LEGISLATIVE, FINANCE AND ADMINISTRATION COMMITTEE
The Legislative, Finance, and Administration Committee meeting was held on March 28, 2005, at 6:30 p.m. with Chairman Salters presiding. Members present were Mr. Hogan, Mr. Slavin, Mr. Shelton, and Mr. Shevock. Members of Council present were Mr. Carey, Mr. Pitts, Mr. Sadusky, Mr. Ritter, Mr. Ruane, and Council President Williams. Mayor Speed was also present.
AGENDA ADDITIONS/DELETIONS
Mr. Slavin moved for approval of the agenda as presented, seconded by Mr. Hogan and unanimously carried.
City Assessment Update - Cole Layer Trumble Company
The City Assessor’s Office has been conducting a reassessment of properties throughout the City of Dover during the past year, to be effective with the tax billings for May 1, 2005. Mr. Joe Pizzoli of Cole Layer Trumble Company provided members with details of the commercial valuations for the reassessment. For the top 50 properties, there will be a significant percentage increase from the old to the new assessment, from a value of $434M to $593M. He stated that a few areas of concern were with the industrial properties that have decreased in value. One specific property is that of Kraft Foods, who appealed their old assessment, which decreased from $31.4M to $20.6M. Collectively, the value for the major industrial properties has decreased approximately $30M. Fortunately, with the increase in value of other properties, that decrease has been off-set, providing a 37% increase overall. He reminded members that this is for the top 50 commercial properties only.
Mr. Pizzoli stated that the new appraisal for the Dover Mall is $86.5M. He noted that this property, which has four (4) major anchors, sold for $75.2M in January 2003. However, he advised members that Boscov’s (was appraised at $7.6M and is now appraised at $15.9M) and Penneys (was appraised at $7M and is now appraised at $11M) were not included in the sale and that by adding those two (2) properties to the new appraisal, the total value would be $113.5M.
With reference to the downtown area along Loockerman Street, Mr. Pizzoli stated that there has been no increase. Since the few sales that have recently occurred were in line with the old assessments, there is no justification for a change in their value. Mr. Pizzoli assured members that an adequate amount of information has been obtained for the commercial values and that the reassessments are supportable and defendable in any court.
In response to Mr. Ruane, Mr. Pizzoli stated that the methodology used for the reassessment included a cost value, market value, and income value. In developing the reassessment for the commercial properties, he stated that the income value was predominantly used; however, details of each value will be provided for each property. In assessing property, Mr. Pizzoli stated that once all the facts are collected on a specific property, the appraiser determines what the cost value indicates, what the income value indicates and if there is a wide disparity in these values, the information is re-reviewed. Many times the income value will be much greater than the cost due to location of the property. Unfortunately, he stated that there were not many comparable transactions for considering market values for commercial properties; however, those that occurred are definitely considered “arms length” transactions.
Mr. Pizzoli stated that of the highest 50 commercial properties, the lowest property on the list was previously appraised at $3.8M, and that this property has been reassessed at $8.8M. The highest property on the list was previously appraised at $48.8M, which was the old assessment for Dover Downs.
Responding to Mr. Sadusky, Mr. Pizzoli explained that the major reason for the decrease in value of the industrial properties is because they are functionally obsolete.
Mr. Rob Engel, Project Manager with Cole Layer Trumble Company, advised members that there has been a significant increase in residential values in the City of Dover. Unfortunately, he stated that he has not yet finalized the total reassessment. Unlike commercial properties, he explained that the income approach is not considered in the appraisal of residential properties; however, the cost and market value approach is used. With a revaluation, areas that have increased dramatically in value will have an increase in their property assessment and will pay accordingly. Mr. Engel explained that the same is true for those areas where there has not been an increase, and property owners have essentially been paying too much. He stated that the effective date of value of the property reassessment is as of January 1, 2005.
In response to Mr. Ruane, Mr. Engel stated that he was aware of the troubles the City experienced during the last reassessment with regards to neighborhood delineation and that a complete reorganization was done. The team completely reviewed each neighborhood based upon sales and re-developed new land values and compared sales for each of the neighborhoods to derive new market values. Mr. Engel stated that there was a significant difference in land values from the last reassessment. He explained that it does not cost any more to build a house today than it did three to five (3-5) years ago; however, land value has increased significantly. As an example, he stated that if the market value of a property five (5) years ago was $100,000 and today, the market value is $200,000, it is likely that the land value increased 50%, not the building.
Mr. Hogan moved to recommend acceptance of the report on the City Assessment Update provided by Cole Layer Trumble Company. The motion was seconded by Mr. Shelton and unanimously carried.
Mr. Hogan moved for adjournment, seconded by Mr. Slavin and unanimously carried.
Meeting Adjourned at 7:02 P.M.
Respectfully submitted,
Reuben Salters
Chairman
RS/jg
S:ClerksOfficeAgendas&MinutesCommittee-Minutes20053-28-2005 LF&A.wpd