Board of Equalization Meeting   6/28/2022

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Thank you.

All right, so I'll go ahead and get us started.

So this is a call to order, the Board of Equalization meeting for June 28.

I will start with a statement.

This meeting is being held pursuant to and in compliance with ordinance number 28-6.

The members who are present are myself, Anthony Arsali, David Ferrall, Bob Beard, and Waki Wynn.

We are all electronically present.

The public has the opportunity to access and participate in an electronic meeting through a phone, computer, or tablet.

Directions on how to connect are located on the Albemarle County website.

The failure to state these items neither makes the electronic meeting illegal nor invalidates any action taken at the meeting.

and I see that Mr. Mayo, Evan Mayo is our other member who just joined, so he is recusing himself from this first hearing.

We do have a quorum.

Before we get started with the hearing, let's move on to approving the minutes of the June 23rd, 2022 meeting.

Has everyone had a chance to review those minutes?

Yes, not.

Do we have a motion to approve those minutes?

Motion to approve the minutes.

A second?

Bob, all in favor?

All right, perfect, thank you.

Now let's move on to our first hearing.

This is application number eight, applicants DJCM Investments, property address is 1389 Richmond Road.

There we go.

Sorry.

Good morning, everyone.

Good morning.

So I'll start with my little spiel and we'll get into the hearing.

So good morning and welcome.

We are the Board of Equalization.

The board is comprised of six citizens of Albemarle County who are appointed by the Board of Supervisors.

We're an independent board.

They'll be hearing the appeal today.

I think we'll have four of our members.

One is

One is not attending today.

One is recusing himself for his first hearing.

And then we have four of us who will be actually listening to this case.

Here's how the hearing will work.

The applicant will have 20 minutes to present their case.

The assessor will have 20 minutes to present theirs.

An applicant will have a five minute rebuttal period.

I think I'm imagining, Mr. Owen, that you are familiar with the rules, but just making a note, as I usually do, that per Virginia law, there is a presumption of correctness, so it is up to the applicants to meet the burden of proof.

Before we begin, we're going to swear in the witnesses, so anyone that's intending to testify, please raise your right hand.

I do.

Thank you.

All right.

OK.

So as you said, the first case is 1389 Richmond Road.

It is the car lot's dealership.

It is a leased car lot.

It's a bit unusual.

Most car dealerships own their space.

And the purchase prices that they pay is usually based on inventory that they can keep.

Of course, that's changing in this

kind of new situation we're finding where inventory is moving very quickly.

A lot of orders are taken straight offline and a lot of these newer used car dealerships have popped up.

You know, convenience is a big thing, Carvana, Car Lots, et cetera.

The subject property was built in 1964.

It has 13,816 square feet of the actual dealership improvements.

Land area is 162,000 square feet.

479 square feet.

The 2022 assessment value is $4,093,900.

We valued the property based on an income approach using the actual lease.

There's not a lot of good data for lease sites such as this, so we thought that one of the most reliable ways is to value the property using actual lease in place.

And we also looked at it based on uniformity, and there's a little bit of uniformity difference between this site and the other car dealerships along Richmond Road.

We reconciled the value to $3.5 million.

Our indication from income approach is $2.6 million.

Our indication based on uniformity is $3.8 million.

So it's not a lot of difference there, but it's just another way to look at this site.

Primary issues of concern are kind of obvious.

Actual rents indicate a value below the assessment.

And then the land value for this site is above the average compared to the other car dealerships and parcels along Richmond Road.

On page three of our packet, three of 28, is our pro forma income approach.

The scheduled rents for this site are $240,000 per year.

We use a very minimal vacancy allowance of 3%.

We use operating expenses of 10%, which just represent the triple net lease there.

Very low, you know, it's pretty much just a little bit of insurance and

maybe a management fee.

Net operating income of $209,520.

We capitalized that at 8% rate because of the age of the subject.

It's kind of a general second tier retail cap rate.

You can go as low as seven and still be right around that three and a half value.

Of course, cap rates for car dealerships are almost non-existent because of the way that they're purchased and the nature of the property.

On page four, I included our equalization grid.

So we looked at CarMax, an independent car lot, Ikea, Flow, Toyota, and Ford, which all are up and down Richmond Road in the 1300s and 1400 blocks.

Lot size is very pretty.

Pretty largely.

Improvements are pretty consistent.

The largest one is for flow.

Toyota and Ford, the rest are more similar to this subject.

We looked at the value per square foot of just the land.

The range is from a minimum of $13.41 up to $22.95.

The subjects at 20.2.

So we took the average of $18.63.

between all those competitive sites, applied that to the land size here, comes up with a value of $3,026,742.

We assume the assessor's own improvement value of $61 a square foot for an overall value there of $3,867,500.

On page five is the actual lease.

It was just signed, let's see,

I think it was just two years ago, no, no, last year.

So May 1st, 2021.

So it is a very, you know, current lease it's with market and the scheduled rents are found on page six of 28.

First few years, 247,200, years 11 through 15, 254,616.

Moving on back, we included,

Our cap rate study on page 23 of 28, first tier retail rates for neighborhood community centers and power centers is between 7.4 and 7.7.

Second tier rates are 8.1 to 8.6.

They don't have a car dealership entry, but somewhere in there is probably the right answer because this is a general retail rate or general retail property that's where to sell.

The description of the tiers is found on page 28 of 28 and first year properties are new or newer quality construction and prime to good locations.

Tier two properties are aging, former first year properties and good to average locations.

I'd say this location is of course good.

It's an older property as I said in 1964, but of course it's been more recently updated.

But that's what I have for you this time.

Our income comes in lower, our equalization comes in slightly lower.

But of course, car dealerships are very difficult to value.

It really depends on what their inventory expectations are, their throughput, their sales, etc.

Thank you.

Thanks for keeping it pretty short.

So any questions from the board for Mr. Owen at this time?

So I definitely agree that as a car dealer, a cap rate is very difficult to establish and to support.

One of the problems

is a car dealer in that it's very difficult to come up with certainly comparable cap rates off of car dealers, but also that the majority of this property is the land that the cars sit on.

So you've got a very small improvement in a large property of three points some acres.

that basically are covered with cars because that's what a car dealer is.

So a cap rate

The cap rate if you're just comparing it to a retail property is difficult because the way cap rate works is it's basically rock and Roy.

It's return on capital and return on investment.

So the portion that applies to a depreciating building is the return of capital, the rest of the return on investment.

So if you have very little in one of those two pies,

And the cap rate would be lower.

So the cap rate on land is just straight land is much lower than the cap rate on an approved property.

So we believe that and that's why we did not develop this approach.

We believe that the cap rate would probably be much lower than the one used by the tax rep. And it's just very hard to support it.

If you used a low recap rate, obviously you'd come up with a higher value based on the same rank.

What we did do was, first of all, the cost approach.

In that cost approach, we obviously are taking into account that this is an old building, 1964, obviously with some upkeep done throughout those

We are depreciating it at 57 percent.

The majority of the value, as I said, is in the land on this property and not in the improvements.

So with the improvement value, including all the asphalt those cars are sitting on, we're around nine hundred and

$30,000 out of the total of $4 million.

So, like I said, the majority of the value is in that land value.

Now, there are a few sales of properties on Pantops.

And just to point out, as everybody on the panel is probably aware, Pantops is a very valuable commercial artery in Albemarle County, second only to Route 29.

especially the section of Route 29 closer to the city.

And this is kind of the mecca of car dealerships.

The majority, nine of 14 car dealerships, I was surprised when I actually counted them up, are located right here by this subject property of the 14 that are in Albemarle County.

So this is the place to be if you want to be a car dealer and you want to have that synergy.

This property fits well in there.

It's a used car dealership where most of the other ones are new car dealers and kind of complements that.

So it's well placed.

So there's no kind of surprise that it remains a car dealer.

We also provide that there are

that the comparison of the equalizations, the other assessments on the properties show that the value is appropriate.

And especially if you're comparing some of those other properties, especially right along Pantops that are newer buildings, they have more value in the buildings, but some of those are smaller

so you can't fit as many cars on them they end up actually covering other parcels so they have multiple parcels that are included in their in their operation so they can actually put more cars out and and as we we should all know the the deal with a a dealership is to have cars out there for people to look at so that's where their inventory sits is on on the land so

The county with the cost approach and the support of the comparable properties and the support of the land value with the sale of properties, sale of land or improved properties that we can extract the land from that are on the Pantops Artery.

I think the land value as it's assessed is well supported.

and that this assessment is appropriate the way it sits.

Thank you.

Any questions for the assessor?

I have one question before we go to the rebuttal.

There are three

On the uniformity analysis from the applicant page four, there are three land values that seem to be outliers.

There's three at around $20, four including this one.

There's one that's a little bit more, but there's CarMax, but especially Toyota and Ford are quite a bit less on a price per square footage basis.

Is there some kind of adjustment there?

Now, are you, which page are you referring to?

