State lawmakers, city administrators and local business leaders have long debated proposals to cut commercial property taxes. Though most agree that Iowa’s tax structure isn’t in line with those of neighboring states, more attention was paid to the highly polarized issue as Gov. Terry Branstad vowed to reduce commercial property taxes by 40 percent during the next five years. No property tax reform, however, was implemented during the 2011 Legislative session, which ended last week. Taxes on commercial property in Iowa are currently assessed at 100 percent of the value.

A number of area commercial real estate firms chimed in last month as the session drew to a close:

Paul Rupprecht, President, Realty Marketing Group, (R&R Realty Group)

Commercial property taxes in Iowa are not competitive nationally and have a direct effect on job growth on our state. Large corporations today have a choice on which state(s) to house their employees. If Iowa isn’t competitive with commercial property taxes, we’ll experience negative job growth as we lose jobs to neighboring states.

By paying less commercial property taxes, our business would have more funds available to invest in new jobs at our company. Strong job growth is essential for a strong Iowa economy.

Matt Anderson, VP of asset management, Knapp Properties Inc.

I’m not sure a lower commercial property tax will have much impact on commercial brokerage operations. Most tenants have triple net leases, which means property tax savings will flow to the tenants, so everything should be business as usual, except pass-through expenses will just be lower. The interesting impact will be on leases which are gross. If a tenant is locked into a 10-year gross lease, they will not see any of the property tax savings. All of that savings will accrue to the owner.

If you believe the governor’s job growth projections, then yes, the addition of 200,000 jobs across the state will certainly mean an increase in commercial brokerage activity.

Kurt Mumm, President, NAI Ruhl & Ruhl Commercial Co. (DM region)

We are in support of the governor’s plan. We believe that the fact that Iowa has one of the highest commercial property tax rates places us at a disadvantage to other states when trying to attract companies to locate here.

We believe it would have a positive impact on the overall health of the commercial real estate market, providing some relief to both landlords and tenants by reducing expenses. There are many examples where more is being paid for property taxes than what the landlord receives in net rent.

Darin Ferguson, President, Ferguson Commercial Real Estate Services

I support Gov. Branstad and reducing the commercial property taxes by 40 percent. Property taxes are the most expensive operating expense for landlords and tenants. Real estate taxes can make up as much as 80 percent of the operating expenses. Not only will it help landlords with large amounts of vacancy, but it will also reduce expenses for businesses. That may in turn allow companies to hire more employees or expand.

I believe it would have a positive effect on the entire commercial real estate market.

Kyle Gamble, Managing director, CB Richard Ellis/Hubbell Commercial

I generally support it. I think from a positive standpoint, the owner-occupant certainly benefits from it because they’ll be able to pocket the savings or take the savings they would otherwise be paying in real estate taxes and reinvest in their business, in the building that they are in, assist in hiring more people. So it will act, I think, as an economic stimulus. I think the tenant experiences the same thing. Their cost of occupancy will go down, thus a decrease in operating expenses. And they can take that money they would have to otherwise spend on real estate taxes and reinvest it in the business, reinvest it in people, in technology, in some cases back into equipment. In some cases, it is going to improve the value of the property.