the measuring tape), they are more inclined to help you when it comes to the revaluation. Residential reappraisals are occurring on a map basis (i.e zone atlas page by zone atlas page)
As it relates to commercial properties, the only major increase I expect for 2014 will be for mini storage, assisted living and banks as they have completed their new valuations for these properties types. I’ve been told that the balance of commercial will show up in the 2015 notices of value.
Our various trade associations like AANM and RANM were very busy this year tracking bills, responding to our legislators, and pushing back on bills that would have a drastic impact.
House Bill 178 (attached) was probably the most problematic of the bunch as it restored the increase of property taxes at time of sale starting in 2015. (a fuller update on this and other bills can be found below my signature line. Thanks to RANM for the update).
The Apartment Association of NM is working on raising funds and partnering with other associations to have a white paper completed this year that can be used to create new legislation to address the property tax lightning mess in the long 2015 session. Email me if you want more info on this process.
Property tax course
If you have an interest in learning how the property tax system works in NM, I will be teaching an 8 hour course a week from today (March 31st) at the Apartment Association – registration is mandatory (so we know how many books to print and bring and because we have limited seating – you can register at – www.canteraconsultants.com/cca2014 . Those of you in the real estate business should know that the course is approved for 8 CE credits. If you have an interest in learning how the property tax system works in NM, I will be teaching an 8 hour course a week from today (March 31st) at the Apartment Association – registration is mandatory (so we know how many books to print and bring and because we have limited seating – you can register at – http://www.canteraconsultants.com/cca2014 . Those of you in the real estate business should know that the course is approved for 8 CE credits. The course is $99 if you want a electronic (PDF) version of the book and $149 for a printed copy of the 300+ page textbook.
Notices of value for 2014
I will be updating our notices of value spreadsheet (2013 notice of value dates can be found here – http://www.toddclarke.net/?p=1656)
NOTE: The Bernalillo County assessor has sent out a notice to all property tax consultants that they need to update their client authorization signature pages. They have had issues in previous years with consultants “slamming” clients and filing without their approval. What does this mean for you? Just send me your notices of value (as they arrive) and I will send you a new contract for 2014.
While I am not expecting increases this year, I do expect previous properties that we have protested may have corrections in info that may lead to increases.
2014 New Mexico Legislature Update 
From David Oakeley, RANM Government Affairs Director
February 21, 2014
The thirty day New Mexico legislative session is over and RANM was successful in getting three bills passed, two of them sponsored by RANM. House Bill 185 (HB185), the Commercial Real Estate Broker Lien Act and Senate Bill 124 (SB124), the Real Estate Foreign Broker Bill, passed in both the Senate and the House. SB110, the Real Estate Appraisers Act, was another high priority bill supported by RANM, also passed.
The bills will be sent to Governor Susanna Martinez for action.
THE 2014 SESSION
The whirlwind thirty day session had a less contentious feel due in part to a much narrower Democrat majority in the House of Representatives and with upcoming elections, neither side appeared anxious to engage in hostile partisan politics.
Some of the bigger issues were the budget, minimum wage, capital outlay and the Navajo Nation gaming compact. The $6.2 billion budget—dubbed a compromise—passed both Houses with apparent input from the Governor’s office. It includes a minimum 3 percent raise for State employees and teachers. The fear was that the budget battle would derail the session and result in the need for a Special Session.
A bill that would have increased the minimum wage in New Mexico narrowly passed in the Senate but failed in the House. It was the other way around for the Navajo Nation gaming compact that would have opened the door for two more Indian Casinos. The bill narrowly passed in the House but was defeated in the Senate.
HB55, the $232.6 million capital outlay bill, which funds projects throughout the state, also passed. $184.8 million of the projects will be funded with severance tax bonds, the remainder from other state funds.
THE RANM BILLS
One of the RANM-introduced bills that awaits the Governor’s signature—HB185—passed the House and was on the Senate calendar when time ran out. The Real Estate Appraiser Act was signed into law last year but amendments were introduced and passed this year to clear up some of the language.
HB 185, the Commercial Real Estate Broker Lien Act sponsored by Representative Antonio “Moe” Maestas, allows Real Estate Brokers to file a lien against commercial (not residential) property for leasing commissions owed by the owner of property if the property owner had a written agreement with the real estate broker to pay leasing commissions. You can download a copy of the bill by going to this link: http://www.nmlegis.gov/Sessions/14%20Regular/bills/house/HB0185.pdf
The other bill on the Governor’s desk is SB124,which amends the Real Estate Foreign Broker Bill, was introduced by Senator Phil Griego. The act was amended to add a definition of Commercial Real Estate and to allow out-of-state brokers to practice real estate in New Mexico with respect to commercial real estate only, provided they enter into a transaction-specific written agreement with a New Mexico real estate broker. For a full copy of this bill go to:
SB110 is the Real Estate Appraisers Act sponsored by Sen. Sander Rue, proposes to amend the Real Estate Appraisers Act in order to comply with federal law and to provide for appraisal management companies, trainees, an appraisal subcommittee, uniform standards or professional appraisal practice, automated valuation models, broker price opinions and criminal background checks.
OTHER HIGH PRIORITY RANM BILLS OF INTEREST
A “tax lightning bill” opposed by RANM, HB178 introduced by Representative Brian Egolf, never made it out of committee and died. RANM sent out a “Call to Action” on this piece of legislation. RANM members responded, many contacted their representatives, and it helped narrow the vote. It did narrowly pass in the House, 32-30. RANM considered this bill unconstitutional and deemed the caps on property evaluation would have the opposite effect and negatively impact real estate sales.
