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2015 Real Property Taxes: Deadlines Approach for Commercial Property Owners

Real Estate Law Update

Commercial real estate continues to be subject to disproportionately high assessments, which ignore prevailing market conditions in the industry to the benefit of local tax bases. This has resulted in inequitable tax burdens for many owners, who continue to struggle with high vacancy rates and soft market demand. However, assessment revisions and new local laws can provide opportunities for relief. Commercial property owners should pay particular attention to the following:

1. Reassessments

By now, property owners in "Assessment Area 3" – one of three geographic areas in each Maryland county that is comprehensively reassessed in alternating years – should have received a reassessment notice from the Maryland Department of Assessments and Taxation. These reassessment notices will propose to increase, decrease, or maintain the current assessed value of the property, upon which real property taxes for the 2015 levy year will be based.

Importantly, the reassessment notices also will provide an opportunity for property owners to appeal the proposed taxable assessment for the upcoming three year period. Applicable statutes require the department to provide 45 days from the date of notice for filing an appeal. The specific appeal deadline will be indicated on each reassessment notice.

In Montgomery County, Assessment Area 3 includes significant commercial properties in White Flint, Silver Spring, the City of Rockville, and other properties in the northern and easternmost portions of the county. Owners of commercial properties outside of Assessment Area 3 that are not subject to reassessment in this cycle may also be able to initiate reviews of their current assessments if they meet certain reporting obligations and preconditions. Any revisions to assessed value resulting from such "out-of-cycle" appeals, however, will become effective in the 2016 levy year.

2. Parking Lot District Taxes

Real property assessments also are subject to certain ad valorem taxes that are associated with particular local government services. The Montgomery County Parking Lot District (PLD) Tax is one such ad valorem tax that is applicable to areas where Parking Lot Districts (PLDs) have been established to fund parking services: Silver Spring, Bethesda, Wheaton, and Montgomery Hills. In these areas, exemptions and reductions from the PLD Tax may be granted based upon the extent to which on-site parking spaces are provided for the land uses associated with a given property.

Traditionally, applications for PLD Tax exemptions and reductions are due by April 1 of the tax year preceding the year for which the exemption or reduction is sought.  However, to address oversights in the administration of PLD Tax exemptions and reductions, the Montgomery County Council passed Expedited Bill 43-14, Parking Lot Districts – Tax Exemption, on November 25, 2014. The Expedited Bill grants a one-time extension of the deadline to apply for PLD Tax exemptions or reductions for the 2014 levy year only, changing the deadline from April 1, 2014, to February 28, 2015.  Any owners who apply for and receive exemptions or reductions pursuant to the Expedited Bill will be entitled to reimbursements of PLD Taxes already collected by the county for 2014, without interest.

The Expedited Bill is a unique opportunity to ensure fairness and accuracy with regard to real property taxation. We recommend that property owners in the PLDs verify whether the PLD Tax currently is being levied in full or in part against their properties. If the PLD Tax is being levied, it should then be determined whether the property is eligible for an exemption or reduction in the 2014 levy year based on the provision of on-site parking. Necessary applications must then be filed with the Montgomery County Department of Transportation by February 28, 2015.

Chris Ruhlen is a land use attorney at Lerch, Early & Brewer in Bethesda, Maryland, who focuses on land use, zoning, real estate and related governmental issues. He has significant experience with real property tax issues and regularly assists clients with the assessment appeal process and associated real estate tax issues. If you own or lease commercial property and receive a reassessment notice that you believe is too high, or otherwise seek advice concerning your current assessment or the applicability of certain ad valorem taxes, contact Chris at (301) 841-3834 or cmruhlen@lerchearly.com.

This content is for your information only and is not intended to constitute legal advice. Please consult your attorney before acting on any information contained here.

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