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HomeMy WebLinkAboutM0109140� O� W Dave Garing Henry Krist Mike Smith 1820 Jefferson Street P.O. Box 1220 Port Townsend, WA 98368 Dave Garing Henry Kriat Michael Smith MINUTES January 9, 2014 Chairman Vice - Chairman Member Chairman Dave Garing called the meeting to order at 9:30 a.m. in the presence of Vice - Chairman Henry Krist and Member Michael Smith. APPROVAL OF MINUTES Vice - Chairman Krist moved to approve the minutes of July 31, 2013 and August 8, 2013. Chairman Garing seconded the motion which carried by a unanimous vote. ASSESSOR'S CERTIFICATE OF NEW CONSTRUCTION VALUE The Board reviewed the Assessor's Certificate of New Construction Value. Vice - Chairman Krist moved to accept the Assessor's Certificate of New Construction Value for 2013 in the amount of $24,156,525. Member Smith seconded the motion which carried by a unanimous vote. REQUEST TO RECONVENE A "Request to Reconvene" was received by the Board of Equalization for the 2013 season. It was submitted on the basis that the taxpayer has met the specific requirement outlined in WAC 458 -14 -127 RECONVENED BOARDS- AUTHORITY (1)(c) which states that Boards of Equalization may reconvene on their own authority to hear requests or appeals concerning the current assessment year when the request or appeal is filed with the Board by April 30 of the tax year immediately following the Board's regularly convened session and when a bona fide purchaser or contract buyer of record has acquired an interest in real property subsequent to the first day of July and on or before December 31 of the assessment year and the sale price was less than ninety percent of the assessed value. The Clerk of the Board confirmed with the Assessor's Office that the appellant has met this requirement. Phone (360)385 -9100 Pax (360)385 -9382 jeffbocc@co.jefferson.wa.us Board of Equalization Minutes — January 9, 2014 Page: 2 Vice - Chairman Krist moved to reconvene the 2013 Board of Equalization for the following taxpayer appeal that was timely filed: NAME PARCEL NO. David Lawrence 962 700 036 Member Smith seconded the motion which carried by a unanimous vote. ASSESSMENT CORRECTIONS Vice - Chairman Krist moved to accept the following assessment corrections. Member Smith seconded the motion which carried by a unanimous vote. APPELLANT APPEAL NO. PARCEL NO. Sanderling Office Properties, LLC BOE 13 -20 -R 989 703 802 Ron Riggle BOE 13 -60 -R 994 200 049 Aimee Boulanger & William Patric BOE 13 -59 -R 984 902 204 HEARINGS B.C. David Testamentary Trust BOE: 13 -17 -R PN: 931 600 111 Kathryn Gifford, Trustee 1633 Water Street, #11 Port Townsend, WA 98368 Michael & Valerie Phimister BOE: 13 -18 -R PN: 931 600 104 1710 Cleveland Street Port Townsend, WA 98368 Laura Medlicott BOE: 13 -19 -R PN: 931 600 107 1633 Water Street, #7 Port Townsend, WA 98368 Kathryn Gifford, Trustee, Michael and Valerie Phimister and Laura Medlicott were present. Independent Appraiser, Ralph Ericksen, was also present and represented the appellants. Appraiser Charley Hough represented the Assessor's Office. After explaining the hearing process Chairman Gating swore in all parties. Under appeal are three condominium units (Unit #11; Unit #4; and Unit #7 respectively) in the Bay Vista II condominium building located at 1633 Water Street, Port Townsend. Board of Equalization Minutes — January 9, 2014 Page: 3 Following is the current assessment and the appellants' estimate of value for each unit under appeal: Parcel No. Current Assessed Value Appellants' Estimate of Value 931 600 111 $383,965 ($168,000land/$215,965 imp.) $291,132 ($100,000land/$191,132 imp.) 931 600 104 $329,945 ($140,000land/$189,945 imp.) $272,067 ($ 100,000 land/$172,067 imp.) 931 600 107 $341,250 ($140,0001and/$201,250 imp.) $265,000 ($100,000 land /$165,000 imp.) Mr. Ericksen provided an independent appraisal for each unit using the same information and he read the following excerpts from his appraisal: "DISPUTED ASSESSED SITE VALUE METHODOLOGY. As it stands, the assessed value of the subject site appears to have been calculated based on what an individual single family residential waterfront site might bring in the open market. The subject is part of a condominium project and the individual site cannot be separated from the project site as a whole, even though the units can be sold individually. The base value used by the Jefferson County Assessor appeared to be about $140, 000 per condo unit and there appeared to be some adjustment for tax reduction programs but those are not considered in this report. The total assessed value of the subject site is currently $1,120, 000 but there appears to be three units that are assessed lower than the base $140, 000 due to reductions for special taxing programs. If those three units were assessed at the base rate of $140, 000 the total assessed value of the site would be about $1,624,000. Sales of waterfront land reasonably similar to the subject are extremely limited in the area. The downtown waterfront is virtually