Board of Equalization Meeting   7/15/2024

All right, call the order of the July 15th, 2024 meeting of the Albemarle County Board of Equalization.

Let's start with a roll call.

Dave Norford.

Bob Beard, Samuel Miller District.

Okay, so we do have a quorum for members of the board available.

Our normal treasurer is missing.

Is anyone willing to take on, or excuse me, secretary, is anyone willing to take on the secretary role for today?

Okay, we're gonna get you a blank copy, kind of a template.

I'll use Excel to check the math.

That's great.

I'll use Excel on the computer to help identify the math.

Sounds good.

I'm Peter Lynch, county assessor.

Billy Taylor, who's the deputy county assessor, just stepped out for a second.

Everyone who may give testimony today, please raise your right hand.

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

So we do have minutes from the meeting on July 11th to approve.

I'm going to ask everyone to review those during our break.

since they were just made available to us to ensure they're accurate.

Is there any other old business take up before the newest applications?

Okay, and we will hear argument from

Board of Equalization application numbers six, just six or property ID 3241 Westminster Canterbury with 911 address 250 Pantops Mountain Road.

And this is a double time presentation.

And so we'll have 20 minutes to present your argument.

We've reserved an hour for this.

Great.

Thank you so much.

Good morning.

My name is Tana Newcannon, Chief Financial Officer and Treasurer for Westminster Canterbury, the Blue Ridge.

Today, I'm joined by my colleagues, Tyler Kendall, our new President CEO, Deidre Massey, our Vice President of Marketing.

Thank you for your time today.

We endeavor to make good use of the one hour we have together.

And thank you for your service to the community.

We also would like to thank the Lynch's and his team.

We appreciate the role of the founding assessor's office.

Westminster Canterbury for Blue Ridge is a nonprofit continuing care retirement community providing long-term care and services to approximately 460 older adults.

We employ approximately 300 full-time equivalents in the process providing care services to our residents.

Throughout today's discussion, I will refer to our community as WCBR by the acronym we often refer to ourselves as.

Westminster Canterbury, the Blue Ridge, WCBR is similar in name to other communities in the Commonwealth, but we share that Westminster Canterbury name only.

We are a single site operator, incorporated in 1985, located on Pantops.

I will describe elements of our business and our care model.

As we know,

mode of operation and what we do is not well understood.

It's very pertinent to today's proceedings.

Westminster Canterbury, the Blue Ridge is licensed by the Virginia Department of Social Services as an assisted living facility.

The Virginia Department of Health as a skilled nursing facility.

We are a registered provider with the state corporation condition Bureau of Insurance for providing long-term care, also referred to as life care.

In statute, we are often referred to as a continuing care retirement community.

We operate as a long-term care insurance program with guaranteed unlimited access to the care continuum on our campus with only a modest annual fee increase.

And so it's a way for our residents to plan for their end of life, later years, many years of care within independent living

assisted living, memory care, and healthcare.

Our residential settings, which we refer to as independent living, include cottages and apartments.

Our catered living is the assisted living space as well as our VISTA memory care.

Our health center provides skilled nursing and long-term convalesce care.

We were organized in 1985 and opened our doors in 1990.

We are not a new community.

The purpose of our founding was to establish and operate housing and healthcare facilities in a manner designated to meet the needs of elderly persons.

That's a quote from our articles of incorporation.

Our tax exempt purpose is promotion of health and care of the elderly for IRS code.

And within the assessor's records, we're referred to as a home for the elderly.

I'll share information.

It was in the packet provided to you for homes for the elderly

We're not a multifamily property and we offer no rental options.

We have no such thing as rent.

It is a life care contract that residents execute with Westminster Canterbury, the Blue Ridge for life care and residential services.

As a WCBR fiduciary, I have a duty to manage the tax liability for WCBR.

We aim to pay no more than our fair share of property taxes, and we are the most highly assessed property in the county.

Today's subject is the most highly assessed property in the county.

We are challenging the 2024 assessment on the grounds of uniformity.

I will offer a supporting analysis with the case, and I'm going to start with the improvements first.

Package provided to you, which is labeled improvements, is where I will go next.

And I'm going to refer quite often to a property in town called the Colonnade, the Colonnade retirement village at 2600 Bearst Road.

And you can see in this table at the top, Colonnade by comparison is a full-profit, multi-site operator within Sunrise Senior Living,

and they also offer four levels of care.

So in terms of the, did you receive the memo?

Yes, okay, right.

In terms of having independent living, assisted living and memory care and healthcare, Colonnay also offers four levels of care.

In terms of our square footage, we are a larger community.

We have about 700, 1,000 square feet of improvements and

As compared to the Colonnades, they have 370,000 square feet.

We are the older of the two communities, first built in 1990, colonnade was built in 1992.

Our ranking description on property cards is listed as excellent, whereas colonnade is listed as very good, and you can see the assessments.

The basis of our appeal is uniformity.

I will go through these increases and many of my comparisons will be to the colonnade community.

We have not built anything new within the past 10 years.

However, our increases year over year have been disproportionate to other homes for the elderly and disproportionate to colonnade.

In 2022, our improvements increase was a 24% premium to the colonnade improvements.

In 2023, our assessment increased 18.4% while Colinade increased 8%.

And in 2024, our clearness increased 5% while Colinade's increase was 1.8%.

I'll also go through some elements of physical depreciation, functional obsolescence, external obsolescence as we continue.

There are two different parts to it.

One land and one improvement.

Improvements is where I am.

All right.

Thank you.

So our buildings by age, and I've referred to them as the name listed in the county's website,

The Pantops building is the youngest, the Blue Ridge building, assisted living, nursing, and Monticello.

You can see the year built, the ages of the buildings, sizes of the buildings, 24 assessment, and the dollar per square foot.

Note the wide range.

Obviously, the newer building has higher value, but it has a demonstrably significantly higher value compared to really almost any comparable that I could find.

So we'll go into that in more detail.

The weighted average age of our commercial buildings, and Mr. Lynch and his team refer to these as the commercial buildings, is 23.5 years.

Our cottages have several generations.

As you can see, our Jefferson cottages, of which there are 20,

built in 1990 or 34 years old.

The hillside cottages were built between 1999 and 2005.

Albemarle cottages built in 2008 and the newer hillside cottage is eight years old.

Average weighted age of the Mr. Lynch refers to these as residential buildings.

The cottage is 24 years.

So you can see overall the 700,000 square feet, the assessment and the dollar per square footage.

A point to note, because every resident on our community, on our campus, receives life care, our residential settings are still a vehicle for providing care.

Residents enter a life care services and residence agreement with Westminster Canterbury of the Blue Bridge.

We provide lifetime care.

We provide access to the care continuum.

Every contract includes dining, dining and specialty or dietary support.

Transportation Services, Housekeeping and London Service, 24-7 Emergency Response, Utilities, Electric, Water, Sewer, Phone, Basic Cable, and Internet, Grounds Keeping, Prepares and Maintenance, Storage and Parking, Activities, Social Events, and Financial Support through the Fellowship Program should anyone outlive their resources.

So the point being, even our residential

setting is a service-oriented, care-oriented environment for residents.

If we could proceed to the next page, labeled attachment one, it's a basic data comparison for Colonnade, Retirement Village, and WCBR.

Again, Colonnade is a for-profit, private equity ownership, and Sunrise Senior Living in a very

sophisticated multi-site operator, WCBR, we are a nonprofit single site.

This gives a breakdown of the independent living cottages and apartments, similar in size, we're slightly larger, assisted living beds, memory care, nursing care beds, total units of 388 at WCBR as compared to Colonnade 305.

About the same split of care area residences, about the same total occupancy,

were on a similar footprint in terms of acreage.

Again, we were first built in 1990, where Colonnade was built in 92.

Resident headcount, we have more couples than Colonnade, and this is our estimate of resident headcount.

Our property tax is $1.3 million on this parcel, whereas Colonnade is 481.

You can see the premium, we are 2.7 times Colonnade.

Are we a nicer property?

Yes.

Are we 2.7 times nicer?

That's what I'm challenging today.

Per unit, our property tax is about $3,400 per unit.

Per resident, it's about 3,000, whereas per resident at Colonnade, it is under 14.

I should move to attachment two, please, which I gave a nice, large, very handy separate sheet for attachment two.

This will be, I think, a good reference point as we go through the rest of today's presentation.

These are our commercial buildings at the top.

The first is the main building, and the only thing they got cut off on the side here are the card numbers, which really aren't that meaningful for us in this exhibit.

What I'm showing here are the 2022, 2023, 2024

values by commercial building or cottages.

And you can see the varying increases for real cost new depreciation for each.

And the numbers are up and down quite a bit, as you can see.

In the right-hand columns, I've indicated the 2023 change over 2022, the 2024 change, and the two-year change in real cost new or value or depreciation as the case may be.

The Blue Ridge, the main building, the first building listed on our card for this 34-year-old building is listed as excellent.

While we think it is very well maintained and a very nice building, to state that it is excellent, I think is unreasonable.

The Blue Ridge building, built in 2003, is 21 years old, and here the value has changed demonstrably

and on the Blue Ridge building, we would like to explore the depreciation on this building.

As you can see to the graph on the side, this curve of depreciation, Blue Ridge is an outlier with the depreciation.

Again, it is listed as excellent.

All of our buildings in the county's website are listed as excellent.

Our assisted living building and our nursing units, the next two buildings listed were the subject of much discussion at last year's

Board of Equalization meeting.

Mr.

Beard and Mr. Mayo were present in that meeting, and we did have adjustments to these two properties.

Thank you for your consideration last year.

But what has happened is that the assessor has taken the value of these buildings right back up to levels not only beyond last year's adjustments, but well beyond anything supportable.

and so we are asking on assisted living and nursing for these values and adjustments to be reset comparable to last year's levels.

Pantops building is our newest building.

Here we are questioning the, again, real cost new, the depreciation adjustments.

While it is a very nice building, the elements of that building are not brand new.

Our cottages in the past two years have had a demonstrable increase, a 38% increase to the cottage values in 2023, 36% overall.