Okay, I gotta get my magnifying glass for this.

Sorry, yeah.

so there's the two, CarMax is $17, Toyota is $15, Ford is only $13.41, so.

I can pull them up.

Typically, so these are all,

on Richmond Road.

So they are all assessed with a base rate of $25 a square foot, but they are then adjusted for

whatever might affect each one of them.

So the larger ones, the biggest adjustment we would make to one of these commercial properties is a size adjustment.

So as they're rather large, they would have a larger size adjustment that would bring the per square foot rate down.

I think some of them,

Right.

The Ford definitely has multiple parcels and it's very large.

That's the one that's being renovated right now.

And it's becoming the out of dealer.

The

Carmax, 222,000 square feet.

I don't have that under my sails, so I don't have the breakdown.

but typically what the differences are, like I said, they're all assessed at $25 a square foot and then adjusted for their size, the topography issues if they, you know, if part of the lot is, you know, maybe the back of some of these lots, I know the ones like the old Ford dealer, the back drops down and it's not necessarily as usable as the front.

So all of those issues,

I think that's sufficient for now.

Anybody else have any questions before we go back to Mr. Owen for his rebuttal?

I have a question.

Peter, what is the outbuilding portion of this?

Typically, yes.

It's probably all asphalt.

If there could be a shed or something, I would have to look at the inside.

It's a nice shed.

I don't see anything except a lot of asphalt.

Yes.

Any other questions?

Hey, I don't really have a lot to say.

I'm well versed in car dealerships.

I represent CarMax, Shehe, Priority.

So I know that it's very difficult to value these every year.

And everybody uses the cost approach because that's the easiest way to think about it, especially because when these sell, there's so much, there's not a good separation between what they're paying for real estate wise and if they're buying a part of the business.

That's why I thought that this was kind of straightforward sort of analysis to look at because we do have that you know recent lease we know what you know an investor would purchase this for with that lease in place you know somewhere in that range and then the difference between the lot sizes you know it's

It does have a lot to do with the scale, but there is an interesting difference between the lot we're looking at, which is 162,000 square feet at $20.02 a square foot, whereas the difference between that and CarMax is about 60,000 square feet, they're down at $17 a square foot, and then if you look at

The next most similar size, Kia, is 109,000 square feet.

That's at $20.96.

So the difference between, you know, 60,000 square feet is not exactly proportionate.

But of course, you know, you have to worry about whether the land is rolling.

There's lots of survey issues.

But, you know, we thought that the best way to value this is a combined income slash equalization approach.

Thank you very much.

Any other questions for either of the parties?

Okay, so well, thanks so much.

Well, I think you're doing the presentation for this next applicant as well, correct?

Okay, so I think it would make sense at this point.

We'll go ahead and turn over to that one and then we'll have our discussion afterwards in terms of both.

So let's move on to application number 13, applicants, Riverside MC owner,

And the address is 23257 O Lane.

Are there any other witnesses that will testify other than anyone new for this one?

OK, so let's go ahead and same rules apply.

So let's go ahead and get started.

Mr. Owen?

You may proceed.

OK, so, you know, this one, everybody might say that this is really easy to look at.

When the owner here purchased this deal, I was a bit speculative and not exactly

Very positive about this particular sort of project, but this is a medical office and they're switching it over to be more of a life sciences property.

It consists of multiple buildings, four different buildings, a total square footage of 111,475 different ages or different vintages built in 1986 and 1990.

The assessed value here increased a lot because of the sale last year.

It went up to $21 or $219 a square foot.

But a lot of the purchase prices is part of their business plan.

They are going through and letting the leases expire.

They are trying to turn it over and repurpose this property.

I represent a lot of properties up in Montgomery County, DNA Alley, these life sciences.

And they're starting to expand more.

This will be more of a unique property in the Charlottesville area.

They're trying to bring this life sciences sort of properties down to Richmond as well.

And the real value here is the build outs.

Clean Spaces, they have centrifuges and just very, very expensive build-outs.

And that's what they hope to accomplish here.

The rents are going to be high at some point, but not quite yet.

The subject itself is a Class B sort of property, just based on vintage and age.

It will be, of course, vastly improved as time goes on.

As of the value date of 1-1-2022, the property was only 67% occupied and they hope to be

Letting go of the tenants which don't fit their business plan and getting in more life science tenants.

We looked at the value based on the 2021 actual income, the 2022 budgeted income, pro forma with an above the line adjustment which takes into account the leasing costs above the line, and then the more traditional approach where you take into account the leasing costs below the line.

because there is a significant amount of leasing that has to be done here and the tenant improvements here will knock your socks off.

It's going to be between $50 and $100 a square foot to get these spaces in line with what the market expects for this sort of industry.

We placed most reliance on our cost approach, our performant income approaches to value.

Both of those ended up at 16.8 and 16.9, so right in line with each other based on those adjustments.

We thought $16,900,000 was the reconciled value for this.

So it's probably best if we turn to page 23 and I'll walk you through our math here.

The green box to the left is the budgeted income and expense for 2022.

The 2021 income is annualized because they only owned it for eight months.

of the year, or yeah, right about there, maybe 10.

But of course, that doesn't tell us a whole lot.

Those values indicated are right around 12.6 in both cases.

So they're not expecting to really make this property worth the purchase price this year.

Then in the blue box is the below the line adjustment, which is how an appraiser would look at this.

You know, they'd look at what are the

Expected rents, we use a ratio in line with the budget of reimbursements and other income.

We use the vacancy and collection allowance stabilized of 5%.

We use an operating expense ratio in line with the budget of 24%.

Of course, expenses are going to increase significantly once they get more tenants in line.

20 cent per square foot reserve.

We use the same cap rate as the assessor, 7.75, plus the tax rate.

So our expense ratio does not reflect the real estate tax expense.

We come up with a stabilized value of $19,108,858.

Our discount for lease up below the line is $2,023,582 and I'll walk you through that math in a second.

There is a significant CapEx project that has to be undertaken.

It's $210,000 and it's for some roofs.

Of course, the 1986 building is due.

The 1990 building will be due very soon, so they have to get this done to keep the income stream in line.

But a lot of the value here is speculative.

And that's kind of what this comes down to.

So the adjustments below the line bring our below the line adjusted income approach to $16,875,300.

Above the line takes into account the lease of costs as a part of the rent.

So this is what would actually be flowing to the owner once they pay out those costs.

It's a little bit more of a fee simple adjustment.

But of course, if somebody comes in and buys this, they're not going to be paying out.

They're worried about this sort of lease of cost expenses.

So I think the below the line adjustment is the better model.

Moving on to page four, this is a summary rent roll.

I have the official rent roll later on, but as you can see, they do have some medical office tenants.

They also have in some of the larger spaces,

which they're turning over and hopefully turning into more life science spaces.

We have estimated rents from the owner for those spaces.

They range between $10 a square foot for the $8,335 square foot space which is the G4000 building is kind of their more flex building.

And then the actual more medical office spaces are the 110, 200, 200, and 300 buildings.

So pretty significant amount of vacancy space.

On the bottom is my calculation of pro forma net effective rents.

So this is the pro forma amount that goes into the green box.

The total for our pro forma, the unadjusted pro forma is in the 1,608,380.

So that's unadjusted.

This is kind of, you know, there's a big disparity between what's in place and what will be in place, but

I wanted to take that on to consideration.

One of the things that you may notice as an outlier is the Monticello Community Surgery Center where they're

paying in reimbursements of $15.01 a square foot.

Those reimbursements are actually part of a tenant build out.

So as I said, these build outs are very, very expensive and a lot of the arrangements for these leases are essentially loans.

So it's separate from the rents that are being collected and they keep it separate for, you know, if this is where to sell the loan would stick with the current owner who's given out that loan.

On page five is a calculation of net effective rents.

So on the left hand side is the average vacant space in buildings one through three.

These are going to be mixed gross leases.

They're, as I said, expecting $20 a square foot in rents.

They're expecting $50 a square foot in tenant improvements, 6% commissions.

So it brings a hypothetical 10 year lease where you're paying $20 or having 3% escalations per year down to only about $16.55 a square foot.

Then on the right hand side is that flex space I was telling you about.

They're only asking $10 a square foot for.

They're still expecting a $10 per square foot build out, 6% commissions brings the $10 a square foot down to about $8.

On page six is leasing assumptions as provided by the owner.

I have the email which supports this later on in the packet, but this is just easy summary, so it's easy to walk through, but they gave me probable rents between $20 and $25 a square foot for the medical office space, 10-year lease terms, $50 a square foot TI, 6% commissions, 3% lease increases.

Asking rents for that flex space, $12, probable rents, $10, five years, 3%, $10 a square foot.

For that below the line adjusted, the calculation is found on page seven.

So this is taking the annual market rent rate of $22 a square foot, which is kind of that mid range between the 20 and 25.

