It’s Not A Dark Store IPT’s 40th Annual Property Tax Symposium It’s Not A Dark Store Brett A....

2016 IPT’s 40th Annual Property Tax Symposium

It’s Not A Dark Store

Brett A. Harrington, CMI President

International Appraisal Company Upper Saddle River, NJ

[email protected]

John M. Schindler, CMI

Senior Manager Real Estate Tax Target Corporation

Minneapolis, MN [email protected]

Institute for Professionals in Taxation® 40th Annual Property Tax Symposium

Tucson, Arizona

Lou Newman, MRICS

Senior Manager Walmart Stores Bentonville, AR

[email protected]

Mark S. Hutcheson, CMI Partner

Popp Hutcheson, PLLC Austin TX

[email protected]


The BIG, Big Box Study



[email protected]


Tucson, Arizona


THE BIG, BIG BOX STUDY

3

OVER 200 SALES ANALYZED

FEE SIMPLE V. LEASED FEE SUBSEQUENT USE

DEED RESTRICTIONS


THE DATASET

4

$0.00

$50.00

$100.00

$150.00

$200.00

$250.00

$300.00

$350.00

$400.00

Jan-11 May-12 Sep-13 Feb-15 Jun-16

Leased Fee Fee Simple Linear (Leased Fee) Linear (Fee Simple)


LEASED FEE V. FEE SIMPLE

5

$0.00$30.00$60.00$90.00

$120.00$150.00$180.00$210.00$240.00$270.00$300.00$330.00$360.00

Leased Fee Fee Simple


FEE SIMPLE SALES

6

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

Jan-11 Feb-12 Mar-13 Apr-14 May-15 Jun-16

MEDIAN PRICE: $26.08

AVERAGE SALE PRICE: $27.73


SALES BY CATEGORY

7

$27.13

$28.60

$27.82

$28.22

$26.00 $26.50 $27.00 $27.50 $28.00 $28.50 $29.00

Big Box

Alternative

Multi-Tenant

Vacant


SALES BY CATEGORY

8

Category # of Sales Average Sale Price

Big Box to Big Box 49 $27.13

Conversion to Multi-Tenant 19 $27.82

Conversion to Alternative Use 27 $28.60

Vacant 11 $28.22

VARIANCE AMONGST SUB-CATEGORIES: $1.47 (5%)

LARGEST VARIANCE FROM COMPLETE CATEGORY: $.087 (3%)


DEED RESTRICTED SALES

9

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00


MEDIAN SALE PRICE: $25.17



UNRESTRICTED SALES

10

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00





RANDOM SAMPLE SIMULATION

11

5000 SAMPLES OF 20 RANDOM SALES



LEASED FEE SALES

12

$40.00$60.00$80.00

$100.00$120.00$140.00$160.00$180.00$200.00$220.00$240.00$260.00$280.00$300.00$320.00$340.00$360.00$380.00





SUMMARY TABLE

13

SALE TYPE AVERAGE SALE PRICE

FEE SIMPLE $27.73

RESTRICTED $26.22

UNRESTRICTED $28.84

LEASED FEE $127.03


Income Approach Pro’s and Con’s

John M. Schindler, CMI Senior Manager Real Estate Tax

Target Corporation Minneapolis, MN

[email protected]


Tucson, Arizona


Income Approach

Pro’s

and

Con’s


Tucson, Arizona


Income Approach Pro’s

16

• It is not the Cost Approach

• Reflects actions of Market Participants

• Economic Cycles


Income Approach Con’s

17

• Lack of Data

• Target, Walmart, Home Depot, Lowe’s, Costco are Owner/Operators • ~ 15% of locations are leased (many are ground leases)

• Quality of Data

• Build to suit leases (versus market lease)

• Investment Value versus Real Estate Value (cap rates)


Assessment Community’s Positions

Lou Newman, MRICS Senior Manager

Walmart Stores Bentonville, AR

Louis.Newman@walmart .com


Tucson, Arizona


IAAO Update

19

Special Committee on Intangibles

• Completed Research

• Draft Report to the Executive Board

• Presentation at Annual Education Conference

• Exposure for Member Comment

• Member Comments Reviewed by Executive Board

• Adopted by Board as Official Position of IAAO


IAAO Update

20

Special Committee on Big Box Valuation

• Research in Progress

• Status Updates to Executive Board

Pending • Draft Report to Executive Board

• Exposure for Member Comment

• Member Comments Reviewed by Executive Board

• Board to Vote to Adopt as Official Position of IAAO



21

• Branding by Public Sector

• Value to a Particular User = Value in Exchange

• Market, Insurance, Federal Reporting Values

• Trends in Building Size

• Internet Sales

• Obsolescence

• Closed Stores Not Comparable to Open Stores



22

• Deed Restrictions

• Assumption of Demand

• Highest and Best Use

• Market Segmentation

• Buyer Motivations

• Net Lease Sales

• Sale-Leasebacks


What’s Next

23

• More Litigation • Formal Position on Big Box Valuation by IAAO • Implementation of Market Segmentation