These are very economically challenged with the level of high operating cost, and I'll present the case for the economic external deficiencies depreciation.

And I'll cover the land challenge shortly.

We could please move to attachment three.

And you'll want to keep that attachment two as we get the computer and the changes.

This next page, attachment three, is a lifetime history of, excuse me, not a lifetime history.

I went back as far as I could go with the data available.

Went back to 1996, 1996, between colonnade and WCBR.

Colonnade and WCBR, the improvements valued

between Collinade and WCBR.

And I grabbed those over to the right, the dollar per square foot values, where in the early days, you can see we were very comparably aligned.

WCBR is the orange line.

Collinade is a very nice stable blue line.

In the 2023-2024 time, excuse me, 2003-2004 time frame is when the Blue Ridge building was built and it was a transformative building.

It's one of our larger apartment buildings and it is a very nice building.

There the lines diverge and we have this premium, this premium for WCDR to colonize.

as we added the Pantops building in the 2014 timeframe, 2014, 15 timeframe, again, it spiked, but you would expect these lines to start coming back together.

What is inexplicable, what is inexplicable is after several years, 15, 16, 17, 18, 19, 20, 21 of a 45% premium Westminster Canterbury to Colonnade at a 45% premium

Here in the last two years, it's gone to a 60% premium and a 66% premium, which we find unsupportable.

If we were to value WCVR's improvements at the colonnade dollar per square foot, our property would be valued $59 million less.

If we could please move to attachment four, which is, again, summary of the assessment,

for improvements showing what you observed on the preceding case with the RAG and the increases year over year.

Colonnade has had an 8% increase in 2023 and only a 1.8% increase in 2024.

In 2023, WCBR experienced an 18.4% increase.

That's after a Board of Equalization adjustment, after a BOE adjustment last year, and a 5% increase this year.

Our premium jumped from 47% to colonnade to 60% to 66%.

Our uniformity computation, which I submitted on the form some months ago, is essentially saying, take WCBR's 2022 assessment and please use the increases that were used for colonnade to get to that 131.5 figure.

The information at the bottom shows the ranking description.

Across the board, our buildings are listed as excellent, where Colonnade is bought very good.

The top shows the commercial buildings again, similar in name.

Again, I've computed the dollar per square foot, and you can see that for our Pantops building, which is a very nice building, it's a very nice 10-year-old building, its value is $315 per square foot.

If we can move to attachment five,

So it's also a handy reference where you can see other categories of comparable properties.

Assessed value, 2022.3.4, changes.

The improvements, the land, as we go across the page.

The top category of properties, these are simply multifamily properties.

Multifamily, apartments, properties,

all of them younger than Westminster Canterbury of the Blue Ridge built in mostly the recent years 2002, six, nine, 2020, and 2023.

These are located in the 22911 zip code aside from one, which is just one exit away.

It was great media in the prior year about multifamily increases going up 28% in the county, but notice in 2024,

Nearly across the board, the 2024 change for these multifamily properties was down anywhere from 12 to 20% for the most part.

Improvements per square foot, not a one on this page is at $315 a square foot as is our Pantops building.

A nonprofit senior living operator in the county being the most highly assessed property in the county

Pantops building is a $315 per square foot assessment where these very nice multifamily properties do not, and we have quite a bit of operating expense burden.

You can see the year over year, the two year change in improvements and total assessment.

The middle section on this table are essentially nursing homes.

52 of our beds, 52 of our residents are nursing home beds.

and that category sometimes referred to as the convalescent hospital category in the middle of the section.

So that is a reference point for 52 of our residences.

Finally, we get to the homes for the elderly, the largest section of comparables on the sheet.

You can see Common Aid Retirement Village, Our Lady of Peace, which does enjoy tax exemption being owned by the diocese, branch lands, Rosewood Village, Commonwealth Senior Living, our neighbor,

on Pantops, Morningside, Rosewood Village, Lodge at Old Trail, Linden House, The Blake, and Anthology.

Some of these are quite new properties.

Again, you can see no one comes close on the improvements over to the far right side, improvements dollar per square foot.

No one is anywhere in the range.

of Westminster, Canterbury, the Blue Ridge.

And then finally, the subject property today, highlighted in blue, our home for the elderly, Westminster, Canterbury, the Blue Ridge.

Again, stupendous increases year over year outside of the range of anyone.

The next item is a map of our plan.

Should that come up, I'm going to place that to the side.

I will next move to our land appeal.

which is a package very similar to two categories here to review would be essentially a comparable purchase of land and that's values of nearby land.

So I have two different items covered here.

Westminster Canterbury has about 56 acres in the parcel we're discussing today.

Westminster Canterbury has approximately 56 acres on the parcel that we are evaluating today.

38 acres of that has an $11.5 million assessment at $300,000 per acre.

17.5 acres are reserved as a natural area.

The basis of our appeal is both fair market value and uniform.

The fair market value, comparable, may refer to Map 1 in this packet.

I'd like to undo the state of the graph.

Map 1 in this packet essentially looks like this.

Green outline is the 56 acres of our campus.

The internal orange outline in that map is the 17 and a half acre nature preserve.

The yellow parcels, the total of all the combined yellow parcels, 17 parcels, is about 50 acres.

just over 50 acres.

Westminster Canterbury of the Blue Bridge through a subsidiary, WCBR Land Holdings Corporation purchased the 50 acres in those 17 parcels just over a year ago, April of 2023.

So that is the next door, as you can see, adjoining property where we purchased that.

Competitive market that was listed by Bill May, ERA Realty.

There were multiple bids on the property.

It was a standard real estate transaction and we were the successful bidder.

The sale price was 6.25 million for 17 parcels, about 50 acres at 123,853 dollars per acre.

So that is the first comparable, whereas the bulk of our property is valued at $300,000 an acre.

If you please move to attachment 1A in this land packet, where again I have at the top Westminster Canterbury's 38-acre parcel valued at $300,000 an acre.

You can see the comparable, basically those 17 parcels, you can see the assessment,

the assessment from the county's website and the dollar per acre of the 50 acres on attachment 1A, where those are valued at about $84,000 per acre.

And then I have another comparable just off the exit from 64 to 350 on Pantops, a Hanson's Mountain Road property, 1998 Hanson's Mountain Road.

It's just under 38 acres.

That is map two, map two.

Very nearby, map two, you can see in WCVR campus in green, the Hansen's Mountain Road property outlined in gold.

It is literally short distance from our campus.

I have included all of the county's information on the website about that Hansen's Mountain Road property, but essentially,

See the value.

It's valued at $72,000 per acre.

72,000 per acre.

In this land patch, I have compared Westminster Canterbury to the Colonnade retirement camp, and now I'm on attachment 2A.

After all of the Hanson Mountain Road listing from the county's website,

I'm on attachment 2A.

Seems like all your pages are in a funny order.

Sorry for that.

They came to you in the same order that I'm following them.

So I'm on attachment 2A, which looks like this.

Westminster Canterbury, the Blue Ridge, again, are developed.

You can see the comparisons here on the first level of use code, home for the elderly, the size of the property.

We are very comparable in terms of the comp plan use, primary, secondary, land use, primary, whether there are steep slopes.

Westminster Canterbury's land is valued at $300,000 per acre, whereas Colonnade combines 181.

I'm referring to attachment 2B, which hopefully is the back of that page, which looks like this.

And again, this is a comparison between colony, retirement village, West Liverpool, Canterbury, and the Blue Ridge.

You can see the land value per acre from 1996 to 2014 or 15 jumped demonstrably.

tracking nearly identically, overlapping for nearly two decades and then in 2015-16, ours jumps quite a bit higher.

I asked Mr. Lynch about this in the December meeting that we had and his reply is, we don't have any documents or information regarding the land value change in 2016 and there's nothing further we can do regarding that request.

which you have to add as an attachment to see the email between me and Mr. Lynch.

And I actually went back and looked through our records at Westminster Canterbury at the Blue Ridge and found this letter from Mr. Lynch where we had adjusted that land value up by over $2 million.

And so I request adjustments on the land.

Our

analysis through a reconciled method of the comparable transaction from about 14 months ago, as well as the comparable properties has a reconciled value of about $5 million lower than Mr. Lynch has assessed the property.

So to recap all of this information and material, and I'm

Hope that was not frustrating for you trying to find pages because I gave these to the assessor in a nice package.

So I'm sorry if you were finding attachments and such.

The summary of our appeal is for improvements.

We are asking for the nursing and assisted living assessments to return to prior year.

We are asking for Blue Ridge and Main Building

to be reduced by $10 million.

We are asking, excuse me, Blue Ridge by 10 million.

For the main building, a $1 million reduction, or Pantops, a $3 million reduction, and for cottages, 3.7.

And I have a summary of those requests.

For the land, we are asking for a $5 million reduction for the reasons I just outlined, profitable sale,

and assessments of nearby properties.

This is essentially the summary of the request.

The main building, this is a 34-year-old building.

We're asking that it be reduced from excellent

that you consider the functional and external obsolescence of this 34-year-old building.

It's physical depreciation.

It is not a new building.

The Marshall and Swift definition of excellent is that all items can normally be repaired or finished, have recently been corrected, such as new roof paint, furnace overhaul, state-of-the-art components within functional inadequacies, all

of any kind and major short-lived components and like new condition, overall effective age has been substantially reduced upon a complete revitalization of the structure regardless of the actual chronological age.

It's not appropriate for a 34-year-old building.

Do we maintain it?

Yes.

Is it nice?

It's very nice if we'd not fall into the category of excellence.

Same with our Blue Ridge building, 21 years old.

Again, reconsideration of this category is excellent.

used the colonnades increases since 2022.

Consider the physical depreciation of this building, which has all original components.

Assisted living and nursing, again, I recap for you.

Essentially, please return this to the Board of Equalization's decision from last year.

Pantops, it's a 10-year-old building.

It's very nice and we maintain it.

It has original components.

She is not,

Justifiable to have this building valued at $315 a square foot when you consider the burden of the economic investment we make in life care services, healthcare services, and residential services.

