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Base Tax Calculation

The Opportunity

A large Tenant (CPA firm) in a mid town Manhattan facility was perplexed as to the cause of recent large increases in their Property Tax obligations.

Initially, a Senior Partner in the firm was advised to perform an internal review and analysis to determine the basis of the tax increases. The internal analysis suggested that the taxes are in compliance with the terms of the Lease Agreement.

BC Compliance Group was engaged to perform a Lease Audit.

The Challenge

To ascertain the precise grounds for the large tax increases, while maintaining the integrity of the Landlord/Tenant relationship

Research the tax history of the building, including any and all Certiorari decisions handed down.

Apply any and all economic information to the Tax Base calculation.

The Solution

A comprehensive review and analysis of the Lease and was conducted. All economic components of the Lease were recalculated and analyzed for compliance with the terms of the Lease and accepted property accounting principles.

Research indicated that prior to the Base Year a Certiorari had been performed, and thus the Base Year Tax was actually a transitional value. Further research revealed that in the event of a Certiorari, Base Taxes, in this property, had to reflect no less than 90% of the Assessed Valuation.

Arithmetic formulas were implemented to recalculate the correct calculation of the Base Year Taxes.

The analysis was presented to the Client and Landlord and a subsequent meeting was held to explain the impact this omission had on the economic performance of the Lease.

An agreement was negotiated and agreed to with the Landlord regarding the correct method of calculating the Base Taxes.

A settlement disclosure was reached with the Landlord and an Estoppel Certificate and Subordination, Non-Disturbance and Attornment Agreement were issued and executed by both parties.

The Deliverables

The client received an executive report, recording in detail, the discrepancies that were uncovered and resolved, the full amounts recovered, and the corrections made to the Property Tax billing systems. As an aside, our reports also come with a complete Lease Abstract, and verification of every Lease payment made since inception (if records available).

The Results

The client received a large cash settlement and continues to save money and maintain a mutually beneficial relationship with the facility owner.