Why solid waste appeals may be solid gold for your portfolio
When most people think of a real estate tax bill, they often think exclusively of their assessed value and local real estate tax rate. However, many jurisdictions have become quite proficient at raising revenue through means that aren’t tied directly to the market value of your real estate and have nothing to do with the actual real estate tax rate levied in your respective locale – like on how much trash your asset produces. In turn, we’ve become quite proficient in building technology that predicts which of those fees you can appeal and win – trash included. Let’s do some figurative dumpster diving to see how.
In property tax geek speak, many of those additional fees and charges you see on your tax bill are lovingly called non-ad valorem taxes (see my previous post on that). That’s a highbrow way of saying that it is a “tax not based on your assessed value.” Those types of fees and taxes can run the gambit from mainstream to outright oddity. For example, these fees and taxes are often levied to raise money for more run of the mill efforts like storm water infrastructure improvements and watershed conservation but also deviate into more oddball efforts such as gypsum moth eradication (one of my personal all-time favorite weird taxes).
If you live in a taxing jurisdiction that tacks on numerous fees relating to any of the above, and more, you know that these fees can add up. In the world of tax appeals, 99.9% of the focus is usually on the actual assessed value of the property. And while taxpayers usually can’t appeal their tax rate (unless there was in error in classification) they often, and should, review their assessed value for appeal. However, one of the most overlooked areas for tax savings are the bevy of non-ad valorem fees. And in many cases, although those fees are not calculated against your assessed value, there is usually a formula or metric that establishes what those fees should be. If you understand what goes into the formula you can also identify savings opportunities.
One specific area where we as practitioners have focused our efforts from both a professional service and technology perspective is on the widely assessed solid waste fee in Maryland. I call it white-collar dumpster diving.
The fee can be quite steep in some cases. The genesis of this fee is meant to offset the cost of disposing of solid waste (AKA trash) produced by property owners. The fee is based on a series of data points that make up a formula that the state uses to determine exactly how much a property owner of a certain type, location, and size should pay.
At Cavalry, we have been identifying and successfully pursuing savings opportunities for commercial property owners and generating millions in savings. In one specific case, we generated more than $1,000,000 in refunds for a single commercial property, spanning multiple years, due to over payment based on an erroneous model developed by the state to assess the fee.
Now, back to that predictive technology we’ve developed. What we found is that because the formula, inputs and metrics used to assess this fee are objective, the opportunity to identify anomalies and savings for property owners was a problem we could solve for with technology.
Over the last year, we have carefully developed and tested a machine learning application that can ingest property data and through a series of tax models identify whether a property is being overtaxed, and if so, the magnitude of those savings. This machine learning application is the first of its kind, patent pending, and is being used by our team to successfully pursue solid waste refunds for clients in Maryland.
Let us “dive in” to your tax bill – we’re always happy to do the dirty work for you.BACK TO ARTICLES
September 21, 2021 at 3:37 pm, Commercial Real Estate Tax Myths said:
[…] fail to budget or manage the other fees that can show up on a property tax bill. Any number of “non-ad valorem” fees can find their way onto your tax bill, and some of those extra fees can be as steep as the […]