Cottages, finally, the external obsolescence here has to do with their non-severability.

Our cottage residents are gonna live in those cottages a long time.

They can't be used for anything else other than life care.

and we're requesting a $3.7 million reduction on the land.

The facts for a $5 million reduction on the land.

And this is our overall request.

That's 30 minutes.

Any questions over here from the ancestors office?

I had a question on attachment 1A.

Yes.

Hanson's Mountain Road parcel?

Yes.

Is that number right for dollars per acre?

You're asking if the 72-42 is correct?

See what I mean?

So you're saying instead of the, well, it drags the acreage down

So 74, 280, 262.

I just did that quickly on a calculator.

I get 78,000.

Is that what you're saying?

61,000.

Okay, dollar per acre.

All right, so I get the 84 above, two, three, and three, 37, 75 divide.

I'm sorry, you're right.

That's $61,000 an acre.

I apologize.

$61,000.

$72,000.

$61,000.

Yes.

That makes sense.

A lot of numbers.

Okay.

One other question.

What did that property sell for?

The Hanson Mountain Road property.

There are lots of transfers in this packet.

Let's see here.

Sale history.

I'm looking.

Sale history was in 2011 for the Hanson Mountain Road property.

That was then 1999.

It's sold for $1.3 million, previous owner, Worrall Land and Cattle Company, to Richard Sperzen on January 5th, 1999, according to the county's.

The Hanson Mountain Road property is $1.3 million from a long time ago.

The parcels that we purchased, $6.25 million for the 50 acres.

So didn't it sell more recently than that in 2011?

Len, were you talking about some more recent purchases?

No, I was talking about the Hanson Road property.

All right.

The sale date, 29, 2011.

Oh no, sorry.

I find the sale information on page nine of the accountants packet.

On top of page 9, there was a sale date of 91.

Looks like some kind of non-cash transfer within Voral.

In 99, it sold Voral to Spursom.

I'm using the assessed value of that property.

You're welcome.

Okay.

So the property is assessed by the cost approach in order to remove any of the value that is attributable to these services.

Crossbridge was the most direct way to get to a market value of the real estate, a simple market value.

So in our Crossbridge we use, you know, for the marginal and swift valuation for what we refer to as the commercial buildings.

They're the multi-family structures, home for the alternative structures, the assisted living, the nursing home, the common area, you know, dining facilities, all of that.

The cottage, what are referred to as cottages or duplexes or residential buildings, we use our valuation model for residential buildings.

So that's how we determine the value in the purchase.

The land value is determined based on

The fact that this property is not multifamily.

It is superior to multifamily.

It allows the assisted living and nursing home uses on top of the multifamily use, basically.

If you look at what this is, it's a multifamily building that has, it's a multifamily plus.

So the land value of a property is typically determined based on the,

How much you can use the land, kind of the highest use of the land, while land for building apartments would be at one level and land for being able to have a

A nursing home or assisted living and basically commercial land is much higher.

And what we are assessing this property as kind of a blend of those where it's multifamily plus it allows that commercial use.

So it is above and should be above the what land would sell for apartments because you couldn't build this on land that's just for apartments on R-15 land.

So

Our values are based on that, the kind of the blending of those.

You don't have land sales of CCRC properties to compare this to.

So that would be the best option if you had comparable sales like that, but you don't.

So you have the sales that are the more rigorous commercial property land, and then the multifamily land, and we're in between those.

What's the split in between?

It's a slightly higher amount per acre than what those would be as multifamily.

It's not a certain percentage.

OK, so I'm hearing then that it's closer to multifamily.

It's closer to multifamily, yes.

And I have on the screen for a few seconds.

So this is the property, Westminster Canterbury.

This is the property, or at least most of these parcels next to Westminster, including the large parcel in the back, is the land that was purchased from the Easter family.

And we don't doubt that

that WCBR won that because they won that bidding war, maybe you might call it, because we think they paid way above what we would expect the property to be worth.

And of course, it's because they want to expand into that area.

That would be typical.

The neighboring property, if they want to expand, they would pay above what anybody else would.

but it's an R, is it R2?

R1 land, I'm sorry.

It's R1 land, it is far inferior in how much, what you can do with it.

It's already broken down into lots and that's, you know, that density is really all you're gonna do with this type of property unless you get it rezoned and we're not talking about that, we're assessing it based on the R1 zoning.

So it is not a comparable to the WWCVR property which is multi-family plus and

This other parcel, which is owned by Mr. Spurzon, is zoned for, it's PDSC, so it's zoned for shopping centers, yet it is not a usable shopping center site, which is why, after 26 years, he has not been able to build a shopping center on it.

He even tried to down zone it to do something else with it, and the county wouldn't allow him to do it, is the information I have.

and the whole problem is this intersection and it's not even an intersection actually it's a one-way in and out on Hanson Mountain Road and you can't put a shopping center in here have all the traffic attributable to the shopping center this is not a comparable if it was a actual shopping center site the assessment would be much higher it would be higher than WCBR's property because

It would be based on commercial, the high level land, but it is so limited in the usability of this property that the assessment is much lower because of that.

It reflects those difficulties with this parcel.

This, again, is not an appropriate comparison to WCBR, which is developed, usable, doing very well, and exactly as it's supposed to be used as.

I believe all of them.

I can actually turn that later on to answer that question.

I'll bring that up in a second, but I don't want to lose track of my thoughts so we don't go too far in time.

I do not believe that the analysis that's done

by the applicant is appropriated.

If this was an appraisal of this property using these comparables, that appraiser would most likely lose their license trying to use that type of comparable to determine a value in the subject.

They're just totally apples and oranges.

The

I'm going to switch over to Deb because Deb has an analysis of the comparison of the subject property of Westminster Canterbury in the colonnades and she wants to go through that.

We also believe that it is not a true, you know, it's not, you have to adjust these because of these differences in these properties and she's going to explain why.

So both properties are valued by the cost approach.

Westminster Canterbury has 55.78 acres, Colonnades has 58.91 acres.

Usable is 38.28 acres for Westminster Canterbury, 28 acres for the Colonnades.

The remainder of the Colonnades parcel is assessed at 122,500 an acre because they have topography in the undeveloped area that makes it difficult to expand to.

The 17.5 acres at Westminster Canterbury is restricted by the easement and is assessed at $15,000 per acre after an adjustment of minus 95% for the restriction.

Both properties are zoned PRD, planned residential development.

The application plan that's associated with Westminster Canterbury does not limit the density for the subject's development area.

but rather provides parking calculations for the minimum number of spaces per unit required for any approved uses.

The application plan that's associated with the colonnades limits development to a total of 318 units, which consists of 220 independent living units, which include 40 cottages and a max density of 3.74 dwelling units per acre.

54 nursing beds and 44 assisted living beds.

The facility currently has 309 units based on the most recent public filing with the Virginia Bureau of Insurance, which was dated June 3rd, 2023.

The subject's land assessment has been equalized based on the development land sales, which we have summarized on page five of the county's presentation.

The adjusted median base rate for these sales is $499,789 per acre.

The assessed value of the subject land is $11,746,500.

This is $210,586 per acre or $30,274 per bed slash unit.

The assessed value of the colonnades land is $10,646,500.

That's equivalent $280,725 per acre or $34,455 per bed unit.

The land value for the colonnades would require adjustments for the differences based on the development density and capacity.

and therefore cannot be compared directly to the subject.

And that is the reason why the colonnades land is assessed at a lower rate than the subject property.

For the commercial improvements, we did a presentation summary on page six.

There are five buildings.

There's a summary on four and then it goes into detail on five and six.

Colonnades has one building.

For both properties, we use Marshall Valuation Service.

The costs were used as of October 23.

These were the most recent costs available for the preparation of the 2024 assessment.

The subject's commercial improvements were built between 1990 and 2013.

Colonnades commercial improvements were constructed in 1991.

The improvements for the Westminster Canterbury are Class D and Class B buildings.

The construction quality is excellent, not the condition.

Construction quality is excellent.

The improvements for the Colonnades commercial building is a Class C building, very good quality construction.

So there's an evidence of differences in the quality of construction.

We have a depreciated replacement cost of the commercial buildings at the Westminster Canterbury of about 185 a square foot.

The colonnades improvements replacement cost depreciated is about 125 per square foot.

The variations in the construction class, the quality and the effective ages of the structure results in differences in the typical building life and rates of depreciation.

For the residential improvements for Westminster Canterbury, we have buildings two through 51 and 53 through 56.

They're on page seven of the county's presentation, followed by the residential improvements for the colonnades, which is buildings two through 41 on page eight.

We use the residential evaluation model for these improvements for both properties.

The subject properties were constructed between 1990 and 2017 and are grades B and B plus two.

The improvements for the colonnades were constructed in 1991 and consist of quality grade B minus two.

We've applied the same functional obsolescence at 10% for the lack of severability to the residential structures for both properties.

In terms of building permits for the last three years, Westminster Canterbury has spent over $2 million in 2023 according to the work value permits filed with the county.

In 2022, it was 2.37 million.

And in 2021, it was 3.095 million.

In comparison, the Colonnades has spent

in 2023, $852 in 2022

$392,787.

And in 2021, the work value that commits was $511,973.

The assessed value of the subject's residential improvements is about 175 per square foot.

And the residential improvements for the colonnades are about 148 per square foot.

I have a few more comments and actually I can answer your question.

These are the comprehensive plan layers.

This green area is neighborhood density residential.

No, this is the neighborhood.

This kind of pink is urban density, a little section of that.

This is the one comparable, and this is the other one.

So you've got a combination of green space, neighborhood, and neighborhood, and urban, and parks on this one.

also green space on that one.

So that's just the county's long-term plan for aiming if a request is made, this is the direction the county would like to go.

So does that answer your question?

I also want to point out several times in the applicant's presentation, she mentioned nonprofit versus for-profit.

The ownership of the property really has nothing to do with the value of the property, unless it makes it exempt, which this ownership does not.

So it doesn't matter if one is for-profit or not.

So that should have no bearing on the value.

The reference was made to excellent condition.

However, we are not valuing this property as excellent condition.

