Few developers think of spending precious time and resources on working with a municipality to determine the appropriate property tax valuation method and an estimated preliminary value of a real estate project during the preconstruction phase. Doing just that, however, can pay dividends over the life of a project.
Today, the taxable value of property interests is a key element in the process of securing economic incentives, in structuring property transfers and in predicting tax assessments that may make or break transactions. It’s important to have a good bearing on how a municipality will likely treat real estate and taxable personal property for valuation purposes. Conversely, not understanding how a municipality will arrive at a property’s valuation can end up being very costly. Once a municipality has established a starting value for the project, that value becomes part of a larger context and therefore much harder to change.
A property’s value is reflective of (and can vary because of) a host of factors: market sales of similar property, perceptions in the finance world, trends in capital and investment markets, operating costs, income from different kinds of activities on a site, macro and micro economic trends and many more factors.