Homeowners weren't the only ones smarting after getting their new property-tax valuations recently.
"If you own nonresidential property, you're really being clobbered," said Jim Wezelman, a lawyer and partner with the Sage Tax Group.
An analysis for the 2007 tax year shows a substantial increase in retail and land valuations in Pima County, Wezelman said.
Residential valuations increased by about 19 percent over last year, according to estimates from the County Assessor's Office. That figure tracks closely to the 18.3 percent increase calculated by Sage.
Their calculations show the highest categorical increase in land, where values increased by an average of 81.7 percent, "which reflects a strong market for land," Wezelman said. The figures were based on an analysis of more than 35,000 parcels not used for residential purposes.
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The values include land that has no structures on it but may include "improved" lots with streets and utilities.
The next-highest average increase was in retail properties, including shopping centers and strip centers. Those valuations rose an average of about 39 percent, Wezelman said. Landlords who end up paying more in taxes will try to pass the costs on to retailers, who ultimately will pass them on to customers.
In his analysis, Wezelman evaluated only the value of the land, not new construction on properties. He also did not include any property where land values were frozen for a year.
Other average, pre-appeal increases include: medical properties, up 4.5 percent; office space, up 8.7 percent; industrial properties (not including self-storage), up 26 percent; and apartments, up 14.9 percent.
And the higher valuations won't necessarily mean higher tax bills, because technically, governing bodies must approve tax rates before the bills are sent out. Theoretically, they could choose to lower the tax rate.
Barney Brenner owns two buildings that he leases to auto-parts businesses.
The valuation for a building on West Prince Road, east of North Romero Road, increased by about 56 percent. The valuation for the other building, on East 22nd Street just east of South Kolb Road, increased by 63 percent. Improvements to the either property are minimal, Brenner said.
Brenner said he's talking with his tenants to determine if and how he should file an appeal. Brenner said he encourages property owners to lobby their elected officials, such as the members of the county Board of Supervisors or others at the helm of taxing districts.
"The county supervisors are supposed to adjust rates. If they get a windfall increase in valuations, they're not supposed to automatically get 20 percent more and merrily spend it," Brenner said.
Property owners should be careful before they decide to file an appeal, said Jim Susa, a lawyer with Bancroft, Susa & Galloway. Sometimes, information revealed during the appeal can result in even higher valuations. Even successful appeals result in nominal valuation drops.
"You're probably not going to go in there and convince them that your business is worthless. You really have to start getting into the $10 (million) and $15 million properties to make the appeal economically worthwhile," Susa said. "If I've got a small bar down on the corner and the valuation they place is $850,000, even if you're doing the greatest (appeal) job in the world, you're saving $300 in taxes."
Small retailers are left with difficult choices, said Alain Hartmann, a tax consultant with Property Tax Evaluations. Businesses can either absorb the cost or pass it along to consumers, and sometimes they can't even do that, said Hartmann, who manages the office complex where his business is housed at 7459 E. Broadway.
"I think you're going to see a lot of your smaller retailers … really have problems, because who you're competing with are the nationals," Hartmann said. "Some clients shut down businesses. I think you're going to see some vacancies show up. I manage this little center, and I know how much my tenants are struggling."
REAL ESTATE