Presentation to New Clients on OCA

Introducing O’Connor & Associates
www.poconnor.com
O’Connor & Associates (“O’Connor”) is a full service real estate company in
operation since 1974. http://www.poconnor.com/au_history.asp It employs about
200 people in Texas, plus several hundred more employees outside Texas. It is
not only the largest property tax consulting firm in Texas, but is also one of the
largest commercial appraisal firm, commercial property data research firm, and
cost segregation federal tax reduction firm. In typical years, O’Connor handles
property tax appeals of nearly $40 billion worth of real and personal properties
for approximately 160,000 clients. Our commercial property tax division alone
has reduced client’s taxable values by about $1 billion each year, saving our
clients nearly $30 million in property taxes.
What Sets Us Apart?
Our business consists of four main segments, created to interact and support the
functions of each department. This allows us to work efficiently and in the
process, save our client valuable time and money.
A. Market Research and Consulting Department
Our in-house research team continually updates more than 100 fields of data
on nearly 10,000 commercial properties in Houston and other regions, and
over 6,000 apartment complexes in all major Texas markets: San Antonio,
Dallas/Fort Worth, Austin, Houston. We are committed to providing the most
comprehensive and accurate property data throughout the state. We analyze
and interpret trend data on occupancy, rents and newsletters to help real
estate professionals make better decisions. We also offer various market
studies, including feasibility and market rent analysis, Housing Tax Credit
studies, highest-and-best-use analysis, as well as lease audits and
customized studies on how to improve an under-performing property. Our
monthly publication, The Houston Real Estate Trends, is widely read by
brokers, developers, and other industry professionals. The newsletter
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covers significant transactions and economic and financial news for Multi-
family, Retail, Office, Industrial, Single-family and Vacant land.
O’Connordata.com is the most advanced on line data program used by
most real estate professionals in Texas.
B. Appraisal Department
O’Connor is the largest independent commercial real estate appraisal firm
in the southwestern United States and has about 40 experienced licensed
appraisers on staff. Our success lies in combining our knowledge of all
property types with our ability to compile pertinent information in specified
formats. These formats fit the requirements for private and public
companies, investors, lenders, national and regional developers, and
national, state and local government entities. Our goal is to apply the full
range of our technical expertise in a manner that helps our clients
accomplish their business objectives. Company president Patrick
O’Connor is a certified appraiser with the prestigious MAI designation from
the Appraisal Institute.
Business Valuation and Business Enterprise Appraisals is another key
service offered by our appraisal department. Method of business valuation
varies with the type of business, and the data source is different from
traditional real estate appraisals. O’Connor provides commercial appraisal
and business valuations for properties all over the nation.
Some of our notable appraisal clients are: JP Morgan Chase, CBRE,
Pennsylvania REIT, City of Houston, CW Capital Asset Management, Sun
Life Assurance Company of Canada, BBVA Compass, Colliers
International, National Equity Fund, Trammel Crow, Greystone Servicing
Corporation, Hartman REIT, University of Houston, etc.
C. Federal Tax Reduction Department (cost segregation studies)
Our real estate professionals provide cost segregation reporting for federal
income tax reduction by calculating costs of property components and
segregating each to the correct depreciation life expectancy, including
CORPORATE OFFICE: 2200 NORTH LOOP WEST, SUITE 200, HOUSTON, TEXAS 77018 TEL 713-686-9955
WEBSITE: POCONNOR.COM COMMERCIAL TAX DIVISION CONTACT Abraham Tieh (713) 375-4212
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short-life classifications. For example, CPAs typically apply simple
depreciation of all commercial properties over 39 years (27.5 years for
apartments). However, Internal Revenue Codes allow breaking down
components of a commercial property into various different depreciation
lifespan such as land improvements at 15 years, equipment at 7 years, and
items like carpet are less than 5 years. Shorter depreciation time increases
depreciation and lowers taxable income, thus saving clients tremendous
income taxes. Combining it with lower recapture capital gain rates resulted
in tremendous overall tax savings. O’Connor has saved our clients across
the nation millions of dollars in federal taxes. This service is particularly
effective for clients with recent acquisitions or new constructions.