$50 a square foot of tenant improvement allowance, lease terms, 10 years, 6% commissions, and then an annual discount rate of 7.55, which I took from PWC's fourth quarter 21 national average for suburban office.

to bring down the beginning vacancy of about 25.4% down to 5%.

So that indicates an overall present value of 1.8.

And this of course is just for the medical office.

The flex-based lease-up costs are found on page eight, $12 a square foot, $10 a square foot of tenant improvement allowance, five year lease, 6%, annual discount rate of 7.55 to bring the flex space down to zero vacancies.

So that'd be about 203,000 of lease-up costs.

On page nine is the official rent roll.

So you can see just where the vacant space is.

It matches what I provided on the summary.

But for readability purposes, I tried to make it a little bit better formatting.

On page 10 and on back are the budget for 2022 and the income statement.

Then I also include

Historical data from the appraisal on page 16, which includes that 2020 income expense for the full year.

And then on page 17 is email from the owner just discussing about leasing status, tenant improvement rents, capital expenditure budgets.

So just to, I guess, expand on that.

It said in 2022 we will be replacing a roof on one of the buildings, $210,000 in the budget, and installing a fire alarm panel.

We're also redesigning our signage and landscaping, which is the site plan revision, so we may get it done this year, we may slide into next year, but that's the big project for this year is getting the roof on.

And of course, you know, the purchase price here is representative of

A future value.

It's a drawback of having to use a direct cap and not being able to use a DCF for these properties.

It's easy to say, okay, they purchased it for right around $25 million.

The value should be up there.

But it's not to that point yet.

And there's still a lot of risk involved with them restabilizing the property.

and getting it repurposed.

So that's where the owner is coming from here.

I also included in the package starting on page 19 some of the previous correspondence between Mr. Lynch and Mr.

Staples when he was there and then with regards to that tenant improvement reimbursement, that $15.01 square foot for that kind of outlier reimbursement space.

The backup for my lease up cost assumptions starts on page 20.

That's an email from the owner.

And then I also included the assessor worksheet.

So yes, this property was purchased for it was $24,750,000.

Thank you.

Any questions for Mr. Owen at this time?

Yeah, I guess I have a question.

I mean, I do live in the county and I'm a taxpayer.

So just to understand your thought here, your client paid almost $25 million for this.

values it at 16, says it's speculation and basically wants county taxpayers to make up the difference because they're speculating.

I mean, how do you reconcile that to a regular taxpayer?

Right.

I think that when they're looking into how it's going to ramp up, it will be worth that at some point.

It's just not right now.

As a taxpayer in a nearby county, I don't know the best way to reconcile that.

but you know they looked at this there you know if they made some sort of allocation to some you know speculative properties here maybe that would have worked but you know it is it is hard to argue when that purchase price is hanging out there but there is a significant amount of vacancy to to cure at this spot and that was part of you know the business plan there is a lot of risk involved I don't know you know when they came to me with this kind of

Proposal before they purchased.

I was like, I couldn't get to their value through my own, you know, looking at what they're expecting, what's going to happen.

Is it safe to assume that they did a deep dive on the property before they bought it and they probably already discounted all these repairs and upgrades and things that needed to be done?

Or they made all these evaluations after they paid $25 million?

I think that was something they might have learned about afterwards, but that is kind of de minimis.

I think that, you know, they were expecting, they're seeing these purchase prices up in, you know, DNA alley for $300 to $500 a square foot.

and they had this pie in the sky plan where they thought that, you know, let's go to other, you know, maybe less expensive areas to try to put in these life science sort of tenants.

And, you know, I don't know if it's going to work.

I told them that.

I was like, you have to attract, I mean, yeah, it's nice you have to have the UVA system there, but to get the sort of

Research dollars and the synergies that's necessary.

I don't know if it's going to happen for them, but that's what it is.

All right.

Yeah.

Any other questions at this time?

Thank you.

So this property, Mr. Irwin did mention that it was it was changing from medical office to to this research

Actually, it's converting still, or it's just from retail to medical office.

So this property, Ritz-Rawbar I know was in this property before and before it moved somewhere else.

And they are definitely repositioning.

So this property is changing and

If this was an established medical office property over the last 10 years, we would be using their actual income and expenses from 2020 that were reported and we would be establishing a bag based on that just like we do with all medical office properties that are established.

So

But with this property, with that change, we can't look backwards at what it was doing a couple of years ago and it's hard to look at what it's doing right now because there is that

What the owner is looking to do with the property, the perspective.

So we have done an income approach that includes that potential for the property.

It also includes all of the value, the

The tenant improvements are part of the real estate, even though they're not paid for by the owner of the property.

So we can't exclude that out of the value.

So whether, and I agree, we wouldn't necessarily, if there's a short-term loan that pays for that tenant improvement, we wouldn't necessarily use for that short-term that added income or that, yes, that added income that was included, but we should include in either income that would be

pro-rated over time that would be equivalent to it, or we should include the value of those tenant improvements as a lump sum added to the income amount if you're only including the base rent.

So either way, you have to include something for it in there in order to come up with a feasible value for this property.

Also, I understand that this is possibly a speculative, how somebody can come in and say, well, I'm going to spend $24, $25 million on a property because I think this is going to work.

It's another thing altogether to convince a bank.

that's what you're going to do and that it's going to work.

So apparently the owner has done that and gotten $18.5 million in financing through, I've lost the name of the bank on my write-up, but

through a bank and has created the deed of trust that is recorded.

And that $18.5 million has to have been based on an appraisal that was done by a certified appraiser.

And that appraiser has to have taken into account the potential for the property and an analysis of if it's reliable or not.

So I believe there's a lot of support for the fact that this property actually is worth what the owner paid for and is worth it now.

I've often heard that, you know, I paid this value, but it's not going to be worth that for five or 10 years from now.

And I always have to reject that because people spending 24 million dollars on a property are a little more intelligent than that.

They know the time value of money and

that 24, $25 million today is worth more than 24, $25 million five years from now.

So on this property, what we have done is we've included a $28 rent, which covers the base rent, it covers the tenant improvement, and it covers the pass-throughs.

But we also include,

about a million dollars or $15.18 per square foot for expenses.

And this is quite a bit higher than the amount used by the,

by Mr. Owen.

Now, Mr. Owen is building in the cap rate.

So there's about $200,000 of real estate taxes that we are including in the expenses based on the current assessment that he is not.

So that $200,000 would be expected to be different between the way we do our two approaches.

But we're including another $300,000 above that.

that kind of offsets some of that $28 per square foot rent.

And that has to be taken into account.

So, you know, basically with this change in the property, change in the use of the property that's been going on over the last probably four or five years, and obviously the sale price for this property,

and the potential of going forward.

We believe that the current assessment of $24,421,000 is well supported.

It's supported by the income approach.

It's supported by the deed of trust that was just taken out in August of 21.

Thank you.

Any questions from the board for the assessor?

I had one question.

It appeared that there was, I mean, I don't know if it was just the facade or what, there was substantial work done in the last few years in that

Shopping Center of Property.

Do you have the permit information?

I do not have it.

OK. Any other questions?

Okay.

These are always the hardest ones for me.

You know, the owner has an opinion of how to proceed and you kind of appease them to a certain extent.

It's like, okay.

But, you know, I think looking at where they are now and where they can go, you know, there's going to be a few more years of kind of lower than expected rents.

You know, right now they're getting $10 a square foot for, you know,

about 6500 square feet that lasts until 24.

They're getting 16 or 18 or 11 square foot until you know in between 2024 and 2029.

It just some of these leases are are going to be holdovers and that's really what's kind of going to be the the brakes on getting the income stream to where it supports that 24.

You know at some point in time it will it's just not right now.

Thank you.

Any other questions from the board?

Okay.

So, Mr. Owen, we thank you for your time.

Okay, thank you very much.

You guys have a great day.

Thank you.

Happy 4th.

All right, should we start with, which one do you all want to start with, the dealership or the one that is a little bit fresher?

Sure, sounds good.

Okay, so any comments, thoughts?

Sorry, Evan, you can't say anything.

I guess I can start.

I think it's pretty, I mean, yeah, it seems like the cap rate on that is too high, the 8% or whatever they're using for a deal, it's a lot.

Okay.

My only question was kind of the, I mean, you don't use cap, I mean, you don't use income approach for any other dealerships.

I don't think we should use it here.

So if we use the cost approach, the only, my only thing was that uniformity thing, but I think I answered, as I was looking at it, I think it's the topography that was the adjustment because like Toyota, they're including all those back parcels.

which are not paved, not really being used.

And then Ford has a huge chunk of it.

Like you said, Pete, it must be going down.

I think it goes down.

Yeah.

So I think that's where your adjustments are and that's why those are $15.

But everything else seems to be consistent with $20 a square foot for the land.

Anybody else?

So my thought right now, I think it's justified.

I think it's justified.

I mean, it's been a pretty consistent assessment over the years and trying to remember.

It's not just the other two.

I mean, yes, it's an older building, but it's almost 14,000 square feet and the entire lot is paved.

