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E&R 2002-06-17 I I I -.., NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 312 The New Hanover County Board of Equalization and Review met on Monday, June 17, 2002, at 3:10 p.m. in the Assembly Room of the New Hanover County Courthouse, 24 North Third Street, Wilmington, North Carolina. The purpose of the meeting was to hear appeals filed by property owners regarding their tax value assessments. Members present were: Chairman Ted Davis, Jr.;Vice-Chairman Robert G. Greer; Commissioner Julia Boseman; Commissioner William A. Caster; Commissioner Nancy H. Pritchett; Tax Administrator Robert Glasgow; Tax Appraisal Supervisor Larry Bolick; Assistant County Attorney Holt Moore; and Deputy Clerk Teresa P. Elmore. Chairman Davis called the meeting to order and welcomed everyone present. He apologized for the late start of the meeting due to the Regular Board meeting running behind schedule. Appellants were informed that the Board would make decisions following the hearings and notification of each decision would be mailed within a week. TAX APPEAL PRESENTATIONS TAX APPEAL - B.P.O. ELKS LODGE #532,5122 OLEANDER DRIVE, WILMINGTON, NC, TAX MAP NUMBER R06205-018-006-000 Tax Administrator Glasgow reported that the assessed value of the 3.57 acre tract land is $796,502. It is zoned CB and has 240 feet of frontage on Oleander Drive. The appellant's argument was based on the condition of the property, the limited use of a major portion of the lot, and the expense to correct the drainage problem. The drainage easement is part of the Riley's Branch drainage project and the lodge has indicated that they will be seeking remedies from those responsible for the drainage problems. Furthermore, the lodge felt that the rate applied to the property was higher than other properties along Oleander Drive. Mr. Pat Mulvey, chairman of the trustees for the Elks Lodge in Wilmington, presented the appeal for the Elks Lodge. He said that the drainage problem occurred when NCDOT constructed a drainage project at Riley's Branch. Stormwater is moved from three 52-inch pipes underneath Oleander Drive and empties out onto the lodge's vacant lot. Drainage from a nearby driving range also empties onto the property. Severe erosion has resulted from the drainage problems. The ditch is 30 feet wide and at some places 15 feet in depth. An engineer has estimated that the problem could be fixed by installing three additional 52-inch pipes at a cost of $240,000. Mr. Mulvey said that the average tax value of nearby properties on Oleander Drive was $181,000 per acre, but the lodge's vacant lot has a tax value of $227,000 per acre. Since one- third of an acre is lost because of the drainage easement, he estimated the value to be $585,000. Mr. Mulvey supported his argument with sales of three comparable properties on Oleander Drive 8et: ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 313 and two lots on Market Street having a value of $221,000 per acre. In the assessment support, Tax Appraisal Supervisor Larry Bolick reported that the value was reduced by $5,994 because of the erosion occurring around the drainage easement. The inequity in value of some of the lots has been corrected. The Rose Brothers Furniture property adjacent to the subject property has a higher tax value, but the owners have not appealed the value. The vacant tract ofland beside Jungle Rapids was purchased for $1,334,000. The Tax Department's assessed value is within 4.5 % of the qualified sale. The lodge has the property listed for sale at $850,000. The property is assessed like other properties along the south side of Oleander at $1,800 front footage with the residual at $99,000 an acre, which typically has a higher value than the north side. The comparable properties referenced by Mr. Mulvey as commercial properties were listed at less than half of the value because of having residential uses. The Tax Department recommended to uphold the assessed value of $796,502. Mr. Mulvey responded that the property could not be sold for less than the listed price of $850,000 because the grand lodge had established the selling price in 1998 before knowing about the drainage problem and they will not allow the property to be sold for less. At the conclusion of the hearings on this date, Staff pointed out that the land value had been reduced because of the drainage problem. The lodge is expecting NCDOT and the adjoining property owner to correct the drainage problems. Additionally, Mr. Mulvey had used comparable sales of properties from the north side of Oleander Drive while values on the south side are higher. The assessed value is supported by the sale of a lot next to Eddie Romanelli's, which sold for $1.3 million and is within 4% of the assessed value. Consensus: The Board agreed to uphold the assessed value of $796,502, as recommended by the Tax Appraisal Supervisor. TAX APPEAL: JOHN C. DREWRY, III, 86 WAYNICK BOULEVARD, WRIGHTSVILLE BEACH, NC, TAX MAP NUMBER R06308-025-006-000 Tax Administrator Glasgow reported that the property is a 2,484 square foot brick building on a 5,575.68 square-foot lot at Wrightsville Beach and is assessed at $606,692. The C-l Commercially zoned property has limited parking and is leased by Kohls Frozen Custard.. The highest and best use for the property is a retail store. An adjustment will be applied in changing the classification from a real estate office to a fast-food restaurant. The appellant's argument was based on the lot being too small for other uses, limited parking, and very poor road access. He stated that the majority of uses under C-l zoning requires a large amount of parking. Mr. Drewry, a state certified appraiser, has provided an appraisal based on sales ofthree comparable properties. He gave the opinion that the property value should be $276,802. I c" 1._ \.-. C I I I ,.., NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 314 Mr. John C. Drewry, III, the property owner, stated that he objected to the Tax Office using South Beach Grill as comparable to his property. The grill's lot has a 77-foot frontage on Waynick Boulevard and 85 feet along Lumina Avenue, a drive through, and 20 parking spaces. His lot is 37 feet wide instead of 40 feet listed by the Tax Department. He cannot apply for a special use permit because the property is too small, has limited parking with 5 parking spaces, and it has poor vehicular access. The property only can be used as an office or take-out food business. The assessed value is calculated at $84 per square foot while adjacent property is assessed at $49.98 per square foot. While two-thirds of the building is leased to Kohls, the remaining section is used for storage and is in need of repair. The completely remodeled South Beach Grill has a depreciation rate of 22 %, while his property has a depreciation factor of 12 %. Mr. Drewry requested the Board to reduce the tax value for his property to $276,802. He calculated that the $49.98 square-foot rate should be reduced by 30% to $35 per square foot because of the lot's restriction in getting a special use permit and the limited access to the property. The reduced value is further supported by the income approach to value of $250,000, based on market rent at $2,500 per month times the gross rent multiplier. In the assessment support, Tax Appraisal Supervisor Bolick stated that the land value for this area is priced at $42 per square foot. The value of Mr. Drewry's building is $54.97 per square foot, South Beach Grill is $83 per square foot, 17 Lumina Avenue is $44 per square foot, 216 Causeway is $42 per square foot, and 5 Lumina Avenue is $47 per square foot. Staff reviewed the appellant's appraisal, but the Tax Department used comparable properties within the immediate area of the subject property. The issue of limited parking is a circumstance that most business owners at Wrightsville Beach deal with during the summer season. However, the Town of Wrightsville Beach has built a municipal parking lot directly across the street from Mr. Drewry's property. The following comparable sales were presented: 101 Waynick Boulevard, sold in 12/1999 for $500,000, Tax Value $675,770 17 Lumina Avenue, sold in 11/1995 for $425,000, Tax Value $678,596 5 Lumina Avenue, sold in 10/1996 for $430,000, Tax Value of $439,932 Mr. Bolick concluded that the property was assessed fairly and equitably with other properties in the area. The municipal parking lot is an asset to the property. The Trolley Stop and most of Wrightsville Beach has limited parking. Mr. Drewry asked why the Tax Office used $49 per square foot as the basis for determining the land value for South Beach Grill and $80 for his small lot. Mr. Tom Nolan, a commercial appraiser for the Tax Department, explained that larger tracts of land are prorated as reflected in the market place. A 200 physical adjustment rate Oc8 ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 315 increases the value of smaller lots. The value rate is higher for the South Beach property. Mr. Drewry did not agree that smaller lots bring a higher price than larger lots per square foot. The Trolley Stop had sold for $265,000, but he did not use it in is comparable sales because he felt that the value assigned to the land was very high. The Trolley Stop business nets about $85,000 per year, which is the reason why the property sold for $265,000. He felt the South Beach property was more comparable in value with his property although the other had better access and more practical uses for the property. Appraiser Tom Nolan explained that the building value for the Trolley Stop is $125,000, and both had the same base rate applied to the properties. The market value of $265,000 is $100,000 more than the assessed value. At the conclusion of the hearings on this date, the Board discussed the limited use of the lot because of its size and location. Vice Chairman Greer did not agree that larger properties were worth less per square foot than smaller lots and he wanted to reduce the value. Tax Administrator Glasgow explained that physical adjustments were used as a means to assign the market value to the property. The County's computer system, purchased in 1989 for the 1991 revaluation, was unable to place a value of more than $999,999 per lot. Adjustments were made to correct the value in the computer system. The new computer system will not have this limitation and this type problem will not occur. The Board felt that the physical adjustments for the South Beach Grill and Mr. Drewry's property should be the same. Using the base rate of $42.00 per square foot and the physical adjustment of 119, the land value was changed to approximately $247,401. Consensus: The Board agreed to reduce the value of the property to approximately $385,736. TAX APPEAL: RICHARD AND ANN LAWING, 726 CUTTER COURT, WILMINGTON, NC, TAX MAP NUMBERS R09200-001-239-000 AND R09200-001-240-000 Tax Administrator Glasgow reported that the property is located in the Kure Beach Club neighborhood and consists of a 3,691 square-foot, two-story home built in 2001. The structure has a full basement with 36% finished area and an elevator. The house is valued at $309,812 or $83.94 per square foot. This lot and the adjoining vacant lot are valued the same as other lots in the area at $55,000. Mr. Lawing is a retired building contractor and Ms. Lawing is a real estate broker. Tax Administrator Glasgow reported that the appellants' argument on the land value was based on the purchase price of the two lots at $52,000 each. The elevator in the house was ~~s I I I ,.., NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 316 assessed at $5,000 more than its cost. The assigned value was reduced from $18,000 to $13,000. The appellants also stated that other properties they own in the area were assessed for less than comparable properties in the area. They did not agree that the finished basement area should be considered as heated space since a split heating system was not used. The appellants provided 14 comparable sales of properties in the area with the appeal. Ms. Ann Lawing, the property owner, said the tax value of the property was $100,000 more than the actual cost of the lot and newly constructed home. The house is located four blocks from the ocean front on a 50 foot lot. Although the house has three levels, only two levels are heated. A middle level has an open area in the foyer and cannot be used in the square footage. The lower level consists of a garage and partitioned rooms used for furniture storage. There is no access to the second level except through the garage. None of the properties in the surrounding area have sold for $380,000. Because no similar properties have sold in recent years, she presented properties listed for sale as comparable in value to her property. In the assessment support, Tax Appraisal Supervisor Bolick submitted comparable sales of four homes in the neighborhood that have quality grades of 150 and effective ages of 1, as does the subject property. The Tax Department reviewed the comparable sales provided by the appellant and found the square-foot value ranged from $74.65 to $98.93. Nine were between $80 and $89 with the average being $84.22 per square-foot and the appellants' home was $83.93. U sing the heated square footage of the houses divided by the assessed value, her comparable properties were valued from $88 to $138 per square foot, with her property at $99.09. Comparable sales used by the Tax Department were: · 417 Sandman Drive, sold 3/98 for $270,000 and has a tax value of $269,249 or $90.89 per square foot. · 446 Ft. Fisher Boulevard sold on 9/98 for $470,500 and has a tax value of $470,894 or $83.49 square foot. · 118 Clementree Lane sold on 7/98 for $235,000 and has a tax value of $240,459 or $88.12 per square foot. · 541 Anchor Way sold on 4/02 for $285,000 and has a tax value of$283,886 or $91.14 per square foot. Sales of comparable vacant lots include: · 225 Sealane Way sold in 1/99 for $54,500 and has a tax value of $55,000 · 512 Sandman Drive sold in 11/98 for $60,000 and has a tax value of $65,000 · 512 Sandman Drive sold again in 5/01 for $66,500 · 317 Sandman Drive sold in 7/98 for $70,000 and has a tax value of $65,000 Tax Appraisal Supervisor Bolick concluded that Mr. Lawing, a retired building contractor, GcE ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 317 was able to build the house for much less than the market value. However, mass appraisal is based on the market value of the property at the effective date of the revaluation and not the cost to the contractor to build or buy property at a discount. Fireplaces and bathrooms are established in the schedule of values as a unit price for all items and it does not matter if a fireplace is marble or an insert. The value is based on the effective age and quality adjustments. Mr. Bolick recommended to uphold the assessed value of $364,812 for lot and house and $55,000 for the vacant lot. Ms. Lawing responded that the Tax Office used comparable sales from Kure Dunes, which is the highest elevation on the beach and a mile from her home, while she used comparable prices of houses on her block. At the conclusion of the hearings on this date, the Board discussed the use of the lower level of the house and whether the owners received a cost break in the construction of the house. Tax Administrator Glasgow remarked that the construction was of high quality products and worth well over $100 per square foot. He also pointed out that the Lawings paid $52,500 per lot, and the assessed value is $55,000. Commissioner Boseman stated that she may have done the loan closing for the owners of the house and she requested the Board to recuse her from voting on the matter. Motion: Chairman Davis MOVED, SECONDED by Commissioner Caster, to recuse Commissioner Boseman from voting on the appeal and to uphold the assessed value of $364,812 for the house and lot and $55,000 for the vacant lot, as recommended by the Tax Appraisal Supervisor. Upon vote, the MOTION CARRIED 4 to O. TAX APPEAL - JOHN D. AND ROSE MARIE MOLLOZZI, 2024 MONTROSE LANE, WILMINGTON, NC, TAX MAP NUMBER R05107-010-001-000 Tax Administrator Glasgow reported that the property is a vacant lot overlooking the golf course in Landfall. Mr. John D. Mollozzi, the property owner, was not present and he did not provide any documentation to the Tax Department. Being that it is incumbent upon the appellant to show the value is incorrect, Mr. Glasgow recommended the Board uphold the value of $165,255. The property is equitably and uniformly appraised as other properties on Montrose Lane. Consensus: At the conclusion of the hearings on this date, the Board agreed to uphold the assessed value of $165,255, as recommended by the Tax Appraisal Supervisor. TAX APPEAL - NORTH CHASE HOMEOWNERS ASSOCIATION, 2832 NORTHCHASE PARKWAY WEST, WILMINGTON, NC, TAX MAP NUMBER R02619-008-057-000 Tax Administrator Glasgow reported that the property has 13.26 acres of improved land, lGt: I I I ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 318 consisting oftwo swimming pools, two bathhouses, one basketball court, two tennis courts, wood canopy for a picnic area, lighting, parking, fencing, and utility building. The assessed value is $516,085. The recreational area provided by the developer for the property owners was sold in November 1995 to the YMCA for $200,000. NorthChase Homeowners Association purchased it from the YMCA in April 2001 for $180,000. The appraised tax value for the property in 1999 was $322,275, but it did not include all the miscellaneous improvements. The property was non- taxable while it was owned by the YMCA and the improvements were not picked up by the Tax Department because exempt properties were not given priority. He recommended to waive the 10 % penalty for late discovery. Mr. Glasgow reported that the appellants argued that the purchase price of $180,000 was the market value for the property and they felt that the tax assessment should be billed to the individual members of the homeowners association. Mr. Charles Meier, attorney representing NorthChase Homeowners Association, stated that the appeal was based on the high assessed valuation of the property and that the assessment was charged to the homeowners association for 2001 when it should have been charged to the individual members of the homeowners association. He confirmed that the property included a basketball court, two tennis courts, swimming pool, kiddy pool, two bathhouses and a covered picnic shelter. In addressing the assessed value, he stated that the 13.26 acre tract is heavily encumbered by a 100 foot easement around the well site, two drainage easements along the boundaries of the property, and a 50 foot landscaped and recreational easement around the corners of the property excluding the separate parking area. Because of well sites and easements, the property is practically unuseable for building purposes. Buildable areas were used for the parking lot, swimming pools, and basketball and tennis courts. Mr. Meier stated that NCGS 105-281 requires properties to be assessed at true value and the market value is the value at which the property would exchange hands between a willing and financially able buyer and a willing seller, neither being under any compulsion to buy or to sell. He explained that the property had changed hands twice over the last seven years. In 1995, Ammons, the developer of NorthChase, sold it to the YMCA for $200,000. In 2001, the NorthChase Homeowners Association purchased the property for $180,000. He concluded that the purchase price was the best indicator of value. Although the property is unique as a recreational center in a subdivision and primarily has value to that subdivision and the members of the homeowners association, it does not have a readily apparent market value to persons other than to the YMCA and to the NorthChase Homeowners Association. Mr. Meier advised that homeowners associations are covered under the NCGS 105-277.8, which states that property of homeowners associations is not taxed to the association, but is distributed to the members of the association. In 2002, the Tax Department agreed to distribute the assessed value of the property among the members of the NorthChase Homeowners Association, but the property tax for 2001 will be taxed to the association instead of the members. PeE ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 319 He objected based on the statute that specifically states that associations are not to be taxed. The deed to the property shows that common areas are conveyed for the benefit and enjoyment of the members of the NorthChase Homeowners Association. The property was tax exempt while it belonged to the YMCA. The association received a tax bill on January 25, 2002 for $322,275. The Tax Department was requested to change the billing to the members of the association, however, the County agreed to make the change beginning in 2002. For 2001, the Tax Department wanted the association to pay the tax and they increased the value to $516,000. Mr. Glasgow had explained in a letter to Mr. Latham that the sale was identified in April 2001, but the Tax Department did not change the classification of the property which would have generated a tax bill in September. They found the error in January 2002. Mr. Meier stated that representatives of the NorthChase Homeowners Association were present to testify on the condition and sale of the property from the YMCA to the NorthChase Homeowners Association. He concluded that it was an arm's-length sale when the developer sold the property to the YMCA and when the association purchased the property from the YMCA. Mr. Richard Lofton, president ofthe NorthChase Homeowners Association, explained that the YMCA first offered the property to them at $200,000. After an inspection of the property, the HOA offered $160,000 based on the condition ofthe property and what they felt the homeowners would agree to pay. However, the property was purchased for $185,000. Substantial improvements had been made to meet the standards of the County for a recreational facility. The YMCA had operated the facilities for three months out of the year. He presented a HUD statement which accurately reflected the financial transaction between the YMCA and the NorthChase Homeowners Association. Mr. Ronald Ryan, a homeowner in NorthChase since 1989, stated that he served on the NorthChase board of directors for two years while the property was managed by Ammons NorthChase Corp. In 1997, the homeowners association was formed and he served as president for four years. At the time the property was offered to the homeowners for $150,000, but many of the homeowners were unable to purchase the property. The YMCA made slight improvements to the property because of the day care center, but they did not maintain it sufficiently. Mr. David Latham, property manager of CEPCO the management firm for the homeowners association, stated that he had notified the Tax Department of the error in billing the homeowners association, a non-profit corporation. Mr. Ammons, the grantor of the property, had graciously deeded the tract of land, which included a listing of the common areas, to the members of the association. According to NCGS 105-277.8, common areas are not taxable to homeowner associations. Mr. Meier reiterated that the purchase of the property was an arm's-length transaction and he requested the Board to reduce the value of the property to $180,000. <, ' /1 I"~ ".' t,' t, I I I ,.., NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 320 Tax Administrator Glasgow explained that the Tax Department missed the transfer of ownership for the property in 2001 and sent a revised 2002 tax notice which included the miscellaneous improvements with the corrected value of$516,000. Although the law requires that the tax value must be distributed to the property owners or members of the association, a revised notice would have to be sent to the 961 property owners. To reconstitute the tax bills for each property owner would mean a large amount of work for the Tax Office, and it would mean 961 appeals to the increased property value. He suggested that it would be more appropriate to have the homeowners association pay the 2001 tax bill, and the 2002 tax bill will be mailed in August 2002 reflecting the value determined by the Board of Equalization and Review. If the value is reduced to $180,000, each of the 961 individual property owners would be assessed approximately $187, a value of $322,000, would be $335.00, a value of $516,000 would be $537. He recommended to waive any penalty to the property owners and to bring the assessment forward as a discovery in exchange for billing the association instead of the individuals. The value of $516,000 was based on the 1999 Schedule of Values. The YMCA gave a special and reduced rate to the homeowners of NorthChase to use the facilities. When the homeowners did not use the facilities, the YMCA finally abandoned the property. Mr. Latham responded that initially the YMCA required residents of NorthChase to purchase a regular membership with the YMCA. In the months preceding the offer to purchase, NorthChase residents were offered a special membership fee of $50 for use of the NorthChase facility, which did not include rights and privileges for other YMCA facilities. The members of NorthChase Association declined the offer. Then they began to discuss selling the property. Two other groups were interested in purchasing the property, but that would not be compatible with the NorthChase membership since the facility is in the middle of the neighborhood of 1,000 homes. Mr. Meier reiterated that the 2001 tax assessment should be given to the members of the association instead of the association. The association did not budget funds to pay the taxes, especially on the value of $516,000. A special assessment would have to be made to each member in order to collect the funds to pay the taxes. Furthermore, individual homeowners will have a tax benefit ifthey itemize their standard deduction. The association's bill would not be tax deductible. Since the Tax Department has identified the property owners and the mechanism is in place to send the 2002 tax bill to each owner, the Tax Department should be able to send the 2001 tax bills to the individuals. Tax Administrator Glasgow responded that some homeowners may not be willing to file an amended tax return for 2001 for such a small amount. Commissioner Caster asked how the homeowners wanted the billing to be done. Mr. Lofton responded that the homeowners may not be aware of the issue since it was not discussed at the last quarterly meeting. The next newsletter will notify them of the Board's decision. 9GS ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 321 Tax Administrator Glasgow advised that not all homeowners associations distribute the assessed value to their members, since some have memberships from those outside the subdivision. Property must be exclusively used and maintained for the membership if the individual property owners are charged. However, the 961 members of the NorthChase Association are the actual homeowners in NorthChase Subdivision and they are be entitled to individual bills. Mr. Meier responded that unless an association objects, the County sends the assessment to the association. If a developer conveys common areas to the association, the County will tax the association. He requested the Board to have the tax bill distributed to the members of the association in accordance with the statutes. At the conclusion of the hearings on this date, the Board discussed the impact of well sites and other easements on the value of the property. Commissioner Caster informed the Board that Mr. Ammons wanted to sell the property to the homeowners, but they did not want to do business with him. After Mr. Ammons sold the property to the YMCA, the YMCA almost went bankrupt. They had sold the property in order to get some cash. The sale could not be considered an arms-length transaction. The YMCA did not maintain the property as well as the homeowners would have. Tax Administrator Glasgow suggested reducing the value to the 1999 value of $322,275 by making an adjustment for functional obsolescence on the property. He explained that the Board could reduce the value of the land by 50% because of the easements and well sites. The land value could be reduced by $100,000 and other adjustments could be made on the miscellaneous improvements. Tax Administrator Glasgow stated that billing the homeowners for the 2001 assessment would be a problem for the Tax Department. Each property owner would have to be keyed in individually. He suggested to reduce the value and see if the homeowners association would pay the bill. Chairman Davis noted that for his time-share property at Baldhead, the treasurer sends a bill listing his share of the taxes for the year and he uses the bill for his taxes. He asked if the association could bill the homeowners for the taxes. Vice Chairman Greer responded that the property owners are entitled to separate billings, and if the association does not want the single billing, the County should bill the individuals. Tax Administrator Glasgow suggested waiving the penalties for the late discovery. He would check to see if the collector can add the 2001 tax assessment to the 2002 bill. He believed that the County will have to generate a separate bill. s(~~ I I I ,.., NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 322 Chairman Davis suggested that the homeowners association could be told that the Board will reduce the value by $150,000 to $369,000 and waive the penalty, and asked the association to accept the billing for the 2001 assessment. Chairman Davis asked the cost for billing the individual property owners if the tax value is reduced to $369,000. Tax Administrator Glasgow responded that the cost would be one day of keying the billing plus postage to the 961 owners. Ifthe individual is assessed $380.94 per homeowner for a total tax value of 365,180, the taxes would around $5 per person. The penalty would be 10% of the assessed value of $516,085. Consensus: The Board agreed that the Tax Administrator should discuss the issue with the NorthChase Homeowners Association to see if an agreement could be worked out. TAX APPEAL - LLOYD E. ROBERTS, 1928 SOUTH SIXTEENTH STREET, WILMINGTON, NC, TAX MAP NUMBER R06007-002-014-000 Tax Administrator Glasgow reported that the property owner withdrew the appeal for the medical office on South Sixteenth Street. At the conclusion of the hearings, the consensus of the Board was to uphold the assessed value of $307,428, as recommended by the Tax Appraisal Supervisor. TAX APPEAL - GARY R. WALKER, 6509 GREENVILLE LOOP ROAD, LOT 220, WILMINGTON, NC, TAX MAP NUMBER R06200-003-049-00G Tax Administrator Glasgow reported that the property is a 1989 Fleetwood Lake Pointe double-wide mobile home, located on a lot leased by the owner. The home is 1,400 square feet and in average condition with wood decks on both the front and back. The assessed value was reduced from $31,134 to $29,280 because of clerical errors. The appellant's argument is that the property should be listed as personal property and not real property and that the personal property value should be $17,164. Mr. Thomas Hicks, attorney representing Mr. Walker, stated that Mr. Walker in 2000 executed a month-to-month lease for lot 220 in Greenville Loop Mobile Home Estates for $245 per month. It has been at this location for several years, but the mobile home was reclassified from personal property to real property. He believed that taxing the improvements as real property was erroneous and resulted in an inflated value of the mobile home. Mr. Walker paid $34,000 for the home in 1989, and the NADA base value is $17,164. Mr. Hicks said that NCGS 143.9, paragraph 6 states that a manufactured home is defined as a multi-sectional residential structure with a moving hitch, wheels and axils removed and placed on permanent enclosed foundation, and that the foundation is on land owned by the owner of the 8eE ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 323 manufactured home. He contended that the mobile home was not on a permanent foundation and Mr. Walker does not own the land. However, Mr. Walker does lease the property for the purpose of placing the manufactured home on the property. While Chapter 105 does not specifically define the leasing of the property, the legislators in session law 2001 506 defined the process in turning a manufactured home into real property. Statute 105-273 essentially includes single-wide and double-wide mobile homes as real property when the owner places the mobile home on property he owns. At this point the title is surrendered to the Department of Motor Vehicles, a declaration of intent is affixed to it and it is filed in the Register of Deeds as real property. Mr. Hicks explained that in Mr. Walker's case, two requirements of Chapter 105 have not taken place. First, the mobile home has to be placed on a fixed and enclosed foundation, however, this mobile home is set on concrete blocks with vinyl underpinning placed in such a way that it can be quickly moved. Secondly, the manufactured home must be affixed to property owned by the owner of the land; however, this mobile home does not belong to the owner of the land and is subject to a month-to-month lease. He surmised that this mobile home depreciates in value while real property appreciates in value since it is affixed to land on a temporary basis and is appraised at a substantially lower value. He requested the Board to assess the personal property at the NADA rate of $17,000. In the assessment support, Tax Appraisal Supervisor Bolick stated that in 1997 New Hanover County made the decision to classify all double-wide mobile homes with permanent improvements as real property. Prior to this decision, only double-wide mobile homes situated on land of the owner were considered real property. The tax value of the subject property would remain the same regardless of the classification. He recommended that the value of the properties be upheld. The County does not have any double-wide mobile homes assessed as personal property due to the decision made in 1997. Tax Administrator Glasgow reported that the General Assembly recently passed a law that all double-wide and single-wide mobile homes which are not permanently affixed to land owned by the owner should be classified as personal property. The law caught a lot of Counties off guard and they will need to reclassify these mobile homes as personal property. However, the Department of Revenue will address the issue and work with the General Assembly to add a caveat to the legislation to say that the reclassification would become effective with the next general revaluation. Also, County jurisdictions do not use NADA, but other guides to determine values. Double-wide mobile homes have begun to appreciate in value. Mr. Hicks reiterated that if a mobile home is placed on a piece of land the value will go up, but not if it is in a mobile home park. The 2001 session law changed the requirements for double- wide and single-wide homes as real property, and he contended that the property should be evaluated as personal property. NADA provides an adequate basis to determine the evaluation at $17,000. I /C' LC,c, I I I ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 324 At the conclusion of the hearings on this date, discussion was held on classification of real and personal property. Staff stated that the County does not have a schedule of values for double- wide mobile homes and hoped that the General Assembly would delay the change until a revaluation. In New Hanover County all double-wide mobile homes are still considered real property. If the Board changes the classification to personal property, the real property value can apply. In the County's appraisal, double-wide mobile homes have a tendency to appreciate in value. Single-wide mobile homes tend to depreciate and NADA uses a sliding scale of depreciation. Consensus: The Board agreed to reduce the assessed value of the mobile home to $29,280, as recommended by the Tax Appraisal Supervisor and to change the listing from real property to personal property. TAX APPEAL - SUMMERSET AT WRIGHTSVILLE, LLC, IN POINTE SUMMERSET SUBDIVISION, WILMINGTON, NC, TAX MAP NUMBERS R05608-004-013-000 THRU R05608-004-038-000 Tax Administrator Glasgow reported that the appeal is on 26 developed and undeveloped lots in Pointe Summerset Subdivision, located off Eastwood Road. The assessed value is $60,000 per lot. The density is approximately 4.2 lots per acre. Tax Administrator Glasgow stated that the appellant, Stanley N. Patelos, is the owner and developer of the subdivision. His argument is that the lots are priced lower than the assessed value and that the value should be no more than $25,000 per lot. Although no lots were sold until this year, some have sold for $45,000 to $47,000, which he felt was an exceptionally good price. He does not separate the lot cost from the total sales price, which makes the value much lower than the value by the Tax Department. The developer has sold a number of lots to Hagood Homes, which he felt was representative of comparable properties. Mr. Patelos provided a complete appraisal dated June 20, 2001 for 6.66 acres of vacant land in Phase 2 of Pointe Summerset for $550,000. He also objected to the County assigning lot costs to the combined sales and listing the home as an extra. Mr. Jim McDonald, representing the property owner Stanley N. Patelos, stated that the value of the lots should be no more than $25,000. The development of patio homes is behind a brick wall next to Cavalier Ridge. The developer has marketed the properties since 1996, but sales have been slow for a variety of reasons. In 2001, multiple sales were made to Hagood Homes, who is the current developer of the project. All sales have been between $45,000 and $47,500 per lot. Based on density at 4.3 lots per acre, the assessed value of $60,000 per lot equals to more than $250,000 per acre. In comparing the property to half-acre lots in King Arthur Extension of Cavalier Woods, the sales price of $75,000 to $85,000 per lot equals to $150,000 to $160,000 per acre. He believed that the selling price to Hagood Homes was the best indicator of value and it was an arm's length transaction between the seller and the buyer. He requested the Board to reduce the value between $45,000 to $47,500 per lot. He said that the selling prices of the patio OE8 ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 325 homes have ranged from $196,000 to $255,000 for 1,900 to 2,200 square-foot homes. In the assessment support, Tax Appraisal Supervisor Bolick said the assigned lot values were based on comparable properties prior to the 1999 county-wide revaluation. Eastport, almost directly across the street, has five lots per acre with individual lot values of $55,000. A review of sales in the development shows ten developed lots with buildings had a total selling price of $2,316,000, and an assigned tax value of $2,314,650 or 99.94% of sales price. Although the developer said that individual lots were not sold until recently, a sale was recorded in May 1999 for lot 25 for $60,000. The homeowner said that he paid for the lot before he was allowed to build. The house is assessed at $197,513 and a total tax value of $257,513 includes the lot. In review of the appellant's comparable properties, Stranton Village should not be included because it is not as good a location as the Summerset property. Also, the builder did receive a variety of discounts depending upon the number he purchased. Using the sales of a total package as a guide, the value of a lot is usually 25 % of the total price. Twenty-five percent of a $240,000 sale will set the value ofthe lot at $55,700 to $60,000. He recommended the Board to uphold the value of $60,000 for the lot. Although Mr. Patelos sold the lots for $45,000 and $47,000 in 2002, it is not an indication of the value for 1999 when the value was established. Mr. McDonald responded that the 1999 sale was for an entire package and the homeowner was required to pay $60,000 for some of the building cost before starting the project. However, the $60,000 was not the selling price of the lot, but a portion of the complete package. The purchaser may not have understood the arrangement or it may have been mis-communicated. Tax Appraisal Supervisor Bolick replied that the sale was not used to establish the 1999 lot value. The value was actually determined in November 1998. At the conclusion of the hearings on this date, discussion was held on developers using the builders' discount to determine the market value for the buildable lots. It was agreed that using 25 % of the total value of a home and lot was a fair basis to use for the value of a lot. Tax Administrator Glasgow stated that the value is also supported in the assessed value of lots in Eastport, which has 5 units per acre assessed at $55,000 per lot, and Cavalier Woods with one-third to one-half acre lots assessed at $75,000 per lot. He explained that the value of a lot does not decrease by half when the size of a lot is cut in half. The value of a one-fourth acre lot in the same neighborhood would probably be $50,000. Tax Appraisal Supervisor Bolick stated that the Tax Appraisers would work with the percentages since they could not force a specific value. He requested some flexibility to determine the value. h/~\ '-/ '~.1 \....# I I I ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW MINUTES OF REGULAR MEETING, JUNE 17, 2002 BOOK 1 PAGE 326 Consensus: The Board agreed that the assessed value should be changed to an amount between $57,500 and $57,900 as closely determined by the adjustment factors. TAX APPEAL - WARREN W. BARNES, 136 SKYSTASAIL DRIVE, WILMINGTON, NC, TAX MAP NUMBER R06309-002-004-001 Tax Administrator Glasgow reported that Mr. Barnes had submitted plans in 1995 for subdividing a .46 acre tract. The Planning Board approved the plan based on a survey that showed each parcel containing more than 20,000 square feet. However, one ofthe lots used the low-water mark instead of the high-water mark as its boundary. An adjacent property owner notified the Planning Department of the error and the Planning Board rescinded the subdivision. Mr. Barnes is now requesting a refund oftaxes he paid on the two properties from 1996 to 2001. Initially, the Tax Department denied the refund because it was felt that Mr. Barnes' intent was to mislead the County in order to sell one of the lots. After reviewing the situation with legal counsel, he was advised that when the subdivision plan was rescinded, the property had to be put back on the tax rolls as it was prior to the subdivision and that a refund should be given. As advised by counsel, Tax Administrator Glasgow requested the Board to approve a refund to Mr. Barnes. Consensus: At the conclusion of the hearings on this date, the Board approved a refund to Mr. Barnes for the amount over paid in taxes on the two parcels from 1996 to 2000. TAX APPEAL - WILMINGTON DEVELOPMENT COMPANY, 5221 MARKET STREET AND 5229 MARKET STREET, WILMINGTON, NC, TAX MAP NUMBER R04912-001- 011-000 AND R04912-001-001-000, Tax Administrator Glasgow reported that Mr. Michael L. Prevatte withdrew his appeal. Consensus: At the conclusion of the hearings on this date, the Board agreed to uphold the assessed value of $3,125,268 and $548,846, as recommended by the Tax Appraisal Supervisor. ADJOURNMENT There being no other business, Chairman Davis requested a motion to adjourn the Board of Equalization and Review for 2002. Motion: Vice Chairman Greer MOVED, SECONDED by Commissioner Caster, to adjourn. Upon vote, the MOTION CARRIED UNANIMOUSLY. GE8 ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW BOOK 1 MINUTES OF REGULAR MEETING, JUNE 17, 2002 PAGE 327 The meeting adjourned at 6: 10 p.m. Respectfully submitted, J~fJ~ Teresa P. Elmore Deputy Clerk to the Board lr:S