built out and sales from other areas might not have the same potential for development or access to utilities, etc. However, there was one sale just a couple of blocks down the beach to the southwest that sold in November of 2009 for $1,050,95 7. It was all of Block 19 in LB Hastings 1 sr Addition (listed as 1901 Water Street, Port Townsend) and it fronts on Water Street where the arterial curves and becomes Sims Way. The lots in that block are about 55x110 feet each, there are 8 lots with four on each side of the block. The total block measures about 220x220 feet and it was advertised as being about 46,75 7 square feet. It tends to be a point area, part of the land is probably on the beach but the portion on the beach would probably only be part of the east and south corners of Lots 1 and 7 and there is an easement to the neighboring property for part of a parking lot, somewhat similar to the parking arrangement for the subject. However, there is a portion of undeveloped Front Street that extends beyond the block to the southeast above the beach. It did not appear to have been vacated and would not be buildable but could be part of the setbackfrom the actual beach and could be landscaped for use by occupants of some future building on the block At any rate, Lots 2, 4, 6 and 8 front on the street and are the full size, Lots 3 and 7 also appeared to be full size and front on the water side, along with the reduced Lots 1 and 7. This block has had an approved plan in place for condominium development but there had also been preliminary approval for a 40 unit hotel. The new owner is a small hotel chain but has not ruled out the possibility of either use when developed. The building and total number of condo units could beat least twice the size of the subject project. In the undeveloped stage, that would indicate about $47,72 7 per unit as site value, based on a possible 22 condo units. Part of Blocks 6 and 7 in the Port Hadlock plat (listed as 64 & 81 Water Street in Port Hadlock), sold 10/12 for S679,000. It would be about three lots and contain between 15, 000 and maybe Board of Eaualization Minutes — January 9, 2014 Page: 4 20, 000 square feet and there would be a little over 100 feet of waterfront with an old dock It is of reasonably similar size to that of the subject and it is considered commercial but there is no sewer service in the area and a condo project on the tract is probably very unlikely. However, it is about the only other potential commercial type site of similar size to that of the subject and it would indicate a much lower value for the subject than even Block 19 of Hasting's I", listed above. Beyond that, the waterfront sites tend to be single family residential and there were twelve between Port Townsend, Cape George, Marrowstone Island and Port Ludlow that sold between 5107 and 10112 for between $260, 000 and $485, 000. None would be in an area where any type of commercial or condominium development would be allowed. Still, they offer some comparison of typical residential waterfront site value, even though 5 were over an acre in size. Based on these sales, there is no supporting evidence that the value of the subject site could be anything close to $1,624, 000 or even $1,120, 000. The tract about three blocks down the beach at 1901 Water Street might indicate something closer to $500, 000 to $700, 000 for the total land site for the subject condominiums. COMPARISON OF ASSESSED VALUE TO PRICE IN RECENT SALES: The condominium projects in the Port Townsend, Kala Point and Port Ludlow areas tend to vary considerably. These are the primary areas where there are condominium projects locally. They might not be competitive with each other due to location or even type ofproject but there can be some interesting indications along the line of the relationship between the sale prices and the assessed value, or lack thereof There has been several condo sales over the last few years and the indications tend to be quite consistent but, for the sake of brevity, only the most recent sales from each of the following projects will be included. The following comps will be arranged from a complex probably least like the subject on size and quality to those that might be considered more like the qualify of the subject. " Although, Mr. Ericksen provided six sales of comparable properties in his appraisal he only discussed Comparable Sale #1. He explained that he used the same methodology for all six comparable properties and then applied the same methodology to the appellants' units. He read the following excerpt from his appraisal: "1. The Olympic View Terrace Condominiums were a recent conversion of a modest apartment complex, most of the units tend to be small, some with one bedroom, some with two, most have only one bath. It is several buildings, all are wood frame with plywood type siding and they tend to be two and three story (the three story buildings tend to have daylight basement type units). The remodeling and conversion was recent and some of the units are