I think asking for an improved value, he suggested 247,000, I think is, I mean, he's in agreement on the land.

And he said there were updates done to that.

I think when they converted to the dealership, they did updated building to make it.

Because before that, I don't know if they did auto sales.

I know in the back, there was like a car detailing.

I mean, the two cases aren't related.

But I mean, if we were to take his sort of speculation, someone's going to pay $4 million for this speculation.

2018, yes, that was four years ago.

All in favor?

Aye.

All right, perfect.

So that is application number eight, and that has been affirmed.

OK, number 13, which is the shopping center.

We can always count on David to ask that question.

Can we send a letter to the applicant saying, yeah, Albemarle County taxpayers do not subsidize regulators?

My only concern was if we're using the income approach for everything else, but it seems like there was quite a bit of improvements done since 2020, and they're changing the use of it.

So I think that's justified to throw that out and not use the income approach here.

So we have the sale, obviously.

When was the sale?

It was 21, right?

It was a 21 sale.

I think they paid too much for it.

That's my personal opinion, but I don't know.

I would be that we shouldn't be looking at perspective rents and stuff like that.

And we should be looking at 2020s income if it was the normal situation.

And also, I was finally catching up and being able to do my research Saturday on this.

And I was very happy to find that deed of trust and that support.

I thought to me, that was the kind of the key to this.

No, they didn't provide us with an appraisal.

What was that, Bob?

Why didn't they put the bank's appraisal in the application?

Oh, yeah.

So, I mean, if we're throwing out the income approach, which I think we can here because of what circumstances, I mean, and the sale is gonna be our best evidence.

And there's nothing really, he didn't put any other sales.

It's really, he was relying on income in his argument.

And I don't think we can use that income.

Otherwise, I think I just agree with you.

If they're repositioning the asset, that's an operations challenge and wouldn't necessarily affect the value of the property.

So I agree.

And that also calls for all the vacancies and everything else.

I know they're using adjustments and things like that, but that's part of the reason why there's so many vacancies.

The whole property is under construction too.

Okay.

Any other comments?

If not, let's do a motion.

Do we have a second?

Second.

Who was that?

Both Waki and Bob.

Okay, so

All in favor?

All right.

So I guess we'll adjourn till 11.

I think we're ready.

I presume you're the next applicant.

All right.

Thank you.

Just so I have the pronunciation right for your last name.

All right.

All right, Ms. Flug.

We're going to go ahead and start with your application.

It's application number 19.

The property address is 500 Crestwood Drive, unit 2502.

Welcome and good morning.

We are the Board of Equalization.

The board consists of myself, Evan, Mr. Mayo, Mr.

Beard, Mr. Wynn,

and Mr. Ferrell.

We do have a sixth member, but she is out today.

We are all six of us are citizens of Albemarle County who are appointed by the Board of Supervisors.

We're an independent board and we will be making the decision today with respect to your assessment appeal.

In terms of how the hearing will work, you'll have 20 minutes to present, the assessor will then have 20 minutes to present, and you will have five minutes for rebuttal.

In between all that, we may ask questions during the course of the hearing.

All right.

One note I do want to just give, usually give before these hearings is just based on a part of Virginia law, there is a presumption of correctness.

So what that means is the burden of proof is on you.

So there's a presumption that the assessor's assessment's correct.

You have the burden to show us otherwise.

Okay.

So

Let's go ahead and swear in the witnesses.

So we're specifying this hearing.

Please raise your right hand.

All right, thank you.

Let's go ahead and proceed.

Ms.

All right.

I am Carol Fluke, and I'm coming to you to request that my real estate assessment be changed.

Briefly, the situation is this.

We have lived in rural Albemarle County for 45 years.

The area has many positives.

but as we age, the negatives of dangerous roads, poor phone and internet service, no cell service and distance from fire and rescue services became more worrisome.

My husband John passed away in 2020.

I realized I needed to move to someplace with better infrastructure and closer to needed services.

Living alone in a two large old house on a two large property was not ideal.

That led me to University Village, a retirement community.

However, in 2021, there were many more eager buyers than sellers, which led to several bidding wars.

I was a party to two of these bidding wars.

I lost the first one but prevailed in the second one, purchasing unit 2502 in December 2021.

As you all well know, Albemarle County assesses properties at market value

which is defined as arms length transaction between a willing seller and a willing buyer.

In this case, the willing seller was asking for $450,000 for unit 2502.

Because of the bidding war, I reluctantly paid $470,000.

You can imagine my shock and surprise to receive an assessment of $529,600 based on its alleged market value only about two weeks after my purchase.

This assessment is almost $80,000 above the willing seller's price and almost $60,000 above the bidding war results.

Unit 2502 at the time of the sale in December, 2021 was 28 years old and in original condition and had its original owner.

It needed new flooring, paint, lighting, appliances, updating of kitchens and bathrooms, some electrical and plumbing work and HVAC work.

The runner up bidder wrote this to the seller.

We are making an offering price of $465,000, which is 15,000 above the price that the other University Village units have brought lately.

We are also basing our offering price on the fact that the unit needs significant updating, paint, flooring, appliances, bathroom updates, et cetera.

We realized that the tax assessments for all the units here at University Village have shot up lately.

However, it is our understanding that the assessment assumes that the units are in updated condition.

As soon as I received my 2022 assessment, I contacted the Assessor's Office.

Louis Herndon and Caitlin McMichael have been helpful in answering my questions.

It gave me information about comparables, other recent sales in University Village and told me the process for changing the assessment.

When I filled out the Board of Equalization application for a formal hearing, I stated my opinion of the unit's value as of January 1st, 2022 was $460,000.

To support this value, please look at the comparables on the spreadsheet I sent in labeled University Village 2021 Sales and Assessments, Exhibit 1.

The units here are listed in order from smallest to largest in size, and it includes all the 2021 sales.

If you look in the first column of the unit numbers,

The first digit of the unit number indicates whether it's in phase one or phase two.

The second digit refers to the floor it is on.

The penthouse unit 1604 is at the bottom and it's separated because it is so radically different from the others.

My unit 2502 is the one with the box around it for easier identification.

Unit 2402 was added because it sold only two weeks before 2021.

It has exactly the same floor plan as my unit and is located immediately below it.

Where orientation and the building see the photos in exhibit two and three.

In reviewing the information in the spreadsheet or chart, please note these things.

In the next to the last column, look at assessments per square foot.

It makes sense that smaller units are worth more per square foot than larger units.

All have the same kitchens and two bathrooms, the most expensive rooms of a home to build.

Generally,

The assessments are lower per square foot as the size increases, except for my unit, 2502.

In the last row near the bottom, the penthouse, unit 1604, and all of the sixth floor have higher ceilings than the rest of the units.

The penthouse, which you can see part of in exhibit

Exhibit 2 is in the center of the building, partly hidden by the flag.

It has a huge palladian window and a cathedral ceiling in its living room.

It has three bedrooms, three bathrooms, three sunrooms and other amenities.

The penthouse is remarkable.

My unit is not.

yet my unit 2502 has the highest assessment per square foot of all 2021 sales, including the penthouse.

The last column is the assessment versus the sales price.

My unit 2502 has the second highest increase of the assessment over the sales price

12.7%, a mere two weeks after its sale by a willing seller to a willing buyer.

Excuse me.

In my conversations with Katie McMichael and Louis Herndon, they said one reason my unit was considered more valuable

was because it was on a higher floor.

Also the view was a factor.

I would like to add some information that mitigates those factors at University Village and for my unit.

First, the higher floor.

University Village is a retirement community.

Demographics here show an average age of 84.

Many residents need to use wheelchairs or walkers and have other health issues.

Many have caregivers.

There are elevators, but they are older and they do not work all the time.

As you might imagine, some residents prefer a lower floor to make getting around easier.

As an example,

Exhibit four shows a solicitation from a realtor with a client specifically wanting a unit on the first or second floor.

In the case of this retirement community with these demographics, I do not think a higher floor warrants an escalation of the assessment.

About the view, University Village

sits on a hill.

No views are bad, but the best views at University Village are looking to the east to UVA, Monticello, and the southwest mountains, or looking to the west at the Blue Ridge Mountains.

I had hoped to be able to buy a unit facing west at the Blue Ridge Mountains, but none were available.

If you look again at the photos in exhibits two and three, phase one looks east or west depending on which side of the center hall the unit is on.

Phase two, the north wing looks either north or south.

My unit looks to the north and my view is primarily trees in the distance.

Closer by, I see the service entrance with its parking, and I see and hear the large and loud cooling tower.

My view and the sound of the cooling tower are far from the best.

To the extent that the view contributed to my high assessment, a deduction is warranted.

Again, back on the spreadsheet, exhibit one,

Look at the other three units the same size as mine.

That's 1616 square feet.

And they also have the same floor plan.

Their average 2022 assessment is $448,333.

Yet mine is $529,600.

