This issue of the CBIZ CRE quarterly “hot topics” newsletter provides guidance on minimizing your property taxes (“Yes, COVID Will Likely Impact Your Property Taxes), discusses five stimulus provisions that affect commercial real estate and offers an in-depth discussion on how to manage the cost of risk in this hardening property insurance market by improving the quality of your data. Included in this issue are the usual additional resources – links to on-demand webinars, COVID-19 resources and additional content and business aids. Residential property managers will find the Loss Control Checklist to be particularly useful in combating rising insurance costs.

1. Commercial
Real Estate
MARCH 2021 | ISSUE NO. 22
©
Copyright
2021.
CBIZ,
Inc.
NYSE
Listed:
CBZ.
All
rights
reserved.
(Continued on page 2)
QUARTERLYHOT TOPICS
CBIZ Commercial Real Estate
Reduce Taxes. Maximize Cash Flow. Minimize Risk.
CBIZ E
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CBIZ BizTipsVideos
IN THIS ISSUE:
CBIZ’s Real Estate practice
is uniquely positioned to
help you minimize risk
and capitalize on market
opportunities.
We work with owners,
managers, operators
and investors, as well as
commercial real estate
developers and partnerships
in all of the major CRE
sectors: retail, office, hotel,
multi-family, shopping
centers and real estate
investment trusts.
Yes, COVID Will Likely
Impact Your Property Taxes
T
he COVID-19 pandemic has had a severe impact on local jurisdiction budgets that
support community services like the operation of schools, police and local health
departments. Taxing jurisdictions will be looking for ways to make up the lost revenue in
2021, and property taxes are the most convenient place to look. There are two components to
the property tax equation – the tax rate and the assessment. It is virtually impossible to adjust
the rate, so the only thing to do is contest the assessment.
If You Have the Bill, It’s Already Too Late
Property tax is a significant factor for commercial real estate development, yet it is often only
thought about when the tax bill arrives. In most cases, it is simply too late to do anything about
your taxes once the bill arrives. Action must be taken when the assessment notice is received
earlier in the year.
Just as critical, treating property tax as a fixed cost misses the opportunity to evaluate and
potentially manage the factors that contribute to – and potentially reduce – this significant
cost. This is true even if the assessment has not changed appreciably since the last
reappraisal. Most jurisdictions “mass appraise” because of the volume of parcels, but this
approach may over value your property.
Yes, COVID Will Likely
Impact Your Property Taxes
PAGE 1
Additional Industry
Insights
PAGE 2
5 Stimulus Provisions
that Affect Commercial
Real Estate
PAGE 4
Strive To Be the Risk Profile
the Underwriters
Want to See
PAGE 6

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Careful attention to the dates and details provided in the
property tax assessment notices is crucial in determining
whether it warrants an appeal. At the core of your review
should be an understanding of the factors that can affect
value and the unique environment in which you operate.
The Valuation Method Matters
There are three valuation techniques used in appraising
commercial real estate – cost approach, income
approach and sales approach. Should you decide to
appeal the assessment, it will be important to know
which appraisal methodology was used on your property.
Cost – The cost approach estimates the value of the land
as if it were vacant and then adds the cost of construction
less depreciation to arrive at a total estimate of value for
land and building. While cost is not always a good indicator
of market value, taxing jurisdictions use the Real Property
Assessment Manual for computing cost, which provides a
uniform approach. Depreciation is more subjective.
Income – The income approach determines value
by analyzing (estimating) annual rent and typical
expenses and applying a market capitalization rate.
In many locales, taxpayers must supply income and
expense data. Although it may be easier to capture
rental income, the commercial property owner should
take great care in identifying every expense related to
operating the property.
Sales – The sales approach uses a database of market
transactions for comparable properties. This is a common
approach in larger jurisdictions.
Determine the Factors Impacting Value
Many factors can affect the value of a property. Some
are specific to the condition of the property itself and
surrounding neighborhood – age, deferred maintenance,
environmental issues, ingress/egress issues, vacancies
and declining rents to name a few. Others can reflect the
economy. Commercial real estate entities should consider
their unique economic conditions before undertaking a
review of their property tax assessment.
