The appeals process reminds us to focus on equity for the taxpayer. Though frivolous appeals happen all too often, appeals certainly can be justified. Since my role in this industry is to provide guidance in income based valuation, a policy I find useful is to make certain the all important market rental rates agree with three principles:
Submarket Specific Rent
The rent estimate must relate exactly to the subject location, type, and subtype. For example, the rent for a medical office on a hospital campus may not relate well to rents applicable for off-campus medical properties.
Aging of Comparable Contracts
Consider the age of the contracts provided as comparables. When were the comparable leases executed in relation to the assessment date of value? If very different, is there a supportable basis for adjustment?
Achievable Rent Versus Asking Rent
Comparable aging (see above) can sure help here, but if not, definitely research achievable rents. This takes diligence: talk to active brokers in your area, particularly those local brokers knowledgable in the specific property type you are working with. Give them examples of similar buildings and ask what is achievable in the local market.
Again, while there are those unfortunate tax appeals which rob jurisdictional time and expose appellants to only contingent expense, as everyone knows, some appeals are wholly justified.
Equity isn’t always easy.