Functional Obsolescence

One of the most frequent issues identified in assessment appeals is functional obsolescence.  In short, when the building you have is different from the building you should have, there is likely obsolescence. Has the use of your building changed since it was constructed?  Is your building too big? Too small?  Poorly laid out for your purpose? Do you have parts of the building that are unusable?  Is your building taller or shorter than you need?  The answers to these and other questions may indicate the presence of functional obsolescence.

Not every case of functional obsolescence looks like the picture below.  In many cases the inefficiency is easy to miss - and may very well have been! 

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Properties like this have had property tax assessments based on full value.

Market Factors

The simple premise of property tax assessments is that a property is to be valued at its market value.  What would its value be in a sale between a willing buyer and a willing seller? MPAC uses mass appraisal techniques, which often miss local market factors.

This building below - is it located in a large city, or a small one?  Or maybe a rural area?  Is it zoned for redevelopment?  Is there a nearby factory with a major contamination issue? How are nearby similar properties selling? All of these questions should affect the assessment.

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Condition Issues

Is your building showing signs of decay?  Does the roof leak?  Do you have many unnecessary windows that keep getting broken?

If there is evidence of wear and tear, ask yourself - when is the last time an assessor inspected the building? 

In these times of financial restraint, capital budgets are often tight.  Although your building might appear to be in good shape, deferred maintenance is a significant issue, which should be considered by the assessor.

Data Errors

MPAC has approximately 1500 employees, but this includes management, admin, and technology.  This leaves well below 1500 actual assessors to value over 5 million properties.  It is perhaps not surprising that data errors arise.

But the process the assessors use, especially for industrial type properties, is complicated, and it can be very difficult to find the errors. Every building, every change in height, age or construction, has dozens of separate data points in the assessor's records.  I helped in the initial launch of MPAC's Automated Cost System ("ACS") - and I excel in finding how it has been misapplied.