by Broderick Perkins
(8/25/2010) - With real estate properties along the Gulf Coast oil disaster zone expected to suffer value losses ranging from 10 to 30 percent or more, some efforts are afoot to help property owners mitigate those losses.
The assistance is sketchy, uncertain and without standardized procedures, however, area property owners face oil disaster-related property value hits on top of losses due to general economic and travel industry malaise and need all the help they can get.
Seattle-based Greenfield Advisors, LLC, a company specializing in complex real estate valuation services, estimates that more than 1 million parcels could suffer value losses in 44 counties in the Gulf Coast states of Alabama, Florida, Louisiana, Mississippi, and Texas.
"These loss-of-property-value claims are going to be tough. Kenneth Feinberg (the attorney appointed to administer the $20 billion Gulf Coast Claims Facility and take over from BP the claims processing and paying process) is not a big fan of the claims, especially not a big fan of paying now, because no one knows the extent of the spill, with new and conflicting reports coming out every day, no one knows the final word on property values," said Peter Taaffe, an attorney, with the Houston, TX-based Buzbee Law Firm. The firm's clients include a host of Deepwater Horizon oil platform workers, Florida property owners, seafood harvesters and fishing industry workers.Potential Oil Disaster-Triggered Property Value Losses by County
|County||Area||No. of properties||Avg. distance from Gulf coastline (in yards)||Avg. loss over 5 years||Potential loss over 5 years|
|Escambia||Pensacola-Ferry Pass-Brent, Fla.||39,368||350||$39,882||$1.6 billion|
|Harrison||Gulfport-Biloxi, Miss.||21,221||568||$56,469||$1.2 billion|
|Mobile||Mobile, Ala.||10,520||436||$44,662||$470 million|
How can individual property owners make a case for a lost property value claim?
• Government action. Earlier this summer Florida's Gov. Charlie Crist issued an executive order allowing appraisers to reassess property values in counties affected by the oil spill.
Owners in Florida's Panhandle, for example, contend their property values have already diminished because of the spill, and studies appear to back up their contentions, but they still have to pay taxes on the higher assessed amount.
The Sunshine State's do-over assessments won't mean reduced taxes, but property owners could use the new numbers to seek, say, the difference paid in property taxes for the higher, pre-spill value.
"A vacation rental property owner should fight the appraisal district to keep the values down, to reflect the reality that they are down. There's a two fold benefit -- lower property taxes and it will be a big piece of evidence if they later file a claim with BP. If the appraisal district has not lowered the appraised property value, then it will not help their claim against BP," said Taaffe
Taaffe said firms are available for hire who fight appraisal districts on valuation for a percentage of the reduced rate.
Property owners must also be aware of scams that seek to take advantage of vulnerable, uninformed property owners seeking due and just redress.
• Legal action. Jacksonville, FL-based St. Joe Co., real estate development company which owns 577,000 acres in Florida, 70 percent of which is within 15 miles of the coast recently sued Halliburton Energy Services, the cementing contractor for the well that blew out.
Longwood, FL-based New Bastion Development has projects in Panama City Beach and Marianna that have been put on hold because of the disaster. It is also planning legal action.
Taaffe, also a contributing writer with the HomeAway Gulf Coast Response Center said certain individual and smaller property owners who lost money on deals since the oil disaster may be most likely to have a lost-value claim paid quickly.
"It would be a seller who had a buyer, pre-spill, the deal fell apart because of the spill, then the seller had to sell to another party and the seller took a big hit. The seller would have a decent shot of being reimbursed for the difference (net) between first sale and second sale. Feinberg would look carefully to make sure the second sale was an 'arms' length' deal," not one made to a friend or close associate, Taaffe said.
"It boils down to what is speculation right now vs. actual documented loss," Taaffe said.
• Claims process. Greenfield recently opened a new Web site GulfSpillValuations.com, which promises automated documentation to help property owners prove their case.
The company begins with tax assessor records and then calculates the effects of historical market trends since the date of assessment as well as any other extenuating circumstances to arrive at a "pre-incident" value for a property.
The company then determines a decrease in value caused by Deepwater Horizon oil spill, based on similar techniques applied to property values following the Exxon Valdez oil spill and Hurricane Katrina.
The report, obtained instantly through an automated online process, can then be filed as supporting material with claim documents to justify a demand for compensation due to property value loss caused by the oil spill.
"This is the same comprehensive analytical work we do for million- and even billion-dollar litigation projects," said John Kilpatrick, Greenfield's CEO.
"There are normally very few individual property owners whose situations justify hiring us, but the economies of scale in this circumstance make it possible to offer our expertise to anyone harmed by the BP oil spill," he added.
The online automated report costs $500 and that's hundreds of dollars more than a traditional appraisal, but a typical appraisal probably won't cut it.
"You wouldn't hire us to do what an appraiser does. When you hire an appraiser they have no training in how to deal with value impairments due to environmental contamination or similar events, but we do" says Greenfield spokesman John Casker.
Casker also said the GulfSpillValuations.com report doesn't consider lost property value due to the effects of lost revenues, something a property owner should also consider documenting for the purposes of filing a complete lost value claim.
"The business valuation of a property leads directly to resale value. If there's (lost revenues) you can't sell the property for what you paid for it. You can't automate valuation due to lost business," Casker said.Refinance at Today's Low Rates!
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