Big box retailers are increasingly using the “dark store” tax strategy under which they want to pay property tax for one thriving location based on comparables that are no longer operating. The lower valuation is costing governments millions of dollars, as one county in Kansas found out after a state review board said it overvalued Walmart’s stores by $60 million.
The justification put forth by retailers is that property tax is tied to the building, not its operation, so the closed stores should pull down the tax rates of the open store. The idea started getting traction about five years ago in some states where laws offer fertile ground for the Dark Store Theory to grow and allow damaging legal precedent to be set.
Stores close and stay vacant for a number of reasons. The retailers may move to a better location or want to expand services. If the original store has deed restrictions it becomes harder to sell; also, keeping the unused real estate crowds out competitors.
Some jurisdictions have been able to defend their assessments of industrial and commercial properties by saying that a property developed for a special purpose must have that special purpose considered as the highest and best use, along with the present use of the unique property. Florida and Ohio offer examples where updated laws allow the governments to successfully defend their tax assessments of industrial and commercial properties, and maintain the expected level of revenue.
However, there have been cases where governments have failed because of unfavorable language in their statues or local ordinances. In addition to Kansas, governments in Michigan, Ohio, and Indiana have all lost “dark store” court cases.
For the jurisdictions, it’s not enough to rely on traditional appraised values because there is so much uncertainty around the issue. One court in Ohio, for example, considered appeals of two separate cases within a month of each other that resulted in different rulings.
Are you prepared? For a conversation about your ordinance and how well you think it will defend against the “dark store theory,” please email email@example.com.
Just when you think you’ve figured out how to secure your information technology (IT) systems, along comes the Internet of Things. Disruptive forces present a constant challenge to local government leaders because they upend traditional processes, time-honored delivery methods and citizen expectations.
This white paper from Avenu and Governing Magazine presents considerations for how to use data to maximize revenue collection, to understand a jurisdiction’s current financial state and to forecast future trends. Download it and learn about data-enhanced solutions that will accomplish your community’s objectives.
Although Avenu is a new name to many jurisdictions, it has a heritage that goes back decades. Companies that Avenu has acquired were prominent among the cities and counties they served, and Avenu embodies their great characteristics in its vision going forward. Here Avenu CEO Paul Colangelo gives perspective on how Avenu supports its government customers.
Q: What are the trends affecting state and local governments and how does Avenu address them?
In today’s world there are increased demands on government for services and limited resources available to meet those demands. Because of this, a critical service we’ll always offer governments is revenue enhancement through compliance audits, our discovery and recovery process, and management of unclaimed property. Government finance professionals need to find revenue to balance their budgets, and they can’t depend on new taxes or fees.
On the other side of the business we help jurisdictions administer services to citizens. That is an enormous undertaking and government and the private sector have to join forces to fulfill it. For example, governments in particular feel the effects of the aging workforce: in Virginia alone, 12% of state workers were eligible for retirement in 2015, and 25% will be eligible in the next five years, which is indicative of the national average of 28%. Governments need partners that can fill the skills gaps.
Nowhere is this more evident than in IT. Much of the equipment operated by governments is several years old, and the applications and operating systems can be much older. Avenu helps agencies keep their systems performing so citizens can enjoy the benefits of automation and mobile web services, and they can know their personally identifiable information is secure.
Q: What can clients expect from Avenu?
Avenu’s mission statement describes how we partner with governments to boost revenue, optimize operations and deepen community trust. This represents the system-level thinking that we apply to our clients. We support all aspects of government and understand how the agencies connect with their citizens, what the citizens look for and how to optimize those interactions. This distinguishes us from other companies out there.
We also take pride in being a customer-first company, which means Avenu can meet governments’ needs more efficiently than our competitors. Not only do we help with both revenue and efficiency, we have the flexibility to scale up and take on large projects, and we can microfocus on smaller ones. That’s important in the local government market.
And we’re getting recognized: earlier this year we landed on the GovTech 100 list of companies noted for their impact on governments.
Q: What innovations can clients look forward to?