We are valuing it as excellent quality.

Quite often quality and condition get confused, but quality is the quality of construction.

So the buildings were filled with very high quality of construction.

Condition and the definition that she read was a definition of the condition.

We are depreciating these buildings based on their age and they have been very well maintained.

So we're actually not depreciating less because of that.

We're still depreciating them based on their aging condition, but not as excellent.

So I want to make it clear because it's quite often confused.

We're not saying these are excellent condition.

We're saying they're excellent quality.

We are depreciating them based on their actual condition, which is good.

You know, based on all of the work that has been done to update them.

We've provided information that shows the difference between how little the Colonnades has done to work on their property to update it and the huge amount of money that has been spent on Western Michigan to keep it up to date.

Fresh and New, and so that the residents come in, you know, will get what they want.

So those are huge differences between these properties.

The year built, original, the year built of colonnades.

It was built then, the whole thing.

The Westminster Canterbury was built over several decades and is not the same as a property in its entirety as a property built in 1990 in combination with the fact that it was built in state

those decades.

It had a lot of money put into it to keep it up to date and well functioning and turning over units that had functional problems.

They might have been smaller units that are combined two units to make them one.

So all of that work is done constantly.

and they continue to spend a lot of money on this property to keep it up.

So that's why there are big differences between the colonnades and this property.

No bearing on for-profit or non-profit has no bearing on supposedly us calling it excellent condition.

It's that this property is in very good condition and it's very high quality and we are using the marginal valuation

both the cost and the depreciation as it should be used for this property based on what it actually is.

And that comes up with a fee simple market value for the property that has, that doesn't include any of the other value of what is being included, the services that are being included there.

I also wanted to point out the applicant had provided last year an appraisal from 2022.

We had provided an appraisal from 2023.

There's a huge difference between those appraisals.

They try to take into account that

What's the value of this whole thing with all the services and then let's back out and get back to real estate by doing both an income approach to do that and then a cost approach.

But neither of those appraisals were anywhere near $5 million for the land for this property.

It was more than $10 million for the appraisal that was presented by the applicant.

Our appraiser had a $9.7 million.

We are just over 11 and we feel that our value is appropriate.

So any kind of talk or any kind of consideration of these adjacent properties, assessments as being applicable to the subject is a reference.

Deb, do you have anything to add?

Sorry, before you go.

I'm sorry your changes are irrelevant in this conversation.

You mean how much it went up?

How much it went up from year to year?

I do have a question.

Since I wasn't on the board last year, I don't know what happened, but it looks like some reduction or some adjustments was made.

Yes.

Some were and some were not.

Or some were and I'm not sure exactly what all of those changes were.

There's also a change for the next year.

So the reassessment would also include an increase because of the increased costs included in the market, the cost approach.

One, the main thing I remember is that we had removed the 10% on each of the cottages, 10% reduction on each of the cottages for separability.

We didn't think it applied to this property.

The board put that 10% back on.

I believe they also adjusted the... Those are 10% on this year?

Maybe you can...

The board last year changed the assisted living and nursing buildings and on this large sheet that I handed out you can see the very significant change in the depreciation in the 2023 number.

The depreciation

for the assisted living building went up 109%, the nursing building went up 112%.

In recent email correspondence with Mr. Lynch, he confirmed that the changes of the BOE last year were on assisted living building and the nursing building, 53 and 54, 63 and 64.

Those two buildings had the BOE adjustment last year.

In fact, when I asked Mr. Lynch about adjustments to the cottages, he recently explained to me that no change was made to the cottage.

You can see it went from $14.7 million on the cottages.

It went to $20.3 million.

There was no reduction on the cottages last year, and he maintained it at $20 million.

And so the cottages have jumped demonstrably 38% in 2023.

slight decrease in 2024.

The OEs change last year was applied by Mr. Lynch's team to the assisted living and nursing buildings were asking for the cottages to be fairly valued because they do have this non-severability.

20%.

He removed that.

and so they jumped to $20 million for two years.

So last year, the BOE applied 10% to the cottages.

So I don't have the calculation in front of me, but that happened on top of the assisted living and nursing.

So we definitely included 10%.

on the cottages.

This year?

Well, this year, yes.

And that 10% exists and was applied in 2024?

Okay.

Thank you.

Please have this handy, and please have our summary requests.

A question essentially on improvements is, what has changed?

What has changed between Hollandaise and Westminster Canterbury, the Blue Ridge,

very comparable communities, similar age, similar size, steady state operations.

And in the past two years, the assessor has ramped up the premium on our property, all of our property, all of our commercial buildings and our residential buildings where we were maintaining a 42 to 47% premium to colonnades.

It is now 60% premium last year.

66% premium this year.

Why the change?

What has changed?

Mr. Lynch refers to building permissions, submits, numbers associated with turnover renovations on independent living units.

That's all that is.

When we have residents move through the care continuum and we have to renovate an apartment or a cottage, some of those renovations require electrical or plumbing,

for, you know, moving a wall or making it a more modern flow.

And we submit a building to permit with the county.

And those estimates around the projects are simply that, estimates around the project cost for renovations of turning independent living units, which is part of our business model.

With the movement from the care continuum, as folks move from independent living to care areas, it is not indicating

changes and renovations and updates and upgrades to common area spaces, elevators, roofs, exterior finishes, doors, windows, transformers, electrical components, lights, those common spaces.

All of the building core is not reflected in those figures.

Can I ask a question about that?

Let's look at the 2023 permit ending in 69 over P, other plumbing, $350,000.

$350,094 in 2023.

Is there more information on the...

I don't have a stack of building permits with me.

I will say we have done some finishes and touches in our health center, which is a 34-year-old setting where we have eight-foot ceilings, we have feedback units, we have small rooms, we have a lot of functional and external

Obsolescence and Economic Inefficiencies.

We've replaced some carpet and light and kitchen and dining area refreshes of that 34-year-old health center.

So that would have been more than a turnover of a department.

There's another for $215,000 in 2023.

Federal addition or alteration, any type of dwelling.

It could be.

It would have been a pretty substantial one.

We did have one of our hillside cottages where we restored a garage and it needed a full overhaul.

It is not uncommon for a unit, especially a cottage, to approach $200,000 per job.

So it's a matter of continuing to invest in the same spaces and fresh and earned where someone may have occupied a cottage for 20 years.

Mr. May, I'm sorry, the $115,000 one is renovation of the interior of the cottage consisting of recessed lighting, tiled showers, enlarging kitchen entrance, and creating an opening from the living room.

No, that's the note from the person.

While they look for that I will continue the rebuttal.

The assisted living and nursing increases this year are completely unsupportable.

Our main building is a 34 year old building with many limitations

in terms of sizes of the apartments, the level of the ceilings, the use of PTAC units, its dated design, smaller undesirable window openings, that it overlooks a loading dock and dumpsters, et cetera.

There are a number of external economic functions and functional obsolescence.

The Blue Ridge building has had an enormous increase in real costs new,

Its depreciation is offline with other buildings.

Again, why the change for Westminster, Canterbury, where in recent years, we have tracked very similarly with premium to colony, and now there has been a change in the value.

For a Pantops building, there is no support for $315 per square foot on the value of this building.

Is it new or yes?

Is it a nice building?

Yes, it's a very nice building.

whose value was too high.

For the cottages, these cottages increased from 14, same number of cottages, same operating mode, increased from $14 million to $20 million last year and stayed at that level, which is unsupportable.

As to the land value,

I couldn't quite follow Mr. Lynch's explanation where sometimes he was using the zoning as support for why it was assessed the way it was, and then other times discounting the zoning for the land.

The fact is, inexplicably, our land value increased in 2016, and I don't have any support as to why.

We don't have a good explanation as to why.

As to the appraisal, Mr. Lynch referred to that appraisal expert of the counties used entrepreneurial incentive and other soft costs and other added elements of value, which again,

Mr. Lynch is going to use the cost approach, then I think those are not applicable.

So, Westminster Canterbury at the Blue Ridge again, as the most highly assessed property in the county with the mission to care for our residents, we expect to pay our property taxes at a fair level.

Thank you for your time today.

I'm happy to answer questions.

This sheet, this sheet is really the series of our evaluation, the main piece of our evaluation suggestions.

And I'm happy to answer questions.

Well, the colonnade community certainly has made investments and improvements since its founding, but my job here is not to increase the assessment for the colonnades, it's to reduce the assessments for Westminster Canterbury of the Blue Ridge.

It is a four level of care community.

Their contract is structured a little bit differently, but for someone who chooses to live decades at the colonnades, that option is available for them.

Moving through the care continuum is available for them.

as to the Marshall and Swift and Cost approach explanations that Mr. Lynch provided.

It seems in studying the history of his own work, which is what I have to refer on, my strength is being able to analyze the data.

We had maintained a very stable premium to the colonnades at about 45 to 47% premium to colonnades.

And something has changed in recent years.

We've made no substantial significant investments.

Both communities are stabilized.

It is the most comparable property in terms of its use, with four levels of care, very similarly sized, very much in similar proximity to the core of Charlottesville,

Similar number of residents, very desirable properties, lots of comparables.

Are we a nicer property?

Yes.

Is there a reason for why it would suddenly become nicer and nicer over the past two years?

Well, I mean, I think I would predict the Assessor's Office would say the reason that your property has become nicer and nicer over the past three years is the millions of dollars you've spent improving it as compared to the colonnades, which didn't spend that amount, right?

Didn't report that amount.

The average age of our property, both cottages and the commercial buildings, is 24 years old.

It's not that new.

In terms of how our buildings are suffering from age, even though we do a good job to maintain them, I have information here.

And I also have information in the accompanying page.

Thank you.

The burden of the life share operation.

The first page here describes the year built

and it gives challenges for each of these buildings, the Monticello apartment building, which is the main building and the oldest.

I won't read all of this to you, but I will select.

It was predominantly a one bedroom unit apartment building.

Some units have no laundry, no sign of barking.

It is commercially a challenging building.

We've tried to combine units, but there are things we can't overcome.

Stick frame constructions, non-concrete floors.