I would definitely prefer to be assessed an equal amount for an equal unit.

but if my assessment is adjusted to my suggested value on January 1st of $460,000, it would still be the highest assessment of all the life-size units sold in 2021.

To summarize then, why should my assessment be adjusted significantly lowered?

It should be lowered

because of these six facts.

Number one, because only two weeks after its fair market sale by a willing seller to a willing buyer, my unit was assessed 12.7% higher.

It was the second highest increase of assessment over sales price of all 2021 units.

Number two,

because the assessments are generally lower per square foot as the size of the unit increases.

That is, except for my unit, 2502.

It should be lower number three because in this community with an average age of 84,

Being on a higher floor adds limited, if any, value.

Yet I was charged a premium for being on the fifth floor.

The fourth fact, because the view from 2502 does not warrant an increased assessment.

Does not the view and the sounds of the cooling tower and surface area deserve a deduction?

Number five, my assessment should be lowered because my assessment is unfathomably higher than all life-size units sold in 2021.

If my assessment is adjusted to $460,000, it would still be the highest assessment of these life-size units.

And lastly, number six,

My assessment should be lowered because my unit has the highest assessment per square foot of all 2021 sales, including the penthouse.

The penthouse is remarkable.

My unit is not.

Please make my assessment more fair.

Thank you.

I wanted to ask Ms.

I'm sorry, the pronunciation is escapement.

Yes.

and it looked like it was a listed for sale by owner purchase.

David.

I paid the commission to my buyer's agent.

Okay.

Any other questions?

Thank you, Mr. Arsali.

So the University Village is a little bit more complex than we would think it would be.

I agree with a lot of what Ms. Flug said.

I've appraised retirement properties a lot in the past and the first floor is sought after.

So typically the first floor has got a premium and then as you go up

there is a premium as you get the upper floors.

So typically what you would see is that the first floor would have a positive adjustment.

The second floor might be the base and then you would go up from there.

But you definitely have always had on a property like this a positive influence for the upper floors for those views.

I do want to, and Mrs. Flug, I'm sorry if we didn't communicate this to you, and it was a result of your initial review request that we did back in probably January, February.

The comparable property that you list on your sales, that is the unit I believe next to you, we actually

and it is this unit.

Oh, no, it's not on my right because it's a sale from 2020.

That was on your list.

It is Unit 2402.

Let me make sure I have exactly the right number.

Here we go.

The assessment for 2022 was corrected to 510,500.

and it is lower than the assessment on this subject unit because it is a floor lower.

And when we look at the sales, we analyze the sales based on the ratio of the sale price to the assessment that we've established for this year.

So that's our sales ratio study.

So when we were looking at the nine properties that sold in 2021 in this building,

We analyzed the ratios that ranged from 89% at the bottom, which was the penthouse unit, up to 125% at the top.

And what is unusual is that in property like this, we would have that much variation.

So the first thing we did was try to figure out, well, what is wrong with our model that would cause such a variation?

The typical thing you do in an appraisal is you do match pairs.

You look at two properties that are otherwise similar, but they have a difference in value or sale price based on something you can identify, one specific thing.

So when we're looking at the nine sales that took place in 2021, we look at is are all the first floor units having low ratios or are they all high ratios or are all the phase one units, do all the phase one units fall in one extreme or the other?

So we look at that.

among other characteristics.

They're all built around the same time.

The quality that we have is all the same.

The condition we take into account in all of these sales we have are sales that need updating.

They are dated in their finish.

but none of them have been updated with new kitchens and baths and countertops according to the information that we have.

So the last item is the size of the properties.

And the size of the properties obviously can make a big difference.

So are all of the small units on one end of the spectrum when it comes to ratios for the other.

And none of those items were identifiable in this study as being an issue.

You can single out

and I can say that this looks to be over assessed or under assessed based on the difference in the assessed value and the sale price.

However,

as a whole, and we have to look at kind of a group of properties in order to come up with the market value and not one specific one.

When you look at that group of data, the sales, it indicates that while there is a lot of variation to the ratios, we are pretty much in the area that we need to be.

We're at 100% overall as a median.

And while the variance is above what we would normally see for this type of property, it's not unreasonable.

For technical terms, the COD is our variance.

And that's our measure as an assessment office of the variance.

7.65 is the number that is indicated from the sales.

5 to 10 is what our goal is as a mass appraisal.

Institute.

So all of the sales, while they don't look really pretty when you look at all of them, they definitely fall within the guidelines.

You know, it takes into account that floor level difference in which we do in this building, we actually have not found that the first floor is much higher and then it starts at the second floor base and goes up.

We've found in the past, and it's still supported in the sales today, that the first floor is the base and it goes up from there.

So that's how we do adjust this

as being on the fifth floor, and that it's basically a plus 40%.

So we started the first floor with zero, and we had 10% for each floor going up.

It's very simplistic, but it also is borne out on the sales.

We have not been able to find that the subject property was listed through MLS.

We weren't able to find the for sale by owner listing or anything because that might not, the record might not stay online.

But we believe that the fact that it was sold, not sold through the normal

means of advertising through MLS and marketing through MLS that if it sold for less than it would have.

We also do know that there were a lot of bidding wars, and we've talked about this before, going on in 2021 and even back in 2020, and that the asking price is certainly not a measure of the market.

It's really that whatever those final sale prices

Whether there were multiple bidders, if there was one single property out of a whole group of sales that was subject to a bidding war, that might be one thing, but when the entire market is basically operating like that, that is really the market.

Thank you.

I wonder if you could give me a summary or a clarification.

You were talking about the variation model and was it about assessment versus sales price?

And did you say the average was

So the median ratio was 100%, was right around 100%.

And the COD, which is the variation, is 7.65.

And that variation measure just shows that if we were coming up with ratios of 20% into 200%, that ratio would obviously be

unacceptable.

Our model is not creating values that mean anything.

Assessment to sales.

So as far as the board, does the board have any questions for the assessor?

I'm wondering what

How are views from a place factored into the assessment at a place like University Village?

The view itself is just a component of the floor level.

And we do not have, in our assessment model, we do not have a difference built in between phase one facing one direction and phase two facing another direction.

So kind of following up on box, that was gonna be, I was gonna have a similar question regarding the view and then what Ms. Flug said about the Western views.

So I'm looking at kind of the area.

Yes.

The North wing, okay.

And the phase one.

So the phase, and then there's, I'm assuming there are two units.

There's one unit on each side of the building.

Yes.

No, we have not.

And that's what I was explaining about.

If we had seen that, our ratios, all of the phase one

properties would have been on one end of the assessment ratio study.

I would think that it's not necessarily a phase one, phase two thing.

Correct, that's true.

And we don't have that much detail in our study.

You mean if they're in phase two, but they're facing one wave or two?

Exactly.

Okay.

Any other questions?

Okay, Ms. Luke, this is your time for rebuttal.

I would just say to fit the definition of market value, what is better than the sales price?

Especially when you have a number of like or nearly like units to compare with.

I don't fully understand the algorithms and the model and the variations.

but I do understand the market value, the fair market value.

And I believe that all the things like the floor it's on, the view it has, the size, et cetera, et cetera, all end up in the sales price.

I think that's a summarized way of looking at the value.

Anybody else have any other questions?

Ms. Flug, just one comment and one question that I have.

One is in terms of comment.

In terms of a unit, I was just looking at it in terms of uniformity of assessments.

I was going through it while we're doing this presentation, just so you're aware.

It appears that the assessments are uniform in terms of level.

So I know you're arguing that first floor units should not be valued less, but your unit is, it appears to be similarly assessed to all other fifth floor units.

That's how the assessor is doing it, just for your point of reference.

The second is, in terms of your sale, do you know if it was advertised, how it was advertised, or how you came about it?

Because I think that would be helpful to know in terms of, because the assessor's saying it was a by-owner situation, it was not in the market, but obviously it appears that you had an agent.

Yes, I can tell you something about that.

There were more people looking for units there than units available.

So I think this probably had been going on before, starting before 2021, because when I started to look for my next home, I had a buyer's agent and she would always, she would look at everything all over the area.

And after a time I said, I really want to be in University Village.

So there were rarely, maybe never, while we were looking, starting in the summer of 2021, anything on the market.

But in July, there was one that said, coming soon.

And it was the penthouse.

and for the penthouse and for one or two others that we looked at, they did have a realtor, but they did not put it on multiple listing.

Although they would let the word out that there would be, you know, this unit was coming, becoming available.

And I think it was about trying to sell it before, before listing it.

And also

So many people were looking for a unit that people like me who had a friend already living there would listen, ask them to keep their ears open if they heard of anything coming on the market.

And my realtor got upset at a couple other realtors because they were showing apartments and not putting it on multiple listing yet.

They eventually did.

In the case of my apartment, I heard by word of mouth that it was probably coming on the market.

So I was not the only one, but several people contacted the seller's daughter, actually.

The owner was in assisted living and her daughter was handling it.