Another bill that addressed tax lightning, SB260 introduced by Senator Steven Neville, died in committee. This bill attempted to fix the tax lightning problem with the valuation and taxation of residential property. This bill transitions valuation to a percentage of the “current and correct” standard set in the Property Tax Code.
THE RANM LEGISLATIVE PROCESS
A total of 1,082 bills were introduced this thirty day session—549 in the House of Representatives and 533 in the Senate. Of all these bills only 126 of them survived; a success rate of a little over 11.6 percent.
Each bill usually gets one or more committee referrals, and if the bill survives all committee votes (some never even get a committee vote and thus fail to advance), they then face debate on the floor of the chamber in which they were introduced. If it passes it then goes to the other chamber where the process starts again. If the bill survives the second floor vote without amendment, then and only then, will it get consideration by the Governor who has 20 days after the session adjourns to take action which would be either to sign the bill, veto the bill, or not sign it (called a pocket veto).
RANM’s staff reviewed every bill and made recommendations to RANM’s Legislative Committee as to which pieces of legislation had a direct or indirect impact on the membership. A total of 104 bills—about 10% of those introduced—were so identified. They were categorized (taxes, water, regulatory, economic development, commercial, mortgage/lending, etc.), assigned the level of interest (high, medium, low), and whether they should be supported, opposed or simply monitored.
OTHER BILLS OF INTEREST TO RANM
The bills previously mentioned were high priority bills. Some other bills of interest included:
SB89, introduced by Sen. Peter Wirth, this bill would have affected the Gila River basin in southwest New Mexico, but never made it out of the Senate Conservation Committee. It would have required the Interstate Stream Commission to divert flood waters.
HB51, introduced by Representative Yvette Herrell and passed in both chambers, amends the Right to Farm Act, a pro-agriculture bill, passed both houses. It amends the Right to Farm Act to provide that no agricultural operation may be deemed a nuisance unless it is operated negligently. The New Mexico Department of Agriculture said about this bill, “Across the United States, nuisance law suits are being filed based on the encroachment of urban presence adjacent to agriculture activities. The consequence of nuisance or negligent lawsuits provides the potential to impair the state’s industry and the state’s economy and provides a negative impact on the ability for the industry to operate.”
HB273, introduced by Representative Ken Martinez and Senator Mary Kay Papen, is an economic development bill that passed both house and senate. It Proposes the Economic Development Grant Act, with a stated purpose to provide matching state grants to local and regional economic development agencies to expand their economic development and job-creation capacities through employment of economic development professionals. This bill appropriates $3 million for matching grants.
HJR8, this joint resolution introduced by Representative Jim Trujillo, authorizes the Energy, Minerals and Natural Resources Department to sell surplus property on East De Vargas Street in Santa Fe. The property was formerly used by the State Parks Division for administrative offices.
SM11, introduced by Senator Michael Padilla, (Identical to HM15), requests the United South Broadway Corporation’s Fair Lending Center, a nonprofit community development corporation that provides housing and foreclosure legal defense statewide, to convene a task force to study the foreclosure process and make recommendations to protect neighborhood and community stability, prevent unnecessary or improper foreclosures, and preserve the rights of families.
This is Albuquerque’s walkability map – the green areas are the most walkable, the red areas the least (walkable in the sense of close proximity to grocery stores, coffee shops, schools, etc.)
What is your walkscore?
This week, the Smithsonian institute released a tool that overlays aerials of major American cities with windows of how they were a hundred years ago. Click here for more.
The second tool comes from Rural Data and it provides quick snapshots and economic overviews of any county in the country. Click here for more info on Bernalillo County.
If some of the results look familiar – they should -they are modeled after BLS.gov ‘s LQ calculator,
Tech guru’s Todd Kuhlman and Todd Clarke will be hosting 60 apps in 60 minutes on 10/26/2013.
The video of the session can be found – here as Todd Kuhlman and I provided info on 97 apps in 90 minutes.
NMMFA-HousingSummit-ResidentialUpdate-08222012-v2NMMFA’s keynote presentation for August 22nd, 2012 (4.5 meg PDF) “Matching Global Trends with Local Values”.
A quick update to this posting (12/19/2011): This article about China’s property bust reminds me of a saying I learned during my travels in China “In my first month, everything in know about China would fill an encyclopedia. In my first year, everything I know about China would fill a book. In my first decade, everything I know about China would fill one page.”
I thought this email chain was a perfect example of being able to take CCIM 102 market analysis knowledge and apply it to global dynamics.
Haven’t we been teaching CCIM 102 in China for a number of years? Maybe they’re not as smart as we thought. If they have so much money, why don’t they invest in the United States….oh, they already are….never mind…Is this a 102 Case Study, or should it have been? Unbelievable video non youtube.
Carl G. Russell, CCIM, SIOR
Executive Vice President
George J. Smith & Son Realtors
and my response is below:
Thanks for sharing – very interesting story – I am adding it to my ongoing list of resource on China Demographics for an article that I have been working on for quite a while now.
The whole idea of this much housing being empty is amazing.
If you have read Greg Lindsay (Skip @ CCIM’s son) book, Aerotropolis, he mentions that there are between 125 to 150 cities in China with a population over a million people compare that with 8 to 20 (depending on if you count “cities” or “MSA’s”) in the United States. Noted author, Greg Lindsay has dubbed many of these “instant cities“.
Many of these cities were created in the last 30 years as China has pulled over 350 million people out of rural poverty into urban jobs.
Since they don’t share their census info, and measuring is often erratic at best, many scholars have spent time trying to do simple things like determine trade areas in China like this report.