COVID-Affected Properties – There are numerous types
of properties (hotels, theaters, restaurants, etc.) that
have been impacted tremendously by the pandemic.
If your property was adversely impacted by COVID, it is
imperative that you have your value analyzed this year.
Additional Industry Insights
COVID-19 Resources
COVID-19 Resource Center. This extensive
source of articles and webinars is updated daily
- so check back often. Access it here.
Accelerated Recovery Resource Center. This
NEW resource center brings together solutions
for businesses ready to accelerate recovery.
Access it here.
COVID-19 Testing Requires Informed Consent.
Clarifies the CDC’s new guidance. Find it here.
Additional Content & Business Aids
Loss Control Checklist for Residential
Property Managers. Protect your business and
combat rising insurance costs. Available here.
Managing a Remote Workforce: Guide to
Success. Confidently navigate an increasingly
digital and remote world. Access this guide here.
Featured On-Demand Webinar
Taking Advantage of the New Paycheck
Protection Program & Other Stimulus
Legislation Developments. On-demand webinar
and slides are available here.
DISCLAIMER: This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional
advice. This information is general in nature and may be affected by changes in law or in the interpretation of such laws. The reader
is advised to contact a professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in
connection with the use of this information and assumes no obligation to inform the reader of any changes in laws or other factors that
could affect the information contained herein.

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You have a chance to reduce one of your largest expenses
– i.e., property tax – in a year when cost savings can be
critical to the health of your business.
Retail – Online commerce has been particularly rough
for the traditional retail model of malls and strip centers.
Business failures and foreclosures are contributing to a
glut of property and an abundance of vacant buildings,
which will cause a decrease in property valuations. Retail
chains as well as strip center owners may want to take
advantage of the price drop for their locations, particularly
for sites located in retail areas that have been particularly
hard hit by industry trends.
Office Space – When businesses are expanding, they’re
looking for modern buildings, which is creating a lot of
vacancies in older office parks and complexes. Assessed
property values for these older buildings are likely not
taking into consideration the vacancies, which may be
understated in the property tax assessor’s estimates. If
you have older office space locations, you should consider
appealing your property tax assessment, especially if your
building has vacancies within it.
Multifamily – Owners of multifamily properties have been
hit with property tax increases over the past few years
and, unfortunately, that trend appears to be here to stay.
The market for purchasing multifamily units is booming,
which means vacancies are at an all-time low. There
may not be much wiggle room in renegotiating your local
assessment, but you should consider having it evaluated
anyway. There may be small considerations that were not
accounted for in the property tax assessment that could
have a significant impact on what you owe.
How and When to Appeal (Reduce) Assessments
and Tax Burden
You don’t have to wait for the assessment. You can
ensure you have the time needed to analyze your
property tax valuation by proactively initiating a review.
Your jurisdiction’s assessor website is the place to start.
If the 2021 values are not yet available, look at 2020
to give you an idea so you’ll be prepared once the 2021
values are issued.
If your review is triggered by receipt of the assessment,
you may have to ramp up and develop your case within
a short time span. There are specific filing deadlines
that vary by jurisdiction. In some jurisdictions, deadlines
are as soon as 15 days from the receipt of your
assessment. You will need to act swiftly.
Bottom Line
A proactive approach to managing your property tax
burden can return significant dollars to your bottom line.
The best time to analyze your property taxes is before you
receive your assessment so you have adequate time for
analysis. Once you have your assessment from the taxing
jurisdiction, the clock starts ticking. You have a legal right
to appeal your assessment, but the deadline for filing an
appeal may be tight. Filing deadlines vary by jurisdiction
and may be as soon as 15 days from the receipt of your
assessment. Additionally, for an appeal to be successful,
you must be well prepared to make your case efficiently
and succinctly, as your hearing will likely be about 30
minutes at most.
Every state has its own property tax laws and individual
jurisdictions are tasked with implementing processes to
comply with those laws. Managing property assessments
in multiple states or multiple jurisdictions within a state
can be particularly challenging, with differing deadlines
and requirements for an appeal. If you do not have the
in-house capacity, there are many options for outsourced
expertise. In these instances, seeking the assistance
of a property tax advisor may be the most financially
responsible and strategically productive course of action.
