02-19-1991 - Laserfiche WebLink

Comm. Ninutes--February 19, 1991 628 Mr. Klein's recommended that abatement numbers 3936, 3937 and 3938 be reduced to $1,258,000 for 1988, 1989 and 1990; and that abatement numbers 3940, 3941 and 3942 be reduced to $1,342,000 for 1988, 1989 and 1990; and that abatement numbers 3939 and 3943 be rejected. Mr. Dwight Cuffe said Community Homes is asking for fair treatment in assessing and assigning the full and true value for ad valorem real estate taxes on Community Homes. He said they have submitted certified, audited financial statements, analyses, and problems with the property to the Fargo City Assessor. He said Community Homes has opened its books for every aspect of examination. The end result was the recommendation of the Fargo City Commission. Mr. Cuffe discussed three methods to figure full and true value: 1) market approach, 2) income approach, and 3) cost approach. He said the market approach is not effective because there are no sales in which to use a comparable sales approach. Regarding the income approach, Community Homes is nonprofit and there is no net income; therefore, the property has lost money. He said certified and verified financial statements were submitted showing the property has consistently lost money for the last 17 years. Regarding the cost approach, Community Homes is financed under Section 236 of the National Housing Act. The Department of Housing and Urban Development set two rent figures on the property. The first figure, called basic rent, is used by Community Homes for operational expenses of the property. The other figure is the HUD determined market rent. He said to figure the true and full value, subtract the market rent from the basic rent. He points out in Mr. Klein's letter of Investigation of Abatement Application that the original mortgage amount for Phase I was $1,350,700 and for Phase II was $1,497,700. If these amounts were divided by 70%, the figures arrived at are the amounts used in Mr. Klein's letter as the original cost to build; this method is how a person would come up with full and true value for commercial properties. According to Mr. Cuffe, this method is not applicable in the case of Community Homes because the properties were built for the exact dollar amount of the mortgages and values assigned to the properties as the original cost to build is off by $500,000; therefore, Community Homes valuation is over-appraised. His request is the true and full value be set at the Fargo City Assessor recommendations which were adopted by the Fargo City Commission. He does not feel it is appropriate for the Fargo Assessor's Office to change their decision as was discussed in Mr. Klein's letter of investigation. He said the values assigned by Mr. Klein are 30% higher than the full and true value. He also explained Community Homes is receiving a 1% interest rate under Section 236 which supposedly raises the property values. He disagreed with this because the money received due to the interest rate deduction does not benefit Community Homes or assist in the maintenance, operation, or upgrading of the property.