Today, there are more “urban” Chinese than there are American’s (total). There are more Chinese that speak English, than there are American’s (total). There are almost as many single men in China who have no hope of finding a wife (due to the gender imbalance from the one child policy which averages 119 boys for every 100 girls) as there are men in America.
I would disagree with the story about the lack of demand for these housing units, since a majority (just under a billion people) of China’s population is still considered rural, and unlike here, needs government approval to move into the large cities. As China continues its precarious balance between keeping the urban population happy with low food prices and the rural population with high food prices (this tight rope act has not prevented tens of thousands of “protests’ this year alone), it will be improving its agricultural efficiency, moving hundreds millions into the cities to pursue industrial (or information) employment, which will provide the income to pay for the housing.
Assuming 3 people per household, 64,000,000 empty apartments would support 192,000,000 people, or about 20% of the current rural population. Looking at it that way, I feel there is a similarity between these empty cities and America’s company towns of a hundred years ago – manufactures like Ford, Cannon, and many others created towns and filled them with their employees.
That said, I know many of us who have visited China on and off over the years have been amazed and appalled at the brutal efficiency central planning.
Lest anyone get their hackles up and try to turn this a political conversation, know that like them or not, the sheer scale of what they have achieved in 30 years is unprecedented in this planet’s history, and as much as we may bemoan lost manufacturing jobs to China, those jobs have pulled hundreds of millions out of severe poverty and their pay scale is rocketing upwards to the point where it is possible that the average Chinese person’s salary could match western European levels.
Finally, I liked the end of the video – watching the agents sell the reporter – it reminded me of GlenGarry / Glen Ross (the ABC’s – always be closing).
Thanks again for sharing!
Urban vs. Rural
PRC demographics – http://en.wikipedia.org/wiki/Demographics_of_the_People’s_Republic_of_China
USA housing breakdown –
Earlier this year I wrote my review of this fabulous book which can be read here.
Greg’s powerpoint webinar from August 2011 is available at the CCIM website.
As an international instructor for the CCIM institute I discovered that the book, Aerotropolis: the way we’ll live next dovetails nicely with what the just-in-time delivery model as a primary driver of demand for industrial space that we teach in the CCIM 102 course, I would highly recommend it to anyone in commercial real estate.
As a rabid book consumer, I will easily digest about 100+ books a year, and without a doubt, Aerotroplis: the way we’ll live next has become not only my favorite book of this year, but one of my all time favorite business books. It is one of those rare books that I thoroughly enjoyed reading that I found myself moderating how much I could read daily so I can push the ending of the book out as long as possible.
My favorite magazine, The Economist recently offered a glowing review of Aereotroplis, stating “In Aerotropolis, John Kasarda of the University of North Carolina and his co-author, Greg Lindsay, convincingly put the airport at the centre of modern urban life.”
The theme of the book is that successful cities of the future will be wrapped around successful airports and those cities that can’t adapt may be passed by. Its authors state the books hypothesis as an equation related to time “The aerotropolis is a time machine. Time is the ultimately finite commodity setting the exchange rates for all the choices we make.”
Author and reporter, Greg Lindsay, expands and expounds on the John Kasarda’s original idea that airports are the highways of the future. As a former Fast Company and Wired magazine reporter, Mr. Lindsay racks up the frequent flyer miles talking with civic leaders, CEO’s and company logicians as he interviews them on their home turf about the importance of air transit to their communities, companies or supply chains future.
As a fellow traveler, I reminisced about Mr. Lindsay’s travels to well-known airports like Chicago’s O’Hare, Atlanta’s Hartsfield, Amsterdam’s Schiphol, or even Hong Kong’s International, but I was green with envy over his trips to Dubai’s Al Maktoum International Airport or South Korea’s Incheon airport and adjoining master planned Songdo International Business District. One story of Mr. Lindsay tracking his gift of flowers from the Aalsmeer flower auction in Amsterdam to his mother’s front porch will endear Mr. Lindsay to the reader as an extremely diligent reporter and respectful son. Even more surprising than his few thousand mile journey for flowers was his mother’s reaction.
Some of the books concepts in the book are eye opening such as “The world’s urban population is poised to nearly double by 2050, adding another three billion people to places like Chongqing. We will build more cities (and slums) in the next forty years than we did in the first nine thousand years of civilized existence. The United Nations predicts the vast majority will flood cities in Africa and Asia, especially China.”
Or this quote about South Korea “South Korea’s capital is the archetypal twentieth-century megacity, doubling in size every decade or so since 1950 to twenty-four million inhabitants—the second most populous on earth after greater Tokyo.”
Or my favorite quote about a Chinese based manufacturer: “We had barely crossed the border before he opened his laptop and began walking me through the true costs of those shipments. He’d built a widget calculating every conceivable variable: the weight, volume, value, and quantity of the products in question; the lead times for sourcing and building them; time spent in transit; their shelf life; the spread between paying his vendors and being paid himself; the cost of money in the meantime; and the cost of returns. An entire calculus, in other words, underlies the pivotal question of our era: What is the price of speed? The widget’s answer: slow is more expensive. The only thing faster than a FedEx 777 Freighter out of Hong Kong is the velocity of money, and the last thing Casey wants to pay for are the days his parcels are stuck on a boat. Obsolescence sets in the moment they leave the factory. “Revenue evaporation,” he calls it. “Air freight is key,” he muttered while running the numbers. “We like to work with products that can go by air. We build them in Shenzhen, and they’re in New York two days later. Time is often our number one currency, and the dollar is second.” ”
And this quote summarized the breath taking feelings I experienced in my many visits to China for CCIM’s education program: “China is placing the single biggest bet on aviation of any country, ever. Even before the crisis and China’s subsequent stimulus, the central government announced as part of its Eleventh Five-Year Plan that it would build a hundred new airports by 2020, at a cost of $62 billion. The first forty were ready last year. The vast majority lie inland, hugging provincial capitals and secondary cities bigger than any in the States. Full-scale aerotropoli are planned for China’s western hubs, Chongqing and Chengdu, and its ancient capital. Besides airports, China laid as many miles of high-speed railroad track in the last five years as Europe did in the last two decades. The trains, in turn, are meant to keep people off the highways, to which China’s adding thirty thousand miles—enough to eclipse the American interstate highway system. China’s planners have internalized the lessons of America’s Eisenhower-era infrastructure boom, designing a world-class system for moving people and goods quickly, cheaply, and reliably across any distance, whether locally by highway, regionally by rail, or globally by air. The plan is to pick up and move large swaths of the Delta hundreds or even thousands of miles inland. There is nothing to stop them.
