Board of Equalization Meeting   6/30/2022

and then hopefully you'll join us.

Thank you.

Thank you.

So I'll call to order this meeting June 30, 2022, 1.02 p.m. and let me start with the statement I'm required to read.

This meeting is being held pursuant to and in alliance with ordinance number 20A6.

The members that are electronically present, that's

myself, Anthony Arsali, David Ferrall, Bob Beard, Waki Wynn, and Evan Mayo.

And Karen Pape is not here with us today.

The public has the opportunity to access and participate in an electronic meeting through phone, computer, or tablet, directions on how to connect or locate an Albemarle County website.

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

We have a quorum.

We have five or six members present.

Before we begin the hearings, has everyone had a chance to review the minutes for June 28th?

Motion to approve the minutes with the one change.

Thank you, Bob.

What was that change?

Thank you.

Do we have a second?

Bob Beard.

All in favor?

Aye.

Okay, perfect.

Minutes are approved, so let's move on to the hearings.

Mr. Williams, if you can turn on your camera and you are on mute.

Good afternoon.

Welcome.

We're the Board of Equalization.

Our board is comprised of six citizens of Albemarle County.

We're all appointed by the Board of Supervisors.

We're an independent board and we will be

hearing the applications today.

Here's how the hearing will work.

You'll be provided with 20 minutes to present in your case.

The assessor will have 20 minutes to present theirs, and then you'll be provided another five minutes for rebuttal.

Just one note that per Virginia law, there is a presumption of correctness, so the burden of proof is on the applicant.

Also, before we begin, we only have

Just the application, there's nothing, no support, nothing else there other than, there's really nothing with any of these applications.

So just want to make sure we're not missing anything.

No, correct.

Okay.

And do you have any questions before we start?

No.

Okay, so let's go ahead and swear in the witnesses.

So whoever was wishing to testify, please raise your right hand.

Do you solemnly swear or affirm that the testimony, both oral and documentary, that you're about to give will be the truth, the whole truth, and nothing but the truth?

I do.

All right, thank you.

So let's start with the applicant then.

And what is, I guess, publicly known is that the property mall is in a time of transition.

That's obvious.

But the question before us all today is what would be a fair assessment?

And to that, we're not really in position to

submit evidence one way or another.

I see the way the Cessna, we took over management not long ago.

So we're here sort of as a fiduciary responsibility to maintain the rights to appeal.

But that's all that really I can testify to today.

The fact that the property is in transition, the value

may or may not be different than what the assessor has.

Candidly, I guess we'll find out.

I do know what the assessor has done over the last couple of years.

And it seems to be that the board and the assessor have responded in responsible and fair ways up till this year.

So that would be a summary, I think, of what I would say.

All right, thank you.

And what I did not do is let's say what applications, what I think we will do because they are all related properties and all contiguous.

I'm gonna go ahead and this is gonna be the hearing for all four.

If there's no objection from anybody else in the board, I'll go ahead and go ahead and state all the different applications and the addresses and we'll address them all together.

Okay, so the applications at issue right now are application number 20, application number 24, application number 25, and application number 26.

The property owner for all four, the Charlottesville JP 2014-C21 LLC, and the property addresses are 1636 Rio Road East, 1606 Rio Road East,

1531, Ryo-Rhodes, and 1648, Ryo-Rhodes.

Those are the four parcels at issue.

So I'm going to sum anything further at this time.

I will turn it over to the assessor to make their

Case, or stated make a presentation.

I do want to note, I'm assuming, and given kind of what the circumstances are here, I'm assuming all my fellow board members have reviewed all the materials, and Mr. Lynch, you're well aware of how we do this, but you don't have to go through every detail.

Thank you, Mr. Arsali, and that's what I had hoped to do, and I had also hoped to be able to just talk about it all as one thing.

So overall, and we do know that this property is under transition.

And I think probably the owner is still trying to figure out what that transition is going to be because there are multiple properties involved here.

The only one that I would kind of separate from the others is the Red Lobster.

It's an out parcel.

It sits out on Royal Road.

It's not as dependent upon the rest of the mall properties to exist.

So that one, I kind of feel that it could stand on its own and that obviously the way we've assessed it is just like every other restaurant in the county that's a single

single parcel, single building with that use.

The other properties we are already greatly reducing.

Normally in my write-up I include the current and two previous years in the history of the assessment, but for this one I actually included six total years because I wanted

Assessment has been reduced over the last six years.

And just referring to the mall proper, the main mall parcel, it's dropped from over $60 million in value, which at that time was very well supported by the information, the operations that were going on.

And then things started changing in those years in between then and now.

and we have drastically changed that value.

It came down to 46 million in 2020 and it dropped more drastically down to 16 million for that parcel in 2021, which is the same value we have this year.

