Client
Our client, a major player in the aluminum production industry, owned a facility in Washington that had been idled. The company was considering both permanently closing the facility and evaluating an offer from an outside group interested in buying and reopening it. An accurate assessment was crucial to avoid excessive property tax liabilities.
Challenge
The client believed the assessment for the tax year in question significantly overvalued the idled facility, leading to excessive property tax liabilities. They believed the county’s assessment did not adequately reflect the facility’s status and included inaccuracies regarding asset ownership and intangible rights. The state’s Department of Revenue (DOR) performed an advisory appraisal that resulted in a significantly higher value than the county’s prior year valuations. The county opted to utilize the state’s appraisal for its original assessment.
DMA was called upon to appeal the county’s assessment by addressing discrepancies in the state’s appraisal and ensuring a fair market value.
CASE SNAPSHOT
| Property Type | State | Assessed Value Before Appeal | Assessed Value After Appeal | Assessed Value Reduction | 1-Year Tax Savings |
|---|---|---|---|---|---|
| Aluminum plant | WA | $128M | $45M | 65% ($83M) | $716,000 |
SOLUTION
DMA’s complex property tax experts undertook a comprehensive approach to address the overvaluation of the client’s idled aluminum production facility. The team began by gathering detailed data on the facility’s operations, machinery, and the broader market conditions affecting the aluminum production industry.
This data collection was crucial for developing a thorough understanding of the facility’s current state and the factors impacting its valuation.
Key Issues Identified by DMA:
- The current assessment did not reflect the facility’s idled status but relied on valuations from previous operational years, which led to overvaluation and excessive property tax liabilities
- Lack of comparable sales data for unique properties like this facility
- Significant machinery and equipment required specialized valuation considerations
- Environmental and operational regulations impacting the facility’s value were not accounted for
- An asset previously sold by the client was included in the valuation, despite the client retaining only a non-taxable contractual usage right to it
To address these issues, DMA’s experts presented the collected data and detailed valuation analysis to county assessors, arguing for an assessment reduction. They also leveraged an independent appraisal, which supported the company’s estimation of the facility’s value. Our team prepared and submitted thorough documentation highlighting the discrepancies in the original assessment, providing a compelling case for value reduction. The negotiations were guided by DMA’s proven ability to effectively communicate complex valuation issues and advocate for fair assessments.
Result
Assessment Reduction
Single-Year Tax Savings
As a result of this meticulous process, the facility’s assessed value was significantly reduced from $128 Million to $45 Million, leading to substantial one-year tax savings of $716,000, providing immediate financial relief to the client. DMA’s strategic approach, specialized knowledge, and effective negotiation skills ensured a fair and accurate assessment, aligning the property’s valuation with its true market conditions and offering significant financial benefits to the client.
Why DMA
DMA was the right firm to address this challenge due to our deep expertise in managing complex property tax cases. Our Property Tax team possesses:
- Specialized Knowledge: Extensive experience in industrial property valuation, including the segregation of intangible assets and navigating complex tax regulations, particularly for facilities facing end-of-life scenarios
- Proven Negotiation Skills: Demonstrated ability to effectively negotiate with county assessors, ensuring accurate and fair assessments
- Detailed Documentation and Reporting: Expertise in preparing comprehensive documentation that highlights valuation discrepancies and supports compelling cases for assessment reductions
The successful resolution of this case underscores DMA’s commitment to achieving the best outcomes for our clients, ensuring they receive fair and equitable property tax assessments.
Complex Property Tax Expertise
Learn more about DMA’s Industrial Property Tax Services for properties across the US and Canada.