So that's why

Okay, that's I mean, that's helpful to know kind of where how that came about.

So yeah.

I think that's pretty much it unless anybody else has any other questions.

All right.

Well, thank you so much for your time.

What we will do now is confirm and make a decision.

All right.

Thank you again.

Yeah, for the board.

Sorry, Katie.

But I mean, I don't mind hearing what, if I may ask.

Well, the applicant should... Yeah, it should be present during that part.

Yeah, that's right.

It's correct.

And that happens, I think we probably should allow that.

No, that's fine.

Let's just go ahead and keep it within the board.

I mean, I'm concerned about the arm's length thing.

I mean, it wasn't arm's length.

I'm sorry the seller put it at 450 because I think it could have sold for a lot more.

I'll hang my hat on 2502 or 2504, which sold right next door to this one.

That one was 1,346 square feet, so smaller.

It was listed on the MLS for 450.

If you know that, you can answer that.

This building is a problem in that.

There's a lot of word of mouth and it's created problems within the MLS.

Agents get a listing and they show it to their people.

At least one of these has the same agent representing the buyer and the seller, which I don't always necessarily consider arm's length.

I consider that.

Agent putting themselves first and trying to get a deal done.

So I'm just concerned about the sale.

I feel sorry for the seller.

I think I think they could have sold it for more, but it's a trust and they probably just wanted to sell it.

So I think it's notable also that she paid her realtor off the transaction close.

That's $14,000 would have been added there.

Presumably another $14,000 if you'd used the standard 6% commissions on the MLS, plus whatever would have been added by a True Arms Link transaction.

To me, it puts it at least at 500 and probably in shooting range of the 530.

That's the whole the bidding argument.

But that is the market.

Yeah, I would get 484 with that.

You have to count what she paid.

We're bringing assumptions to pay 3%.

But right.

I was looking, I'm looking at the pictures, the views.

I mean, obviously it's not part of the evidence, but it's part of our comp though is a 2504.

And if that's, it looks like that is the east or northeast facing.

So they do have the views of the Southwest mountains.

It's mostly treated.

So it's not, I don't know if it's dramatically different on the east side as it is in the west side.

in terms of views, but that's my, that would be the only factor I could see in terms of, one other thing was 2504, there are the comments in terms of that was repainted, new flooring and things like that.

So there's a possibility we might want to deduct for that purpose if, but condos are difficult because you're kind of, everything should be kind of the same, it's the same art, it's not really that unique.

My only, the only thing I could see, the only factor I see is that the view factor,

But Mr. Lynch says that they haven't seen that in any of the data.

So there's a view as you get higher, but not per side.

I mean, I prefer the West view.

The West view is very nice.

It's hot in the summer and winter though.

And I know there are people that prefer the Eastern view.

Those are just going to be my two things in the sense of so

In essence, she paid $4.84.

I mean, was that an arms transaction or is that how transactions work there?

And then the other two things I would say is $25.04, is that whatever improvements, should we deduct whatever the cost of new flooring and carpeting would be?

and also it's a 9% increase over 2021 just in general I mean I think the average increase in Albemarle County certainly in western Albemarle County is in excess of eight so I mean I'm not it's it's also in line with

average increases in the county.

So I don't know where we'd pick.

I mean, we have to, if we're going to reduce this, we have to pick a justification.

We can't just pick a number.

It's those two things, whether or not, is it appropriate for everything to be considered average, even if it has new flooring and carpeting, obviously it's not the same as a new kitchen and bathroom.

Is that appropriate?

And then is the view thing appropriate?

Should we make an adjustment for view?

being Burt West versus East.

So I kind of go either way on one.

I could see her thing with the 484, but the thing is it wasn't an MLS transaction.

But then this other question is, and then with 2504, did we look at, that was one, so it sold for just, so at 473.8, it sold for just less than assessment.

About $5,000 less, $4,000 something change under assessment.

So even with those slight, again, I don't know how much value we put to flooring, new flooring and paint.

Do we put any value into that amount?

they're not really upgrades sort of maintenance in my mind but paint maintenance new flooring after 28 years you know it's just limited and we're also working with some limited information there so anybody else have any thoughts one way or another

I don't really see anything.

I mean, that she didn't bring anything to my attention that would make me think that this is out of line with the rest of the building or the rest of the county.

I think she got a good deal and she should just be happy with it.

Sure.

Evan, any thoughts?

Yeah, I mean, I do think she pointed out some ways in which the outcome of the process with respect to her unit does look a little different than some of the other units, but I don't know that I could confidently say that she did enough to say it's worth $520 or $510.

So how about Bob?

I don't know.

And it's uniform, so... Yeah.

Yeah, maybe this goes to Pete, I mean, in your office, you may want for next, then I don't think you can do much with it this year because we don't have the evidence.

And Waki, I'll go back and get to your thoughts too.

But my only potential suggestion is take a look at that maybe for next year in terms of assessments and see if that'll have an impact.

Yeah, it's challenging because we want to be consistent.

We can't on one case say, hey, you paid $25 million, so that's the number.

And in this case say, ah, you paid $460, but hey, you got a great deal, so this is the number.

You know what I mean?

So we have to be mindful of

How we approach it, obviously those commercial and residential is different, but we just want to be consistent in our approach and not always have it, you know, make sure it's not going both ways.

So, you know, I like what Evan said, but what David said, we got to justify any adjustment we make.

So I'm having a tough time justifying the adjustment.

I like what Evan said,

I'm not sure.

Can we justify any adjustment?

But definitely not to 460.

Yeah, I think if we base it on what she provided us and the comps she provided us and she didn't make a distinction with it and there doesn't seem to be a distinction at least with the 2021 sales of the view thing.

So, I mean, based on that, there's not really much.

And then this was a buy owner sale versus the commercial listing where

You know, all of this word of mouth, my friend needs one, my friend's selling one, and that's how a good amount of these properties, transactions are taking place, they're probably suppressing the market.

I know Waki you bring up a good point I had the same exact thought of hearing number two and hearing number three but you know I thought about it a little bit differently I mean I think the buyers hearing number two were fairly shrewd investors and they you know but I thought about that it's a good point I mean you know 470 is the sales price here

Yeah, 484, but it's not an arm's length.

And just to make sure everyone, I mean, she did not, on her spreadsheet, I'm tilting my head because I couldn't turn it.

2402 is assessed, Peter, you say now at 510?

510, correct.

510, yeah.

Yes, and I include that in my write-up under that.

Yes, we said, wait a minute, why is this one so low?

Have you heard back from those people?

All right.

All right, so do we have anything else to discuss or should we have a motion?

Anyone feel that this can be changed or something they can hang a change on?

Not at this time.

I think if we have the information, the only thing I really see is if we're

We're saying the painting stuff is not much.

It's not going to be a factor.

That's in the flooring.

Then this question is the view thing.

And we don't have the information in front of us.

So I think, again, my suggestion would be to the accepted offices for next year to maybe do that review and just see if there is a distinction.

Maybe that might be because you do have that variation there in your assessments.

Maybe that's the reason why.

But that's the only thing I would say.

But I'm looking.

I'm not as concerned about it after looking at the pictures for 2504, which is the one next door.

It still has a pretty nice view.

The eastern or northern facing view is not a bad view.

It just might not be as good.

Seeing as that, I'm assuming we'll have a motion to affirm.

Do we have a second?

Okay.

All in favor?

Aye.

All right.

So our next hearing is at 12.

Do you all want to go ahead and go into that or do you want to take a little break?

I keep going.

Everyone's going to keep going?

Mr. Arsali, we sent everyone a spreadsheet that the dependents had sent us.

I sent that this morning.

I received it.

I think I'm getting nods.

I got it.

I am muted.

Good morning, Mr. and Mrs.

Lieutenant.

We're going to go ahead and get started with your hearing.

That is application number 29.

The property address is 2118 Aspen Drive.

I want to start by welcoming you.

We are the Board of Equalization.

Our board consists of myself, Mr. Mayo, Mr.

Beard, Mr. Wynn, and Mr. Ferrell.

We have six members as well, but she is not available today.

We are all citizens of Albemarle County.

We're appointed by the Board of Supervisors.

We're an independent board, and we will be listening to your tax assessment appeal today.

Here's how the hearing will work.

You will be provided with 20 minutes for your presentation.

The assessor will be given 20 minutes for theirs, and then you'll have five minutes time for rebuttal.

In the middle of all that, we may have questions for you.

during your presentation, usually afterwards.

One note I want to provide is just, per Virginia law, there is a presumption of correctness, so the burden of proof is on you.

So that's what we're working with.

You all are on mute, but I see nodding.

No questions.

OK.

So whoever is testifying on this hearing, please raise your right hand to be sworn in.

Do you solemnly swear?

Raise your right hand if you're going to testify to the hearing.

Thank you.

Thank you.

OK.

Thank you.

Thank you.

Okay, back to the pennant.

Go, please.