And this quote on where the future global cities will be “Finding another five hundred million passengers 7should be easy. China has anywhere between 125 and 150 cities with populations greater than a million. The United States has nine; Europe, thirty-six. When the first phase of China’s airport-building boom is complete, the number of hubs handling thirty million passengers annually—more than Boston’s Logan or Washington’s Dulles—will have risen from three to thirteen, all of which will be the host of aerotropoli. By the time they’re finished in 2020, 82 percent of the population—1.5 billion people—will live within a ninety-minute drive of an airport, nearly twice the number today.”
The book dovetails nicely with some of my other favorite business reads like Marc Levinson’s “The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger” and Sasha Issenberg’s “The Sushi Economy: Globalization and the Making of a Modern Delicacy” both of which deal with just in time delivery and creating new markets.
Additional topics addressed in Aerotroplis include Peak Oil vs. Peak Food, globalization as a tool to pull the poor into the middle class vs. the carbon footprint of globalization via air travel, and the true cost of air travel in both economic and environmental terms.
If you enjoy Aerotroplis as much as I did, you might also read the June edition of Southwest Airline’s Spirit magazine as Mr. Lindsay has recently penned an article titled “Corporate Latter”. In this article he builds on the concepts discussed in Aerotroplis and discusses how technology has allowed us to shift away from being tied to an office, setting up shop at any location (http://www.spiritmag.com/click_this/article/the_corporate_latter/) . One economic development guru and author, Mark Lautman, is pushing this idea as the next evolution of cutting edge business recruitment – to scale down the benefits big corporations receive so communities can chase the highly mobile, quality of life comes first businessperson/consultant who eventually expands their business and hires staff. According to “When the Boomers Bail: A Community Economic Survival Guide”, this segment of our economic businesses is one of the fastest growing.
Not only would I highly recommend you read Aerotroplis, I would encourage you to purchase copies to share with your family, friends and clients as the conversations started from the concepts in the book are engaging, enlightening and very relevant to anyone with commercial real estate.
Todd Clarke CCIM
Aerotropolis can be purchased at: http://www.amazon.com/Aerotropolis-Way-Well-Live-Next/dp/0374100195/ref=sr_1_1?ie=UTF8&qid=1306590616&sr=8-1
Notices of value are in the mail, or will soon be in the mail. If you need assitance this year with your property taxes – we offer a number of services for you, your firm and your client including:
We have an “app” for that
If you are trying to determining if your value is “fair”, consider downloading our 99 cent app from the iTunes store – http://itunes.apple.com/us/app/taxessor/id419811562?mt=8
Version 1 of the app takes the Bernalillo county resolved cases from 2010 and applies it to your property to help you determine what your value could have been. Because 2010 is a revaluation year, hopefully these values will go down. Version 2 of the app, which is awaiting approval of will automatically lookup your info from the county website and compare it to the potential value.
If you need some light reading, how about our 320 page textbook?
Now in its 5th edition, the text walks you through the property tax process including calculating your bill, determining if you should protest, and provides case studies of formal hearings and claim of refunds. Available in PDF format for $39 or printed for $49 at http://www.canteraconsultants.com/books
Property Tax Class – is on May 19th, 2011
This NMREC approved course is good for 8 CE credit hours and includes the above mentioned app and textbook and provides hands on training on how to handle your protest and covers our everything you need to “understand NM’s Property Tax System” – course registration for the 5/19/2011 course can be made at – http://www.canteraconsultants.com/registration
Finally, if that all sounds like a lot of work, you can hire our firm to represent you. We will analyze your property for free, and we charge you a small percentage of the savings only in the first year we obtain a reduction. Over the last 22 years, we’ve won 97% of our cases, representing over a billion dollars of commercial real estate with an average reduction of 23%. We charge 1/3 of what we save the client (i.e if we reduce their property tax bill by $10,000 then we charge $3,333) and we pay a 25% referral fee (on what we collect) to licensed agents, property managers or Realtors. If they choose to waive the referral fee, we can reduce our fee to 25% of the savings, and let the client know why they received a special discount.
If you have a property tax problem, look to us to be your solution.
Apple announces their update to the iPad – the iPad2 and as part of Steve Job’s keynote speech and presentation he indicates that 2010 was the year of the iPad, that its sales have outpaced anything they thought possible, AND, were due in large part to its retail stores.
The Wall Street Journal indicated today that most big box retailers are downsizing, subleasing or vacating their big box locations in pursuit of a better retail model.
The article goes on to indicate that it may have less to do with the size of the store than the quality of the experience and, in fact, the article mentions the “customer experience” of an Apple store.