It doesn't have sound insulation.

As we move to the health center and VISTA buildings, you can see the challenges there as well, 8-foot ceilings, PTAC heating and cooling.

No ability to combine those healthcare rooms, which are small,

Catered living, again, small rooms, very, very limited options to combine.

The dining setup in catered living is operationally difficult on three small dining rooms, so these are economic challenges that we're up against.

These are not new buildings.

These are not new buildings.

Our Blue Ridge apartment building.

It's a very nice apartment building, but it has all original equipment.

Its depreciation assignment is off the curve with everything else.

It has original common space roof, gutters, HVAC, full elevators, lighting, transformers, doors and windows.

And again, the Pantops apartments add a premium to anything, anything, multifamily or other lots.

The next page shares with you the burden of life care and the high operating costs.

The assessor appropriately noted in using the cost approach that adjustment needs to be made for what's our model of care and then how much of what we do do you assign to the real estate.

We're trying to value the real estate, the land and the improvements.

And regardless of the broader community and operation of our organization, we have significant liabilities on our balance sheet for life care.

We have substantial operating expense for every 10 units we have at Westminster Canterbury at the Blue Ridge.

We employ seven people.

to maintain them when you think of the ratio of units to the number of FTEs that we have.

And so it's a significant operating cost.

And because we are a very nice community, our staffing levels are higher.

Our nurse to resident ratio is higher.

Our information technology support is higher.

Our facility support is higher.

We have transportation available to residents.

We have 24-7 guest services.

We staff three people on security and guest services.

And so

We do offer excellent care, excellent life care at Westminster Canterbury, that Bluefish.

And a lot of that is because of who we are and what we do.

It's not driven by the real estate.

And our job today is to speak of the improvements and the land and try to assign a value to that.

Is it a complex property?

Absolutely.

And then finally, if you turn to the last page of this packet, I just handed to you, these are the product templates.

The Jefferson Cottages, 34 years old, have vinyl siding, no garages, colonial style, you know, they're somewhat dated.

We had to invest in a different outside look.

Compartmentalized floor plans, they're small, typically very small.

The hillsides, you know, some of these cottages are in varying stages of having generator backup or no generator backup when built, and so we've had challenges there.

We do suffer, I should say suffer, we experience,

Lower demand for cottages.

More of our residents are looking to be in an apartment, to be under roof, to be connected to the core of the community.

And cottages, likewise, have extremely high operating pots.

Nothing about a cottage is scalable.

We have very much higher utility costs, groundskeeping repairs, emergency response.

The life safety systems in cottages, much more of an investment.

Transportation, because people are in cottages,

or inclement weather mitigation, et cetera.

Higher renovation costs, as we discussed with the example of one building permit, which is essentially to turn over a cottage and prepare for a new resident.

And a greater likelihood that it ties up multiple units because of requests for internal moves.

If we were to expand today, we wouldn't add cottages because it's just that difficult.

Thank you.

One of the points of comparison between you all and the colonies is the construction quality and condition.

It depends on the building.

Depends on the building.

I described for you our Monticello building, our health center building.

These are stick frame construction, non-concrete floors.

When you walk on the floor of an elevated, you know, second or third floor, they give poor sound insulation in some cases.

D is a frame building instead of a concrete construction.

Is that the only frame building?

You know that's depreciated at 55%?

That's correct.

Building one actually went down by approximately $4 million.

Again, the understanding there was with the information I had available and

the deficiencies that I have described.

It is a challenging building.

The cards that I have access to, the information shared with the county, from the county, and the fact that it's quite a bit higher than where it was in 2022, that's what I'm questioning.

A 22%, real cost new increase last year, a 14% value change in two years,

That's what I'm questioning.

In 2022, up and down the line where this entire assessment was 131 million, that was much more in line with Westminster Canterbury's understanding of value for our properties.

And it was, again, very much in line with a very consistent premium that we had to the colonnades.

I'm not disputing, we're a nicer property than the colonnades.

for having increased to a 60% premium last year, a 66% premium with no basis for that substantive change is what I am questioning.

Any further questions?

Okay.

Thank you.

I think we have another presentation started at 12.45.

So yeah, what is your choice to do lunch now, lunch break now, or

I can't imagine it's going to be any less of a problem.

I mean, we've got to deliberate also on this one, which I expect to take longer than usual.

My thinking would be that we should take about a 15-minute break and simply eat lunch and then resume the presentations.

Would you all?

So you all have time at the end.

OK, that sounds good.

I'm going to pause the recording.

All right, thank you.

The recording is ready.

OK, so we are back in session and ready to hear

Presentation from applicant for Board of Equalization application number 36 WIAA LLC for 1250 Branch 1 Strive.

Raise your right hand.

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

Thank you, sir.

So you'll have a 10-minute period to present your case.

My name is Graham Edelman.

I am a resident of Elmore County.

I live in Boonsville.

I'm the owner of the company LLC called Cambridge Healthcare Holdings.

Cambridge Healthcare Holdings has two subsidiaries that do business in Albemarle County.

One is WIAL that I'll talk about first.

It is the owner of a 0.97 acre lot in Branchlands Retirement Village.

and 2018 we built a 82 unit assisted living and memory care community on that lot in Branchlands and through, as part of Cambridge Healthcare Holdings, we also operate the facility.

The other subsidiary that we're gonna talk about today is WHSB.

and it owns five lots adjacent to the WIL lot that owns five lots in Branchlands.

And I believe it was the mid 1990s, a 69 unit senior independent living community was built on those properties called Branchland Senior Independent Living.

And so those lots in that community is owned by WHSP and operated by another part of Cambridge Healthcare Homeways.

So I'm here today representing both of those two areas.

I think if you were, first of all, I want to say we appreciate very much your willingness to wait while we try to get back on schedule, and then so that we can get everyone closer at least to their start time.

And if you were willing, I think we'd ask you to do the presentations for both, and then we can have a rebuttal from both on the Assessor's Office, and then back to you.

Does that work?

I might save us a few minutes and just be a courtesy to everyone after.

Excuse me.

So in between the time that we filed our application for appeal on both assessments for both properties, the Tax Assessor's Office issued a revised assessment for both, and that has somewhat changed our positions

on appeal.

Primarily with regard to WIAL, we no longer contest or have a difference of opinion with the tax assessor regarding the assessed value, 2024 assessed value of the improvements.

That is Lindenhouse Assisted Learning and Memory Care.

However, as part of that revised assessment, the tax assessor's office

increased the assessed value of the lot where Linda Dennis was still.

And that's the 0.97 acre lot.

The 2023 assessment is apparently inaccurate and is really not relevant for purposes of discussion, I think.

In 2022, the lot was valued at $470,000.

In 2024, according to a revised assessment, it is worth $840,700.

That was a $370,000 increase, a 79% increase over the 2022 value.

In our opinion, the best comparables for the value of that lot are the adjoining lots.

which were purchased at the same time as the WIL lot.

There are five of them.

They're all used for the same thing, which is housing for seniors who were independent.

On a per acre basis, the 2024 assessment values that 0.97 acre lot, just for apples and apples comparisons, values at 867,000 per acre.

The five adjoining lots that we own, we are not contesting the value of their assessments in 2024.

Those five adjoining lots,

The average assessed value for any three equivalent places is $595,000.

I just want to make sure I'm following your argument.

In your letter of March 27, 2021, you say this application does not seek to appeal the assessed value of land funding for construction.

Yeah, at the time that I filed that, as I mentioned, there was a revised revision to the assessment.

At the time, the assessed value, which was incorrect, was, I think, $180,000.

So obviously, we were happy with that.

So is that caught as part of your review process?

Yes, sir.

Obviously, the assessment changed since he had had her first fine.

So I have no objection to his arguments changing.

I ask that you never restrict it to what David tries to restrict the question to, that it should always be all components.

that the applicant does not have, in my view, the ability just to appeal the land or the improvement that is.

And then we've discussed this before, that the total value is an improved property.

That's what we're striving for and we want it to be correct.

Understood.

I think for the purposes of narrowing the scope

that one aside and look at them at least in turn, but I understand what you're asking.

Okay, so I'm really sort of toward the end here of my presentation on WIAL.

In our opinion, an appropriate value for the WIAL properties

It is comparable to the values of the properties that are joined that are used for the same thing, the same purposes.

And we believe that is $567,000.

And that is what we're prepared to agree to.

will be increased to 577 rather than 82700.

No, that is the value of the improvements is, I believe, nine

Yeah, so no, that's a totally separate issue.

I'm just talking about the land value, which was initially incorrectly assessed at 180 versus 1,000.

In 2022, it was correctly assessed for 170,000.

OK, so the 180, 900 you agree was incorrect.

Yes, we agree that an inquiry of any increase is appropriate.

We just feel that it should be commensurate with the values of the adjoining properties that we own and operate.

There's nothing that I know of that's particularly special about the Linden House.

Why?

With regard to WHSB,

which is the owner of Branchland Senior Independent Living, 69 Parklands, a limited multifamily, zoned as and used as multifamily.

We provide, as you may have heard, sounds like the prior appellant in his chair.

We also provide meals, housekeeping services, transportation, you know, emergency alert service and housekeeping there.

So the rents that we charge cover all those things.

There's no separate charge for those.

It's all increasing.

We are not appealing.

WHSB is not appealing.

The land value assessed for 2024 for its five lots.

We are appealing the assessed value of the improvements and there are two grounds for the for the appeal.

The first relates to what appears to us to be an anomaly in the way in which net operating income was calculated for 2024 versus the five preceding years.

And the result of that anomaly was to increase the value

which increased the net operating income in 2024 of what it would have been had the same methodology been used in the prior years.

And the result of that increase was to raise the value of the improvements by $1,430,000.

If that is an error in the calculation, then we understand and we would hope that the value would be reduced accordingly.

If it is not an error, we would at least like to understand why it was a departure from the methodology that had been used in the previous five years.

The second ground for appeal relates to the omission in the calculation of net operating income of certain actual operating expenses that are incurred in the business and have been always incurred.