Any high dollar properties acquired within the past five years are ideal
targets for cost segregation studies. Most importantly, you pay for one time
cost segregation study and benefit every year thereafter during your
ownership. Savings derived from the first year alone will be far greater
than the cost of the entire study.
D. Property Tax Department
O’Connor is the largest property tax consulting firm in Texas, bigger than
the next three largest consulting firms combined. No other property tax
consulting firm came even close to the size and experience of O’Connor.
Our teams of licensed commercial property tax consultants are highly
experienced attorney, developer, real estate brokers, property managers,
licensed appraisers, senior property tax consultants, and former appraisal
district appraisers. Our property tax consultants are required to go through
extensive training programs, and they travel all over Texas to meet clients,
inspect properties, and conduct hearings.
We cover more than 50% of the 254 counties in Texas, plus 15 other states
(see attached list). No other consulting firm covers as many Texas
counties as O’Connor & Associates.
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Consultants are supported by several hundred analysts providing in depth
research on each property. In addition, we have a team of attorneys and
licensed appraisers as expert witnesses to handle litigations for our clients.
O’Connor is truly a One Stop shop for all property owners needs.
Texas Property Tax Appeal Process
(1) Meeting with Appraisal District appraiser
This is the first level of negotiation with an appraiser, commonly known as
the “informal” hearing. The level of success depends on the appraisers,
the appraisal districts, and the consultant. Some appraisal districts, such
as Harris County Appraisal District, sets a lot of restrictions and limitations
at the informal level so their appraisers may not be able to offer significant
reductions regardless of how strong evidences presented. On the other
hand, many smaller appraisal districts have only one or two Appraisal
Review Boards so they tend to offer greater reductions at the informal level
to minimize their burden for the limited boards. By law, informal
settlements are final; no further appeals or litigation can be filed.
O’Connor consultants have established a long and good relationship with
most appraisers at various appraisal districts. At the informal level,
relationship plays a major role in the success. Therefore, it is utmost
important for property owners to engage and rely on highly experienced
consultants to make prudent decision on their behalf at the informal level.
(2) Appraisal Review Board hearing (Administrative appeal)
This is commonly known as the “formal” hearing. It resembles a miniature
court setting whereby property owner or his representative presents his
evidences, followed by an appraiser presenting his case on behalf of the
chief appraiser. A panel of three independent Appraisal Review Board
(ARB) members will rule and determine the final property value. O’Connor
consultants are supported by hundreds of analysts doing extensive
research. In most cases, we are able to provide very strong evidence
which is the key to success at the formal level. In addition, O’Connor
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consultants are well acquainted with most ARB board members over the
years, and past reputation of consultants’ knowledge often provide a slight
edge at hearings.
(3) Arbitration
For properties under $1,000,000, property owners may choose to appeal
the ARB decision through binding arbitration within the 45 day deadline.
The arbitration hearing is handled by an arbitrator at the arbitrator’s office.
Property owner or his representative presents his evidences and an
appraiser from the appraisal district presents his evidences. The arbitrator
will then issue a ruling at a later date, usually within 30 days. Both parties
are required to pay $500 arbitrator’s fee up front. The “winner” will be
reimbursed, less a small processing fee. In order to “win”, however, there
are a lot of strategies involved. It is crucial to engage consultants
experienced in handling arbitration.
O’Connor has consultants specialized in handling arbitrations. We have
established a high success rate in achieving further reductions for our
clients. In addition, most of our clients end up getting their $500 fee
reimbursed. In some selected cases, O’Connor will pay the $500
arbitration fee on behalf of our client. To our knowledge, no other
consulting firm offers that.
(4) Litigation – Judicial Appeal
Within 60 days from receiving ARB hearing result confirmations, property
owners may file a lawsuit against the appraisal district to further appeal.
Many property tax consulting firms do not have in house attorneys to
handle the litigation. Therefore, their clients will have to pay outside
attorneys (typically $750 to $3000 per account) to pursue further appeal.
This second and final round of appeal is very important and very effective
because over 90% lawsuits are settled out of court. Appraisal districts
often offer more attractive concessions before the trial to save them time
and money going to court. Harris County Appraisal District paid about
$700,000 per month defending lawsuits.