A: Avenu will continue to be the partner that governments need us to be. That means providing them with revenue opportunities, finding ways to help them deliver the experience that citizens expect, and engendering the trust that is so central for governments to function. We will continue to invest in the solutions that enable this vision, whether it’s new software, analytics, a digital community, mobile enablement of an existing solution, or new solutions such as Clearview Analytics that jurisdictions can use to better understand revenue sources and make projections.
Q: What are the most significant challenges ahead?
We need to keep up with a dynamic and continuously evolving market. Our clients expect us to anticipate and understand their needs, so our job is to identify opportunities that leverage our national experience with other governments. Delivering that takes both creativity and structure, and it’s what makes this space so interesting.
If you’ve ever come across change in your jean pocket or a few dollars in an old purse, you know the giddy joy of finding missing money. When you’re tight on cash, those extra few bucks can make all the difference. But what if you were able to come across more than that?
Each year, government agencies in the United States collect billions of dollars in unclaimed property waiting to be returned to the rightful owners—and, more likely than you might think, some of those lost funds could be yours.
Unclaimed property refers to lost monetary funds in accounts at financial institutions or organizations that haven’t had any activity or contact with the owner for at least a year.
First enacted in 1954, the Uniform Unclaimed Property Act requires holders of unclaimed property to “turn it over to the state unclaimed property administrator” after a given amount of time. The administrator then safeguards the accounts while actively seeking to return the lost property to the owner. The purpose is to protect owners from losing out on rightfully owed funds.
There are many forms of unclaimed money, however the most common include:
So, how do you know if you have lost money that’s owed to you? A simple and free search is all it takes.
To unearth any possible funds you may be owed, you can search on your state’s treasury—or other responsible agency’s—page. However, if you’ve lived in multiple states this process could be tedious as you would have to perform multiple queries on each state’s website. The best option is to use a national database that collects the information from all the states.
Whereas other websites will charge a fee to release such data that may not even be accurate, MissingMoney.com is the only official, multi-state search engine endorsed by the National Association of Unclaimed Property Administrators (NAUPA) and supported by over 43 states. Searches and claims are always free, and our secure database is updated weekly with information from each participating state and province.
Discovering you’re owed money is as simple as typing in your name and pressing “Go.” Happy searching!
Spanish speakers can now see if there is any money in their name being held by state governments. A free search on the new Spanish-language version of MissingMoney.com will show if there are any forgotten bank accounts, uncashed checks, insurance policies, money transfers or utility deposits in their name. Each year the states receive billions of dollars in unclaimed assets and they also return billions to rightful owners.
Go to MissingMoney.com, click the Spanish option from the dropdown on the top right, then enter a name or business name in the box to see if there is any money to be claimed.
MissingMoney.com is the only site for unclaimed money that is endorsed by the National Association of Unclaimed Property Administrators.
MissingMoney.com allows visitors to perform nationwide searches for lost property that has been turned over to state governments. Started in 1999 to help track and return unclaimed property, MissingMoney.com now contains over 130 million searchable records from participating states that support the site by submitting their data weekly. It is the only unclaimed property site endorsed by the National Association of Unclaimed Property Administrators, which facilitates collaboration among administrators to reunite unclaimed property with rightful owners. MissingMoney.com is operated by Avenu Insights & Analytics.
Kennon Walthall is Avenu’s senior vice president in charge of partnerships. Here he describes the partner program and how it brings value to Avenu’s state and local government clients.
What is the strategy behind Avenu’s partnership program?
Avenu provides solutions that jurisdictions use every day, but in some cases we add the technology and expertise of other companies to make those solutions work as well as they do. This way we stay focused on the primary mission of solving clients’ problems.
Avenu needs to continue to grow in order to meet the many needs of our clients. The immediacy to deploy a solution means that it’s not feasible for us to build each of them because the development, quality control and testing processes can take a long time. Nor is it prudent to try and acquire many companies with particular software or expertise. But partnering with them means we can bring a solution to market quicker and optimize clients’ operations.
Whether we deploy only our core solutions or bring in partners with ancillary ones, clients know we are delivering the value they need to serve their communities. So, Avenu will join forces with other companies when there is a specific need and if they complement our offerings.
What are the companies with which Avenu has partnerships?
