03. Reconvene County Board of Equalization

Equalization Department Box 2806 Telephone: 701-241-5616 211 Ninth Street South Fax: 701-241-5729 Fargo, ND 58103 assessor@casscountynd.gov Owner: Sterling Management, LLC (Various Apartment Complexes) Appellant: Sam Jelleberg – Sterling Management, LLC Property Class: Commercial – Multi-Family Summary: Sterling Management, LLC submitted income information, appraisals, and write-ups for various apartment complexes throughout the Fargo and West Fargo area. They provided a detailed summary of their appeal at the county board in which they stated their net operating income is down due to rising expenses outpacing their ability to raise rents. They also felt the increase in the local cap rate should result in a decreased value as they would not be able to capture the same price they paid for some of these apartments four years ago. Review: I reviewed the 6 appraisals provided by the appellant along with the voluminous income information for each apartment. The appraisals contained great information, but they were quite dated and outside the timeframe that would be acceptable to reference current values. 4 of the appraisals were for apartments in Fargo and 2 were in West Fargo. My review showed the NOI was slightly up or near the same it was during the time the appraisals were completed. I did see that expenses are up on these properties but one thing to note that wasn’t discussed at the meeting is that the apartments are continually rolling out ratio utility billing services (RUBS) as new tenants arrive, or leases are renewed. This is a nationwide trend that is intended to offset the expenses apartment owners incur. A considerable amount of analysis was provided on these appeals by the city assessors as a result of the local boards of equalization. Both city assessors made changes to a handful of properties they felt had values that were overstated. These adjustments were the result of correcting the data, reviewing sales, and ensuring the property is modeled equitably amongst similar competing properties in their market. Those that were not changed, they demonstrated their support through various mass appraisal standards and are confident they can defend themselves at the highest level of appeal. Conclusion: I feel both parties provided a lot of great information and the adjustments made by both city assessors are warranted. As much as a single year can impact an apartments NOI, it’s important to note that mass