From a CCIM market analysis standpoint, if retail big boxes truly downsize, we can anticpate a glut of retail to hit market in the next couple of years. If you haven’t taken CCIM 102, and would like to be able to calculate the impact of this spatial change in your market, the course provides the tools and processes to help you calculate what this will do to occupancy, rents and values.
After many months of strategizing, negotiating, researching, and putting together our cases for our client’s, Cantera Consultants & Advisors Inc. recently settled all of its cases on the controversial apartment property tax lightning cases for 2010 (click here to read the summary).
In a recent (and copyrighted) Albuquerque Journal article, The Bernalillo County Assessor has indicated that she intends to roll back the 2010 values on all apartments that were raised more than 3% over their 2009 values.
If you own an apartment that experienced an increased of more than 3% in value (over 2009), and you did not file a protest by May 20th of 2010, there is one additional option available to reduce your property taxes for 2010 – you can file a claim of refund.
While this is a normal a service we offer our clients for contingency fee, in this unique situation, I believe the work we (and others) have done for our client’s this year has laid the foundation for the remaining apartment owners who haven’t filed to seek a refund.
If you meet the following criteria, you might be able to handle this case yourself:
– If you are the owner of a property not held in a partnership or corporation, you can represent yourself at district court to seek a refund of your property taxes.
– If you have already paid your property taxes, the full amount (not the first half installment)
– If you fill out a claim of refund (again, its more than a form, it is a lawsuit)
– If you file, in person, and pay the filing fee
In New Mexico, a claim of refund is lawsuit against the county, in which you, as the property owner, claim that you have overpaid the county in property taxes.
While I am not an attorney, and cannot offer any legal advice, I have been involved in a handful of claim of refunds and I can tell you that you can go to the district court website at www.nmcourts.gov and search the cases for the name “Karen Montoya” (our current assessor) and request a copy of a claim of refund from the court (you must do so in person, and they will charge you a copy fee) and use it as a model for your claim of refund.
You can also download Chapter 11 of our book “Understanding NM’s Property Tax System -2010 edition” that includes a blank form that we’ve used before. The deadline to file the lawsuit is 60 days after the property tax bills were sent out.
When filling out the form – be sure and look up your property’s property tax bill information at Bernalillo County’s website. Part of the form requires that you calculate what your property tax bill should be (based on 2009 values + 3%) vs. what it was on the actual tax bill.
Most tax consultants, such as our selves, are also working with attorneys and can provide assistance, but this maybe one of the rare situations, where everything has already been resolved (thanks to those owners who filed protest, and there consultants/attorneys who worked through the cases in 2010), that an owner maybe able to simply handle this themselves.
****disclaimer – in case I haven’t made it totally clear – this information is provided as a public service, and it not intended to offer legal or real estate advice. Going to court without legal representation is not a wise idea.
2010 Bernalillo County Multi-family Property tax rollback – the rest of the story.
The following is a summary of an email sent to clients after our December 15th, 2010 hearing:
As I was working through a review and update of the apartment property tax lightning cases of 2010, I was reminded of the ancient Chinese blessing (or curse depending on your viewpoint):
“May you live in interesting times”
Many people are not aware that this blessing has two follow-up lines:
“May you come to the attention of the authorities” and
“May you come to find what you are looking for”
Unfortunately, 2010 was a year where all three of these came true for many of us. With that in mind, The following is an update on the property tax protests for your property.
The short version of this update is simple: we were able to get your property the lowest value we believe was possible in 2010, that value is final, and is not subject to any further litigation or appeals.
The long version as follows:
In my 22 years of handling property tax protests, 2010 was a unique year. State statutes indicate that the “value” year was 2007, which represent the tail end of the peak in the real estate market, and yet here in 2010, values in many cases had plummeted. We can add to that mix a county assessor who had recently been told by two different judges in district court that parts of a law passed by the legislature in 2002, and enforced by 33 county assessors was unconstitutional. As these recent changes in the law have had a big impact on how properties are valued, and it would be a safe to say this was a “perfect storm” that could wipe many property owners out.
Why we believe our client’s hire us at Cantera Consultants & Advisors Inc.
As it relates to handling property tax protests for our clients, we have found that successful protests involve more than knowing valuation technique and state statutes, it is also about knowing the people and having a strategy.
Our strategy this year was as follows:
– To use time to the advantage of our clients
– To research, develop, or create market information for the foundation of value negotiations
– To provide our clients with the risk/return analysis of the values that were negotiated with the assessor’s appraisers
– To meet with our local politicians, keep abreast of the recent changes in law, and provide an continual education on our property tax system
– To keep our clients and the public informed as to the changes in the property tax arena
– To align ourselves with other professionals who have experience in the property tax protest arena and litigation (i.e. find a good attorney)
For the first time ever, our firm, Cantera Consultants and Advisor Inc., compiled a 5 year survey of occupancy, rental rates, CAP rates and value changes. This market information was published in the Albuquerque Journal earlier this year and was used to help our client’s in obtaining lower property tax values.
A bit of history about recent changes in the law
The law, known as the “property tax lighting” or “3% maximum increase” or “3% Cap on values” law limited the increase in values for residential properties by no more than 3%. What many people forget is that the law had other components, such as requiring all assessor’s to bring their entire portfolio to “current and correct values, which are to be no lower than 85% of market value” prior to implementing the cap.
The intention of this law was to minimize the impact of a property tax bill increase on the little old lady in Santa Fe whose neighborhood was being overrun by Hollywood types that were paying outlandish in prices for housing. The value of the little old lady’s house would rise to the recent sales, which would lead to an increase in her property tax bill to an amount she might not be able to afford.
