Fighting CW Property Tax re-appraisal

[dusovt]

Hi all -
Anyone had recent experience in fighting a property tax re-appraisal for self serve car washes? The big difference from other appraisals is that they are labeling the property as a "special purpose building", therefore using a car wash appraisal per sq foot value - rather than appraising the building as a block structure. I did extensive work to demonstrate that the equipment is 'soft' mounted and could be easily removed. Can an property assessor appraise based upon a business that the structure houses? Wouldn?t seem so.

Any tips or similar experiences would be appreciated.

-chris-

 

[Danny]

Were you able to also demonstrate that the bays could be "easily" converted for other uses besides a car wash?

 

[dusovt]

Danny-

The facility we started with originally (across the street) was retro-fitted to retail when we vacated. This was brought up, however they contest that that was a steel structure building that was made a car wash after being built out.

-chris-

 

[Charles Ho]

Points to bring up:
Car wash equipment are can be 7 / 10 /15 years depreciation.
Car Wash building depending on building material may fall under 7 / 15 years depreciation.
If equipment are 'hard-mounted', they shall no longer be taxed as business personal property.
Business good will shall not be included as part of real property value.
Your time at the car wash shall be part of expenditure if using revenue method.

Good Luck!

 

[Patrick H. Crowe]

Deduct misspelled, the ahould be then, others also.

Dear Chris:

As you may know I wrote The Car Wash Appraisal Handbook. It contains and entire chapter on getting proiperty taxes lowered. The 2009 version has just been published. Moreover I was in the car wash business with an MAI appraiser for over 25 years.

The claim that it is a single purpose building has only this application: In using the comparable sales approach the "comps" must also be car washes. Beyond that it is off point. It has no relative merit at all and plays no role on the determination of Fair Market Value.

The appraisal process is complex. You should use all three approaches to get to fair market value. Then deduct the value of the good will and most of the equipment. That leaves the real estate which is what they can tax.

There are many details about what equipment is permanent and what is not. Determination of good will is also very tricky and merits pages of consideration in the book.

Space limitations prohibit me from being able to say much more than this Yes, I have had to argue the case on some of my washes.

Patrick H. Crowe

 

[lag]

http://www.heartlandcarwash.org/pdf/Iowa_Car_Wash_Property_Tax_Appeal.pdf

 

[robert roman]

I worked in government for about 10 ten years, and my assessment of county tax offices is that the department head must often bend to the will of the politicians. Unfortunately, this can lead to biased appraisals and tax assessments. If your county is reeling, as mine is, from the loss of tax revenues in the face of falling property values, I believe that you may be facing a difficult uphill battle.

Quite frankly, a self-service facility is limited in terms of alternative uses. What can you with it without blowing it away or making major structural modifications; detail shop, quick lube, body shop? However, I have seen a few people who have converted a wand-bay facility into a successful convenience store or flower shop. As such, it seems to me that it might be possible to make the claim that wand-bays are not special and, therefore, along the lines of a general purpose building.

Bob Roman
www.carwashplan.com

 

[Danny]

I agree with Bob I would argue all the other uses that the building and bays could be used for. Including tire shop, mechanic, equipment rental, car rental, storage, pet wash, automotive accessories (tint, wheels, audio, glass replacement, vinyl decals), equipment repair shop just to name a few. Any new business has to make modifications for the work environment functional for operation. As you did with the original location across the street to turn it into a car wash.

 

[Patrick H. Crowe]

Mr. Roman:

If I understood what you said it was that for ten years while you were in government employment you personally observed biased (i.e. wrong and dishonest) assessments. Why didn't you BLOW THE WHISTLE? Ten years?

You go on to excuse this dishonest activity on the grounds that property values and thus tax revenues are in decline and therefore an "uphill" battle should be expected. Perhaps had you exposed the very first case of "bias" you observed these dishonest bureaucrats would have learned fair market value has nothing whatsoever to do with whether tax revenues are in decline. Shameful neglect, in my opinion. Ten years?

Finally what does the "single purpose nature" have to do with fair market value? I can show McDonalds which are now law offices, a car wash which is now a porno shop, gas stations which became strip malls, car lots, coffee shops and so on; a car wash which is now a tire shop. All of these were "conversions" not demolotions. Not only are car washes not single use buildings but even if an assessor could prove that they are, he/she is wildly off point. Fair market value has almost nothing to do with "special (single) purpose (if there is such a building). It has far more to do with the income approach to appraising them.

Patrick H. Crowe

 

[dusovt]

All -

Thanks for the all the input; had my grievance meeting on Friday with the assessor and I think it went well. Two points that I brought forward seem to sway him from appraising the building as a single purpose facility (car wash). One was that I own the property and lease it to the corporation that runs the wash. In our city equipment/personal property is taxed separately. Therefore, they cannot tax the corporation for the equipment that makes it a car wash - and tax the property owner as if the equipment were part of the appraised amount. The other point was demonstrating the ease of changing the building from a car wash to another business and emphasizing the possibility that someday the car wash may not be "highest & best use" for the property.

Of course time will tell; I won't hear the results of the meeting until the end of the month.

Thanks again;
-chris-