Avenu has an established partnership with Esri, the leading provider of geographic information system (GIS) software. We use that technology to geo-enable some of Avenu’s solutions so jurisdictions can know more details about their sales and property tax data, for example.
In another partnership with Ellucian, we have two dozen deployments of their human resources and finance software for jurisdictions. There are a variety of other ones, and we’re always looking at new opportunities to partner as long as it meets the criteria for a specific need that fits with our solution portfolio.
How does the term partnership extend to client relationships?
The private and public sector are molded together for delivery of services. The needs are too great for government to do it for itself. We’re a few weeks away from the 50th anniversary of the moon landing, and even for that one program estimates are that 400,000 people from various organizations supported that.
Avenu shares the vision of seeing a better tomorrow with state and local governments. To us this means we stretch each other and provide value outside the scope of a particular agreement by offering our perspective and information that will help jurisdictional leaders do their jobs better. For instance, we are advising a city in the Southeast on how to streamline their business license renewal process, so they will improve the perception and reality of being business friendly – something that other cities will emulate. This is a long-term, partner mindset that distinguishes Avenu from vendors.
We also make key investments of our time and funds in developing new solutions so clients can stay ahead of citizens’ expectations for how they interact with their governments. Last, several of Avenu’s solutions are budget neutral. For example, we only get paid for our Discovery & Recovery work when we find new revenue. By structuring this offering on a contingent-fee basis, we can honestly say that we are more than a vendor that wants a fee. To me that’s a partner in the truest sense of the word.
Are there other organizations Avenu would consider partnering with?
Avenu is a strategic partner of the International City/County Management Association, so there are awareness and information exchange opportunities that we take advantage of there. We also have an agreement with the Texas Hotel and Lodging Association under which we exchange referrals and awareness. And we are in talks with other organizations to see if we can formalize some type of relationship. The challenge is to identify the ones that will offer the biggest value that we can pass along to our clients. Ultimately that’s the deciding factor in whether we engage with another organization.
The marketing rule of thumb is that a thought has to be articulated seven times before audiences hear it: government and the private sector need each other. As a partner, we reinforce that by focusing on what communities need.
GovTech magazine’s Ben Miller recently joined Avenu’s Director of IT Roger Murphy on a webinar to highlight examples of local governments that are making the best use of technology with minimal cost. Highlights are below.
Q: What are ways that cities and counties can make better use of data for service delivery?
Ben: StreetLight Data is a company that offers traffic counts for streets/intersections gathered via anonymized mobile device location data, as opposed to expensive studies where workers have to go out and monitor traffic.
Another example is Roadbotics, which uses computer vision to assess pothole needs; this is a more comprehensive and proactive approach that can prevent the road repair backlogs.
Also there is Soofa that collects data on foot traffic in the areas where they deploy their solar-powered “smart” benches. This tells cities how many people come through certain areas and during what times.
Q: How prepared are cities to handle threats to IT systems?
Ben: GovTech’s research shows that only 60 percent of cities report having cyber insurance. I’ve also seen other facts that underscore the scope of the problem. A 2018 joint study between Deloitte and NASCIO (National Association of State Chief Information Officers) found that:
Roger: Many agencies do not have a great security posture. It costs a lot of time and money to do this well, and it takes a specialized skill set. Attacks are always changing, and patching is not a sufficient strategy because of zero-day attacks. Some attacks encrypt files at random, others use ransomware from automated bots, and still others use better social engineering techniques to get users to click a link or a file. The high-profile attack in Atlanta revealed 2,000 vulnerabilities and caused months of disruption.
IT leaders own it when there’s a breach, and that event follows them wherever they go. The best practice is a three-tiered approach of prevention, detection and recovery.
Describe why it’s difficult to make comprehensive improvements in local government IT?
Roger: It takes many years to introduce major change that is tied to public funding processes. Bonds, elections and politics all have an impact, and funding commitments are not guaranteed from year to year. Contracts tend to be short term, meaning strategic changes are hard to maintain. Also, it’s hard to rip and replace systems that are highly customized and often embedded. Furthermore, a key constraint is that it’s hard to find programmers such as those who know COBOL for old systems. And don’t forget the challenge of mobile – every mobile app would have to be customized because you can’t use the development frameworks available today on legacy systems.
