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HomeMy WebLinkAboutM082907 ()\ tQU~e ~~~ g~~~ ~ co (ti ~) z \. *! '~ 1820 Jefferson Street P.O. Box 1220 Port Townsend, WA 98368 James A. DeLeo William S. Marlow Richard A. Broden MINUTES August 29, 2007 William S. Marlow Richard A. Broders James A. DeLeo Chairman Vice-Chairman Member Chairman William S. Marlow called the meeting to order at 10:00 a.m. in the presence of Vice-Chairman Richard A. Broders. Member James A. DeLeo was absent. HEARINGS Janet M. Hill 781 Leland Valley Road W. Quilcene, W A 98376 BOE: 07-14-R PN: 802252025 Ms. Hill was present. Appraiser Dennis Pownall represented the Assessor's office. After explaining the hearing process Chairman Marlow swore in both parties. Under appeal is a residence situated on 1.8 acres located at 781 Leland Valley Road W. in Quilcene. Ms. Hill stated she was shocked when she received her assessment notice. The value of her house increased 369% and the value of the land also increased dramatically. She presented photographs of her house that show the poor condition it was in at the time the property was revalued. The photographs speak for themselves. After the property was reassessed she received a grant from Housing Preservation to make improvements to the house, so it is important to note that some improvements have been made since the photographs were taken. With the grant she was able to rebuild the foundation and replace the windows. She then got a loan and had to pay $1,800 for six months to buy insurance. For 23 years she has lived there and could not find an insurance company that would insure the house because of its poor condition. She added that the appraiser contacted her prior to the hearing and offered to reduce the value of the house by 50% and stated that the house is "grandfathered" and that "rich people" would jump at the chance to own her land and tear down her house to rebuild a new home on its footprint. The house was built in 1901. She doesn't see how the appraiser's comment pertains to her situation, nor does she feel it is fair to make such a comment. She has no intention of selling the property. Currently, the property is assessed at $147,660 ($73,200 for the land and $74,460 for the improvements). She estimates the value is 570,000 ($50,000 for the land and $20,000 for the improvements). Phone (360)385-9100 Fax (360)385-9382 jeflbocC@Co.jefferson.wa.us Board of Equalization Minutes - AUl(ust 29, 2007 Pa~e: 2 Mr. Pownall explained that he offered the appellant a 50% reduction in the valuation of the house using a completion factor because the house is in a condition that it could be remodeled. It is basically incomplete. The issue is whether or not the property is worth the assessed value in its current condition. He has no doubt that if she put it for sale on the open market at the assessed value it would be sold in a week. It is a very desirable site that overlooks the lake. He feels the property has been undervalued for a long time. For many years prior to this most recent assessment the house was valued under $16,000. Finding comparable property sales was difficult because this parcel is not waterfront property and there are not many parcels in the area which are that close to the lake and yet don't front the lake. In response to a question posed by Ms. Hill, Mr. Pownall explained the utility valuation. Ms. Hill stated that she shares a well with a neighbor and has a problem with water pressure being too low. Mr. Pownall made a general statement that twice now, appellants from Lake Leland have been offended by statements made by the Assessor's staffthat were actually complimentary. To say that a person's land is a desirable piece of property is a compliment. It's not in anyway a negative statement. Ms. Hill replied that she did not say that it wasn't complimentary. She was just stating what was said and she has no judgement about it. Hearing no further testimony, Chairman Marlow closed the hearing. The Board will conduct a physical inspection of the property and make a determination at a later date. Kah Tai Medical Investors, LLC c/o SC& H Group, LLC 910 Ridgebrook Road Sparks, MD 21152 BOE: 07-15-C PN: 949817101 Scott Sheppard representing Kah Tai Medical Investors participated via teleconference. Senior Appraiser Bob Shold represented the Assessor's office. After explaining the hearing process Chairman Marlow swore in both parties. Under appeal is a 24,315 sq. ft. building which currently used for a convalescent nursing care facility for the elderly. It is situated on property which is zoned commercial and located at 751 Kearney Street, Port Townsend. Only the improvement value is being disputed. Mr. Sheppard explained that the facility is 33 years old and has 75 skilled nursing beds. The skilled nursing industry has changed noticeably over the last 5 years. With the rapid development of assisted living and continuing care retirement facilities which offer independent living, more elderly residents are being shifted away from skilled nursing facilities until absolutely necessary. Residents with disposable income are overwhelmingly choosing these "private-pay" type of facilities because ofthe amenities and the structure. As a result, more and more skilled nursing facilities are becoming home to residents who cannot afford the "private-pay" type of facilities and must rely on Medicaid and Medicare. Government reimbursement programs for Medicaid and Medicare are fixed and limited which in turn limits revenue and the operating margin of older skilled nursing facilities. Board of Equalization Minutes - Au~ust 29, 2007 Pa~e: 3 In addition, skilled nursing facility operations are highly specialized and are generally considered to have a large business component, as well as a Real Estate component. There are required furniture and fixtures, a medical workforce and licensing agreements with Medicaid, Medicare and local jurisdictions. All these things add to the value of the property above and beyond the value of the Real Estate. Also included in the information he presented was information on the facilities income and expenses over the last four years and a capitalization rate analysis to convert the net operating income that was used as the basis for their estimate of value. This analysis was from a national senior housing research firm and shows that skilled nursing is considered a much higher risk operation than independent living which is generally senior apartments or assisted living which provide moderate care. In regard to the sale of this property in 2004 for $3,200,000, he clarified that the sale was not an "annslength transaction". The buyer was a tenant in the facility prior to the purchase and was paying $500,000 annually for the lease. The buyer purchased the property for $3,200,000 because, even though it created a negative cash flow, the debt on the purchase was less than the well above market lease rate. The seller was under no obligation to agree to a fair market sale price because the tenant was in good standing and forced by lease agreement to pay a high annual rent stream. A typical buyer would not have paid that much for the property based on the limited income being produced. The sale also included the licensing agreement and permits for the 75 skilled nursing beds. These permits are not part of the real property and can typically be transferred or sold to other facilities. The Assessor's determination of value is $2,925,125 ($929,900 for the land and $1,995,225 for the improvements). The appellant's estimate of value is $1,100,900 ($929,900 for the land and $171,000 for the improvements). Bob Shold explained that the property was revalued in 2005. The value was established based on the sale of the property in November of 2004 for $3,200,000. Hearing no further testimony, Chairman Marlow closed the hearing. The Board will make a determination at a later date. Meeting adjourned. Attest: 8z~" ~a_ ,) Erin Lundgren, Clerk ofthe~~ JEFFERSON COUNTY BOARD OF EQUALIZATION ., A- ~ktJ~Chairm Richard A. Broders, Vice-Chairman L a fY<-L-. res A. DeLeo, Member