Rich Hermes is a Managing Director in the CBIZ St. Louis
office and the national leader for the CBIZ Real and
Personal Property Tax Practice. He has over 35 years of
property tax experience throughout the United States.
For information on property tax assessment, appeals
and related issues, feel free to contact Rich directly
at rhermes@cbiz.com (314.692.5841) or connect with
your local CBIZ MHM professional.

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T
he Consolidated Appropriations Act (CAA) was
passed on Dec. 21, 2020 with overwhelming
majorities in both Houses of Congress and signed
into law six days later. The CAA contains much-needed
stimulus relief and helpful clarification regarding the
tax treatment of Paycheck Protection Program (PPP)
loans. While commercial real estate owners were mostly
unable to take advantage of the PPP, there are other
tax provisions included in the CAA that may be more
beneficial for 2021 planning.
Employee Retention Tax Credit
The Coronavirus Aid, Relief, and Economic Security
(CARES) Act created a payroll tax credit that employers
could use to offset the cost of retaining employees – the
Employee Retention Tax Credit (ERTC). Employers could
claim the credit on a quarterly basis if they experienced
a 50% decline in 2020 gross receipts compared to the
same quarter in 2019. The credit is equal to 50% of
qualified wages and health plan expenses after March
12, 2020 and before Jan. 1, 2021. Employers can claim
a per-employee maximum of $10,000 in ERTCs.
Under the CAA, the ERTC is extended to June 30, 2021,
and the size of the credit is increased to 70% of eligible
wages and health expenses incurred between Jan. 1,
2021, and June 30, 2021 with the same per-employee
maximum. The CAA also permits employers who claimed
PPP loans to take the credit (whereas the CARES Act
had specifically excluded them). However, to the extent
that wages were used in the calculation of forgiveness
of any PPP loan, they may not be used again to calculate
the ERTC.
To get the most out of the ERTC in 2021, commercial
real estate owners must follow special rules provided
by the CAA that will allow employers to claim retroactive
5 Stimulus Provisions that
Affect Commercial Real Estate
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ERTC benefits. This is helpful because payroll tax returns
have already been filed for the first three quarters
of 2020. The CAA permits an employer to treat the
retroactive ERTC benefits as incurred during the fourth
quarter of 2020. Retroactive benefits are based on
eligible wages paid after Dec. 31, 2019 and before
Oct. 1, 2020. These cash refunds may be accessed by
amending (with a Form 941) any previously filed payroll
tax returns for any quarter that experienced the decline
compared to the same quarter in 2019.
Energy-Efficient Commercial Buildings Deduction
(Section 179D)
Another significant tax benefit for commercial real estate
owners is the extension of the deduction for energy-
efficient building investments. The CAA made Section
179D permanent, ensuring the continuation of deductions
for energy efficiency improvements to buildings, including
lighting, heating, cooling, ventilation and hot water
systems. The provision also indexes for inflation the
amount of the $1.80-per-square-foot limitation.
Work Opportunity Tax Credit
Another extension to note is the Work Opportunity Tax
Credit (WOTC) program, which the CAA extended through
2025. This credit is for employers hiring individuals who
are members of one or more of 10 targeted groups,
including young individuals and veterans.
The Family First Coronavirus Response Act (FFCRA) set
forth that employers cannot claim both WOTC and ERTC
credits for the same employee and the CAA upheld this
stipulation.
Energy Credits
Commercial real estate owners should also take note of
extensions and phase-outs of energy credits. The CAA
extends the current 26% investment tax credit for any
solar energy property, fiber-optic solar equipment, fuel
cell property and small wind energy property that begins
construction by the end of 2022. The CAA also extends
the 22% rate for a property that begins construction by
the end of 2023, after which the credit is reduced to
10% or 0%.
The 10% investment credit is also extended for any
microturbine property, geothermal heat pumps,
and combined heat and power property that begins
construction before the end of 2023.
