Remember this building at the corner of 4th & Vine? The subject of my second post in the wtf? Board of Revision series, I highlighted the 59% drop in property tax valuation between 2010 and 2012, begging somebody, anybody for a logical explanation. I was shocked. I was scared. I was mortified and I kind of blamed the Auditor (and had to write “Dusty Rhodes, I think I owe you an apology” a few weeks later.). One real estate professional took the time to comment and counseled, “Wait, there could be lots of reasons behind that kind of decline.”
So I decided to ask Susan Silver, Hamilton County Auditor’s crackerjack chief administrator for more information and she offered to send me recordings of the actual hearings. Within a week I had an envelope with the CDs in my mailbox, as well as the support of their technical whiz on how to access the necessary software to listen on my computer.
Wow. These hearings are like a master class in commercial real estate in Cincinnati. There’s a treasure trove of information for a nosy-butt-in-ski like me.
Today we’ll cover the 1st hearing on August 5, 2010, which ran about 30 minutes.
Referred to for many years as the Provident Tower, the 20-story Class B office space was built in 1967 by Carl Lindner, and at the time of the hearing all the tenants in the building were parties with strong ties to American Financial. Mr. Lindner’s famous “white office” was located on the third floor with a private elevator directly from his carpeted garage space and featured the same breathtaking view of the river that all the floors enjoy. Keating Muething & Klekamp, chief legal counsel for American Financial, and the bank that bought Provident from the Lindners were the other major tenants. The building was 100% occupied with an assessed value of $24,240,000 when the complaint was filed asking for a revised value of $12,000,000.
Here’s the good news: Cincinnati Public Schools fight the good fight on downward revisions of over $50,000 and they are vigorously represented by Dave Dimuzio whose many years of experience as a specialist in this area are obvious. The guy knows his stuff. Most of the testimony for American Financial came from their professional appraiser who tried to argue that National City was probably going to move out when their lease was up, that corporate tenants want at least 20,000 square feet per floor (as opposed to 11,000 per floor at 1 E. Fourth), and that the rents were artificially high because of long-term leases signed by inter-related tenants.
The three members of the Board – representatives of Todd Portune, Dusty, and Robert Goering – noted the outstanding location of the property, what good shape it was in, the problems with the comparable sales of lower quality buildings used in the professional appraisal, the 139 indoor parking places included in the rent at no cost and the top-shelf tenants. After a short recess to confer they lowered the valuation from $24,240,000 to $19,250,000 – perhaps somewhat of a disappointment to the owner, but still over a 20% cut in their tax bill. I would have been happy with it.
Though the notes don’t reflect any other case numbers and it would have been impossible to have filed another complaint until the following January, the valuation mysteriously drops to $16,000,000, an additional 17%, in December of the same year. The only explanation I can think of is a possible appeal to the State Board, although Dusty has complained frequently that cases can sit at the state level for years. We’ll have to check back with our friend, Susan Silver, to see if she can find somebody to clear up the mystery.
Tune in tomorrow for the shocking reason behind the decision of our local commercial real estate experts to drop the value of the building by ANOTHER $6,000,000, less than two years later.