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Trends in Property Tax Assessments: Good News for Senior Living Centers

Mary O'Connor

Oct 21 2019

3 min read

Owners of senior living centers are challenged by rapidly rising property taxes on their facilities

Appealing these taxes involves a process that often comes with a hefty price tag for consultants – up to 50% in contingency fees should any reduction be realized. Once taken for granted, management attention to this rising expense category is essential.

What to Consider for a Proper Assessment

There is good news for senior living operators and owners: significant assessment reductions of 25% to 35% have been achieved in many jurisdictions, notably in California, Colorado and Ohio. The reductions resulted from the employment of valuation professionals who understand how to appraise the non-taxable business value for ad valorem purposes. This work, completed cost effectively on an hourly rather than on a contingency fee basis, is particularly important when the senior living center has recently changed hands. Often the Assessor assumes that the full price paid is the real estate value that should be assessed. This is a false and expensive assumption for the owner as the purchase price includes non-taxable assets such as:

furniture and equipment,
financing and portfolio allocation considerations,
business value related to:
- dining,
- personal care,
- activities,
- transportation,
- housekeeping, and
assembled workforce.

The key in the appeal is to emphasize to the Assessor that the monthly fee paid by residents and short-term occupants includes many more services than shelter. The fee includes the business acumen that delivers the additional services listed above. Avoiding comparisons to an apartment complex or hotel, a successful appeal discusses the unique business model of the senior living center and the full range of value it brings. Working closely with real estate appraisers, business valuation experts are best qualified to appraise this additional business value.

Sufficient case law and precedent exists across the United States that supports the identification, valuation and exclusion of these non-taxable assets from the purchase price resulting in a large reduction in the assessed value of the real estate. The savings are considerable in the current and future years of ownership.

Sikich can assist you with authoritative valuation services specific to this industry. We’ve successfully helped many senior living center taxpayers across the United States to significantly lower their property tax obligation by providing expert witness testimony in this field. We are precedent setters in this field and welcome the opportunity to consult with you. For immediate assistance, please email Mary O’Connor ASA, CMI at mary.oconnor@sikich.com or call (312) 648-6652.

This publication contains general information only and Sikich is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or any other professional advice or services. This publication is not a substitute for such professional advice or services, nor should you use it as a basis for any decision, action or omission that may affect you or your business. Before making any decision, taking any action or omitting an action that may affect you or your business, you should consult a qualified professional advisor. In addition, this publication may contain certain content generated by an artificial intelligence (AI) language model. You acknowledge that Sikich shall not be responsible for any loss sustained by you or any person who relies on this publication.

About the Author

Mary O'Connor

Mary O’Connor, ASA, CRE, CMI, CFE, has worked exclusively in the field of valuation and financial forensic since 1979. She specializes in business valuation and the appraisal of tangible and intangible assets for litigation with special focus in health care, intangible assets in property tax appeal, securities, subrogation and insurance matters. Contact Mary at mary.oconnor@sikich.com.