Owners and assessor dispute valuation of West Covell strip mall over income, expenses and capital items

At a May 2025 special hearing of the Board of Equalization of Oklahoma County, representatives for a property owner and assessor staff debated the market value of two adjacent commercial accounts—775 and 805 West Covell Road—centered on differences in income accounting, expense treatment and vacancy and cap-rate assumptions.

Tax agent Rafael (first name used in the transcript) told the hearing panel he and his client had submitted a profit-and-loss statement, rent roll and an itemized list of property improvements totaling $116,863 that the assessor had not fully reflected. "It is our position that the expenses are actually a little higher than what the assessor's office has calculated, and it is primarily due to this itemization that I provided, for property improvements," Rafael said. He asked the board to accept an income-based valuation nearer to $973,926 (as presented in the evidence packet) rather than the assessor's higher figure.

Assessor representative Ralph explained the assessor's approach and why the office reached its figure. The assessor's hearing record showed the assessor began with a combined value near $2,031,988 and reduced it to $1,431,275 using an income approach that treated the two parcels as one economic unit and then split the total evenly between accounts. The assessor said the original hearing officer had used actual income and expenses and applied a 10% capitalization rate because of higher observed vacancy for the property; the assessor also reported that market unloaded cap rates for the submarket were lower (roughly 6.5%), which would reduce the loaded cap-rate estimate to around 7.8 percent.

A central technical dispute was whether the owner's profit-and-loss "additional rent income" items included property-tax recoveries that should be backed out of income for an income-capitalization analysis. Rafael said the owner removed property-tax recoveries from gross income but the assessor's informal analysis had not. Rafael also supplied a breakdown of $116,863 in property improvements and asked the assessor to accept at least some of those costs as expense items rather than reserves.

Other figures cited during the hearing: the rent-roll property-tax recovery totaled $31,337.52; the owner's gross income figure (excluding property-tax recovery) was $413,494 with expenses of $242,022; the assessor's gross income and expense figures were higher on income and lower on expenses, producing a higher value. The parties disagreed on vacancy (owner cited >20% in the rent roll; assessor pointed to earlier reports showing about 5% vacancy but accepted there were higher vacancy elements). The assessor representative said that if the assessor removed property taxes from NOI and used loaded cap rates, a split valuation would be about $1,274,000 per parcel under one reconciliation the parties discussed.

Board members and staff asked for clarifications and for a numerical reconciliation. The hearing concluded without a formal vote; the hearing officer said the owner would receive a written notice. Both parties agreed there were remaining items to reconcile (division of the improvement itemization between the two parcels and precise treatment of property tax recoveries), and staff flagged the need to compute final numbers before a written determination.

Why this matters: Commercial valuations commonly hinge on whether recoveries and owner-paid items are treated as income, operating expense or capital-improvement deductions; small differences in cap rate assumptions and in including or excluding property-tax recoveries can produce six-figure differences in indicated value.

The hearing was closed and the board said a written determination would follow; no final assessment change was announced in the meeting.