So we feel that yes, this property is in transition, but however, we have addressed that sufficiently in our current assessment.

So we're not being unresponsive to the situation.

We have determined that value through an income approach on the main parcel that includes a lot of, a cap rate that's very high that includes a lot of risk.

It includes a vacancy that is high, and I believe it represents an appropriate reduction in value for that parcel.

Greatly from where it would be if there wasn't any external feature, external influences that are negative on this property.

And the Sears, which is not in operation, the building is being carried out at $1,000.

So it's just a token value for the agreements.

So the majority of the value

We are not in agreement based on the applicant's applications with what that land value is.

We are around 21, just over 21 million in land value.

This is, this area, Route 29 is one of the most valuable

areas in Albemarle County for commercial land, and this is prime real estate.

So we believe that we are well justified in our land values.

The improvement values based on the different portions are reflective of current activity that's going on there.

Our overall value of $30 million for these four parcels, just over $30 million is justified, but I just want to remind the board that

So there's an underlying ownership of the land and a separate ownership of the improvements and the operations.

So the property did transfer for $20 million at auction, which is the ultimate situation of being under duress.

So that's not a market, what would be considered a market condition sale, but it is a representation also

the underlying ownership of the parcel.

So they don't have the full bundle of rights.

So again, I think there's no support in any of this information for a reduction in our assessments.

Thank you.

Thank you.

Any questions from the board for the assessor?

Any questions to the applicants?

Mr. Williams, do you have any?

Yeah, hi.

For Mr. Williams, I'm just wondering, you talk about the property is in transition.

What specifically do you mean by that?

I mean, is them all going to be torn down, that kind of thing?

Sure, in kind of general terms, when you have, one of the challenges of an enclosed mall is that the costs of common area, you know, HVAC, cleaning, all the rest of it, that creates an operating cost that's very high.

And that's where great malls do very well, because they command great rent that cover that.

But then when a mall like this one, when,

The affordable rents, what tenants can afford to pay, declines, it ends up being lower than the cost to actually keep it open.

So going forward, most likely a new owner will have to demolish some or all of that enclosed portion of the mall.

What that will look like

Yeah, Mr. Williams, just double checking my numbers.

You have the land in total of about 6.3 million, is that right?

2.7, 3.7, 4.5, 5.2, six, all right.

So you have it at about 6.3 million for 12 and a half acres.

Yeah.

I would say that that's likely what's on the application there.

You know, there are other factors.

Oh, okay.

For clarification, David, it's 37 acres, a little over 37 acres.

37 acres.

I don't think so.

I don't think so.

Other than,

I guess the rebuttal is that I follow the logic that the assessor made and don't disagree strongly with it.

All right.

Any other, anybody have, anyone else have any questions?

Okay.

Well, we thank you for your time today.

Okay.

Thank you for your time.

Thank you.

So this is a point of order, I guess.

He was plainly an authorized representative.

They've got to fill out that authorized representative letter for him to come and represent the owner, right?

And one of the things that has to be selected, there's a checkbox as to whether or not he's going to offer an opinion of value.

And it looks like he also signed the initial appeal that

gives an opinion of value and I wondered if a more tenured, longer tenured member of the board could help me understand like what is the significance of asking that?

I mean, I think even if we give him the benefit of the doubt and allow him to do so, even though he said no, I don't know if it makes any difference whatsoever in this case.

Yeah, it wasn't a terribly confident presentation.

Nor could it be.

I mean, that's the thing.

There's not really much justification.

I think the properties being

My personal opinion is I think the property is being undervalued by the Assessor's Office with respect to land value.

At 37 acres, I think it's worth more than $30 million potentially in that location.

And knowing

In terms of the sale, like you said, the foreclosure, the second highest bidder was a ready and able bidder.

He's the owner of the JC Penney.

He went up to $20,200,000 was for the leasehold rights.

So that was just a ground lease.

And I think I don't remember the terms, but it's not it's not an indefinite ground lease.

And there are I don't know,

I don't recall what the terms were, but I'm not sure why they disclosed those terms.

But anyways, but in any event, without even using that information, just the fact of the land value and just the fact that knowing it was a land lease and knowing that the bid went up to that high and the bank still took it back for whatever reason, the valuation is more than fair.

I mean, if we're just charged to make a decision based on, I mean, if the assessor is assumed to be correct and he's supposed to dissuade us, I mean, he didn't present anything or really do anything.

Yeah.

Okay.

Do we have a motion?

Make a motion.

Okay.

I make a motion to affirm application

number 20, number 25, number 24, and number 26.

Do we have a second?

Second.

All right, so I think that's all we have until July 19th.

Any other points we need to discuss between now and then?

No?

Thank you.

All right, all in favor?

All right, see you all next month.