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To the best of our knowledge and feedback from clients switching to us,
O’Connor is the only property tax consulting firm that offers judicial appeal
on contingency basis. We absorb all legal fees, court fees, and expert
witness expenses.
Types of Property Tax Consultants
In general, there are several types of property tax consultants:
(1) Small entrepreneur type of consulting firms – the property tax consulting
industry is full of many small mom and pop shops catered towards
residential properties. These companies often operated by one or two
property tax consultants plus several part time seasonal agents to conduct
their property tax protest hearings. Often, these entities are short of
manpower and lack of research support. Part time seasonal real estate
agents are mostly inexperienced, often employed to conduct hearings
without proper training. These companies typically offer lower contingency
fees to attract property owners who do not know the difference in the
quality of services provided by the larger established consulting firms.
These companies tend to focus heavily on settling most accounts with
small reductions at the informal level to earn quick easy money and save
them time and effort. While some property owners may be pleased to pay
smaller consulting fees, they often end up paying far more taxes.
(2) Some national corporations holding large portfolio of real properties in
multiple states and cities tend to engage national consulting firms or
commercial real estate firms to represent them in a variety of services
including property tax appeals. These large national consulting firms
provide great management consulting services but most of them are not
specialized in property tax appeals, or may not be familiar with local Texas
markets. In most cases, they out source or sub-contract the appeal service
to a local property tax consulting firm and mark up the fees to charge their
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clients. Property owners may end up paying significantly higher fees for
the same services they could have skipped the middle man.
(3)Mid size property tax consulting firms generally employ ten to twenty
employees so they are able to provide some limited research and training
for their consultants. While these firms do conduct both informal and
formal ARB administrative hearings, they typically refer litigations to other
law firms. Property owners who are reluctant to pay high retainer legal fees
often giving up the second round of judicial appeal. Even if they do pay the
upfront retainer fees, third party attorneys often are not familiar with the
accounts or appraisals so they may not be able to negotiate a good
settlement with the appraisal districts.
(4)Property tax law firms are attorneys specialized in property taxes appeals.
In contrast to the smaller consulting firms, law firms tend to avoid settling
values at the informal level in order to preserve the right to file lawsuits.
Their primary goal is to pursue litigation after ARB hearings and most of
them do charge clients upfront retainer fees for litigations.
(5)Industry leader O’Connor & Associates is a class by itself, sets apart well
above all others. O’Connor consultants are supported by hundreds of
analysts, 40+ licensed appraisers, and a team of attorneys. Our
experienced consultants typically start with informal hearing. If the
consultant believes he can achieve better result than the settlement offer
received from the appraiser, he will reject the offer and proceed to the
formal ARB hearing. In some cases, our consultants will contact property
owner before accepting an offer he deems satisfactory.
In most commercial accounts over $750,000 in value, after the ARB
hearings, regardless of how good or bad the results may be, our team of
attorneys will continue the appeal process by filing lawsuits against
appraisal districts.
If evidences support further reduction, properties under $750,000 may be
heading for arbitration. O’Connor offers property owners the maximum
chance of tax savings by aggressively pursue every level of appeals the
law allows. The combined two rounds of appeals are one of the key factors
why O’Connor achieved superior results for our clients.
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In addition, one of the biggest differences between O’Connor and other
consultants is that our consultants visit most of the properties, take
pictures, and travels to most counties to attend hearings in person. For
property appeals in remote counties, most consultants conduct hearings
either by phone or by Affidavits (fax or mail). Such practice generally
resulted in very little or no reductions. In most cases, O’Connor
consultants will travel to conduct hearings in person and, at the same time,
build up excellent relationship with appraisers all over Texas.
How will O’Connor & Associates handle your property?
– Confidential and All rights reserved
O’Connor has been successful to bring building value down significantly using (1)
Income approach; (2) Market approach – comparable sales; (3) Equity approach
– unfair valuation compared to other similar properties; (4) Cost approach, and
(5) Other factors - physical condition, location, or any economic negative
influence, etc.
(1) Income Approach
Income Approach valuation for buildings are widely used based on Net
Operating Income times cap rate. Income and operating expenses are
based on actual figures. However, management fees and reserves for
replacements are flexible allowable expenses. The higher the expenses,
the lower the NOI.