• Prescriptive Legislation

• Branding by Private Sector


Selected Cases


Popp Hutcheson, PLLC Austin, TX

[email protected]


Tucson, Arizona


Indiana

25

• Stinson v. Trimas Fasterners, 923 N.E. 496, 498-99, Ind. Tax Ct. (2010)

• Meijer Stores, L.P., et al. v. Wayne County, 926 N.E.2d 1134, 1137, Ind. Tax Ct. (2010)

• Meijer Stores, L.P. v. Marion County Pet. Nos. 44-440-02-1-4-00573, et al., Ind. Bd. Of Tax Review (Dec. 1, 2014)

• Kohl’s Indiana L.P. v. Howard County, Pet. Nos. 34-002-10-1-4- 00350, et. al., Ind. Bd. of Tax Review (Dec. 31, 2014) • Howard County Assessor v. Kohl’s Indiana L.P., Cause No. 49T10-1502-TA-00004, Ind. Tax Court (Sept. 7, 2016)


Iowa

26

• Soifer v. Floyd Cty. Bd. Of Review, 759 N.W.2d 775 (Iowa 2009) • Hy-Vee Food Stores, Inc., et. al., v. Carrol Cty. Bd. Of Rev., Case File

Nos. 3-546/12-1526, 2013 Iowa App., Lexis 1074 (Iowa Ct. App. Oct. 2, 2013)

• Hy-Vee, Inc. v. Dallas Cty. Bd. Of Rev., Case File No. 13-1377, 2014 Iowa App., Lexis 960 (Iowa Ct. App. Oct 1, 2014)


Kansas

27

• In Re Prieb Properties, LLC, 275 P.3d 56 (Kansas Ct. of Appeals, March 16, 2012)


Michigan

28

• Target Corp. v. City of Novi, Docket No. 345523 Michigan Tax Tribunal (September 23, 2010)

• Target Corp. v. City of Auburn Hills, Docket No. 361955 Michigan Tax Tribunal (April 24, 2012)

• Ikea Property Inc. v. Township of Canton, Docket No. 366639 (Michigan Tax Tribunal (July 18, 2012) • Kohl’s Department Stores, Inc. v. Township of Kochville, Docket No.

369840, Michigan Tax Tribunal (Feb. 22, 2013) • Kohl’s Department Stores, Inc. v. Township of Frenchtown, Docket

No. 369836, Michigan Tax Tribunal (Feb. 22, 2013)


Michigan

29

• Lowe’s Home Centers, Inc. v. Township of Grandville, Docket No. 414842, Michigan Tax Tribunal (Aug.15, 2013)

• Lowe’s Home Centers, Inc. v. Township of Marquette AND Home

Depot, USA, Inc. v. Township of Breitung, Docket Nos. 314111 and 314301 (Mich. Ct. App. April 22, 2014)

• Lowe’s Home Centers, Inc. v. City of Grandville, Docket No. 317986, (Michigan Ct. App., Dec. 30, 2014)

• Menard, Inc. v. City of Escanaba, Docket No.325718, (Michigan Ct. App., May 26, 2016)


New York

30

• In the Matter of Home Depot U.S.A., Inc. v. Assessor of Town Queensbury, 15 N.Y.S. 3d 364 (N.Y. Supreme Court, Appellate Div., 3rd Judicial Dept., June 25, 2015)

• In the Matter of Rite Aid Corp. v. Haywood, 15 N.Y.S.3d 523 (N.Y.

Supreme Court, Appellate Div., 4th Judicial Dept., July 10, 2015)

• In the Matter of Rite Aid Corp. v. Huseby, 13 N.Y.3d 753 (N.Y. Supreme Court, Appellate Div., 4th Judicial Dept., July 10, 2015)


Wisconsin

31

• Walgreens v. City of Madison, 311 Wis.2d 158 (Wis. 2008) • Bonstores Realty One, LLC v. City of Wauwatosa, 351 Wis.2d 439

(Wis. Ct. App. 2013)

• Target Corporation v. City of Racine, Case No. 10 CV 1963, (Racine County Circuit Court, Dec. 3, 2015)


It’s Not A Dark Store



[email protected]

John M. Schindler, CMI

Senior Manager Real Estate Tax Target Corporation

Minneapolis, MN [email protected]


Tucson, Arizona

Lou Newman, MRICS

Senior Manager Walmart Stores Bentonville, AR

[email protected]


Popp Hutcheson, PLLC Austin TX

[email protected]

It’s Not A Dark Store IPT’s 40th Annual Property Tax Symposium It’s Not A Dark Store Brett A....

Documents

Transcript of It’s Not A Dark Store IPT’s 40th Annual Property Tax Symposium It’s Not A Dark Store Brett A....