Property Taxes. Lakewood's Drug Mart Plaza-The Smell Test?

[Bill Call]

A while back I emailed a request for information to Cuyahoga County about the Drug Mart Plaza. (I call it Drug Mart Plaza because that's what most people know it as. Drug Mart just rents space.) Anyway..

I wanted to know why the property was still appraised at its pre purchased value and what action was being taken to collect the back property taxes. I never did receive and answer. Eventually I just gave up.

However..

I noticed this today when I looked up the property on the County web site:

http://auditor.cuyahogacounty.us/repi/t ... l=31214107

Something doesn't smell right.

[Grace O'Malley]

Oh, for goodness sakes, the web site gives that same notice for any parcel you look up today. Try your own parcel numbers.

The site might be undergoing maintanance; nothing more sinister than that.

And BTW, parcel reassessments are NOT automatic or immediate when a property sells. They are only reassessed during the next cycle.

According to Ohio law, a property undergoes a reassessment every 3 years. These re-assessments alternate between a quick adjustment and a more in depth reappraisal where the county must send out appraisers to physically inspect the property. So, for example, in 2003 we got a "quickie" while in 2006 they did a more thorough adjustment. In fact, all they really do is drive down the street and take a quick view of the outside of the building and look at recent sales figures in the area. So basically, a major adjustment is supposed to occur every 6th year.

In reality, the county does not always bring a property up to its purchase price. Why? Beats me, but take a look at some of the low appraisals on houses in Clifton Park. You can find houses that were purchased over 10 years ago that still have not been brought up to the last sale price.

Have fun.

BTW, the School Board should insist that properties are brought up to recent sale price. Some boards actually have a full time attorney who challenges low appraisals.

[pat ballasch]

My experience is property values are all over the place. High, low and some about right. If you recall the last reappraisal happened as most properties were heading down in value. I wrote, if the county was on top of the market they would have lowered or at least kept values frozen. They did not. Most Cuyahoga County values have continued to fall. (taxes stay high) I think they just decided they needed the increase in taxes. That was another un voted increase. You need to keep an eye on the pirates.
Once again unless the public starts raising hell it will be bad business as usual.

[Brian Pedaci]

Bill, if the assessed value met the market value on your home, you'd be paying almost three times the taxes you are now. Don't rock the boat!

[pat ballasch]

assessing property in Cuyahoga County is done at 1/3 the presumed value. It's just a format they use. They could just as easily work up a formula that uses what they think is an actual value. It may be confusing on purpose but that would imply someone is trying to keep you in the dark. Who would do that?

[Lynn Farris]

Bill, I believe you are right. Residential and Commercial property is treated differently.

When we bought our building 10 years ago, we used a primarily residential realtor who wasn't aware of what happens with commercial real estate and got burned.

A few months after we bought, we were sued by the Board of Education for the increase in property value and they went back during the period that we didn't own the building and we had to pay for the increase in property tax. They figured the increase was equal to the amount that we had paid for the building - which is a fair assumption. I recently leared that the Board of Education doesn't do this routinely with residential property.

I'm not clear as to if House Bill 920 only protects residential property but not commercial. If that is the not the case, why would the school board be sueing for the inside milage that they collect when property values go up, but not the city who stands to gain far more - as the city is not affected by HB920. I didn't get a good answer for that.

We ended up paying a small fortune and I have warned people ever since about this feature. So I am surprised that a city that is looking for every penny isn't jumping on this gravy train.

[David Scott]

I believe what Mr Call was referring to is that the owner has not paid their property taxes from January or July. I looked at my house and all payments have been received.

[Bill Call]

I believe what Mr Call was referring to is that the owner has not paid their property taxes from January or July. I looked at my house and all payments have been received.

From the treasurer:

"The District filed for an increase in valuation on this sale in March 2008, during the allowable period of January 2008 through March 31,2008. We are awaiting a hearing before the Board of Revision. The Board of Revision is still scheduling hearings for 2006 complaints, thus it will likely be a while before we get a hearing on this 2007 sale. Let me know if additional information is needed. "

The taxes on the new valuation would be about $196,000 per year. That might pose a problem because I think the rent is about $275,000 per year. Not much left for a $5 million mortgage. Of course the owner could have triple net leases in which case the sub shop is going to have to sell a lot more potato chips.

I don't understand why the values of private homes are valued at the sale value immediately but the value of commercial property can take years to reset.

[Grace O'Malley]

I don't understand why the values of private homes are valued at the sale value immediately but the value of commercial property can take years to reset.

They are not.

Values are adjusted during the next 3 year cycle so if you bought in 2004 and the next reevaluation is in 2006, they wouldn;t look at your parcel until then. Even at that point, you may or may not have your value adjusted upward, and may or may not have it set at your sale price.

As I noted earlier, there are homes in Clifton Park with ridiculously low values and homes right next door to each other that are valued at shockingly different values in spite of similar characteristics and the same location.

[Bryan Schwegler]

I don't understand why the values of private homes are valued at the sale value immediately but the value of commercial property can take years to reset.

That's not true. I bought by house in April 2007 and my property tax valuation did not change.