First, I want to thank you all for taking the time to listen to us, and I assume you all have a copy of the spreadsheet.

My name is Gary.

Okay, well, before we start the spreadsheet, kind of go through quickly what we did.

When we got our assessment in January, it increased significantly.

Dana I believe is the one I called and talked to and the crux of our conversation was that because of Highland Park and the price of the houses selling in that neighborhood and the low number of resales in our neighborhood that Highland Park was used as assessments that's setting us the value of the property in our neighborhood as the comparables.

So we'd written our first letter and

had some objections that we thought had gone up a little bit too much.

House price had gone up and in total, it had a value of our house being assessed that we wouldn't pay for our house and that other homes in the neighborhood hadn't sold for.

So anyway, we received a response back and some more work was done, some measurements were taken, we provided more information,

and the assessment on the house went down much more in a reasonable amount.

But the assessment of the land remained the same.

The land had gone from 175,000 to 225,000.

And we just didn't understand how the land value is going up so much.

So we wrote another letter and appealed that the land value of the chart you have in front of you

is just a comparison of values around us.

We went up, you know, what was it?

28, 29% just for land.

And there's a lot of confusion on our part as to why land would increase at all after a development is complete.

And then why it would increase 30% in one year.

The Highland Park, which

was a comparative in terms of the house prices also went up.

So it wasn't that they were at 225 and they brought us up to 225, we were both at 175 and both went up 29%.

So what we're appealing is that we feel that the value of the land is still, it's just way too high.

It's 175, we haven't had anything done.

in the neighborhood.

There's been no improvements on our land.

Improvements all been in our property.

Neighborhoods around us, Fontana, Cascadia, have not gone up as much.

We reached out for a similar, not the same, but a similar development in Whittington, and they hadn't gone up, requesting that the land go back down to what it was before at 175, which is still more than it was when we bought it.

with neighborhoods like six, seven years old now, there's nothing to improve.

No, I'm just trying to wrap it up.

Don't understand why land assessment would increase

Do you understand property?

That's not the issue at all.

But land value, and then why it would increase so much in comparison to the properties around us.

All right, thank you.

Any questions from the board to the applicants at this time?

Is everyone having a hard time hearing me?

Oh, okay.

Let's see if there's anything.

How about now?

Is that the same or?

That's interesting.

Better.

Better?

Okay, so when we assess residential properties in the county, within the neighborhoods, we actually, even for rural areas, we are creating a model that values the improvements and the land as two parts of, two components of the total bag.

So as we look at the sales studies,

What we have done as these new homes were built in the Highland Park area is we've determined that those homes are highly comparable to the Highland Ridge properties.

So we've combined them into one assessing district.

There are differences between the lots in Highland Ridge and Highland Park.

Highland Park ones are smaller, but they have amenities within the neighborhood that are not in Highland Ridge.

There's kind of a positive and a negative, but overall they're comparable in value between the two properties.

And the houses themselves are comparable overall between the two properties.

And when we're looking at the sale price or the analysis and the assessment of an improved property,

What we're, our goal is to assess the overall property at 100% of market value based on sales coming through homes.

If there are no sales of land directly related to a neighborhood, so the subsection of what

which includes Highland Park in our analysis, there were no land sales within the old original Highland Bridge to base the land value off of.

So we're using the composite of the sales that are taking place in Highland Park.

Now, when we are determining, so when we're looking at the value of the properties in 2021, what are we gonna assess the properties for 2022?

We can either, and we're falling short on these sales studies.

So our sales studies say that we are at 95% and we need to be at 100%.

We can choose to either change the land value

changed the improvement value through a multiplier or do a combination of both.

And when we were reassessing Island Ridge, our decision fell with the support of these Island Park land sales in adjusting the land value to get the sales that took place, the sales ratios overall to come up to 100%.

Now, out of the 19 properties that have sold, and that includes a lot of the new Highland Park homes and the lots that are in that Highland Park section, there were actually three that sold within the original Highland Ridge.

And those properties, based on the change that we made in our model that increased the land and not the improvement that improvements are multiplying,

We are at 98.5% on 2128 Aspen Drive.

We're at 99.98% on 2097 Aspen Drive.

And we're at 100.0034% on 1826 Final Creek Drive.

These are three sales.

They're all about a half an acre, just like the subject.

The ratios are all almost

exactly at 100% and the median is right at 100% of those three.

And it's very strong support that our model is appropriate.

And in response to why would the land change over time, land value definitely changes over time with the market just because within a subdivision, there may not be any lots left or even lots that are left

That doesn't mean that the land value doesn't actually go up.

If the property was developed five years later, the lots are going to be worth more than they were five years before.

So our assessment should reflect that change.

And usually it requires us to extrapolate sales that are from outside of that neighborhood but within

comparable neighborhoods that will help us determine those land values.

But when it comes down to kind of the final decision, why the land versus the improvement change is we make these changes in batches, we change the improvement multiplier by groups of 5%.

So while we might be

We have a 105% multiplier that we're using currently in Highland Ridge on the improvements.

So it takes whatever our model comes up with for Highland Ridge that's based on all the sales and accounting for the type of improvement this is, which is two-story home,

and it adds 5% to that part of the value to create the improvement value.

And then we set the rate for the home sites based on whatever information we've gotten.

In this case, instead of changing the 105% on the improvements to 110% and then leaving the land the same,

We made the decision that it made more sense in the balance of the ratio of land to total value and the progression of land value over time that we change the land value in this case.

Next year, it might be that the land isn't really something we want to adjust again, but the improvements if there's another increase in value that we need to match.

So

It's important to understand that the value has to go up for one or the other in order to reach that 100% and we are required to assess that 100% value.

I think there's a lot of support for the overall values where we are.

You can certainly argue the points of whether it should be in the improvements for the land

But overall, if you were to lower the land on this assessment, you would have to increase the value of the home in order to get back to that 100% of it.

The reason why we don't adjust, we don't make minute adjustments to those.

those adjustments we go 105, 110 is because it's very difficult to kind of pinpoint those numbers to make 102 percent adjustment and then a you know let's add ten thousand dollars or five thousand dollars to the to the ring it's kind of a balancing act but in the end our requirement and what we want to do is to get to that hundred percent adjustment

Having said that Dana inspected the possibility and Dana if you would unmute yourself.

So we did take a look at this during the initial review request we got on this property, which Ms. Bennett mentioned.

And we found that there were some things that we needed to fix when it came especially to the description of the improvements.

And Dana adjusted those to the correct, basically the correct description, and that caused the reduction in the value.

So once we did the review initially, we were,

very confident that we have gotten the property described correctly.

However, the land part of it as part of the model was appropriate the way it was set in the first place.

Well, I think that Mr. and Mrs. Pennant's first question regarding land value was why we could group

Highland Park with Highland Ridge instead of with Fontana because the Highland Park lots, there are a couple of little infill sections legally within Fontana and liable for Fontana homeowners associated with Fontana Homeowner Association amenities attached.

But instead of placing them with Fontana, we placed them over with Highland Ridge based on

age of the homes being built, quality of the homes, lot characteristics which turn out to be very similar to the lot characteristics in Highland Ridge rather than in Fontana.

And there actually are a number of, I think, significant locational differences which argue for Highland Park, which is about 30, I think it's 39 lots being

It's placed within the Highland Ridge Assessing District rather than in the Fontana Assessing District.

Some of the similarities with Highland Ridge would be sidewalks and curbside landscaping.

It's very similar to Highland Ridge.

Fontana has no such thing.

Fontana has no curbs, no sidewalks.

Streetside Landscaping, the individual lots run right down to the road, and it's whatever that homeowner provides in the way of landscaping for curb appeal or curb view.

Fontana is a through neighborhood, which Highland is not, and those two streets in Highland Park are not through streets, which I think that that is kind of

is significant to consider as well.

In comparing the homeowner's fees, let's see, we have Highland Ridge, the research that I just did on the MLS, the houses for sale are advertising $200 per quarter in homeowner's association fees.

And in Fontana, they're advertising $208 per quarter

Fontana does have the pool and tennis court and have a clubhouse.

Both neighborhoods have walking trails, but we also found that other pool and tennis clubs are available for membership at probably a doable fee if you wanted to join one around the county.

So I just think that it's more reasonable to place Highland Park's lots with Highland Ridge on the basis of the site characteristics

the ratio of land value to total value, the price ranges of the two areas and age of improvements.

Fontana is really an aging neighborhood.

Houses are up to 25 years old or more in Fontana.

They're just, it's not, they're not really similar.

And to add to that, we do absolutely admit that being associated with Montana and the amenities there is superior.

However, these new lots are half the size of the ones that are in Highland Ridge.

So we believe that those two are offsetting.

If you were to positively adjust the parcels for being in Fontana and using their amenities, you'd have to also negatively adjust them and we believe equally for the fact that they're half the size.

Also, the assessment, the 225 was not arbitrary.

225 was the sale price on the lots that took place in Island Park.

