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— Property Management Quarterly — July 2016
hibits the elimination of
the remaining 2.22 mills if
assessed property value and
local growth exceeds 6 per-
cent.
Third is the Gallagher
Amendment, which divides
the state’s property tax
burden between residential
and commercial. Forty-five
percent of the total state
property tax collected comes
from residential property
taxes and 55 percent comes
from commercial property
taxes.
The assessment ratio for
commercial property is 29
percent and the ratio for
residential property is 7.96
percent. The residential ratio
floats while the commercial
ratio is static. The effective
tax rate is the product of
the mill levy and the assess-
ment ratio.
The effect of a thriving real
estate market and legislative
tax policies is higher taxes
per square foot. Denver’s
central business district and
Lower Downtown have the
highest taxable values per
sf but the lowest tax rates.
The net effect is some of the
highest property taxes per
sf in the metro area. LoDo
property taxes are especially
high due to many properties
being located in the Platte
River Valley Metro District.
The Denver Tech Center and
Meridian office parks have
the lowest property taxes
per sf. Interlocken office
properties have high taxes
per sf due to high levies.
The takeaway is that savvy
investors and office tenants
need to pay close attention
to property tax liabilities
when buying and renting
office space. Tenants are
wise to negotiate expense
caps when signing new
leases. Property values con-
tinue to rise while decreases
in property tax rates have
been minimal due to voter
approval to remove some
or all of the revenue limits
set by TABOR. It’s crucial
to understand the effect
of property taxes and the
impact they have on your
total occupancy cost.
s
Sullivan
a defense to a landlord’s
claim against a tenant for
the nonpayment of rent.
Most commercial leases
include language indicating
that rents are due without
notice, demand, offset or
deduction. This means that
a tenant usually is required
to pay rents notwithstand-
ing a condition that might
interfere with its use and
possession of a property.
With that in mind, if a
tenant believes he has been
constructively evicted, he
should contact an attorney
to confirm what his rights
and obligations are in that
circumstance, what notices
might be required before
such a claim can be assert-
ed and whether it is appro-
priate to withhold rent.
Sessions:
How does a
constructive eviction differ
from a breach of the war-
ranty of habitability?
Halstead:
The warranty of
habitability only applies in
a residential lease context
and not in a commercial
context. The warranty of
habitability statute provides
certain notice requirements
that must be met before a
tenant can claim that he
has been in essence con-
structively evicted. In the
case of a commercial lease,
any such notice require-
ments arise under the lease
agreement itself.
Sessions:
What is the rem-
edy if the tenant has been
constructively evicted?
Halstead:
If a tenant is
constructively evicted, the
lease would be deemed
terminated, in which case,
the tenant would have no
ongoing liability for rents
that would have otherwise
accrued thereunder. A ten-
ant also might seek an
award of damages he incurs
as a result of the construc-
tive eviction, including,
without limitation, mov-
ing and other relocation
expenses, a rent differential
(if the rent at his new loca-
tion is higher) and, even,
lost profits. Of course, in a
well-drafted lease, a ten-
ant’s rights to one or more
of the foregoing may have
been expressly waived.
Whether a tenant has
been constructively evicted
is fact specific. It is not
common for tenants to pre-
vail on these claims, but a
landlord should, nonethe-
less, take situations that
could ripen into a construc-
tive eviction claim very seri-
ously. A good landlord/ten-
ant attorney can be essen-
tial in navigating the terms
of the lease and applicable
case law.
Sessions:
Class
adjourned!
s
Sessions
et expenses, commercial
building owners can reap
the financial benefits of
generating electricity from
the sun immediately, signifi-
cantly reducing electricity
costs and protecting against
future utility rate increases.
C-PACE participants can
combine solar installations
with other building effi-
ciency improvements, like
lighting, heating and cooling
upgrades. Combining solar
installations with efficiency
upgrades often can improve
the terms of C-PACE financ-
ing. C-PACE project applica-
tions, eligibility information
and lists of eligible contrac-
tors and lenders can be
found on the website, www.
copace.com.
Improving Property
Performance
Reducing energy consump-
tion by generating electricity
on site and improving build-
ing efficiency can help com-
mercial buildings qualify for
green certification programs
such as LEED and Energy
Star.
These certifications verify
that a building meets certain
standards aimed at optimiz-
ing building energy perfor-
mance and reducing envi-
ronmental impact, all while
reducing overhead costs
through energy savings.
A 2015 study published
in the Journal of Portfolio
Management found a strong
correlation between green
certifications and property
performance, such as higher
occupancy, tenant satisfac-
tion and retention rates. The
study looked at lease data
from nearly 300 office prop-
erties across North America.
Occupancy rates for the
10-year period of the study
were 9.5 percent higher in
U.S. buildings with Energy
Star certification, then in
buildings without certifica-
tions. Net effective rents
averaged 3.7 percent more in
LEED certified properties in
the U.S. than in similar non-
certified buildings.
With increased prop-
erty performance comes
increased property value.
The market forces that favor
sustainable buildings, par-
ticularly in Colorado, make
investing in solar a net gain
in terms of building income
and overall asset value.
s
Christensen
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