A Kansas City consulting firm that specializes in real estate taxes has opened an office in Washington to help businesses review and challenge their property tax assessments.
Officials of the firm, Tenenbaum-Hill Associates, analyze, review and, if warranted, appeal tax assessments for commercial and industrial buildings only. They do no residential work.
The company operates almost exclusively on a contingency-fee basis, so a commercial property owner who believes his or her property taxes are too high can find out what Tenenbaum-Hill Associates thinks at no cost.
"We don't bill the client a single dollar unless we save him money," said Steven A. Glorioso, an associate of the firm who is managing the new office here.
Generally, about half the property reviewed by the firm nationwide is either fairly assessed or even underassessed, according to company officials. When the company finds that's the case, a written report is given the property owner, and that is that. No fee is charged.
When Tenenbaum-Hill deems a property's assessment too high, the owner may retain the firm to help appeal the assessment. Most owners do so, agreeing to pay a percentage of the resulting tax savings as the fee, Tenenbaum-Hill officials say. The firm took on about 1,000 appeals last year; its revenues in 1982 were 280 percent higher than in 1981.
According to Kenneth C. Hill, one of the two principals who started the firm two years ago, the company is successful in at least 90 percent of the appeals it pursues. "My guess is we saved our customers close to $3 million in property taxes last year," he said.
"We usually save our customers between 16 and 20 percent of their tax bills on average," Hill said. The normal fee, all inclusive, would be half the tax savings for the first year, firm officials said.
Both Hill and Wayne A. Tenenbaum had extensive real-estate-related careers before teaming up. Besides property tax consulting work, Hill had experience as a real estate broker, appraiser and investor. Tenenbaum, also an appraiser, is a lawyer who specialized in real estate matters and served as an assessor for four years in Jackson County (Kansas City) and as a member of the county appeals board.
A senior instructor for the International Association of Assessing Officers, Tenenbaum was in College Park last week at the University of Maryland to teach a course to officials of the Maryland State Department of Assessment and Taxation.
According to Glorioso, Washington was picked as the site for the firm's East Coast office partly because of its central location and accessibility to clients throughout the East, but also because Washington is considered a very strong local market for their services. "The reason is the very high property taxes here . . . among the highest in the country," says Glorioso.
To head up the technical side of the Washington office, Tenenbaum-Hill hired Tom Branham, former tax assessor of Charlottesville and president of the Virginia Association of Assessing Officers.
The Washington office is the company's third, after its home base in Kansas City and a second office in St. Louis. Another office to be opened next year will be located in either Houston or Denver, Glorioso said.
California, which once would have been a logical place for a business like this, is now "barren territory" because of the passage several years ago of Proposition 13. Because the effort reduced the tax burden on Californians, Glorioso noted that most properties surveyed by the firm there were undervalued or properly valued.
The company, with a work force of about 25, currently is working in the District and 30 states. Clients include some of the nation's major corporations, among them Xerox Corp., General Mills, Carnation Co. and Upjohn Co.
Bill Locke of Boston-based Bay Colony Properties, a national developer that has real estate dealings in the Washington area, said Tenenbaum-Hill had reduced tax assessments for his company on properties in both Philadelphia and Kansas City by between 12 and 15 percent.
"They've helped us get fair tax assessments," he said.
Locke said he used to think that an assessment on one of Bay Colony's buildings was proper if it was similar to the assessment on a neighboring building. He has a different view now. Even if a property owner and a neighbor have comparable tax bills per square foot, an owner is paying too much in property taxes if the average assessment for the city is lower, he said.
Because assessments can vary significantly, Tenenbaum-Hill tries to determine the average assessment rate for some cities to use as a standard to measure a particular assessment. The company currently is working with Rufus S. Lusk & Son. Inc. on several studies that are designed to uncover and analyze any inconsistencies in the city's tax assessments of commercial buildings.
One study here seeks to determine how close an assessor comes by comparing the amount a property sells for with the property's assessment. In the District, a property is supposed to be assessed at 100 percent of its fair market value, Hill noted.
"If the average level of assessment were less than l00 percent, the other owners would be entitled to be treated the same way," Hill explained.
Using a hypothetical example, if a building with a fair market value of $10 million is assessed at $10 million, and the average level of assessment in the city is truly 100 percent, then the assessment is probably fair. However, if it can be demonstrated that the average level of assessment in the city is 90 percent of fair market value, then an assessment of 100 percent on a building of $10 million would be unfair to the property owner. In that case, Tenenbaum-Hill would seek to reduce the assessment to 90 percent of fair market value.
Although the study won't be completed until some time next month, the data collected so far indicate that the level of assessment may be below 100 percent in the city, Hill said.
Besides giving a property owner professional advice on a property's assessment, even a finding that a property is valued fairly or undervalued can help an owner, Glorioso noted. The written report can go into the files and be used to mollify tenants complaining about tax increases passed on to them. The report would show that the owner had asked a professional to review the assessment and it was found fair, he added.