And I believe that there may be some misunderstanding in how NOI is calculated, perhaps on my part,

with the tax assessor.

But in my experience and based upon my discussions with the brokers in this area and properties that I've purchased over the years and sold over the years for senior living, I don't understand the calculation of NOI having permitted

the salary of the person who actually runs the community, and to clerical employees, at least a portion of their salaries, that is attributable to everything from billings, penance for rent, preparing financial reports, paying vendors, taking care of banking,

payroll, without those people, none of the employees that work there would get paid.

Their services are essential and we don't know why they've been omitted.

It turns out that they've been factored in in some other manner.

It is obvious to me and I'm certainly happy to get to cut that and be educated.

But had those costs been included and not subtracted from NOI, the NOI would have been reduced by about $191,000.

and using the cap rate for this property, which we do not contest, that was used by the tax assessor of 7.604%.

That translates, I believe, into about a two and a half million dollar reduction in assessed value.

So again, there are two,

and the other one has to do with the method in which NOI was calculated not using actual expenses and instead using another number which we're not quite sure how it was calculated.

And that concludes my presentation.

We'll hear from the Assessor's Office.

Thank you.

So to start, I'm just going to go through, and I want to just make it clear though, these properties, the assisted living property is separate, is a separate property of five parcels that are apartments, the senior apartments.

So we do a cost approach on the assisted living properties.

We do an income approach on the five parcels together as one kind of economic unit.

So she's going to go through those separately and explain how we develop.

I do want to say, so we just discussed this in a prior hearing.

where multifamily land is a certain level and assisted living, nursing home land, land that would support that is basically commercial land and

at a much higher level.

So in that case, we're looking at something in between because it's a blend.

Now this property is an assisted living property.

It's assessed, the land is commercial land.

It's adjusted for its location.

It's on the Route 29 artery grouping, but its location away from that, we reduce that 50%, the same as we do as other properties that are

Commercial in that same area.

No, the services include what we do on the other parcels, but we also provide

Assistance with what are called the activities of daily living, you know, so-called ADLs.

So people who need assistance with activities of daily living are suitable for Linden House.

They are not for Branchlands independent living.

And so the apartments are independent living.

And so they're basically just senior, but they're senior apartments.

So we have a land value on those five parcels that's based on multifamily land, which is lower than the land that's, you know, or a commercial improvement, which is an assisted living.

And now the zoning on all of this is plan unit development, but plan unit development, just like some of the other plan development zonings are basically, this section is for

is equivalent to commercial assisted living.

This area is equivalent to multifamily.

So you don't see it directly in the zoning unless you look at the actual plan that allows what's developed.

But they are different.

And I wanted to point out, and this is kind of to the argument of the applicant cannot decide which part of the value is appropriate.

What Mr. Adelman said was we originally had a value of 180,000 on the land on the assisted living.

They were fine with that because it wasn't too high.

But what our goal here and what your goal is, obviously, is to determine the market value of the property.

Is it correct?

So when we made that correction from 180 to the new land value, 84700,

That was to correct that value.

And so it's not up to Mr. Adelman to decide that it wasn't worth fighting for because it's to his advantage, but now it is worth fighting for because it's against him.

So that's just my overall argument of you have to consider everything.

We wouldn't ignore one part of the value, especially in the cost approach because it's included.

You have to add the cost of the building to the land.

It's very important in that sense.

It's probably less important than the overall in an income approach because you're coming up with the total and subtracting the land to get the improvement.

The Linden House, WIL's property was built in 2018.

So Deb is going to go through and she's going to summarize basically the cost approach and the way we set up the assisted living property.

Then she's going to go through the income approach for the apartments.

And she will explain the difference that Mr. Adelman is talking about when it comes to the management fee, which is where this cost is reported that he refers to.

And we've had conversations about management fees before.

May I respond very briefly, Peter, to a point, excuse me, Mr. Mayo, to a point that Peter made, just for clarification.

Yeah, my concern was Peter was going from 470,000 to 800 and some thousand, rather than 180, because I recognized that the 180 was a mistake.

The comparability, I would say, you know, the land, the WIL, the lended out, assisted living land, was valued at $470,000 from the time that it was built.

So that's part of the reason that I acknowledge that an increase would be appropriate.

The values,

of the value of the Linden House property relative to the independent living properties.

Okay, we're going to discuss the Linden House, the Sense of Living and Memory Care Facility first.

Our approach is the calculator cost methodology for the cost approach based on marsh evaluation service.

We used cost as of October 2023.

They were the most current available at the time of the 2024 reassessment.

This is a Class A building.

It's good quality construction.

We have taken four of the five stories at full cost.

The ground level includes a laundry area and we've adjusted the entire ground floor to a semi-finished basement to recognize the level of finish associated with the laundry area.

The effective age of the building is six years.

It was built in 2018 and that is also the actual age.

The total depreciation is 4% based on the physical depreciation schedule that we refer to

and Section 97 of Marshall Valuation Service for this property type and classification.

Replacement costs new, less depreciation is $18,816,700, which is just slightly higher than the building permit was in 2018.

Page three, we have just the calculation, the reference to the depreciation and section one is for a five-story section, two is the semi-finished basement.

There are no additional site improvements associated with the parcel.

So I'll just go to the land.

We have a 9.65 acres or 42,035 square feet.

It's located in the Route 29 business corridor artery.

The subject's land value has been equalized based on use and sales of parcels located in the same assessing district.

They're included on page seven of our presentation.

The median adjusted base rate for the sales is $39.89 per square foot.

Base rate for land in this district for commercial land has been equalized at $40 per square foot.

Then we've made appropriate location adjustments for location, I'm sorry, location as well as

Yeah, just location, sorry.

And we've looked at the location is a 0.5, yeah, so minus 50% for the location adjustment.

There's two other properties that are assisted living, one to the north, which is the Lady of Peace, and that's got an adjustment of

Multiplier of 45% and the one to the south at the corner, Greenbrier, has got an adjustment of a multiplier of 70 or an adjustment of 30% for location.

So as you move down the hill drive corridor and you get closer to the Greenbrier Road intersection, the location adjustment is reduced.

So if you take 42,035 square feet times the $40 per square foot times a 50% location multiplier, we have a total land value of 840,700.

Any questions?

We're going to say last year was a mistake, 23, and 22 was using the same methodology.

You're talking about the land?

Yes, the land.

I'm just curious of the increase.

How long will it take me to find it?

Great, thank you.

This is appeal number 37, WHSB LLC.

It's the Manor House Independent Living and Branch Lands.

It's a 69-unit senior independent living facility.

It's located on a total of five parcels of land

with 2.901 acres.

It's also located in the French Lands Retirement Village and it was a planned unit development.

The original Manor House was constructed circa 1800s.

The Whole Trust House was constructed in 1938 and expanded in 1999 and the Sargent House was built in 1997.

There are closed connectors that provide access between the Manor House and the apartment units.

Both buildings are handicraft accessible.

They have elevator service.

and it's my understanding that one meal per day is provided for the residents.

In the Manor House, the administrative offices, dining area, commercial kitchen and common areas are located.

The assessed value of the combined parcels is 11,149,400 effective January 1, 2024.

Page two and page three is the individual parcels and their assessment history and that's what they total.

We used the income approach for this property type.

It's a multifamily property.

The 2024 apartment assessment model uses a management fee of 4% of effective gross income.

We applied this to all multifamily properties.

However, we considered the smaller number of units of 69 at the subject property and increased the management fee to 6%.

Since the 2022 assessment, a reported

higher than normal vacancy for each year due to residents moving apparently from the subject independent living facility to the adjacent assisted living facility.

So we've also applied an extraordinary or high vacancy to value the subject property to take into consideration the actual vacancy.

On page four as the apartment assessment worksheet,

In page five, I can go over the income.

For 2022, the subject revenue was reported at 2,045,463.

They had a vacancy at year end of 33.3%.

So we had taken the reported revenue, grossed it up to 100% of potential, and then applied a vacancy, extraordinary vacancy and collection loss of 27.25%.

So after deducting the vacancy collection loss, we have an effective gross income of $2,230,775 or approximately $32,330 per unit.

The expenses for that were reported for the subject property with use with the exception of the management fee, which has been reduced to 6%.

which is 2% above the rest of the multifamily properties.

And real estate taxes have been excluded because they're loaded in the cap rate.

This is a multifamily property.

So we load the real estate taxes in the cap rate.

Replacement reserves have been estimated at 425 per unit.

And the estimated effective year bill weighted average is 1997.

A net operating income for the property is concluded at 847-803 after deducting the replacement reserves.

We have considered this property a grade four property.

The grade report is on page six and the description of grade four properties is presented there.

We used cap rate development using survey data and sales transaction for multifamily properties from the local and the regional markets.

We have national apartment data that ranges from 3.75 to 8.0% with an average cap of 5.25.

And the Mid-Atlantic region apartment market had a 4.25 to 6.50 spread with an average of 5.13%.

They're presented on page seven for reference.

We also have had local sales of grade 3A and grade 4 properties in the last year in the market.

The cap rates that these properties sold out range from 4.58% to 5.81%.

The sales that we use for are included on page nine.

They're throughout Virginia.

They have cap rates ranging from 3.22% to 6.50% with a median of 4.52%.

And the appraisal model, when we use mass appraisal model, we look at those sales cap rates in the aggregate, not individually picking a sale out.

So at 6.75%, which is the grade four cap rate, we believe we're well in line and well supported.

for that 6.75%.

When you add the tax rate to the cap rate of 6.75%, you have a loaded cap of 7.604.

That results in a value of 11,149,400.

I have an answer.

We tried to actually fix the way we were assessing the land

in 2023, and that's where the 180,000 came from.

We combined the location adjustment for the commercial related to commercial values with the multifamily rate that had been on there before when those two don't go together.

The multifamily rate had a 1.3 location adjustment for this location.

and a totally different scale of commercial.

It is 50% of the commercial used for the $40 rate.

So where we started at a multifamily rate with a 1.3 adjustment, we changed it to multifamily, the same rate with a 1.5.

That's why it dropped to 180.

