Case Studies

A First Class Hotel

NATURE OF REDUCTION: Base year and Prop 8 reductions
TAX SAVINGS ACHIEVED: Annual savings of $137,000
Four year cumulative refunds of $850,000 (in addition to annual savings from base year reduction).

This high-end hotel was purchased at the height of the market. The total consideration (purchase price) was based on the total value of the hotel's business enterprise, which included tangible and intangible properties. ITR professionals produced a well-reasoned and well-supported study that quantified the value of the franchise that was part of the total consideration. The assessor's office agreed to reduce the purchase price by more than $12 million. The Base Year reduction produced a tax savings of more than $137,000 per year.

As the market declined during the latest recession, ITR aggressively pursued Proposition 8 appeals and achieved additional refunds of $850,000.

R & D Business Park

NATURE OF REDUCTION: Base year and Prop 8 reductions
TAX SAVINGS ACHIEVED: Annual savings of $222,000
Three year cumulative refunds of $1.5MM

This R&D Business Park was purchased at the height of the market at a purchase price based on leases in place. Invoking the case of Dennis vs. Santa Clara, the ITR team produced a fee simple value using an income approach. The assessor’s office agreed to reduce the base year value by $20MM, providing a corresponding tax savings of $222,000 per year. After successfully arguing the base year case, ITR produced an additional $1.5MM in refunds due to changed market conditions.

Condominium Development

NATURE OF REDUCTION: Base year exemption and parcel split
TAX SAVINGS ACHIEVED: Total tax liability reduced from $1.7MM to $700,000

A real estate developer completed a condominium project and performed two parcel splits. The assessment and tax bills were almost three years behind. Tax bills were generated based on incorrect parcel numbers and for incorrect amounts. Condo owners could not re-finance or achieve income tax deductions. ITR obtained legal opinion from State Board of Equalization staff that cleared the way for automatic builders exemptions and modification of the tax bills. ITR also worked with the assessor’s office to facilitate the parcel split and allocation of values, taking into consideration legally restricted values of Below Market Rate units.

Shopping Center

NATURE OF REDUCTION: Base year reduction, construction exclusion
TAX SAVINGS ACHIEVED: Annual Tax Savings: $220,000 (base year)
Annual Tax Savings: $55,000 (construction exclusion)
Annual Tax Savings: $440,000 (no change in ownership)

A client purchased improvements on a shopping center and assumed a long-term ground lease. ITR appealed and reduced the original base year value by $20 million based on its as-is conditions. A multimillion dollar renovation project was completed several years later. ITR filed the proper claims for exclusion from new construction certificates, and the assessor agreed that $5 million of construction should be excluded. Finally, the client’s equity partner elected to exit the project. The difference between fair market value and assessed value was $40 million. We advised the owners on the recapitalization transaction, so that there was no change of ownership by law.

High-End Single Family Home

NATURE OF REDUCTION: Base year and Prop 8 reductions
TAX SAVINGS ACHIEVED: Annual tax savings: $70,000
Two subsequent years’ tax savings: $130,000

A single family home was purchased without going onto the open market. ITR re-appraised the property and successfully negotiated a $6 million base year value reduction. Two subsequent years’ assessment reductions totaled more than $11 million dollars.