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This page contains a single entry from the blog posted on November 17, 2006 4:39 PM. The previous post in this blog was Critics without berets. The next post in this blog is Instant classic. Many more can be found on the main index page or by looking through the archives.

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Friday, November 17, 2006

SoWhat madness explained, somewhat

Pulitzer Prize winner Nigel Jaquiss of Wily Week follows up today on our query of yesterday about the drastic reduction in the assessment of the Zidell property down in the SoWhat district here in Portland. Turns out, the county and the state Department of Revenue recently determined that the property had been way over-assessed to begin with, and not only did the county reduce the assessment, it paid Z R Z Realty, the Zidell entity that owns the property, a large refund.

The piece also implies that I accused people of some sort of conspiracy. All I said was that "something funny may be going on." And if you're like me, a $10 million mistake by tax bureaucrats is funny.

Now that the big change has been explained, we can still debate the correctness of the bottom line. Was this 30 acres of waterfront land really "essentially worthless" in 1995, because of the contamination? Thirty acres, on the waterfront, worthless, even then?

Didn't the Z R Z folks have a development plan for the property back then?

Comments (20)

Shouldn't it be taxed at the value of the land if cleaned up minus the cost of the clean up? (But you can't include any costs that would be paid by the government, superfund cleanups, etc..) Or is that what they say $94,820 is?

Maybe it will really cost $17,550,630 to clean it up.

Of course it that fair, that someone can get away with devaluing their property by contaminating it? Shouldn't they be forced to clean it up, and then we wouldn't have this problem?

If it is that bad maybe it should just be condemned and taken away from them, to be used for some public good, maybe a nice big 30 acre park.

To be sure, the current property tax system, which obviously does take contamination into account, provides a terrible disincentive to cleanup. In addition to paying for the cleanup, you get to pay extra property taxes. And under the Measure 50 "system," you pay way more property taxes after the cleanup. Another gift to us all from Bill Sizemore.

Those 30 acres are ripe for condemnation. Where else could the City get a park that size for $100,000?

If it has to be cleaned up, doesn't the local government have to pay for that under measure 37? ;0P

Everything questionable is explained as "a mistake". Sometimes it is, sometimes is isn't. To me, Nigel's conjuring of the 'conspiracy theorist" mantra seems old and formulaic. It's not like Portland has never seen any old boys put their head together to make killings in real estate.

heads

Nigel is incorrect. At least based on what I was told today by an appraiser at Multnomah County.

Yes, the $8,300 for R327850, the 15.69 acre parcel north of the Ross Island Bridge, is, in fact, the Assessed Value, which is the value the taxes are based on. But the Real Market Value remains at $8.498 million. I specifically asked the appraiser how this could be, shouldn't it be reduced commensurate with the reduction is Assessed Value? No, I was told, the land is that valuable. But the Assessed Value can't capture that increased value because of the 3% cap increase each year. That's the claim that brought the tax reduction. Or so I was told.

This should be obvious from the other 13.98 acre parcel, ID 327878, to the south of the Ross Island Bridge. In addition to $8.365 million in land value, it includes $782,030 in IMPROVEMENT value. And yet its Assessed Value is STILL only $86,520. What...the plant is nothing but worthless contaminated soil too?

C'mon Nigel...nearly 30 acres of SoWa industrial land assessed at less than $100,000, and you're buying that that's a reasonable valuation?

Look at the County records. They did not reduce the Real Market Values. They only reduced the Assessed Values. There's a reason for that. Take another look.

A reader writes:

I looked at the Willamette Week article about ZRZ again and wondered about the statement, "At one point, he says, ZRZ appealed the increased valuation but then withdrew the appeal for reasons that are unclear."

I'm not sure but maybe it was because the petition was filed late (see attachment).

Jack Bog, Steve Shain representing Zidell that is in your attachment, the legal brief, is now a PDC employee. Interesting.

Actually, that's a court decision. But yeah, there are many revolving doors in our little town. If the fix isn't in, the grudge is. World-class small town.

Nigel Jaquiss But starting in 2000, the state Department of Revenue began assigning large and steady increases in assessed value, based on what the property would be worth if cleaned up.

Walruff says the county simply took those increasing assessments and billed ZRZ, which paid the ever increasing tax bills.

At one point, he says, ZRZ appealed the increased valuation but then withdrew the appeal for reasons that are unclear. Only earlier this year,
JK: Lets see, professional accountants, working for a land management company just didn’t happen to be concerned about “ever increasing tax bills”. Gimme a break.

Nigel Jaquiss after ZRZ hired a lawyer to examine the assessments did county officials realize they had over-charged ZRZ. In May, according to deputy county attorney John Thomas, the county agreed to repay ZRZ nearly $500,000 in over-paid taxes.
JK: Gee, the county suddenly got so co-operative. Right around tram time too. Gimme a break.

A friend of mine had her retirement lot slapped with an environmental zone making it almost worthless. Only after she WON IN COURT, did the county reduce her property taxes. Then they went back up after a couple years because of something to do with the court cannot order a permanent reduction, only a temporary reduction. Gimme a break.

Where is the FBI?

Thanks
JK

It does seem that the county and the state went down without much of a fight.

If you believe the contamination argument I have a monorail I can sell to you that will perfectly compliment the tram

Remember, the Willamette Week's cover story about South Waterfront, was named, "Magic Kingdom", so they've been in gush-mode for a while now. I don't know if it's the contamination, but watching these South Waterfront numbers bounce around, it's hard not to come to the conclusion that something stinks. "It's a Small Assessment After All."

"It's a Small Assessment After All."

Damn you Bill McDonald! Now that song is going to be running in my head all day!

And, yes, the assessment is small...but the Real Market Values remain really, really big, reflecting the true worth of the property.

"Damn you Bill McDonald!"
If only I had a dime for every time I've heard that.

If you were getting dimes before 1965, you might have enough for a condo.

From an anonymous newsgroup elsewhere:

Today it is worth 93 cents. Any pre 65 dime has a silver content of 90% and according to the silver weight that is its daily net worth @ 12.83/ troy ounce of 90% silver.

Better late than not at all: Per Sizemore via the legislature (M47 morphing into M50), the Assessed Value (AV) is the lesser of Real Market Value (RMV) and Maximum Assessed Value (MAV). MAV is the 1995 RMV less 10%. In this case, that 1995 value was really low. Prior to M47/M50, anytime the actual value increased, so did the taxes. M47/50 "fixed" that by restricting increases in MAV to 3% except in cases where thare are physical changes to property. So, even if the RMV goes from nothing to over $8 million, unless there are physical changes to the property, the tax bill can only change about 3% a year.

Keep checking the facts here and it adds up to a state/county goof regarding increases to MAV (no physical changes like a cleanup) that was eventually discovered by a lawyer and, to the county's credit, quickly reversed (they are supposed to follow the law, after all). Given the complexity of M50, perhaps the goof is understandable, but in the end there's no conspiracy, no secret deal, no real story. Sorry (1995 SoWhat valuation conspiracy? Nah). Next . . .

there's no conspiracy, no secret deal, no real story. Sorry (1995 SoWhat valuation conspiracy? Nah). Next . . .

You were doing great 'til you got cute. Now you're gone. Next...

Pretty standard ad valorem property valuation problem, isn't it Jack? Take the clean value of the land based on the then comparable sales of waterfront industrial land (back then, based on a 6-year statutory appraisal cycle from the early 90's), deduct the net present value of the cost to clean up the contamination (per the relevant OAR), and the result is likely a pretty small number. Don't know if the city's records go back to 1995 & before, but it should be pretty easy to research if the actual facts are of interest.


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