Employee Benefits-Related Credits
The CAA extended credits for some employee benefits
as well. The refundable payroll tax credit for paid sick
and family leave established as a part of the FFCRA was
extended through the end of March 2021. Only some
commercial real estate owners will qualify for this credit
extension, as the program is for private-sector employers
with fewer than 500 employees (and government
entities).
Also extended was the employer tax credit for paid family
and medical leave through 2025. Eligible employers
can claim an elective general business credit based on
eligible wages paid to qualifying employees with respect
to family and medical leave. The CAA separates general
business credit from FFCRA credit. Taxpayers who claim
the FFCRA credit cannot use those wages for purposes
of calculating this credit. The maximum amount of family
and medical leave that may be taken into account with
respect to any qualifying employee is 12 weeks per
taxable year.
Where Can I Learn More?
For more information on how the latest stimulus
provisions in the CAA affect the commercial real estate
industry, contact our team.

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P
roperty Insurance policyholders have seen ongoing
price increases and modifications to coverage
terms/deductibles and premiums increasing
significantly since the property insurance market began
hardening prior to the onset of-COVID-19.
Almost universally, insurers are utilizing more stringent
underwriting guidelines and becoming more selective
about the type of accounts they are willing to insure. The
industry is extending rates and terms by each account’s
specific profile and actively looking at the overall quality of
each submission and the risk associated with it.
In this environment, developing a plan to ensure the
quality of the data used for your submission has a
direct correlation to your total cost of risk. Like many
of us, much of the insurance underwriting community
is working remotely at least part of the time. Providing
a complete, well organized submission, in the required
format speaks volumes to the underwriters who
ultimately determines your organizations fate from a cost
and terms perspective. Now more than ever the more
comprehensive picture you are able to provide of your
organization from a risk standpoint the better off you will
fare with both an incumbent or prospective insurer.
Accurate data can be key.
Properly representing your risk (and risk management
policies) to the carrier will directly affect the rates and
terms offered. Missing information from a submission
was tolerated or incorrected now can have a significant
impact on your cost of risk. For example, depending on
the market where a building is located, the market value
of a property and the replacement cost can be very
different. If your replacement value is inflated (e.g., your
lender used market value vs actual cost to replace),
you may be grossly over insured to begin with. In this
difficult market, taking steps to secure coverage that
achieves precise allocation of premium dollars is well
worth the effort.
Errors of omission can also be costly. Building updates
that reduce probable maximum loss (PML) can’t be
factored in by the underwriter if they are not clearly
reported. The age of items such as electrical, roofing
and heating and cooling also play into how the carrier
rates risk. Something as simple as reporting that building
and systems maintenance occurs on a set schedule
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Strive To Be the Risk Profile
the Underwriters Want to See

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reflects minimization of risk to the carrier. Furthermore
with the increase occurrence of natural disasters, having
secondary exposure data for your properties can really
help an underwriter understand the risk associated with
your property. Not having this information can often lead
to worst case assumptions by modeling and underwriting
tools which can negatively impact your cost and terms
from your insurer.
Simply put – the more prepared you are to provide
a complete profile, the better your outcome. Ask for
and review your “statement of value” (square footage,
distance to fire hydrant, etc.). This is your property’s
“Carfax report.” You will want to correct any errors and
challenge any misrepresentations.
In prior years, an insurer who has written your policies
for a number of years may have accepted a less-than-
perfect submission. Maybe you neglected to include
the total square footage or left other requested details
unanswered. In this market, insurers are automatically
declining risks they had previously covered.
In our current risk environment, proper guidance and
representation is a value in itself. Depend on your
broker’s expertise and guidance. They will know what
data you need to collect and what alternatives are
available to you. A property-based valuation can provide
key information to support a true PML. You may benefit
by engaging multiple carriers. Carriers may be looking at
different detail when analyzing terms and coverage and
may require different types of information. Knowing what
to provide to which carriers pays dividends.
COVID created an even more complex risk landscape.
The range, probability and calculation of risk required
in 2021 could not have been imagined just 18 months
ago. COVID-19 has changed the global risk landscape.