While the intention of the law might have been noble, the thought process about how to implement it was poorly executed. If we as citizens of New Mexico have decided that the little old lady deserved protection, then the legislature could have granted her an exemption on her actual property tax bill. Instead, the law limited the increase of her assessed value by no more than 3% a year, or 6.1% every 2 years.
Anyone who has analyzed our property tax system knows that there are three variables that impact your final property tax bill. Your assessed value, the percentage of your property that is assessed, and the mill levy. In New Mexico, your assessed value should be close to “market value”, most properties are assessed at 1/3 of their market value, and the mill levy floats as a ratio between the county’s total property portfolio value and the budgets of those entities that tap into property taxes.
By limiting only the value of the property, the law did not limit the increases on the property tax bill. By requiring disclosure of all single family residential property sales, the law ensured the assessor had a ready pool of comparable sales, AND, many of us believed it opened the door for the legislature to consider a property transfer tax.
The law had some exemptions that allowed increases of more than 3%, including new construction, changes in zoning, and the sale of the property. If your property had experienced any of these, its value could be increased by more than 3%.
As property buyers came into title in their new property, they experienced a large increase in values, larger than the 3% of previous years, which led to the term of “property tax lightning” for the zapped feeling many of these owners experienced as their property tax bills shot through the roof.
From 2002 to 2009, residential property owners were repeatedly zapped with this unfair law. Typically, case law, or interpretation of laws in the court room allows our legal system to provide a balance against our legislature. Amazingly, it took a few years before a case was filed that impacted the interpretation of this law.
In 2009, a handful of property tax cases were brought against the Bernalillo County challenging the implementation of the exceptions to increasing values more than 3%. Two different judges ruled that the law was unconstitutional, and those cases have since been appealed, and now, on the eve of 2011, have still not been resolved.
Resolution or not, the message was clear – the legislature created a law that treated property tax owners differently based on the date of their purchase of a property.
At the end of 2009, and after these court rulings, the county assessor “rolled back” all single family home values that had been increased by more than 3% to their 3% limits.
As a side note – it is interesting to note that a legal opinion written about the same time as the law was being considered by the New Mexico Attorney general indicated that the while this new law may not be unconstitutional, “its application could be unconstitutional”.
Fast forward to spring of 2010, where the Bernalillo County assessor has two rulings that the 3% cap on increase law is unconstitutional. She decides to rolls back the value on some 45,000 single family homes that had experienced property tax lightning in former years.
As the overall value of the county’s portfolio is decreased by these roll backs, she also interprets that the law on limiting increase does not apply to apartment buildings based on their occupancy status and then she proceeds to raise the value on thousands of apartments across the county.
Although the decrease in single family values was not entirely offset by the increase in multifamily values, the timing of the two cannot be entirely coincidental.
Through out the summer, fall and winter of 2010, our office met with the county assessor’s appraisers and reviewed each of our client’s properties. In many cases, we were able to get a value reduction to the 2009 value plus 3%, or lower.
In some cases, we were able to get the value’s negotiated down close to the 2009 level +3%, and we signed off on those cases. Working with our client’s we performed a risk/return analysis that balanced an additional smaller decrease in value vs. the possibility of paying a property tax bill on the original assessed amount for many years as the cases worked their way through the property tax protest process and possible appeals into the legal system (keep in mind, those owners who prevailed in the 2009 single family property tax lightning cases are still paying higher property tax bills in 2009 and 2010 as their cases are still under appeal).
The balance of the property cases we had, totaling 30 in number, proceeded to formal hearings on December 15th, 2010. These were the most hard core cases, where none of the standard value techniques indicated a value remotely close to the 2009 plus 3%. In one particular case, while we able to reduce a property’s value by 50% from its 2010 assessment, the 2009 value plus 3% was another 50% lower. Each of these owner’s (including myself) indicated an ability to pay the higher property tax bill and a desire to continue their protest based solely on the legality of the removal of the 3% increase in values.
On November 19th, 2010, the Bernalillo County assessor was deposed by a handful of attorneys, including ours. I attended a majority of the deposition and I can tell you my summary at the time was that the most repeated answer in the 167 pages of the deposition, was “I don’t know”. Part of that consistent answer relates to the questions that some of the other attorneys asked – questions that showed a limited understanding of the assessor’s job duties, but the balance of the questions related to the assessor’s execution of the changes in values to apartments as it related to the removal of the 3% increase cap on values.
As you may know, there is a state statute that gives any county assessor a large advantage in formal hearings:
7-38-6. PRESUMPTION OF CORRECTNESS
Values of property for property taxation purposes determined by the department or the county assessor are presumed to be correct. Determinations of tax rates, classification, allocations of net taxable values of property to governmental units and the computation and determination of property taxes made by the officer or agency responsible there for under the Property Tax Code are presumed to be correct.
Our belief was that the assessor’s deposition demonstrated that this presumption of correctness should not be applied by the formal tax board in these apartment cases.
Based on last year’s single family property tax lightning cases, and our experience from previous years, we believe the longer we can wait to resolve our cases, the more our client’s benefit. For example, last year, some of our clients benefitted from recent court rulings that came late in the year. Said succinctly, each year the aggregate protests carry with them a body of knowledge, and by being last or close to last in the protest process, we benefit from that knowledge base.
The unfortunate side effect of waiting until the end is that the assessor was successful in getting an extension of their cases until after the December 10, 2010 property tax bills were due, so many of our clients received a bill for full value.
Our formal hearings for unresolved cases were scheduled for December 15th, 2010.