Q: What are examples of governments that are making good use of technology?
Ben: San Francisco is one. The city’s building-inspection process involves inspectors from multiple departments looking for different things, and they all relied on paper job cards. The info would be put into two separate Oracle databases where the same permit would have two different numbers. But, by using SaaS on a tablet they could update the info that everyone could access and check to see what other departments had done. So, instead of leaving a building saying “everything looks good but I need to check that you’re fixing your fire sprinkler before I can approve your permit,” inspectors could see it before they left and not hold up the permit process.
Another example of good use of technology is mobile apps for emergency responders. One really interesting company is Callyo, which serves emergency responders. They have a freemium video solution where officers can record, stream and store video from their cell phones rather than buying a body camera. Another one of their apps is this nice workaround for delivering the location of a 911 caller to dispatch, which is actually a really big issue in dispatch centers because a lot of them don’t have that capability built in so they just rely on the caller to tell them where they are. You don’t need to integrate into the dispatch console, though, all you need is an app where the caller consents to send their phone’s location to the dispatcher.
A third way of example is how governments are making better user interfaces and user experiences. The reason for a lot of citizens’ frustration with government comes from complicated backend processes that rely on older, complicated systems. A lot of this can be improved on the front end with changes to user interfaces, including web pages, apps and forms. One example here is SeamlessDocs, which turns PDFs into interactive web content. With this an agency can capture user information and repurpose it in several places.
Q: What’s a starting point for governments to introduce more innovation?
Roger: Start with the problem you’re trying to solve, not the solution you want to use. This is often more citizen engagement, better service, more security or the need to lower risk. In IT cost is always an issue, so consider a discretionary funding model. This turns capital costs into operating costs, so there’s less upfront investment for equipment, for example, and predictable costs every year.
New Members Will Contribute their Expertise in Economic Development and Sales & Use Tax
Avenu Insights & Analytics (Avenu) welcomes two new members to its Advisory Board: Dr. Angelov Farooq and Jeff McGuire. Their expertise will guide the company as it provides government clients with insight into expanding their tax base and driving economic development.
Known for his work in revitalizing neighborhoods, Dr. Farooq is often sought as a speaker on the economic development impact of policies from all levels of government. He serves on the tax-focused council of economic advisors through an appointment by the state controller, and has been part of the California Workforce Development Board since 2013 through an appointment by the governor.
Jeff McGuire joins the board following a 35-year career with tax administration programs in California. He held multiple roles including field auditor, administrator of compliance and technology, tax policy chief and he was director of the sales and use tax program. Among his highlights is the innovative program to combat sales tax fraud by retailers and vendors using sales suppression software.
“We know that our clients want to attract the right types of businesses to their communities, and they want to continue to identify, forecast and manage their revenue,” says CEO Paul Colangelo. “With Angelov and Jeff as advisors we add to our capabilities in applying industry leading solutions.”
Avenu’s David Milby, program manager for MissingMoney.com, has received the Lifetime Achievement Award from the National Association of Unclaimed Property Administrators. Congrats David on this accomplishment!
David Milby Will Support States in Facilitating the Return of Unclaimed Assets to Owners
David Milby, former director of the National Association of Unclaimed Property Administrators (NAUPA), has joined Avenu Insights & Analytics (Avenu) as program manager for the company’s MissingMoney (www.missingmoney.com) website.
In his position Milby will ensure that state treasurers, comptrollers, administrators and those in similar roles have a central location for channeling inquiries and input about the program. This starting point simplifies the process for citizens who may have unclaimed property in multiple jurisdictions.
As the former director of NAUPA, Milby understands the challenges facing states that find the rightful owners of stocks, insurance proceeds, dormant bank accounts and other unclaimed property collections that totaled $7.7 billion in FY2015. All businesses are required by law to report unclaimed accounts each year.
“As the only official location that presents an aggregate of unclaimed property availability, MissingMoney is an important tool for the unclaimed property programs as they put more money back into the hands of rightful owners every year,” says Paul Colangelo, CEO of Avenu. “David knows this process better than anyone and will be a great resource to expedite it as well as maintain our strong relationship with NAUPA.”