By: Donald Archer

Many automotive brands have recently created “image enhancement” programs to redefine their products and provide a more distinctive and recognizable dealership. These programs have been designed to increase the visibility of the dealerships and improve the in-store experience. In order to conform to the new corporate image, many dealerships are remodeling their building exteriors, which usually require the addition of new façades, canopies, portals and other exterior enhancements. This has created several questions about how we treat these embellishments in our cost segregation studies.

When confronted with a new facility exterior design, we ordinarily examine it for structural dependence or independence. This means that we investigate how the structure is supported. If it is free-standing, we generally classify the structure as personal property; however, if it is integral to the building, it becomes a part of the structure and is treated as real property. We classify free-standing structures as possessing the ability to support itself with minimal lateral support (if any) whereas in an integral design, the exterior structure is an essential part of the main building’s structural framework.

Among the most common structures, we have encountered to date are the entrance portals found on several different automobile dealership brands (i.e. Toyota, Honda, and Chevrolet), canopies, awnings, building facades and Porte cohere as might be found at the front entrance to a hotel, restaurant, bank, etc. Entrance portals are most commonly found at automobile dealerships and serve only as a recognizable symbol of the brand. A Porte Cohere is a bit more complicated since its does have a significant function in providing a protective space at a building’s entrance or at a retail window such as a bank drive-up window. Again the manner in which the structure is supported determines whether it is real or personal property.

Exterior façades in the auto dealerships, restaurants, hotels, and most retail industries are considered to be part of the structural shell of the building. This includes the exterior wall sheathing (ACM, EIFS, stucco, etc.) and the systems used to attach them to the framework. Exterior façades in casinos and theaters are Section 1250 as well, but many interior façades, such as those that would be considered theme elements, are made of synthetic material, or are not permanently attached, may qualify as personal property.

Canopies and awnings are judged as much on the purpose they serve as how they are attached to the building and can be located either interior or exterior to the building. Structurally they follow the same general guidelines as portals, with one exception: awnings and canopies that are cantilevered from the building frame can be segregated as long as they fulfill the functionality test. If they serve to protect customers, employees, or equipment or are used as advertising displays they could qualify.

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