IN TODAY'S TOPSY-TURVY economy, many property categories have suffered substantial declines in value. For owners, there are few places where they can crow about strong equity prices. Several factors may be at work, including excessive supply, a drop in regional employment, softening retail sales or reaction to the terrorist tragedy of Sept. 11. In these times, it is critically important to manage tax liability. What follows are specific ways to exert some control over your property tax exposure.

Stay On Top of Your Assessments

Many jurisdictions revalue property every year or two. Just because you are happy with your 2001 or 2002 value doesn't mean that you shouldn't think about challenging the new assessment. Many large rental properties should be valued using the income approach.

Property owners need to ask several questions when evaluating their revenue streams. What has happened to your revenues? Have vacancies increased? Are significant tenants seeking to renegotiate rents?

Are demands for new tenant improvements sky-high? Have there been bankruptcies among your tenant group? If income is declining, or just static, your assessment may be too high.

As for expenses, have you already been hit by radical increases in insurance costs due to post-Sept. 11 concerns? How do these costs affect your net operating income? If your property has experienced vacancies, chances are that unbudgeted brokerage commissions and relocation costs reduced net operating income. Therefore, an income-approach to value may warrant an assessment reduction.

Analyzing the Marketplace

What is happening to similar properties in your region? If comparable apartment properties that were trading at $45,000 per unit are now down to $35,000 per unit, it does not make sense to remain quiet when your new assessment comes in at $42,500.

Use of comparable sales, carefully and accurately adjusted, could impact your local assessor's judgment. Effective use of such data at the local level could encourage an assessor to reduce an assessment, partly to avoid the negative publicity that could result from the filing of a court challenge.

Some taxpayers overpay unnecessarily. Many property owners incorrectly conclude that they will not get anywhere with local authorities, even after a market correction, if the new assessment is roughly equal to the price of the property six or 12 months ago.

This assumption may well be incorrect. Smart assessors understand market dynamics, track sales and may be more receptive than you think to an assessment reduction below a recent purchase price. Be prepared to document why it is reasonable to argue for a lower value in the face of a high acquisition price. Vacancies, rent concessions and, perhaps, the need for a major capital improvement program will help you frame your case.

Look for Inequities

Unless your asset is located in a rural area, your assessment is part of a stream of assessments of like-kind properties and must be evaluated in those terms. Even if the assessor has been fair and taken into account recent softness in the market for your project, it's possible your competitors may have been given a better break.

There are other questions to consider, such as whether a recent board of equalization or court decision on a large office property cast doubt on some of the assumptions used by the assessor in valuing your high-rise tower.

Although property tax managers sometimes remain silent when asset managers are celebrating strong cash flow, it is especially important to be aggressive when the economy is in choppy waters. Attention to all aspects of the assessment process, both those arising from external market conditions as well as specific to your individual property, is critical to achieve a fair assessment.

Elliott B. Pollack is chair of the valuation section in the Hartford, Conn., law firm of Pullman & Comley and a member of the American Property Tax Counsel, the national affiliation of property tax attorneys.