"Mills
Act" - Tax-Saving Program for Historic Buildings - Example 1
Mills Act v. Normal Assessment - Commercial Office Building
Mills
Act Assessment
Income Approach to Value |
|
Normal Assessment
Market
Approach to Value |
|
| Gross Income: |
Gross Income: |
| Office 140.136 sf @ $1.71=
$239,626.00 |
|
| Office 20.860 sf @ $2.04
= $42,554.00 |
(Same as for Mills Act Treatment) |
| Storage 540 sf @
$1.01 = $545.00 |
|
$282,725.00 |
|
|
x 12 months |
|
| Total Annual
Income: = $3,392,700.00 |
|
| Vacancy (5%)
= -$169,635.00 |
|
| Effective Gross
= $3,223,065.00 |
|
|
|
|
|
| Expenses: |
|
Management: -$257,845.00
|
|
Maintenance: -$96,595.00
|
|
Insurance: -$50,000.00
|
|
Utilities:
-$321,984.00
|
|
Janitorial: -$120,744.00
|
|
| Total
Expenses: -$847,168.00 |
|
| Net Income:
= $2,375.897.00 |
Net Income: $2,375,897.00 |
|
|
| Capitalization Rate: |
Capitalization Rate: |
Interest
Rate 7.50
|
|
Risk
Rate 2.00
|
Market Derived OAR 9.5% |
Depreciation Rate 2.00
|
|
Tax
Rate
1.00
|
Tax Rate 1.0% |
| Total Cap
Rate 12.50% |
Total Cap Rate 10.50% |
|
|
| Capitalized Value: |
Capitalized Value: |
| NOI/Cap Rate
$2,375,897.000/.1250 = $19,007,176.00 |
NOI/Cap Rate $2,375,897.000/.1050 =
$22,627,590.00 |
|
|
| Value Conclusion: |
Value Conclusion: |
| Assessed Value =
$19,000,000.00 |
Assessed Value =
$22,625,000.00 |
| Estimated Property Taxes:
$190,000.00 |
Estimated Property Taxes: $226,250.00 |
Net property tax savings under Mills Act =
$36,250.00 (16%) |
