HIGH RISE CONDOMINIUM BUILDING (CHICAGO)
Over $8 Million in Tax Savings*
A property management firm took over the management of a newly-constructed, premium condominium building in downtown Chicago from the developer. The developer previously hired a prominent Chicago-based law firm to contest assessments and that firm obtained standard vacancy relief for un-occupied units owned by the developer. No relief was obtained for the units the developer sold (i.e. the occupied units). Our firm was asked to if we could provide additional relief.
- Property Type: High-rise condominium building
- Savings: Over $8 Million in tax savings*
- Location: Chicago, Illinois (Cook County)
- Description: Premier 363 unit high-rise condominium building
- During the first year of engagement, we obtained an additional 20% reduction over the prior law firm’s assessment reduction, resulting in 650K in savings in that tax year
- Reduced underlying market value of units in addition to obtaining vacancy relief for developer-owned units
- Obtained over $8 Million in tax savings in the first 3 years of engagement
OUR STRATEGIC APPROACH
Elliott & Associates interviewed the developer and property manager and conducted a thorough review of assessments. Our team concluded additional opportunities for assessment relief were available. Prior counsel pursued vacancy relief for unoccupied/developer-owned units, which was proper; however, we determined the underlying market value of all units in the building, including those that received vacancy relief, were overstated. Furthermore, we learned the Assessor’s records overstated the common area percentages of certain units causing assessments of those units to be additionally inflated.
Elliott & Associates obtained assessment reductions from both the Assessor and the Board of Review. During the first year of engagement, we obtained an additional 20% reduction over the prior law firm’s assessment reduction. This resulted in approximately $650,000 in savings for that tax year. Appeals were filed in subsequent years further reducing assessments. We obtained over $8 Million in tax savings before exemptions during the first three years of our engagement.
Our team convinced the assessing officials that all units in the building were over-valued based on our analysis of current unit sales. Sales were adjusted downwards for tax purposes due to the inclusion of personal property and construction extras in the purchase price. We then convinced the assessing officials to apply occupancy factors to the already reduced values of the vacant, developer-owned units reducing those assessments further. Finally, we caused the Assessor to correct his records with regard to the common area percentages of certain units causing them to be additionally reduced.
*tax savings before exemptions
CONDOMINIUM BUILDING (KANE COUNTY)
Over $180K in Tax Savings
A bank needed to contest assessments on a few foreclosed units in a newly constructed condominium building in Kane County, Illinois. The developer sold a number of units in the building at relatively high prices; however, after the economic downturn, he was unable to sell the remaining units in the building. The bank foreclosed, took back the units and leased them out. The Assessor valued the bank-owned units based on the high sales prices realized by the developer (pre-downturn) that were no longer obtainable. The income valuation approach supported a lower valuation; however, both the Assessor and the County were unwilling to reduce assessments based on this argument because recent sales in the building supported the Assessor’s valuations.
The bank had previously engaged a Chicago-based law firm with a national tax appeal practice; however, this firm failed to obtain any assessment relief. Elliott was asked to help.
- Property Type: Suburban condominium building
- Savings: Over $180,000 in tax savings
- Location: Kane County, Illinois
- Description: 58-unit condominium development
- Client received a settlement for a value nearly equal the appraised value. E&A was able to obtain this reduction since we were prepared to try the case
- Elliott then filed appeals for the following two tax years and settled those cases as well.
- Values reduced below recent sales prices, but consistent with income approach and appraisal
- Obtained over $180,000 in tax savings
Elliott believed the sales prices realized by the developer, although somewhat recent, were not indicative of current market value because the market declined significantly after those sales occurred. While the income approach supported a lower valuation, our firm recognized that the Assessor and County would be unwilling to approve assessment reductions based on the income approach. In this situation, we recommended appealing to the Property Tax Appeal Board (PTAB) and we were also prepared to try the case. We also knew that we needed a solid appraisal valuing each unit in the current (deteriorated) market.
The appraisal also valued the units 30% below the Assessor’s valuation, consistent with the income approach, thus solidifying our decision to appeal to the PTAB. The Assessor, County and a local school district vigorously contested our appeal.
While prepared to try the case, our firm eventually convinced the Assessor, County and Intervenor to settle for a value nearly equal the appraised value. Elliott then filed appeals for the following two tax years and settled those cases as well. Total refunds were in excess of $180,000.
The bank recently sold the units in a bulk sale for a value consistent with the appraisal we obtained.