Cap rate is highly subjective. It is up to the consultant to push for higher
cap rates to get maximum reduction. The relationship between the
consultant and the local appraiser plays a major role in the net result.
Goodwill value is typically associated with hotels but, to some extent, it
does impact assist living property investment value. Such intangible value
is not supposed to be taxed. The same property could be worth less if the
management company gets replaced. This is why appraisal district’s “one-
shoe-fits-all” can be grossly wrong. An experienced consultant will be able
to present “proper adjustment” to achieve better result.
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(2) Market Approach - O’Connor Data Services provide research data of
similar properties sold in the area. If similar properties sold within the past
two years for lower, O’Connor consultants will push for a market
adjustment of the value. The law requires appraisal districts to provide
substantial evidences when raising property values.
(3) Uniform & Equal (U&E) Equity Approach – Texas Property Code requires
appraisal districts to treat every property Uniform and Equal. O’Connor
Data Service keeping track of all property values regularly and instantly.
Consultants are able to create a most updated U&E comparison report to
present at hearings. Often, O’Connor’s U&E report uses comparable
properties closely match with subject property in size, age and location, far
better than those provided by the appraisal districts.
(4) Cost Approach - The depreciation should be taken in consider for the
properties since the upkeep of assisted living facilities are much higher
compare to apartments or hotels. Since assisted living facilities can’t not
be configured with flexibility, functional obsolescence and economic
obsolescence should be applied, in addition to age depreciation.
(5) Physical Condition or Negative Economic Influence – Physical condition
plays a major role in decreasing value. O’Connor consultants inspect most
properties regularly and take pictures of the worst part of the property to
use in the presentation. Pictures have been a proven effective way to
obtain addition reductions.
Due to high oil prices in 2013 and 2014, Texas economy was booming.
Occupancy during that period is at record high level. Current market has
changed drastically. Appraisal districts are trying to cash in on the oil
boom which is no longer the case. After all, lower property tax expenses
boost cash flow and net profit, which in turn raises property’s market value.
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Conclusion
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In 1974, Mr. Patrick O’Connor started a small real estate appraisal firm with 3
employees. Today, it has grown to become one of the largest property tax
consulting, commercial real estate appraisal, and data research firms in
southwestern United States with hundreds of employees. Such tremendous
growth can be attributed directly to the superb quality and level of services we
offer our clients over the years. Year after year, thousands of property owners
switched to O’Connor and Associates, in anticipation of higher tax savings and
lower fees.
Although no one can guarantee a reduction, we are confident we can achieve far
greater tax savings than the results you experienced so far. On average,
O’Connor can achieve about 10% reduction at the administrative appeal level,
followed by another 10% reduction at the judicial appeal level. Even if we are
only 50% successful on your property, it will still bring you 10% reduction. In
addition, our cost segregation studies could help you save tremendous federal
income taxes.
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I sincerely request your consideration to give us an opportunity to represent you
some or all of your Texas properties. We are your partner when it comes to
saving your investors’ money and boost up market values. 2015 property tax
protest deadline is approaching, and our consultant will need time to visit
properties and prepare for hearings. Your early response will be greatly
appreciated.
Sincerely,
Abraham Tieh
Commercial Property Tax Consultant
Email: Atieh@poconnor.com
Direct: 713-375-4212
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Client Accolades
“O’Connor & Associates is the leader when it comes to aggressive tax appeals in
Texas. Last year, they were able to lower taxes on multiple properties with
outstanding results. I strongly recommend the services of O’Connor &
Associates, who consistently achieve superior results.”
Owner of a statewide property management firm
“I have been an O’Connor client for years and they continue to amaze me. It’s
simple…hire O’Connor or pay more than your competitors.”
Owner of a national property management firm
“As a result of O’Connor & Associates’ aggressive litigation efforts and
continuous support, our property taxes have been reduced. I give O’Connor &
Associates an AAA+ rating and recommend them to anyone who enjoys dealing
with bright and responsive consultants who can save you money.”
Owner of multiple office properties Houston, TX
“O’Connor took all the uncertainty out of the litigation process and handled the
entire appeal from start to finish.”
Commercial property owner, Houston, TX
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