September 21, 2021

Volume XI, Number 264

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September 21, 2021

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September 20, 2021

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When Colorado Commercial or Multifamily Property Owners Should Consider Protesting Their Property’s Value

There are several situations where a property owner should consider filing a property tax protest.

1.   Assessor’s Value Is Higher Than Market Value

Assessors generally use three approaches to determine market value – market, income, and cost, as described in our March 2021 GT Alert, What Colorado Commercial Property Owners Should Know About Property Valuation Approaches. If the assessor’s value is higher than the market value, Colorado property owners should consider filing a property tax protest.

2.   Classification Is Incorrect

It is possible that an assessor uses an incorrect property classification. For instance, an assessor could classify a flex/warehouse space as office, or a residential nursing home as commercial; such incorrect classification could have significant effects on the property’s value and resulting taxes. Commercial and multifamily property owners should check that a property’s classification is correct.

3.   Assessor Using Incorrect Data

Property owners should check that the information the assessor is using is correct, such as lot size, building square footage, and year built. Property owners, or their attorneys or tax agents, can also request additional information from the assessor to determine what numbers the assessor is using to estimate income, expenses, and vacancy. For instance, if a property was 50% vacant during the base period, but an assessor is estimating 5% vacancy, a property tax protest may be appropriate. Similarly, an assessor may use an estimated rent per square foot that is higher than what the property owner is charging its tenants.

4.   Unusual Property Conditions

An irregularly shaped property may not be suitable for traditional development, and that should factor into its value. Similarly, lack of access or impaired access, and obsolete improvements and substantial deferred maintenance also affect a property’s value. Additionally, any negative environmental conditions and casualties that have occurred on the property should be taken into consideration and shared with an assessor, because assessors are unable to visit every single property to see its actual condition. Owners should share these factors, as applicable, with the assessor when protesting the property.

5.   Property Is Not Valued Uniformly

Colorado requires assessors to value property uniformly. A property tax protest based on the argument that the property is not valued uniformly is most common with vacant land. If a neighboring property is valued significantly lower per square foot, it might make sense to protest the subject property’s valuation if there are no other factors that justify a larger per square foot value, such as zoning, location, and lot size.

©2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XI, Number 116
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About this Author

Neil Oberfeld Real Estate Attorney Greenberg Traurig Denver, CO
Shareholder

Neil Oberfeld is Co-Chair of the National Leasing Practice and assists national and regional retailers, developers, institutional owners and investors in real estate and general business matters. Neil concentrates his practice on acquisition, development, leasing, finance and investment transactions, including retail, office and industrial real estate; joint venture and fund formation and investment; secured and commercial loan transactions; and property tax assessment.

Neil has wide-ranging experience in all phases of real estate development. Neil is also actively engaged in...

303-685-7414
Laurinda Frederick Real Estate Attorney Greenberg Traurig Denver, CO
Associate

Laurinda Frederick assists clients in virtually all aspects of transactional commercial real estate throughout the U.S. She concentrates her practice on acquisition, disposition, finance, development, and leasing of real estate including office, hospitality, industrial, and retail properties. Laurinda has represented wireless telecommunications companies in numerous real estate leasing matters, including due diligence, lease negotiation, and complex master agreements with private owners and municipalities. She also advises clients on Colorado property tax assessments and provides projected...

303-685-7422
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