And this year we finally, I think got it right with the commercial valuation

with all components being correct.

So the commercial rate with the correct location adjustment compared to at 50%.

So that's the difference over the last three years.

I don't know if it matters, but you're grading the apartments Grade 4?

Yes.

Why not use Grade 3T income restricted and senior apartments?

Yeah, that's for actual income restricted.

Not just because they're senior, but because they're income restricted.

And so we're actually using a lower grade than the three.

So if we were using a three, the value would be higher.

Okay.

Go ahead.

Yes, I'm not sure that we have, maybe I'm just going to discuss the second ground for our objection on WHSD.

We use the operating expenses.

What we did is the management was reported at, I believe, 12.9%, and it was reduced to 6%.

So this may be more than the board wants to know and cut me off if it is, please.

Cambridge Healthcare Holdings until 2020 was also involved in the skilled nursing business.

It owned and operated three nursing homes.

I'm sorry, I thought I left that in the corner.

I apologize.

Right, so it owned and operated skilled nursing homes, three of them, one in Alexandria, one in Richmond, and one in Colonial Beach, in West Portland County.

We had a significant, obviously, for efficiency purposes,

You try and have all your home office expenses in one place, rather than distribute them around.

So we had the departments, you know, that took their payroll for all of our operations, including, you know, Warren County.

Whether it was payroll or financial statements, bookkeeping, paying bills, you know, issuing invoices and collecting them.

We've invested our nursing homes in

December 30th of 2019.

So I needed to reduce my overhead.

I didn't need all of that manpower, which is what I've done.

What I did not do

is charged those people directly to the remaining operations in Albemarle County.

I kept them in the management company.

We don't mark up our services.

I think Deb and Peter see that.

And so we pass them through and we call it a management fee.

And it's only passed through.

There's an allocation based on how much work they do.

and what the respective revenues are for the operations.

So I think addressing the board but also the tax assessor that maybe we can clear this up if I change my corporate structure and I start having those people as employees of the Albemarle County operations

and have their compensation and benefits baked right into the actual expenses that we dispense with the whole notion of management fees.

For example, I think any assisted living, independent living community has an executive director, somebody who's in charge of the operation.

That person is typically not in a management fee.

They are an employee of the community.

We have a person who

Fortunately, or unfortunately, is in our management company.

So we allocate a portion of his salary to Linden House and to Branchlands.

It would be a lot easier if we just had him as an employee of Branchlands, like every other operation does, and then he would be in a management.

And that's probably what I should have done two years ago, three years ago, and I'll do next time around, I guess.

But the fact is that that 100 and some thousand dollars of compensation that any senior independent living community would have to pay for a person with that experience and responsibility

is not factored into our NOI.

A flat fee is, which is 6%, which is fair.

But the actual compensation of the executive director should be in addition to that, but it's not.

And I'm happy to sit down with Deb and with Peter and to work through all this.

They probably think I'm from Morris, I'm making these arguments and I frankly don't understand their positions.

Thank you, sir.

Okay.

Board have any further questions?

Okay.

Excuse me.

Thank you for your time.

Yeah.

Thank you.

Okay, so we're four minutes behind.

Are you guys ready to deliberate on this one?

I don't want to keep the next person waiting for too long, but I also don't want to leave everything for the end of the day.

I'm ready to act on this number 36.

Thank you, Mr. Norford.

Is there a second?

Second.

Thank you, Mr.

Beard.

All in favor?

Aye.

Aye.

Okay.

So we're affirming the, this is application number 36.

That's correct.

19657400.

Okay.

Thank you.

Okay.

Now we'll move to Board of Equization application number 37 for WHSB LLC.

On this one, I'm inclined to make a small adjustment.

I'd be interested, I guess, to hear what the assessor says, but to me, this kind of straddles the line between assisted living and multifamily.

I understand the assessor's point that you're not having

It doesn't look that much like multifamily or assisted living, but the fact that there's a commercial kitchen and they're supplying one meal a day to the residents with dining.

So having bid on contracts like scattered site rental,

property contracts before.

I just think 6% is too low for a management fee on this.

I would have thought it was 8% without the dining element, and I probably would have gone up for there where there's an operational responsibility beyond just normal multifamily.

At the same time, I disagree with the applicant's request to

I'm highly irregular to staff a $150,000 salary on a project like this.

That's not at all consistent with my experience of how these projects are run.

So I'd be inclined to ask for an adjustment of something like 7% or 3%, 7.5 or something like that,

And the actual operating expenses are significantly higher than those properties.

Yeah a little bit and you know I think the Assessor's Office recognizes this and saying there's a small number of properties that

my experience multifamily beneath 65 or 70 no one wants because it's not big enough to support on-site management like a you know someone doing facilities work and then like a lease or someone like that once you get over that they start to trade more like real multi-family properties based on the cap rate beneath that

Does he advertise this as assisted living?

I'm sorry, Sam?

No.

I think that was the second position.

His first position was sort of the number set forth in his letter, which were pretty high.

It was 144 plus 46, representing a quarter of a

accounts payable person, a payroll manager, oh no, that's one person, and then the accounts receivable manager and accountant.

So you're basically, that's one and a half people who wanted an executive rate and that's one that's out.

Should we raise the management fee to 70%?

In this particular property, I mean, there's a building you need to be able to adjust it, recognizing it doesn't fit neatly into assisted living with the other and the small size.

And in the future, it sounds like perhaps the accounting will be done differently and maybe there's more data to evaluate exactly what the management burden is.

Can we have a motion?

So, we're working on it right now.

We could determine a total value for all, and then we could distribute it the same way we did in the past, which is the total value minus the land, the total land, and then we break it down per unit for the improvements.

So the current value is 11,149.

Right.

That's reduced value at 260,000.

We'd like to contemplate this one a little longer.

I would ask that we table it and let the next applicant present.

I'll make a motion for appeal under 37.

We change the

Management fee to 7%, which brings the total assessment to 10,880,500.

Is there a second?

Thank you, Mr. Melu.

All in favor?

All opposed?

Okay, the assessment for Board of Equalization application number 37 is reduced to the number set forth in Mr. Norford's motion.

I have three separate valuations for application number 37.

They're all different.

Yes, we can break that down for you based on this total number.

So if you just make a note, we can fill all those out.

We are.

So we'll now call Mrs. Rachel Brooks from CBRE as tax representative for Berkmar Apartments LLC for an equalization application number 56 with address 1100 Monacan Lane.

If you raise your hand, I'll swear you in really quick.

We solemnly swear or affirm that the testimony, both oral and documentary, that you give today will be the truth, the whole truth, and nothing but the truth.

Thank you.

All right.

So we're starting with Berkmar.

So

I'm here to discuss the Berkmar apartments that are located at 1100 Monacan Lane in Charlottesville.

It was recently constructed in 2022.

During 2023, the property was in lease up.

We are looking at

across all the pictures, 261 units.

This would be considered a Class A apartment community.

As of the date of value of 1-1-24, the property was 90% leased.

There are some maps in here.

It is located on the southeast side of Charlottesville near Engine Airport.

So as stated, this is a garden-style community.

Average unit size is about 1,155 square feet, which is pretty average for the market.

Pretty much basic amenities.

It does have a pool, clubhouse, small gym.

And at its current occupancy, it's got about 10% vacancy.

That's pretty much stabilized, I would assume.

and the county did give the current assessment of $68,794,300, some consideration at the first level review.

However, I and ownership do still believe that there is a little more that needs to be taken into consideration.

specifically, not necessarily the actual operation of the property, but also in the capitalization rate, which I'm sure is not a new argument that is being presented to this board.

So the main approach to value for this property is the income approach, which is also how the county has approached it and is the most appropriate way to value an income producing property.

As stated, the property was 90% leased as of the date of value.

And so for purposes of preparing an income analysis on the property, we have used the actual income and expenses as of year end 23.

Understanding the county this year would be using 22.

However, as of 22, the property was not yet stabilized.

So we're looking at 23.

And in doing so we did also normalize the vacancy to 5% and considering 5% as stabilized versus the 10%.

To address the capitalization rate, the county is

Last year was using a base cap rate of 4.25.

I argued that at that time last year as well.

This year the county has increased the capitalization rate for a Class A, I guess a Tier 1 property to 4.75%.

However, considering everything that happened in 2023,

We are looking more at a 2022 valuation year as far as cap rates are concerned, which in 2022 the county was using a five and a quarter cap rate and I do believe that that's pretty much where we are back in 2024.

Below on page eight is a chart of cap rates from sales that either CBRE, our valuation team has either appraised or has confirmed with the buyer, seller, and the broker.

The cap rates that the county is using in their support, which I believe is on my page

My page 16 is the county's cap rate support, including multiple charts of regional multi-family cap rate sales ranging with A, B, and C class properties, and then

on page 18 is the county support for multifamily sales less than 30 million in sale price.

So really, if we're looking at the regional cap rates, there are some threes in that mix.

However, I think that the support here is a little skewed.

Most of the sales that took place that are in the threes

Typically, our sales of LAHTC or low-income housing tax credit properties built in the 60s and 70s, where the owners are also selling the tax credits, which drags down the cap rates into the 3s, we don't necessarily consider these market rate or market value transactions.

And so, for our support, we have, like I said, included a chart

with a range of sales that have taken place in the Northern Virginia area, but also some in Southern Virginia and coastal Virginia.

And as you can see, these are all relatively new properties and all of these sales with an average have traded at about a 5.39% cap rate with the lowest cap rate.

being in McLean, which is for us considered the Tysons Corner Market that sold at a 4.75.

So taking that into consideration, that is really the big sticking point for us.

Yes, the income is a little skewed for us as well.

However, it really does lie in the cap rate.

And so we are considering a cap rate of five and a quarter, which like I said,

the county did use in 2022.

Loading that with the tax rate brings us to a 6.1% cap rate and like I said normalizing the vacancy and everything else being equal indicates a value of 59 million 200 which is ownership's requested value from the current assessment of 68

No, 68794 is the current assessment.

Ownership is requesting a value of 59 million.

59, I thought you said 39.