In a moment, if you don't mind, I'm gonna see, I think the assessor is done.

Let me just make sure the board doesn't have any questions for the assessor, and then I will turn it back to you.

And as part of your rebuttal, you can ask any questions.

The board, do you have any questions for the assessor?

I went through the 2021 sales for Highland Park.

and the land value and all the sales was 175.

Maybe the data online is wrong.

I mean, I just used the online assessments.

Because both Highland Park and Highland Ridge were raised from 175 to 225 for 2022.

So I'm understanding what you said about, we didn't know about this district from what you said that makes sense.

And I understand about Fontana, but that's just addressing the value itself.

I'm trying to understand the question.

Yes, for the sales in 2021 that I checked.

I think that's what the assessor's, they're not saying anything differently, I think the assessor's saying the 2022 assessments are all 225 as they are yours, and there were sales in 21, and this is what I understand, there were sales in 21 which were for $225,000.

I couldn't find those.

Everything I found in 2021 shows the sale value with the property at 175.

I can go back and look.

I think you're referring to the 2021 assessments and that is true.

They were at 175 and that was what the builder was paying for the lot, for the lots when he was taking them down for new construction.

but his price went up to 225.

Is that for phase two, his new lots?

It's for Glenley and Ballina Lane.

So he raised the, well, he doesn't have any sales left in Highland Park one.

So he raised, he had more infrastructure costs, way more infrastructure costs in Highland Park too.

Right.

That's what we're talking about.

Right, but I'm getting a little confused because I understand the districting.

That's what they have.

We have a list here of sales and they can put it, I'm just letting you know what we have.

It's showing about six or seven sales on Balluno Court from May 21 through May 22.

December 21, let me see how many there are.

One, two, three, four, five, six, seven sales.

And they were at 225.

They're all 2021 sales.

You know what phase?

Oh, I couldn't find them.

But let's go ahead and give you an opportunity to have your five minutes for your rebuttal.

I think we as a board understand.

We'll ask questions and try to figure out what the answers are.

No, I heard an explanation.

Understand the districting.

I gotta say the math part sounds like more that we're just trying to meet a goal and the land was convenient to go up.

Cause the concern is land, I gotta say, I can't quite agree with you as an individual on why land value goes up after a development's complete, but that's just me.

But the fear is, you know, a house will go up and down.

We're gonna have a whole lot in both neighborhoods.

We're gonna have a whole lot of sales for 2022 to be reflected in 2023.

but I don't understand why land value would ever go down.

So we're stuck at this 225 that can only go up.

And I just don't understand really how 225 is an equitable figure for land that's done.

The property can increase, but it'd be like, as an example, I could see the land in Fontana going up if the county came in and put in,

sidewalks and drains.

Then that makes sense.

Land would go up because you have improved the land itself.

But in a property that's done, the sales are all done, the buildings have been put on or will be put on.

I'm just not quite understanding that.

And if I could just add though, just specifically for phase two of Highland Park, which is Belluno Place and Court or whatever, that's phase two.

I can understand why those lots would be more expensive, 225 versus 175 for those lots on Glenway.

because if you've seen those lots in phase two on Belluno, they basically moved an entire mountain and put it back again.

They put up huge walls.

I mean, just the infrastructure to build out those few lots.

And I think there's only 15 houses.

So you have 15 houses to amortize across

that would have to be an extraordinary cost for land development.

And I'm pretty sure that the builder, when they were doing phase one, actually I have heard that their cost for developing that was way more than they planned.

So I think they were just trying to recover their costs.

in phase two across the smaller.

So I don't think 225 is representative of the amount of land development costs between phase one and two and between Highland Ridge.

Because Highland Ridge, yes, there was land development costs, but that spread out over 100 homes versus 15 homes.

So I think the 225 is just not

I understand there's an option if you can put the cost in the house or the land and they all gotta add up to 100%, but I just think it's a bad precedence to peg, all of a sudden peg 150 homes, or 140 whatever, homes at the 225 level.

I think it's gonna upset the model, even though it's sort of like a second order thing.

So I don't think the 225 is a good,

A good number, and I don't think, and that's what my wife's saying as well, is we can't, that's not a sustainable, justifiable number because it requires a 29% increase, which is just not, it's not reasonable.

It's not, it's just, it's not comparable at all.

I think, let me try to system translate it.

This is still in our role, but I just, I don't know.

It might be helpful.

Let me, from the assessor side, I've been on the board for a few years now.

I'm not an expert on this, but I'm just want to be helpful in this.

Your land value can go up and it can go down.

It doesn't, it's not going to be set at a number and it goes up, it goes down.

That's land everywhere.

I mean, if I have a piece of land, it could be an established neighborhood.

or it could be unique or whatever else.

It'll go up, it'll go down just like any other real estate.

The other thing is we're looking at it, we're actually looking at the big picture.

So for our purposes, we've got to look at the full price, not just what the Cesser looks at as land value and improvement.

We have to look at the total number and see is the total number appropriate?

Is that appropriate for the value?

And so,

Whether or not it's 225 for land, is that correct or not?

At the end of the day, we have to look at the total number.

So we can't really just... And then the costs for the builder, for the other lots, again, not really relevant.

It's the sales of those lots that are relevant for our purposes.

We don't care how much they cost.

It costs them $500,000 a lot.

It's what they sell it for.

So those are a couple things just as you're saying it and I just I'm hopeful this is this may be a little bit of a translation from the assessor's side to kind of a homeowner side hopefully that's helpful but I'm just and it doesn't mean we made a decision either way I'm just trying to kind of translate so hopefully you understand the fact that the your land values are 225 doesn't mean it's locked in at 225 by any means

And what the assessor is trying to do generally is they have to get the market value right on all these properties.

So they've added to the land, added to the improvement, but the number we care about is that total number more than we do the breakdown.

So I don't know if anybody else has any questions or comments from the board.

No, I think it's just the spreadsheet.

Oh, I'm sorry.

No, I was asking you all.

No, I think the spreadsheet was just what we were trying to show that we do understand where you're coming from Highland Park too.

But yeah, as you said, the developer set that price and the developer of Craig, Ryan, Southern and Evergreen

When I asked them how they set their lot price, it is based on the cost of the land and bulk and then the improvements.

And when they have to, as Gary said, when they have to cut down a mountain and then put it back up again, and I don't know if you've been up there and seen their retaining wall, but it is something to see.

So they had a lot of issues with infrastructure.

Yeah, and we understand the total cost perspective and I appreciate that, so I think we have a better understanding of that.

I just think it's a bad precedence to, because if you look at the ratio of the cost of the house to the land, that has

that has changed as well, making the land more significant part of the cost.

So it just, I don't know.

I just, I guess we're looking for more consistency as homeowners.

We don't expect things to change.

And, you know, they're obviously going to change based on house values, but, you know, proportionality is now, you know, tilted towards the land.

Anyway.

Understood.

Anybody else have any other questions?

All right, well, we thank you so much for presenting this.

Okay, thank you.

We really appreciate your time and we appreciate what you all do as a board and as members of Albemarle, all members of Albemarle County.

It is a difficult situation, especially the way the county is growing.

Thank you.

Well, I mean, I don't mind pointing out the three sales that this Esser brought up were all MLS sales.

Average day on market, three.

I believe two of them sold for more than the asking price.

Average price per square foot was $231, but the average size of these were a little under 3,500 square feet.

Two of them were on a slab.

Applicants house has a fairly significant finished space in the basement, but it's a 4,960 finished square foot house.

The idea that it's worth $805,000 is fairly ludicrous.

They wouldn't sell it there.

They'd list it well in excess of $900,000 pretty easily.

I think they had a hang up it seems on that they have a hang up on that land value and the concern that they're stuck with that and this idea that land value can't go down which obviously they can't but um and that an established neighborhood you set a land value and it's done but um I think they were happy that seemed like they were very happy with the improvements going down going down as much I think it went down more than they were expecting

Changing from 1159 on December 31st to 1201 on the 1st of January.

Anybody else have any?

That was the session.

I'm feeling we're going to affirm this.

I was waiting for Bob.

I know, right?

David, I think you've got to reflect that.

I think every one of these has to be both of them at the exact same moment.

I am still working on the analysis for the mall for Thursday.

I have not seen any transfer of the property, which the tax prep or agent or whoever he was that I spoke to had indicated.

So that as far as I know right now, the property is not transferred to another owner.

So, and he also indicated that he probably wasn't going to be at the,

That's great.

Hopefully we'll have a 30 minute hearing for all four.

So I don't know that for sure.

Quick question, just, Pete, I know we've had one change, so I know Anthony and I will have to sign that change.

No, we can just do it after Thursday and get the ones that we've done so far out.

Perfect.

The next one's gonna be mid-July, right?

Or after that.

19th.

19th.

Okay.

All right, do we have a motion to adjourn?

Okay.

Second?

All in favor?

Aye.

All right.

All right.

Thank you.