PRLA Restaurant & Lodging Matters Spring 2020

Spring 2020  •  PENNSYLVANIA RESTAURANT & LODGING matters  • 27 Most property assessment cases ultimately end up in court. Pennsylvania law allows property owners to represent themselves, but if representation is desired, the law requires that the owner engage an attorney. Hotel operators in particular should evaluate the potential to reduce their property taxes this year. Even in a typical year, valuation of hotels presents a unique appraisal problem that requires a specialized appraisal expertise. Because hotels operate as “going concerns”—in which the separate values of the personal property, real estate, and the business itself are intertwined—the normal valuation process for a property assessment appeal requires the appraiser to tease out the real estate component because the real estate value alone is the basis for the assessment. For this year, the expectation is that the impact of the current crisis will impair hotels’ real estate values in most cases. Further, as market participants in some sectors are looking to the 2009 financial crisis as a point of reference, there seems to be general agreement that demand for hotel rooms will be slower to return this time around. This unknown timeline increases the risk to potential investors, further driving down property values. Now is the time to start collecting the data and documents that will be necessary to evaluate your property’s assessment to see if there is an opportunity to reduce your real estate taxes. Owners should gather three years of income and expense statements, a current balance sheet, and a recent monthly STAR Report. In addition, STAR Reports from 2018 and 2019 will be helpful to compare and estimate the impact of the pandemic on 2020 performance. If you believe the value of your property may be diminished by the COVID-19 crisis, contact an experienced attorney and/ or appraiser before July so that you can properly evaluate the opportunity to reduce your property taxes with adequate time to prepare a winning case. • DiPaolo and Kelly are attorneys in the law firm of Siegel Jennings Co. LPA, where DiPaolo is the managing partner of the firm’s Pennsylvania practice. Siegel Jennings is a founding member of American Property Tax Counsel.