200,000.

No, we do not want an increase.

Thank you.

The 59,200,000 would be the requested value.

I do understand that cap rate is a challenging argument and can be somewhat subjective, but CBRE also produces a cap rate study, which I've included in the back of the report.

and on page 57 of that cap rate study, which is implying the cap rate survey from the second half of 2023, just going off of Richmond's average in

The first half of 2023 cap rates were between five and five and a half percent for Class A stabilized property.

That then dropped again in the second half of 2023 from 5.25 to 5.75%.

Thank you.

Anything further?

I don't believe the argument about shape weights is true.

I'm looking for a mortgage or any other kind of market value.

Question.

But I also want to point out that there are some differences in our model and the way we do things.

Some structural differences, timing differences.

When we are typically looking at 2022 income and capping that for 2024 value, the cap rates in our schedule in order to actually meet market value might be a little bit lower than they would be if we were using 2023's income, which would have been higher than 2022.

And so,

We're still trying to get market value as of January 1, 2024.

Typically our data is a little behind when it comes to income and our cap rate has to adjust for that a little bit.

So sometimes you'll see our market rates in our schedule are slightly lower than what you'll find in a

either certainly performed a cap rate based on the immediate 12 months prior to the sale, which is what you typically see in a reported cap rate.

And I wanted to just point out this because I can't say enough about motivation of the applicant to reduce the value.

These three properties, which are three of our local sales that happened in 2023 of apartments.

The applicant, not this applicant, came to the board last year asking for these values as the market value.

44 million, six basically, 23 million, and just over seven million.

And then within three weeks of our hearing, those properties sold.

So they were already under contract when the applicant came to the board professing a market value that was

82%, 65%, and 70% of what they actually sold for immediately after.

Now, of course, those are sales in the next year.

They wouldn't have been considered in the, if they'd happened a month earlier, they wouldn't have been considered in the assessment either by us or by you, but

I just ask you to be careful with adjusting cap rates and the cap rate schedule based on some of these arguments because I don't think they're necessarily supporting market value.

We used the December 31, 2023 rent roll for this income approach.

It had a monthly revenue of $409,725.

The property was nearing stabilization with a reported vacancy of 9.5%.

Effective gross income was $4,916,700.

The market expenses were estimated at approximately 32% of effective gross income.

and the real estate taxes were not included in that because they are in the cap rate.

Net operating income was estimated at 15,071 per unit.

The replacement reserves based on the replacement reserve schedule that we provide over on the model was 300 per unit or 78,300 based on the year built.

The net operating income for the property

is concluded at 3,855,231.

This is a grade one property.

It's new, it's in the market.

It is got all of the amenities, very nice property.

The cap rate schedule that we developed, we've talked about this before, but it's on page eight of our presentation.

We use the national apartment market data as well as the mid Atlantic region apartment market data.

We look at local sales.

In this case, we had them.

They're presented on page eight as well.

We look at regional sales and they're not used individually, these sales, they're just used in the aggregate to help support the cap rate schedule that we're providing.

With regard to the cap rate of 4.75 for 2024, there was a comment made about 2022 rates

which were 5.25 and if you look back at our schedule 2021 was 5.75.

The loaded cap rate is 5.604 and the value concluded is 68,794,300.

If there are LIHTCs in here, it's just that we're looking at all properties in the market.

Of their LIHTC life.

I don't see how their tax credits would affect that.

I guess when we were discussing sales that are taking place now, if there really are any sales taking place now, the financing, these cap rates would be much higher.

I mean, I talk to brokers all day long that talk about sales taking place, what those cap rates look like now.

I mean, I don't know how the county plans to address these cap rates for next year.

but saying that the financing and everything that the 475 is appropriate, I still very much disagree with that.

I mean, if the board would recognize some sort of expansion, I mean, we could start at a five.

And if we did the load there, that would bring our value at the net operating income of 3.6 and some change.

I think the county was using a 3.8.

3.6 is what we're using, which I said is taking into account a little less vacancy.

If we started at a five cap, loaded that with the tax rate, that would still put us at $61,770,000.

As far as the LIHTC sales that are included, I've researched most of these that are in the threes especially, which I think is really skewing the average here.

Like I said, I've checked these out with our appraisal team because it looked crazy to me, like these 3.2s and 3.1s.

I don't know about the life of the tax credits, but these were all appraised for financing purposes, so there was clearly some kind of value still left there.

So with that said, I still think the cap rate that we are applying is correct, however, for sake of

of finding some sort of compromise and giving some sort of relief and recognizing the market we are sitting in now and not in 22.

At a 5% cap rate, capping the net operating income shown here would bring us to 61 million 770.

So I would be willing to increase our requested value to that level.

just to recognize some level of cap rate expansion.

Like I said, 475, that's not it.

It wasn't it at the beginning of 23.

It may have been it at the end of 22, but it's within the tax year 23, those cap rates just weren't transpiring anymore, which is evident in that.

List of sales of Class A fully stabilized properties that I presented on page 8.

Okay, any questions for the applicant or the assessor's office?

I guess it says here that you used the PWC real estate investor survey for third quarter 2023 at the time of the investment.

We would have had access to it under the review.

Yes, that is correct.

Right.

Well, I mean, that's not quite true.

I mean, we change things all the time when we have new data.

Is that it?

So then how do we answer an applicant though who says you're 90 days too early and I've got a right to have my property processed as of game one and the data coming out of those industry reports 90 days after the ones that you used was different.

If you are permitted, just consider that.

Well, that's a tough sell because

If it had been available, you guys wouldn't have used it, presumably because it's more accurate, because it's closer in time to the date of the valuation.

I mean, I understand your point is like a practical matter.

You can't update every one, right?

You can't do two assessments.

But when there is a trend in the data, and I'm not saying there is here, but when there is and the applicant brings that to us,

Seems like there would be a presumption that the data would be more accurate.

I mean, it's not a presumption, but I would tend to be more persuaded that the data was accurate because it's closer in time to Jam 1.

Assessments created?

Okay, and then their mail comes out in like January or something.

Yeah, it's a tough coin.

And maybe you say, hey, 90 days is just noise in the data.

The argument would be made in the other direction, Mr. Mayo, as well, though.

If they're going down, then they want to see that.

So this is a 12-month snapshot in time.

And I guess, you know, it extends one more quarter.

It's only a fourth of whatever the new snapshot is.

We don't have any choice but to change it if the value is different than what's presented to us, regardless of what we've done on everyone else, I think.

I mean, it's a good policy to try to approach things in a systematic way.

I think where I am on this is like I empathize with the CBRE's argument I think they're probably right that like the wind is pushing them in their direction but I think that the evidence presented overcomes the presumption of the assessor's office being correct and particularly you might want it to be convinced by the

They explained all that to us in excruciating detail.

So if they were sold and if they brought cap rates down, I don't think it was because of the credits still existing.

The tricky one.

I mean, it bothers me that the cap rates are in quarter point step.

I see where you have to take a snapshot in time and that's what it has to be.

And it goes both ways when it's going up.

I would like to make a motion to affirm the Assessor's Assessment of $68,794,300.

I'll second.

All right.

Thank you, Mr. Norford.

All in favor?

Aye.

All opposed?

OK. Board of Equalization application number 56 is the

Praisewell, the Assessor's Office or the assessment of the Assessor's Office is affirmed.

Well, I'm going to bore you because it's the same argument.

So this one is for the assessments on Stonefield Common Apartments.

at 3105 District Ave.

This is located in pretty much a retail hub behind Costco.

It is a 250-unit Class A apartment built in 2013.

As of the date of value, it was 95% leased.

It is a mid-rise community as of the date of value of 1-1-24.

The property was assessed at $82,906,500.

This did take into consideration a small reduction that the county offered at the first level.

With that said, we still believe that the actual operation of the property is not being recognized and is not being capitalized at the appropriate rate, which I don't necessarily have to go through all that argument again, but it's the same picture.

Still looking at that cap rate expansion.

If we're looking at the PWC information that was brought to

brought up into the prior discussion.

I mean, it's one data set.

CBRE surveys all of the owners and sales and transactions and brokers and whatnot that are a part of this.

And they too would like to see lower cap rates because that means higher values and higher commissions for those brokers typically.

So they're not a fan of this cap rate expansion either.

However, for the average national cap rate for the PWC report to be at 5.28 and the regional at 5.13 and we're still at a 4.75, I still take issue with that.

And then, like I said, within CBRE's report, which again, they are not fans of showing a downturn in the market either,

but it is the case and it is what happened and I actually quoted the wrong cap rate before with the second half actually being 5.5 to 6% within this packet that I gave you that's on page 47 of multifamily suburban.

So again, it's a cap rate discussion and whether you want to look at it quarterly, you want to look at it based on

22 Income, all of these cap rates that we are supporting with these sales are based on operation of at least one year of operation.

If anything, they're looking at multi years of operation, but the financing is just not possible.

at the cap rates that the county is assuming.

So I still, I'm sticking to my guns on my cap rate argument and whether you want to recognize the 3% LHCC sales or not per our appraisal team, they are not considered market sales per se.

So still,

Thank you.

Okay, so

When it comes to cap rates, I just want to also remind the board that these are grade one properties.

These are the highest grade apartments in the county.

They have the lowest cap rate.

Cap rates in the schedule include a range of properties.

So typically toward the best because they're more institutional properties, but they aren't necessarily just the primo grade ones.

They might include grade twos.

We have 4.75, but we also have 5.25, a range of cap rates in our schedule at which 4.75 is just the lowest because it's the highest grade.

So this property,

For the current assessment.

Do you have an adjustment for age or anything?

True.

We don't have an adjustment in the cap rate for age.

If it's a grade one property, it's the same cap rate.

But we do have a higher reserve amount for older properties.

And that'll be based on the age.

I inspected this property for this appeal.

This property is in excellent condition.

It's a beautiful property.

So there's no physical deterioration.

It's lovely.

We are not saying it's not.

The statement vacancy, 3.2 on the one that you guys provided.

Right.

You have 3.1, so I've got 3.2.

What page?

What page are you on?