being sold for the first time since that conversion. This complex would probably be least like the subject but still useful in comparison of sale price to assessed value. Unit 37 in Building A at 1930 Lawrence Street Port Townsend, sold in November 2012 for $105, 000. The assessed value was $136,625 ($61,625 or $125 per square foot for improvements and $75,000 site value). The assessed value was about S31,625 or 30% above the sale price. Recognizing that cost does not necessarily equal value, a cost indicator might still be a useful tool in segregating the value of the improvements out of the price and offer some insight into the contribution value of the site. This complex might be considered average or below in the Marshall and Swift tables (the most recognized cost data service for the Pacific Northwest and many other areas of the Country) and the indicated adjusted cost factor would probably be about $102.39 per square foot. The unit was only about 493 square feet, which would indicate about $50, 478.27 for the unit and there would be about $7,920 (based on the tables) for the improvements Board of Eaualizafion Minutes — January 9, 2014 Page: 5 like parking, landscape, handicapped access, etc. The total improvements should contribute about $58,398.27. There is probably no allowance for physical depreciation, even though the building is somewhat old, because it was completely renovated and updated Deducting the improvement value from the sale price, the indicated site value is about $46,601. 73. The assessed value of the site was about 40% above what the market supports. " He continued to read the following excerpt from his appraisal: "S UMMA R Y OF A SSESSED VALUE TO PRICE COMPARISON. Most of these sales are the most recent (since 1213112012) in each complex, except where there was reason to believe it was not arms length or not typical of or similar to other recent sales in each development. Half sold for less than the assessed value, half sold for more. However, in each case, the assessed value of the site was well above the indicated contribution value based on actual sale. Dividing the assessed value of the improvements in the sales by the square feet of the units, the range of per square foot value is somewhat similar to what has been taken from Marshall and Swift, however, there is no consistency in the assessed value factors related to the quality of construction. It would appear that there was no coordination of the use of any cost factors used by the appraisal staff in the Assessor's Office. All of these projects were revalued well into the current economic downturn and there should have been some consistency based on sales. It isn't just because they were revalued in different years, Comps 5 and 6 are in Port Ludlow and would have been addressed at the same time. Comps 1 and 2 are in Port Townsend, both tend to be a lesser quality than the subjects and the other comps but the per square foot value of improvements differs by around 15 %. Only Comps 3 and 4 indicate some consistency with each other but there is the biggest separation between them and Comps 5 and 6, the Port Ludlow Sales, and they would be the most competitive with each other. It seems to be pretty apparent that the value factors used by the Jefferson County Assessor's Office were not based on hard sale data, nor were they based on consistent use of those factors provided by Marshall and Swift. Sales do not support the Assessor's Office conclusions and further indicate that the value factors used are not relevant to market value. If the factors used are not relevant to market value, the conclusions would be considered to be very unreliable and the comparisons used above, based on actual sales for six condominium projects would bear that out. As previously stated, the sales used are very consistent with other sales and assessed values that were gathered from the period between 2008 and 2012. That being the case, the number of sales included in this report could have as much as tripled and the indications would have been very similar. " Mr. Ericksen stated he used the same methodology to determine the site value for each unit. He then read an excerpt from the appraisal report of Unit 7 (Laura Medlicott Parcel No. 931 600 107): "SUBJECT SITE VALUE: The subject of this appraisal is a second floor unit in the Bay Vista II Condominium complex. The unit contains about 1,150 square feet and it is one offour similar sized units on the second floor. As such, it is not actually in contact with the ground but part of the total site value would be a contribution value to the subject and each of the other units in the building. The condominium units can be sold separately and the sale price would certainly contain some amount of value for a site, even if it was to be a pro rata share of the total site value. Typically, there would be comparable sales on which to base a value estimate but comps in this case are extremely limited. That being the case, there will need to be some extractions from some other