[Bill Call]

Values are adjusted during the next 3 year cycle so if you bought in 2004 and the next reevaluation is in 2006, they wouldn;t look at your parcel until then. Even at that point, you may or may not have your value adjusted upward, and may or may not have it set at your sale price.

As I noted earlier, there are homes in Clifton Park with ridiculously low values and homes right next door to each other that are valued at shockingly different values in spite of similar characteristics and the same location.

When I bought my house (many years ago) the value was reset to the purchase price one year later. I was told at the time of the purchase the property taxes would increase to an amount based on the purchase price That's what happened.

Last year I contacted the County and asked about the tax valuations. I was told at that time that "in a year" or so the value would be reset. Maybe the policy has changed or maybe the values are not being reset because the County is far behind as evidenced by the email from the treasurer.

Once your value is set to the purchase price the value is reset every three years. At one time that increase was less than the actual increase so the County estimated value was usually less than the real value. In recent years the opposite was true.

Anyway, the values of many Lakewood commercial properties are underappraised. By that I mean that many years after they were purchased the properties are still valued below the purchase price. Under the current values the Lakewood Center Building is valued at slightly more than the sale price of Drug Mart Plaza.

It wouldn't hurt for the school system or the City to evaluate each commercial property in Lakewood to make sure it is properly valued. I suspect the building owners would tell them "It's not worth half what I paid". If they can get away with it why not everyone else?

[Grace O'Malley]

Bill

You may have been "lucky" enough that you purchased your home just before the next appraisal period, e.g., if you bought in 2005 and the 2006 reappraisal used the 2005 sale to raise the value. Had you bought in 2003, you would not have seen an adjustment (if at all) until 2006.

Rocky River recently reviewed some expensive properties in prestigious neighborhoods and found many of the homes very undervalued. They attempted to have the county reassess them and bring up the values outside of the normal appraisal schedule. Needless to say, the property owners protested loudly claiming they "couldn't afford" such big increases and that it unfairly singled them out; the city backed off.

I'll search around and see if I can find out what happened after that.

[Bill Call]

You may have been "lucky" enough that you purchased your home just before the next appraisal period, e.g., if you bought in 2005 and the 2006 reappraisal used the 2005 sale to raise the value. Had you bought in 2003, you would not have seen an adjustment (if at all) until 2006..

I think that makes sense.

Needless to say, the property owners protested loudly claiming they "couldn't afford" such big increases and that it unfairly singled them out; the city backed off.

I suppose a City has less of a case when they seek to have a property reappraised outside the normal reappraisal period. If there is a sale the might have a case to seek a reappraisal but it would be bad politics. And, if the County is just now getting around to reviewing 2006 transactions it might be three years before the values are changed anyway.

In reviewing some commercial transactions I noticed that well after the sale and well after the reappraisal period the properties are still valued below the purchase price.

What do you think of this:

http://auditor.cuyahogacounty.us/repi/t ... l=31416011

I think it is the new Walgreens on Madison. Let me know what you think.

[Will Brown]

I'm told that tax valuations are based on recent sales prices of like properties, but the owner is always free to argue why his evaluation should be different.
I live on McKinley, a street that has a traffic problem. When they tried to base my appraised value on recent sales of homes on Niagara and Glenbury, streets that do not have the traffic congestion of McKinley, I appealed. They listened to me and reduced my appraised value. I think they were amenable to a realistic reduction because they have to process thousands of home evaluations, and it would not be cost effective for them to hire attorneys and appraisors to contest a relatively minor amount. I know people who won't contest their appraised valuation, as they feel having a higher valuation means there home is worth more and they will be able to sell it for more. I won't say what I call these people, but it ain't smart.

I think evaluation of commercial property is a whole different ball game. In the first place, much commercial property is unique, and it would be hard to find meaningful sales prices of like property. I doubt you could find another parcel in Lakewood that is virtually identical to the so-called Drug Mart plaza. And of course, the commercial property owner is much more likely to have attorneys and appraisors offering argument and evidence in support of his lower valuation, and be able to overwhelm the relatively untrained people who assign the evaluations (how much training and education does it take to be the idiot cousin of a politician?) I think the bulk of the income from property taxes goes to schools and libraries, the I'm not sure it would be a good use of their resources to hire the very expensive lawyers and appraisors it would take to compete with the property owners.

The only solution I see would be to get elected officials who are very capable, and whose objective is to serve the public, rather than to establish a fiefdom and employ all their otherwise unemployable supporters, and people like that rarely run for office.

[Bill Call]

I live on McKinley, a street that has a traffic problem. When they tried to base my appraised value on recent sales of homes on Niagara and Glenbury, streets that do not have the traffic congestion of McKinley....

I think that dead ending McKinley at the freeway wakes sense or allowing no right turn on to Mckinley when exiting the freeway. But I guess the residents should have the biggest say. What do you think?

The rest of your post makes a lot of sense but I think the school board (in their spare time ) should make more of an effort to challenge the assessements of commercial property.

There are good reasons why we might not want to see those higher reappraisals but those reasons would apply to homes as well.