Wednesday, December 04, 2002
Copyright © Las Vegas Review-Journal

Local chapter OKs study on tax effects

Group to present results to lawmakers

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The Southern Nevada chapter of a national real estate association has commissioned a study by UNLV to determine how the proposed gross receipts tax will affect the local commercial real estate industry, an executive said Tuesday.

The study, assigned to researchers Alan Schlottman and Bob Schmidt at the Lied Institute of Real Estate Studies, is expected to be completed in January, in time for next year's Legislature.

It will arm the National Association of Industrial and Office Properties' local chapter with facts and figures in its lobbying efforts against the tax that would take one-quarter of 1 percent of a company's annual revenue, with exemptions up to $350,000.

"We're not going to go up to Carson City and say, `We don't like the gross receipts tax. Let's change it,' " said Kevin Higgins, senior vice president of Voit commercial brokerage in Las Vegas and president-elect of the Southern Nevada NAIOP chapter.

"We believe that commercial real estate should pay their fair share of taxes. We're not trying to skirt gross receipts, we just want to do it the right way."

The gross receipts tax, recommended by the Governor's Task Force on Tax Policy, is part of a tax package intended to offset a state budget deficit now projected at $800 million over the next two years.

Higgins said it's going to hurt the bottom line of NAIOP's 460 local members, mostly developers, property owners, architects, engineers, title companies and commercial real estate brokers such as himself.

"What affects my industry that I work within affects me because if Majestic or Thomas & Mack or Dermody doesn't build here, then I can't make money selling their property and leasing to tenants from out of state," he said.

Las Vegas is often played against other development hotbeds such as Phoenix, Salt Lake City and Southern California when companies look to expand or relocate.

Tim Snow, president of Thomas & Mack, said a strong draw for Las Vegas has always been its low-tax, business-friendly reputation. He's concerned the gross receipts tax could swing that sentiment.

"Colorado can waive taxes, and they've got stronger redevelopment tools that we do not," he said.

Higgins said home builders and developers may have a high-ticket project going, but they also operate on thin profit margins, "so a tax like this can eat away a huge deal of it. It could affect it in a large way."

Along with an in-depth analysis of the gross receipts tax, the NAIOP study will address whether the commercial real estate industry pays its fair share for development and present possible alternatives to the tax, Higgins said.

NAIOP has taken steps toward becoming the "eyes, ears and voice" of the commercial real estate industry, recently hiring development consultant Terry Murphy to monitor issues at local municipalities, he said.

"We are going to become more politically active. We're doing a better job with our state lobbyist, Bill Gregory. Myself and a handful of people will go to Carson City and meet with legislators and talk about our feelings on this," Higgins said.

"As a board and also some members, they were asking our opinion on it. We all said we believe this is not the right way to go, and if ever there was a cause to get behind, this is it, because it affects all of us. When people stop coming and stop building, they won't need brokers like me."