sales that might contain improvements and not necessarily being condominium units. Board of Equalization Minutes — January 9, 2014 Page: 6 CONCLUSION. It would appear that the site value for the subject unit should be about $100, 000. The improvements would probably be calculated at the same rate as those condos in the original comps 3 through 6 or about $138.26 per square foot. At that rate, the subject has about 1,150 square feet and that would indicate about $158,999 before adjustment. There should be a physical depreciation allowance for the effective age (about 5 years) and that would amount to about S15,900 and leave a depreciated value of about $143,000. The building has a parking garage and each unit has an assigned parking space and that should be calculated at about $6, 000. There is also some guest parking that can be used by guests to any unit that should probably be calculated at about $3, 000. The building also has an elevator, it would normally be of no significant value to those on the ground level but it also travels to the parking garage. For that reason, it probably contributes about $5, 000 to each unit. The subject unit should include the $6, 000 for the single garage space, $3, 000 for the guest space, $5, 000 for the elevator and about $8, 000 for the exterior parking, landscape, etc. That would add about $22, 000 to the indicated value of the improvements. The total contribution value for the improvements should be about $165,000. " Using the same methodology for each condominium unit, Mr. Ericksen estimates the approximate values to be: BOE 13 -17 -R 931 600 111 (Unit #11) BOE 13 -18 -R 931 600 104 (Unit #4) BOE 13 -19 -R 931 600 107 (Unit #7) $291,132 ($100,0001and/$191,132 improvements) $272,067 ($100,000 land/$172,067 improvements) $265,000 ($100,0001and/$165,000 improvements) Appraiser Charley Hough stated he provided the same documentation for each appeal with the exception of Exhibits 1 -4 that pertain to each specific condominium unit. The appellants' property was valued as of January 1, 2013. He discussed the following comparable property sales provided by the appellants in the independent appraisal: Appellants' Comparable Property #1 (Exhibit 7 -9) Parcel No.: 978 200 137 Location: 1930 Lawrence Street, Port Townsend (Olympic View Terrace Condo Bldg. A, Unit 37) Value: $101,800 (Value as of 1/1/2013) Sale Date: November, 2012 Sale Price: $105,000 Appellants' Comparable Property #2 (Exhibit 10 -14) Parcel No.: 951 800 020 Location: 23 Grant Street, Port Townsend (Forest Park Condo Unit E -4) Value: $136,110 (Value as of 1/1/2013) Listed Price: $149,500 Sale Date: November, 2012 Sale Price: $148,000 Board of Equalization Minutes — January 9, 2014 Page: 7 Appellants' Comparable Property #3 (Exhibit 15 -18) Parcel No.: 965 500 008 Location: 41 Seaview Court, Port Townsend (Kala Heights, Phase 1, Bldg. 4, Unit 4008) Value: $300,395 (Value as of 1!1!2012) Listed Price: $365,000 Sale Date: September, 2012 Sale Price: $330,000 Appellants' Comparable Property #4 (Exhibit 19 -22) Parcel No.: 965 300 044 Location: 40 Upper Bluffs Drive, Port Townsend (The Bluffs, Bldg. 22, Unit 3044) Value: $274,450 (Value as of 1!1(2012) Listed Price: $332,500 Sale Date: October, 2012 Sale Price: $320,000 Appellants' Comparable Property 45 (Exhibit 23 -26) Parcel No.: 990 200 042 Location: 181 North Bay Lane, Port Ludlow (Port Ludlow Condo 42, Unit 706) Value: $228,100 (Value as of 1/1 /2011) Listed Price: $299,500 Sale Date: December, 2010 Sale Price: $280,000 Annellants' Comparable Pronertv #6 (Exhibit 27 -30 Parcel No.: 951 500 201 Location: 60 Fairway Lane, Port Ludlow (Fairway Village, Unit 2 -A) Value: $203,300 (Value as of 1/1/2011) Listed Price: $235,000 Sale Date: June, 2011 Sale Price: $220,000 Appraiser Hough noted a sale occurred recently in Bay Vista II Condominiums (Unit 41). The unit sold for $320,000 on December 30, 2013. The assessed value as of January 1, 2013 was $329,945. The sale occurred 12 months after the assessment date. Chairman Gazing asked Mr. Ericksen if he objected to Appraiser Hough providing the tax affidavit for the recent condo sale in Bay Vista II to the Board? Mr. Ericksen objected. Appraiser Hough stated that the appellants are requesting an additional 24% reduction. The appellants' land and improvement values were reduced 30% since the last assessment on January 1, 2009. There is not another condo within the City or County that compares to the quality or amenities of Bay Vista II. The units have access to underground parking, an elevator and beautiful views. Mr. Ericksen testified that the Assessor's Exhibits 5 and 6 reference sales that occurred after the January 1, 2013 assessment date. He said the rule is to provide evidence of comparable property sales that occurred on or before December 31, 2012. He stated Appraiser Hough provided a list of assessed values in his packet of information. It was his understanding that using assessed values of other Board of Equalization Minutes — January 9, 2014 Page: 8 properties is not