On November 30th of 2010, the formal property tax board found in favor of a property owner who owned a single family residential property that was rented out. The property in this case had sold in 2004, and had been hit with tax lighting, but its value was not rolled back as it was believed to be a “non-owner occupant” property. The board ruled that irrespective of the property’s occupancy status, it was not being treated uniformly with other similar properties. The board ruled that the value be rolled back.
Owings Star decision
On December 3rd, 2010, the formal property tax board found in favor of the county assessor in a case where an apartment owner believed that their property had been discriminated against based on its increase value of 25%. Unfortunately, the owner presented little in evidence to demonstrate said discrimination, and the formal property tax board, citing the case Hahn, Inc. vs. County Assessor that “the bar is set very high for a property owner claiming discrimination. What must be proven is an intentional scheme of discrimination, for which there is no evidence here”, and the formal board found in favor of the assessor.
On December 9th, 2010, the formal tax board convened to hear the 40+ cases of another tax consultant and his attorney. Although the assessor had been subpoenaed to appear, the county attorney informed the board that she would not be appearing, and that the consultant, and their respective property tax owners, did not have the authority to subpoena an assessor to appear. Both sides tendered their briefs and this case should be ruled on by January 8th, 2011.
About a week before the hearing, our attorney, Stephanie Dzur (who prevailed in the single family residential property tax lightning cases in 2009), extended an offer to the county attorney’s office. The offer was an agreement that indicated we understood that the county assessor has been making decisions based on the information available at the time, and while we respected the difficult position she was in, we believed we would prevail at formal hearings, and as such, the county should agree to rolling back all of our pending protests to the 2009 values plus a 3% increase. As part of this offer, Mrs. Dzur shared with the county assessor our case, which we believed to be very strong.
Wednesday, December 15th, was our formal hearing for all remaining property tax protests for Bernalillo County. By Tuesday afternoon, we had been able to negotiate all of our pending cases down to the lowest values, subject only to the apartment cases that has experienced “tax lightning” or an increase of more than 3%.
Wednesday morning, I received a call from the assessor and she indicated that she wanted to meet with myself, the county attorney, and our attorney, Stephanie Dzur. The assessor indicated that based on how the formal board was ruling, she believed that apartments should not be treated differently, and although she intended to appeal some of the formal rulings, she was willing to resolve and sign off on the balance of cases if we could come to terms on a stipulated agreement.
Over the course of the morning, we modified the language of our original stipulation presented in our offer the week before.
Although we had an intellectual interest in pursuing the case through formal boards and a passion to put on our case, foremost in our minds was the issue of an appeal. The assessor had indicated that she was going to appeal the decision of the formal tax board, and similar to the property tax lighting cases of 2009, we were concerned that our client’s would be exposed to many years of property tax bills based on much higher amounts, until the legal system could provide a final and complete ruling.
By working through the stipulated agreement, you and our other clients would benefit from a lower property tax bill and a final decision that was not appealable. For each property that was subject to this agreement, I have already forwarded to you the stipulated agreement. The gist of it is that we agreed that the assessor interpreted the law based on the best information she had at the time, that the information was changing over time, and that we wanted our clients to benefit from that updated information by being treated the same as other the residential properties in 2010.
In the end, we believe we had the better hand, the better case, and that it led to the best possible outcome.
2011 and beyond
Many of our client have asked us what 2011 will hold, and to be candid, while I have many ideas as to what might come about with a new governor, a “refreshed” legislature, and an reelected assessor, I remain hopeful that they will have the courage to deal with this pressing issue head-on.
My largest concern for future years is the creeping of politics in the property tax system. In his autobiography, Former Governor King indicated that one of the many reasons he wanted the state constitution rewritten in the 1970’s was to push politics out of the property tax system. The laws that came out of that constitutional congress served our state well for over three decades, but all of that effort has been undone by recent laws. Until we repeal those laws, or modify our property tax system I remain concerned that politics and politicians will continue to provide uncertainty in our property tax system. That uncertainty translates to an opaque property tax system that will have an impact on all of our property values.
Fortunately, organizations like the Apartment Association of New Mexico and NAIOP are staying on top of these issues by meeting with our elected leaders to provide a better outcome. If you are not currently a member of both of these organizations, I would highly recommend signing up in 2011.
My apologies for the lengthy update, but I thought you might have an interest in the rest of the story. If you have an interest in copies of any of the above mentioned documents, don’t hesitate to let me know.
Todd Clarke CCIM
Cantera Consultants & Advisors Inc.
715 8th NW Albuquerque NM 87102
Read Confessions of a Commercial Real Estate Consultant – www.toddclarke.com
In case you can’t read it – it says “your art might suck, but your studio doesn’t have to”.
Advertising live/work/walk studios adjacent to the main square in Taos, the Central Station Taos wins our award this month for being brutally frank.
Take this example whereby they explain the inputs a home buyer needs to make a decision:
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.
OP-EDEquity in property taxes
Todd Clarke CCIM
The Albuqueruqe Journal editorial titled “Add Equity to State’s CAP on Property Taxes” dated January 23, 2009 contains only part of the information needed to make an informed decision about making changes to the NM property tax system.
As always, there are unintended consequences of any piece of legislation, and in 2000 the desire to protect New Mexico’s most vulnerable citizens, those low income seniors, has ended up protecting some of New Mexico’s largest property owners.
As the editorial indicated, House Bill 366 was enacted into law in 2000, was pushed by the Santa Fe County Assessor to protect long time elderly home owners from rapid increases in values from neighboring sales to out of state buyers. The stealthier part of this legislation was to undo a 30 year ban on the disclosure of real estate sales information. It is important to note that his legislation only impacted the taxable value of the property, not the tax bill (i.e. if the taxable value increased by the cap of 3%, but the mill levy increased 200%, the property owner’s tax bill would more than double).