Risks have been reprioritized and new risks have
emerged. Management and insurers alike are taking an
enterprise-level look at risk, assessing compliance risks,
financial liquidity, third-party vulnerabilities, litigation
threats, workplace operations, extreme weather events,
pandemics and more.
In this environment, you will want to incorporate these
additional coverages into your insurance profile review. An
experienced broker can assist you at a management and
planning level to take a broader look at your total risk and
help you manage your total cost of risk.
■
Workers’ Compensation – The pandemic-produced
expansion of a remote workforce has expanded
workers’ compensation rates and considerations to
include offsite work-related injury, clocking in and
out, and wellness programs.
■
Directors Officers Insurance – Social media
draws public attention to corporate missteps
like never before. There’s a bullseye on business
executives whose management decisions might
cause the company and investors financial harm.
DO insurance is a must.
■
Risk Transfer Agreements – Third-party services,
already commonplace for business services
like payroll, now commonly include vendor
management services, building maintenance,
industry-specific core applications, AI data
analytics and, in today’s ultra-connected living,
cyber and network management services. Risk
transfer agreements with third-party vendors are
essential to ensure you are held harmless.
■
Business Interruption – This coverage has been in
the spotlight since the pandemic response closed
businesses and then limited capacity for extended
periods of time. Most policies stipulate coverage is
triggered by “physical damage,” meeting the need
for businesses impacted by storms, flooding or
fire, for example, but resulting in claims denials for
lost business due to a pandemic. Only Florida and
North Carolina have had some court action in favor
of the plaintiff.
■
Climate Change – There is no doubt that weather
events are becoming more severe and more
frequent. Climate change has become a factor.
Coverage may be difficult to secure in coastal
locations, for example.
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(Continued from page 7)
■
Cyber Liability – With much or at least some of
the workforce working remotely, you want to be
sure your cyber liability insurance will respond to
security and privacy infiltrations within a remote
desktop environment.
Build risk management attitude and strategies.
These suggestions are practical, indeed prudent, across
the board.
■
If you have active risk management programs
in place, continue to ensure all levels of your
business have bought in, from the president/
owner to the new hire. If no programs are in
place, work with your risk advisor or broker to
create and implement risk management and loss
control programs (e.g., safety manuals, employee
handbooks, hiring guidelines).
■
Review open losses and loss control practices.
In response to our current litigious business
environment, insurance carriers are evaluating
sufficiency of risk management practices, policies
and procedures in place to help mitigate and
minimize risk when determining rates.
■
When entering into contracts with other parties
be sure you understand how much of their risk
you are assuming and what your responsibilities
are. Your risk advisor can provide experienced
guidance and advice with respect to contractual
risk transfer.
■
Consider purchasing or increasing the limits of
an umbrella liability policy to ensure sufficient
protection should you find yourself in a
catastrophic suit. High-limit umbrella coverage
may require multiple layers of coverage with
different carriers; your broker should be able to
manage that process for you.
■
Make two lists – one with the top five or 10
business losses you could suffer that have the
greatest chance of happening and another with
the losses that could cause the greatest damage
to your business. Review these lists with your risk
manager or insurance broker to ensure you have
the coverage in place to respond to all.
Additional Related Resources
■
Post-Coronavirus Office Checklist – return to office
planning
■
Safety Checklist for Employees Working From Home
– support employees working remotely
■
Loss Control Checklist for Residential Property
Managers – show insurance carriers the risk
mitigation strategies you have in place
■
How Accurate Data Helps Control Property
Insurance Rates in a Hardening Market –
on-demand webinar and slides
Your team
Be sure to tune into Episode 12 of CBIZ’s What’s Next?
podcast - The Rising Cost of Insurance Insurable
Values. Guests Greg Cryan of the Property Casualty
Insurance team and Ron Acebal of our Tangible Asset
Valuation team provide insights on what businesses
can do to manage the hardening commercial insurance
market. If you have questions about your risk profile or
your current coverage, don’t hesitate to connect with
the CBIZ Insurance Services Team, your CBIZ advisor,
connect with Greg or Ron directly. They will help you
develop strategies to mitigate exposure, build effective
governance and assess risk tolerance.