ONARCHITECTURE- Whose values? New assessment less than half purchase price
The Jefferson Scholars Foundation paid $3 million for the Compton House property last year. This year, the property, sans house, is assessed at $1.3 million.
The demolition of the former Compton House, a.k.a. Beta House, on Maury Avenue by the Jefferson Scholars Foundation and VMDO Architects, which occurred two days after Christmas, angered and dismayed lots of city residents, preservationists, and some City Council members. History-loving folks were surprised the City would help provide $18 million in low-interest financing without ensuring the house's preservation.
Now folks might have a new reason to be upset: the Foundation's tax bill will be based on less than half the purchase price.
Charlottesville's December 2007 real estate assessment values the property at 124 Maury Avenue at $1,135,600. That's $1,863,400 less than the $3 million the JSF paid for the house and 1.629 acres last February.
Of course, assessments have been notoriously lower than market value in recent years as the assessors seemed to be one step behind the red-hot market.
But as city assessor Roosevelt Barbour explained in the Hook last October, "Because it's currently a buyer's market, with sales prices down and many foreclosures in the area, it's taking longer for houses to sell. As sales prices go down, asking prices are skewing closer to actual assessments."
However, the sales price for Compton House property skewed nowhere near the assessment. The assessment is just 43 percent of the sales price paid to Wooglin Company Inc., the fraternity organization that sold the property.
Barbour points out that the property was never listed on the open market, and the "current assessment is representative of other like-zoned UVA area properties." These include, Barbour says, a 1.277-acre apartment complex on 14th Street (land: $890,000, improvements: $8,635,300, total: $9,525,300), a bigger 3.594-acre apartment complex on 15th Street (land: $2,504,900, improvements: $37,410,200, total: $39,915,100), and the smaller 0.60-acre Carrollton Terrace apartments (land: $429,800, improvements: $4,191,000, total: $4,620,800), all of which have land values of $16 per square foot, the same as 124 Maury Avenue.
Still, many people believe that there could be no truer measure of a property's value than the price a buyer is willing to pay for it. Apparently not, according to Barbour.
"The City of Charlottesville has experienced (as do many other localities) that developers and other organizations buy properties above market price to ensure that specific properties are acquired for the entity's intended use," he explains in a memo to City Finance Department Director Bernard Wray. "This high sale is only one sale, and one sale does not drive a market."
One sale can, however, surprise a City Council. After approving the $18 million bond financing for a new building on the site, City Councilors apparently realized too late that the Foundation was planning to demolish the circa-1913 house designed by famed local architect Eugene Bradbury.
"Who would have thought it was their intent to tear it down?" Mayor David Brown said when the City refused to approve another $3 million in low-interest bond financing last fall.
Did the Foundation pay too much or is the assessment too low? Foundation president James Wright responds with a statement of the obvious.
"The price," Wright says, "reflects the Foundation's commitment to this program and to this site; the assessed value represents the City's appraisal of what currently exists."
Wright mentions the land's many attributes.
"The site is within walking distance of the University's main Grounds and the first year dorms, and it's advantageously located among a mix of student housing, University athletic facilities, and the Fontaine Research Park," he says.
"Purchasing the parcels," he adds, "created an exceptional opportunity for the Foundation to help the University become competitive in recruiting some of the nation's and world's most promising graduate students."
Indeed, some might wonder why the city assessor doesn't recognize the special characteristics that mean so much to the Foundation. After all, anyone who has owned property in town knows that assessments routinely track toward recent sales prices. Why did the Compton House property assessment fall so short?
Barbour's memo points out that the 4,600-square foot Compton House that the Foundation so unceremoniously demolished was valued at $252,000, or less than $55 per square foot, and Barbour is sticking to his assessment.
"Based on comparable properties, the $16 per-square-foot assessment for 124 Maury Avenue is a fair and equitable assessed value," he concludes.
Of course, when the Foundation finally builds its 23,000-square-foot headquarters, it may have spent around $20 million, so it's probably safe to assume the assessment will rise considerably.
It'll be interesting to see whether the Foundation applies to the City Council for a tax break. For now, though, the Foundation appears to be already enjoying a property tax break most Charlottesville property owners can only dream of.