Until the 2000 law was passed, County Assessors had a difficult time ascertaining “market value” for any given property, as they had a limited pool of comparable sales available to determine values. After the 2000 law, any residential property sold required that an affidavit be collected by the title company at the time of closing, disclosing the sales price of the property. Although the law stipulated five pieces of information be disclosed, some county assessors generated a multipage form that covered a lot more disclosure than the original law intended. The failure to do so allowed the county attorney to pursuing the seller and buyer for fines. The flipside of this legislation prevented the assessor offices from “disclosing” this sales information to the public, with the potential for similar fines and penalties to be applied to offending assessor’s employees. A year after the law was passed; some 80% of the county assessors who participated in an appraisal panel indicated a desire to repeal the law due to ambiguities in wording and the potential to create inequities in values between similar properties.
Those who spoke in favor of the disclosure of sales for residential properties indicated that with 3 to 5% of the housing inventory selling every year, in 15 to 20 years, many residential properties would be finally valued closer to “market value”.
Unfortunately, the potential to increase many “residential properties” is overlooked as evidenced by the fact 85% of the large apartment sales sold in the last couple of years in the three counties that make up the Albuquerque Metro area witnessed no increase in taxable value, and in fact benefit from the 3% cap on property value increases.
Meanwhile, commercial property owners stood on the sidelines, neither enjoying the benefits of the 3% cap on increasing values, nor the downsides of disclosure of property sales hoping that no one realized that many commercial properties are significantly undervalued.
Based on the information maintained in a database by our firm, Cantera Consultants & Advisors Inc. (CCA) believes that on average, most assessors had the value of their county’s portfolio at about 65% of “market value”. Idiosynchroncies in the tax law like the fact that the property tax bill you receive today is based on the value of the property two years prior further distanced the gap between assessors value and market value.
The lack of clear definitions of terms like “market value”, “residential” and “commercial” only allow more ambiguity to creep into the valuation process. For example, a survey performed by CCA in 2008 discovered that of the 33 county assessors in New Mexico 68% of those assessors consider an apartment building residential, while 32% believe they are commercial, and believe it or not, one county assessor thought it might be both. The state constitution and laws that have followed since lack a clear definition of “residential” and commercial is defined as “non-residential”.
Unfortunately, the valuation of your property is just one of several variables that determine your property tax bill – another is the percentage of the property’s value that is used to calculate your net taxable value, which is currently limited in state law to 33.33%, but in previous decades fluctuated widely. In his book, Cowboy in the Round House, former governor Bruce King writes: “In those days (prior to 1970), your tax evaluation fluctuated along with who might be in power. If your political party was in, that was one thing. If not, that was another. Your assessment was strictly up to the tax equalization board, which consisted of the country commissioners, the county assessor, an at-large Democrat, and at-large Republican. If they wanted to assess a building at 10% of its value, that was what they used. If they wanted 50%, that was it. In some counties, the assessments ran all the way up to 90%.” This hardly created an equitable property tax sytem.
The other variables that come into play between the assessor’s valuation of your property and the treasurers invoicing of property taxes include: property type designation ( residential, commercial, agricultural, etc.), the percentage that is used to calculate net taxable, the mill levy, and qualified exemptions for veterans, head of households, low income seniors, etc.
Representative Boitano’s bill to extend the 3-percent cap to all properties only opens the door to even larger abuses of the ambiguities of the law and enshrines higher property tax bills for all participants by decoupling the connection between a property’s true value and its tax bill.
The second bill repealing the 2000 law would restore equity to the valuation process, but would leave low income senior citizens vulnerable to sudden increases in property tax bills. The most transparent place to provide cover for these citizens in the exemption category.
Ideally, if New Mexican’s truly want an equitable property tax system, future debate and legislation should decide if NM is a disclosure or non-disclosure state, clarify the definitions of property categories, provide guidelines for the consistency of the valuation process across all counties and discuss the merits of providing special exemptions for any of its citizens.
Todd Clarke CCIM, has been performing property tax protests for the last 18 years as a consultant at Cantera Consultants & Advisors, Inc. and teaches a NMREC approved course on “Understanding Property Taxes in NM”.
Thanks to my good friend, Sam Foster for turning me on to this article in the WSJ. The OP-ED piece by Daniel Henninger highlight’s one of today’s biggest issues for an investor – how to sort through the overwhelming amount of data and capitalize on the fact, while others are swapping cocktail conversation about the fiction.
Daniel goes on to say
“I’m still mesmerized by the virtually uncountable number of intelligent individuals worldwide who were revealed as dumb in 2008. What happened to them? What if mass dumbing down is now the norm?”
The Economist recently ran an online debate about the same issue – is our society getting smarter or dumber over time?
What are you thoughts?
In a story created by the Daily News (yes created, not reported), the Daily News “stole” the Empire State buidling by filing fraudulent deeds on the property transferring ownership to themselves.
The story then goes on to report, that once ownership is obtained, its easy for the new owner to obtain a mortgage.
While I am not sure of the real estate laws in New York, in most states in the country, doing what the Daily news did would be considered a slander of title…but hardly a transfer.
The story goes on to report that the office of the city register doesn’t bother to verify deeds prior to filing.
Ok, so Daily News, here is your Real Estate 101 lesson. By filing a document (any document including a deed), you are “noticing” the public about your interest in the property. Any investor/buyer who purchased the property, would obtain a property title report from a title conmpany would insure against bogus claims of ownership.