COVID-19: How It Affects Value for Retail, Hotel, Multi-Family, Office and Industrial Properties
What We Know So Far:
- The Governor of California issued a “shelter-in-place” order that essentially halted the state economy on March 19th, 2020.
- Local jurisdictions have issued additional emergency orders and regulations that are even more stringent.
- The likelihood is that the economy will not turn around quickly.
State and Local Governments in California have offered an insufficient response to the COVID-19 crisis, failing to help businesses cope with the economic disaster they have faced.
The taxable value set on January 1, 2020 will not be billed until December 10, 2020 and April 10, 2021.
Unfortunately, the value on January 1, 2020 is not likely to include any reduction related to COVID-19 because COVID-19 was not known until AFTER January 1, 2020.
In the ordinary course of affairs, the first financial relief you might see would not be apparent until the next year’s tax payment on December 10, 2021, which could be devastating for many property owners.
There is a provision in California Revenue and Taxation Code Section 170 that allows for mid-year property tax relief called Misfortune and Calamity (M&C). The code reads “To be eligible for reassessment the damage or destruction to the property shall have been caused by any of the following: “A major misfortune or calamity, in an area or region subsequently proclaimed by the Governor to be in a state of disaster […] As used in this paragraph, “damage” includes a diminution in the value of property as a result of restricted access to the property where that restricted access was caused by the major misfortune or calamity.”
County Assessors and some property tax practitioners are currently taking the position that there must be physical damage, and that economic damage (loss of rents, higher capitalization rates, etc.) is not to be considered. Alternately, several property tax practitioners are taking the position that the Assessors are incorrect and that they or Assessment Appeals Boards MUST make these property tax reductions, taking into consideration the diminution in value as result of restricted access.
It is still unclear what will be decided by the state government, the county assessors, and ultimately the courts regarding allowable M&C claims, but it is important to protect your rights!
How ACS can assist you
We are at the forefront of dealing with the Board of Equalization and assisting other tax professionals with proposed legislation to help obtain statutory relief. We are a great source of information as to what is happening on the county and state level. We are available to file M&C Claims and represent you before the Assessor’s Office and Assessment Appeals Boards. We are available to file 2020 and 2021 decline in value assessment appeals and assist with all property tax issues you may have. Please CONTACT US today regarding your filing!
The following ACS tax consultants are here to help: