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HomeMy WebLinkAboutE&R 2006-05-22 I I I 41 ~ ,., BOOK 1 PAGE 362 NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW, MAY 22, 2006 ASSEMBLY The New Hanover County Board of Equalization and Review met on Monday, May 22, 2006, at 9:00 a.m. in the Assembly Room of the New Hanover County Courthouse, 24 North Third Street, Wilmington, North Carolina. The purpose ofthe meeting was to hear appeals filed by property owners regarding their tax value assessments. Members present were: Chairman Robert G. Greer; Vice-Chairman William A. Caster; Commissioner William A. Kopp, Jr.; Commissioner Nancy H. Pritchett; Tax Administrator Robert C. Glasgow; Assistant Tax Appraisal Supervisor/Revaluation Coordinator Roger Kelley; Assistant County Attorney Holt Moore; and Deputy Clerk to the Board Teresa P. Elmore. Commissioner Ted Davis, Jr. was absent. Chairman Greer called the meeting to order and welcomed everyone present. He informed the appellants that the Board would make decisions following the hearings and the Tax Administrator would notify each of them by mail of the Board's decision. TAX APPEAL PRESENT A TIONS TAX APPEAL: SPIRO J. MACRIS, 914 S. LUMINA AVENUE, WRIGHTSVILLE BEACH, NC; TAX MAP NUMBER R06806-004-004-000 Tax Administrator Glasgow reported that the subject property consists of a single-family dwelling located at 914 S. Lumina Avenue, Wrightsville Beach. The dwelling, built in 1965, is of brick and frame construction. The assessed value is $471,766. Appellant's Argument: The appellant believes that the value should not change as there has been no new construction to the property since he purchased it in the late 1970's. The appellant believes that the Tax Department received information from a bank appraisal on his property, which prompted an increase in the tax value. Assessment Support: The reason for the value change was a discovery of a portion of the dwelling which was not properly identified and valued during the initial software conversion in 1991. A Base Over Garage (BOG) in the old OASIS software required the area of both the garage and room over the garage to be entered into the database twice. During the recent conversion of the tax data from the OASIS software to the new IAS4 software, more than 100 similar situations were identified and corrected. Dr. Macris was notified of an $11,700 increase in the 2006 evaluation. The Tax Department had no knowledge of the appellant's appraisal by the bank. It would have been a violation of the Uniform Standards of Professional Appraisal Practice if the County had used the appraisal without the appellant's permission. Secondly, the tax value is based on the 1999 Schedule of Values and would be in conflict with a new appraisal. North Carolina General Statutes require the correction of all identified errors regardless of when they are identified. The correction applies for tax year 2006 only, meaning the appellant did not pay taxes on this portion of his property for 15 years. General Statutes allow Counties to go back 5 years to correct a clerical error. Conclusion and Recommendations: The taxpayer did not provide evidence to support his claim that the County used the bank's appraisal to increase the assessed value. Therefore, the increase in value of$11,700 ~ 41' 4 NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW, MAY 22, 2006 BOOK 1 PAGE 363 for tax year 2006 is correct and appropriate in accordance with North Carolina General Statutes. Dr. Spiro Macris, property owner of 914 S. Lumina Avenue, presented his appeal saying that no additions or modifications have been made to his home and the garage has always been a part of the house. He received a valuation change notice on March 6, 2006, just after receiving a bank appraisal on February 23, 2006. He questioned the Tax Department about the circumstances and he wanted to know more about the new appraisal software that changed the value of his home. He did not claim the value exceeded the 1999 value, but questioned why an evaluation took place prior to the revaluation scheduled for next year. He felt that the Tax Department was pressuring him against appealing the value by saying they could apply the correction for the past five years. Mr. Glasgow reported that the County purchased the new tax appraisal software from Tyler Technologies/CL T Division. When comparing the new software program with the old OASIS system using the 1999 Schedule of V alues, they found the area of the garage was not assessed. He assured the Board that it was simply a clerical error made during the conversion of 1989 and 1991 which carried forward until the new software program found the error. Mr. Kelley reported that the new software also found errors in value for 81 porches. In order to make future discoveries or releases, values calculated by the new software must match the values of the old program. Some homeowners were notified in November of the correction, but most were notified in February. Adjustments were between $10,000 and $20,000 per home. Commissioner Kopp confirmed that the County made a mistake and the adjustment was not from a discovery of a garage or any addition. Mr. Glasgow pointed out that 11,000 homes with base over garages were done correctly. The square footage was captured correctly, but a coding error was found. No value was entered for the garage. It was a coincidence that the mailing was sent out at the same time that Dr. Macris received his bank appraisal. In further discussion, Chairman Greer said that the County determines the value of a structure based on the square footage. He believed that the value of the house should not change since no change had occurred on the structure. Dr. Macris expressed appreciation for the Board's consideration. Motion: In deliberations after the hearings, Commissioner Pritchett MOVED, SECONDED by Vice- Chairman Caster, to uphold the assessed value of$47l,766, as recommended by the Tax Administrator. Chairman Greer believed that an increase in the assessment was not justified. He felt that the value should be reduced because the value ofthe garage was included in the living space. Vote: Upon vote, the MOTION CARRIED 2 TO 2. Chairman Greer and Commissioner Kopp voted in opposition. In further discussion, Mr. Glasgow reiterated that the homeowner must prove the adjusted value is incorrect. He reported that if the Board does not uphold the value, the Tax Department will need to waive the adjustments for the other 180 homeowners with similar errors. I I I ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW, MAY 22, 2006 BOOK 1 PAGE 364 Chairman Greer disagreed with Mr. Glasgow saying that the circumstances may not be the same for the other homeowners. Mr. Kelley explained that the structure has 2,000 square feet ofliving space and is valued at $75 per foot for the heated area. The property should have received a value for the garage area, but it did not. Commissioner Kopp expressed concern that the homeowner believed that the County increased the value because of the bank appraisal. He felt that too many questions existed on the reasons for the adjustments. However, Commissioner Kopp said he would trust that the Tax Department handled the assessments properly and he would change his vote. Mr. Glasgow assured the Board of his integrity and veracity to do his job and he would not infringe upon property owners' rights to question the validity of their valuation. Change of Vote: After receiving the assurance from the Tax Administrator, Commissioner Kopp changed his vote to affirm the assessment of $471,766. The MOTION CARRIED 3 TO 1. Chairman Greer voted in opposition. TAX APPEAL: RUTH E. YARBOROUGH AND LAURA PARKS, 169 SPRING CREEK LANE, WILMINGTON, NC; TAX MAP NUMBER R03718-007-025-000 Tax Administrator Glasgow reported that the subject property consists of a 16,553 square foot vacant lot located in the Spring Creek! Argean neighborhood of Middle Sound. The zoning for this neighborhood is R-20. This parcel was subdivided by the developer/owner and later sold to Ruth E. Yarborough. The property owner beyond the subject parcel accesses his property on the north side of the vacant lot. However, no easement or right-of-way is recorded for his use. The assessed value is $38,000. Appellant's Argument: The appellant believes that the assigned tax value is not representative ofthe 2006 fair market value since the subject parcel was denied a variance by the New Hanover County Board of Adjustment on June 24, 1997. Laura N. Parks presented a letter from Mr. Bruce W. Deschamps, a certified real estate appraiser, stating the land has no value. Therefore, Ms. Parks has requested the assigned land value be changed to reflect no value. Assessment Support: After reviewing Ms. Parks appeal, it was agreed that the subject parcel was unbuildable under New Hanover County zoning requirements and minutes of the Zoning Board of Adjustment. The Tax Department does not agree with Mr. Deschamps that the parcel does not have any value. Every parcel in New Hanover County has some value. The subject parcel has value for several reasons. The owner directly behind the subject parcel was the developer ofthis area and he must access his residence through the northern side of the subject property. Although the subject property is unbuildable under current zoning regulations, it would appear that the property owner directly behind the subject property would want to purchase the property since there is no record of an easement on the subject property. Perhaps the property could be used as a small park or green space. Conclusion and Recommendation: The Tax Department agreed that the assigned tax value of$38,000 is excessive for an unbuildable parcel in this neighborhood, and has agreed to reduce the value to $19,000. Ms. Parks does not accept that value. It is recommended that the tax value for 2006 be reduced to $19,000 as an unbuildable lot. OGV j NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW, MAY 22, 2006 BOOK 1 PAGE 365 Laura N. Parks, daughter of Ruth E. Yarborough the property owner, stated that she lives at 101 Spring Creek Lane and she has power of attorney for Ms. Yarborough. Ms. Yarborough purchased four lots in the early 1980s and built and sold homes for 3 of the lots. She received well and septic permits for the remaining lot, but was unable to get a building permit. A deficiency in the lot size of 8/1 00 of an acre went undetected when the subdivision plat was approved by the Planning Department. She had requested a variance from the Zoning Board of Adjustment for the deficiency, but was denied because the neighbors who attended the meeting objected. She believed she did not receive a fair hearing because the chairman at that time, Pete Devita, had a conflict of interest. She recently learned that Mr. Devita's brother lives and owns property at 114 Spring Creek Lane. Even though a structure would not conflict with any set back requirements of the Zoning Ordinance, no deal could be negotiated with the neighbors for a variance. Assistant County Attorney Moore advised that the primary concern before the Board of Equalization and Review was the decision made by the Board of Adjustment. Unless a variance is granted, the lot cannot be built upon. Ms. Parks said she is unable to get health care and housing assistance for her mother because her mother owns the lot. Furthermore, she is unable to sell or borrow money on the lot because of the unrecorded easement and lot size issues. She requested the Board to change the assessment ofthe lot to no value. If the status of the lot changes, she realized that she would be required to pay taxes for the property. Mr. Glasgow responded that a value change can be made, but they are unable to go back and make changes for past years. He reiterated that the property has some value, whether an adjacent property owner, the County, or the community purchases it for green space or a park area. In deliberations after the hearings, Commissioner Pritchett agreed with Staff that all property in the County should have value particularly on Middle Sound. In discussion of the 1997 decision made by the Board of Adjustment, Assistant County Attorney Moore advised that Ms. Parks should make a formal appeal to the Zoning Enforcement staff if she has a contention about the decision. Staff would forward her appeal to the Legal Department for advisement. The Board of Adjustment could reconsider the request. Motion: Chairman Greer MOVED, SECONDED by Commissioner Pritchett, to reduce the assessed value to $19,000, as recommended by the Tax Administrator. Upon vote, the MOTION CARRIED 4 TO O. TAX APPEAL: FBC HOLDINGS, LLC, 20 NORTH FOURTH STREET, NC; TAX MAP NUMBER R04817-030-001-000 Tax Administrator Glasgow reported that the Tax Administrator initially approved the Application for Property Tax Exemption submitted by Attorney W. Berry Trice on behalf ofFBC Holdings LLC, the owner of the former New Hanover County Law Enforcement Center. The initial approval of tax exemption was based on the property being used on January 1,2006 for charitable purposes by First Baptist Church. An internal review by the Tax Department, followed by a review through the Legal Department, and validation of those findings by the Property Tax Division of the Department of Revenue, agreed that, since FBC Holdings, LLC was not the primary user of the property, such an arrangement would cause the organization not to qualify for tax exemption. Portions of the property are leased to New Hanover County for much less than the standard square foot 6117 I I I .., NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW, MAY 22, 2006 BOOK 1 PAGE 366 rents charged throughout the area. A qualifying charitable organization is permitted to lease or rent space to other religious, charitable, educational, literary, cultural or scientific organizations so long as the amount charged is nominal and no profit is realized from the arrangement. The question of leasing to a governmental organization would appear to not be a disqualifying condition as long as the funds received are nominal. Other portions of the building are used to store equipment that was left on site when the building was vacated by the County. Much of this equipment, such as beds, tables, chairs, kitchen and food preparation equipment etc., will be used by those organizations that will eventually lease office space in the building. Storage of equipment for charitable organization(s) is considered appropriate and does qualify a property for tax exemption. The Jo Ann Carter Harrelson Center, Inc. has a lease agreement with FBC Holdings, LLC for a portion of the building. The Center is the primary administrative coordinator for use ofthe building by other charitable organizations. The assessed value is $10,428,042. Appellant's Argument: The appellant believes that portions if not all ofthe property should qualify for tax exemption. Administrative Space: For most of2006 all of the administrative space in the building will continue to be used by New Hanover County for its 911 Center, Emergency Operations Center and the Criminal Investigation Division of the Sheriffs Department. Once the County vacates the building, which is expected to occur the later part of 2006, the administrative space will be occupied by other charitable or nonprofit entities that provide services to low income or impoverished citizens. The intention is to only charge enough rent to cover the costs of operating and maintaining the administrative space. Cell Tower: The owner intends to build housing in the cell tower space for individuals with low or moderate income. The owner is in the process of making application for low income housing tax credits to assist with the costs of rehabilitating the cell tower area to accommodate such use. Parking Spaces: On weekends and after work hours during the week the parking spaces are used by First Baptist Church. During working hours, New Hanover County continues to use, free of rent, 26 parking spaces while they occupy the building. The remaining spaces are used by or rented to third parties during working hours. The owner's intent is to charge only enough rent to cover the costs of operating and maintaining the parking spaces. Assessment Support: G.S. 105-278.6(8)( e) is understood to have been written and adopted by the General Assembly as a result of a request from Habitat for Humanity. The NCDOR has stated a specific criterion was written into the statute to insure that qualifying organizations had five years to construct housing for low-to- moderate income families or individuals, and the tax would be deferred for that five-year period. Ifhousing was not built within that five-year period, taxes and interest would become due and payable. Habitat for Humanity is not in the business of providing long-term housing for low-to-moderate income families and individuals, rather they construct housing and transfer ownership to qualifying low-to-moderate income families or individuals. It is both the Department of Revenue and the Tax Department's opinion the statute was written with the purpose of exempting qualifying organizations that build and provide long-term housing for low-to-moderate income families and individuals. Secondly, only a very small portion ofthe building was used by the appellant on January 1,2006 for any ofthe charitable purposes proposed. Granted portions of the building were leased to a government entity, but the lease agreement between FBC Holdings, LLC and the County as a local government should not be considered for exemption based on his interpretation of the general statutes. 8lt' ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW, MAY 22, 2006 BOOK 1 PAGE 367 Conclusions and Recommendations: If the building was not being used for its intended purposes on January 1, 2006, FBC Holdings, LLC would not qualify for tax exemption. If it is determined that FBC Holdings, LLC was using the building for tax exempt purposes on January 1, 2006, the storage area for the furniture and equipment would also qualify for tax exemption. The portion which is leased to the County would be taxable. It is the Tax Department's recommendation that since the owner has formed a limited liability corporation and sublet the entire property to the Jo Ann Carter Harrelson Center, FBC Holdings, LLC should not qualify for tax exemption. W. Berry Trice, Attorney with Murchison, Taylor & Gibson, PLLC, presented the appeal for tax exemption for FBC Holdings, LLC, the holding entity who purchased the property in October 2005. FBC Holdings, LLC has leased the property to a new non-profit organization, the Jo Ann Carter Harrelson Center, Inc. for $1.00. The Harrelson Center was created to operate the building. Mr. Trice said the appeal is based on IRS Announcement 99-1 02 which allows a charity organization to hold property for environmental reasons or other liability issues in a holding entity. For tax purposes, the entity is treated as a division ofthe church and shares the exemption ofthe parent. Secondly, the cell tower of the complex is to be refurbished for housing of low-to-moderate income families and they plan to apply for low-income housing tax credits. If tax credits are not awarded, they will raise money for the refurbishing. The law allows tax exemption of real property owned by a non-profit organization for the purpose of providing housing for low-to-moderate income families. They will need to construct the housing within 5 years to keep the tax exempt status. If the housing is not constructed, the County can collect back taxes. IfFBC receives tax credits, the property will be transferred to investors, who will use the tax credits. The property would be transferred back to the non-profit entity after 15 years. Mr. Trice said he had discussed the issue with Lee Harris of the N. C. Department of Revenue. He came away believing that the statute would apply to other entities besides Habitat for Humanity when property is transferred for low income housing. He contended that the County could grant a tax exemption as it would for Habitat for Humanity. Mr. Trice reported on the current uses of the facility that he believed qualify all of the property for tax exemption. He believed that since both charity-owned property and government-owned property are tax exempt, the areas rented to the County should qualify for tax exemption. He requested the Board to grant the tax exemption for the entire property. In discussion of the jail space, Mr. Trice spoke of plans to remove the top two floors of the jail cells for housing units. Currently, the Harrelson Center is interviewing charities who will provide services for the poor in the downtown area. They hope to provide a free or low-cost prescription pharmacy and a clinic. A part-time executive director and other staff members have been hired, but a good part ofthe work has been done by the volunteers of the church. Mr. Glasgow responded that GS 105-286 was specifically written with the Habitat for Humanity in mind and it did not include any other non-profits. He felt obligated to inform the Board that some of the property may not qualify for tax exemption at this time. The law allows charities that rent to other charitable organizations the tax exempt status, but it does not address charitable organizations renting property to governments. L~t7 I I I ~ NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW, MAY 22, 2006 BOOK 1 PAGE 368 During the deliberations after the hearings, Mr. Glasgow reported that the tax value of the property was not included in the tax base budget analysis. Motion: Vice-Chairman Caster MOVED, SECONDED by Chairman Greer, to grant a tax exemption from ad valorem taxation beginning in 2006 for the property currently owned by FBC Holdings, LLC. Upon vote, the MOTION CARRIED 3 TO 1. Commissioner Pritchett voted in opposition. TAX APPEAL: CANEBREAK APARTMENTS L TD PARTNER, 4805 GREENWAY A VENUE, WILMINGTON, NC, TAX MAP NUMBER R04919-008-012-000 Tax Administrator Glasgow reported that Frank Slaughter, National Tax Resource Group, filed an appeal for the Canebreak Apartments. The complex consists of an office/community building, 5 apartment buildings with 4 units, and 2 buildings with 6 units. The zoning for the neighborhood is MF-L. It is located in a community of single- family houses and apartments, bordered by commercial properties. The assessed value is $1,696,032. Appellant's Argument: The appellant believes that the value of the property should be based on the income generated from actual rents. Residents must be age 55 or older to qualify for the apartments and rent payments are based on the individuals' incomes. Based on actual rents and expenses, the appellant believes the value of the property should be $1,100,000. Assessment Support: Researching the local apartment rents in the area, it was determined that market rents were considerably higher than the subject property. The appellant's rent information did not reflect the total income from tax credits or loans with low interest rates. The North Carolina Supreme Court ruled that tax credits and low interest rates must be factored into the income stream in order to arrive at a true market value. Secondly, the building permits list the construction value at $2,716,023, which is twice the amount the appellant listed the value. The Tax Department requested all documents supporting the appellant's argument be provided by May 12,2006. Specifically, they needed to see the tax credits to appropriately calculate the income stream. However, no additional information was submitted by the appellant. Conclusion and Recommendations: The Tax Department recommends no change in value. In North Carolina it is incumbent upon the appellant to show that the tax value is incorrect. Frank Slaughter, National Tax Resource Group, was not present to give the appeal. In discussion, Mr. Kelley explained that tax credits are used as an incentive for developers to provide low-income housing. Although the construction cost was approximately $2.4 million, the assessed value is based on the 1999 Schedule of Values. He recommended to uphold the value. Motion: Vice-Chairman Caster MOVED, SECONDED by Commissioner Pritchett, to uphold the assessed value of$1 ,696,032, as recommended by the Tax Administrator. Upon vote, the MOTION CARRIED 4 TO O. TAX APPEALS WITHDRAWN Tax Administrator Robert Glasgow reported that the following appellants have either withdrawn their appeals or have agreed to adjustments as negotiated with staff. He recommended that the Board affirm the assessed values of the following: G G 17 .....4 NEW HANOVER COUNTY BOARD OF EQUALIZATION AND REVIEW, MAY 22, 2006 BOOK 1 PAGE 369 ~ Christ's Sanctified Holy Church /Jernigan, Samm Johnson, Richard McNeill, Samuel F. Harrington, George W. & J oann R03 614-00 1-0 19-000 R06700-002-052-000 R06200-004-0 16-000 R0541 1-001-002-000 R05411-00 1-003 -000 R06319-005-005-000 R08800-005-0 14-000 R08800-005-0 15-000 R08800-005-0 16-000 R051 12-010-018-000 Bremer, Emma Food Lion, LLC King, Charles B. Motion: Commissioner Pritchett MOVED, SECONDED by Vice-Chairman Caster, to affirm the assessed values of the appeals that were withdrawn or agreed upon. Upon vote the MOTION CARRIED 4 TO O. ADJOURNMENT There being no other business, Chairman Greer adjourned the 2006 Board of Equalization and Review at 1 1 :25 a.m. Respectfully submitted, ~~p~ Teresa P. Elmore Deputy Clerk to the Board 1;1 , ~J 17