allowed or acceptable in this process. The recent sale in Bay Vista II occurred after the assessment date. It is irrelevant and can't be allowed as evidence. He agrees that the Lawrence Street units are not comparable, but he used them to show a reasonable perspective of what the contribution values of the improvement and the site should be. He feels his independent appraisal meets the standard of the preponderance of evidence to support the appellants' position. Mr. Ericksen has not seen supporting evidence of how the Assessor's Office established the appellants' values. Chairman Gating clarified that the appellants must show proof of, "clear, cogent and convincing" evidence. Not a "preponderance" of evidence. Mr. Ericksen responded that "preponderance" is part of the RCW requirement and he feels he has met the standard. Appraiser Hough said he provided "all" sales that occurred in the City of Port Townsend six months prior and six months after the January 1, 2013 assessment date to show what sales are happening and if the sale price was at or around the assessed value. He mentioned two property sales that were not used by the appellants: 1) Sold in July, 2012 for $164,200 and is assessed at $147,400; and 2) Sold in February, 2012 for $161,000 and assessed at $127,575. Also not used by the appellants were four condominium sales that occurred in the Bluff condos at Kala Point. Each sold for more than the assessed value. Appraiser Hough then discussed the newly built Nordland Condominiums located on Lawrence Street which he feels are more comparable than the sales used in the independent appraisal. He discussed the history of the construction of the Bay Vista II condominiums. Some units have sold above the purchase price two or three times. Member Smith asked how many units are located in Bay Vista II? Appraiser Hough replied there are 11 units in Bay Vista lI. Chairman Gating said in looking at the independent appraisal, specifically comparable sales #'s 3, 4 and 6, the sale price is more than the assessed value and he doesn't understand how that is a problem? Mr. Ericksen responded that the problem is in the breakdown of the improvements and the site value. The Assessor's Office appears to be assessing the sites as if each unit is a single family residence. The site value needs to be broken down into proportional shares for each unit. The appellants are providing documentation on how they arrived at their estimate of value. The Assessor's Office has not provided evidence on how they established their value. Chairman Gating stated that the Assessor's Office is presumed correct and the burden of proof is on the appellant. Mr. Ericksen replied that he has provided documentation showing the burden of proof. Appraiser Hough referenced Docket #49223 of the Washington State Board of Tax Appeals where they determined that listing prices of the subject property can't be ignored. Listing prices set an upper level of value. In the case of Docket #49223, the listing price exceeded the assessed value by approximately $100,000. Appraiser Hough provided the listing price for the following Bay Vista II units: Unit #1 is assessed at $329,945 as of January 1, 2013. On October 2, 2012 it was listed for sale at $399,000; In March, 2013 the listing price was reduced to $369,000; and ultimately sold for Board of Equalization Minutes — January 9, 2014 Page: 9 $320,000. Unit #2 is assessed at $341,250. On October 2, 2012 it was listed for $395,000 and on December 31, 2012 the listing price was reduced to $375,000. He stated that the Assessor's Office doesn't use sales flyers to set values, but they need to be aware of them. Chairman Gating asked Mr. Ericksen if he would like to comment on the recent sale of Bay Vista II Unit #1 discussed by Appraiser Hough? Mr. Ericksen replied that the sale of Unit #1 is irrelevant because it occurred after the assessment date of January 1, 2013. He doesn't know the particular conditions of the sale. Chairman Gazing asked if Mr. Ericksen would like to postpone the hearing until he has had a chance to review the sale of Unit #1? Mr. Ericksen responded that he does not want to postpone the hearing. He is not allowed to use sales that occurred after the assessment date for his independent appraisal and the Assessor's Office is not allowed to either. He stated that it is not about what the value is today. Chairman Gating stated that the Washington State Board of Tax Appeals has used sales that occurred after the assessment date when making their determinations. He said he will contact the State to get clarification on this issue. Hearing no further testimony, Chairman Gating closed the hearing. The Board will make a determination at a later date. NOTICE OF ADJOURNMENT Vice - Chairman Krist moved to adjourn the meeting at 11:20 a.m. Member Smith seconded the motion which carried by a unanimous vote. ATTE T: - Le ie R. Locke, Clerk of the Board JEFFERSON COUNTY BOARD OF EQUALIZATION v _ Cr Dave Garin , hai mil Q i7 Henry Krist, Vice - Chairman Michael Smith, Member