Case Studies

Office Building Case Study 1

CTN saved Cummings Baccus Interests $143,600 in Taxes for A Class Office Building in Midland, TX in a Single Year

CLIENT PROFILE

Cummings Baccus Interests has been a client of CTN since 1998. CTN became aware of their recently acquired portfolio from one of our Senior Consultants acquaintances. It was a portfolio of Wells Fargo owned office buildings throughout Texas. They asked us for help in managing the property tax function of the entire portfolio. Since then, we have continued our relationship in minimizing their portfolio with great success.

PROBLEM

The subject of this case study is a high-rise office building in the central business district of Midland, TX. It was purchased in April 2001 for $20,500,000. The appraisal district was aware of the purchase and reflected its sale in the 2001 increase in assessment. The Appraisal District previously valued the complex during the 2000 tax year at $11,049,710; they proposed a new 2001 valuation of $18,101,860. This was a significant increase over the prior year's taxes.

SOLUTION

After analyzing their actual income and expenses, occupancy, market rents and other comparable assessments, CTN filed an appeal based on the Uniform and Equal approach to value. The new proposed value for the 2001 tax year showed a 63% increase over the previous year.

The data collected in our original analysis of similar Class A office buildings in the central business district reflected relatively unchanged assessments from the prior year. This caused an unequal assessment for our subject property in conflict with the Texas Property Tax Code.

In the administrative appeal we were moderately successful by securing a reduction of $1,676,860 to $16,425,000 or a tax savings of $47,200. While this was a sizeable reduction, it still left the subject assessed significantly higher than comparable properties.

In review of the formal hearing results, CTN recommended a lawsuit to be filed against the appraisal office to compel them to correct this inequity. The property owner agreed with our analysis and requested CTN to pursue the matter to District Court.

The lawsuit was filed and CTN presented evidence to the appraisal office in support of our unequal appraisal. By agreed judgment, the value was reduced to $13,000,000. This was an additional reduction of $3,425,000 or $96,406 in tax savings.

Summary of Value Reductions:
  Total Preliminary Value:   $18,101,860
  Administrative Hearing Value:   $16,425,000
  Litigation Final Value:   $13,000,000
  Total One Year Reduction:   $5,101,860
  Total Tax Savings:   $143,600

This case reflects CTN's commitment to our clients that we will campaign our clients' interests until we are convinced that they are being treated fairly. Even though at first glance it appeared that the Preliminary Noticed value of $18,101,860 was good compared to the sales price of $20,800,000, our in-depth research uncovered the inequity that ultimately saved them $143,600.

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