Assessments frustrate Concord commercial property owners
Concord’s total commercial property value increased this year for the first time since 2008, according to the city’s latest property assessments. While Assessing Department officials say the increase reflects updated data and signs that the economy in improving, the new assessments and tax bills have shocked many commercial property owners.
The overall assessed value of commercial and industrial properties increased 13.77 percent this year, according to the city’s Assessing Department, while residential properties decreased 2.64 percent in total assessed value.
Some commercial property owners are angered and confused by their increased assessments. The assessed value of the Smokestack Center on North State Street, for example, increased 98.88 percent, from $1.17 million to $2.33 million.
“It was really out of the blue, to tell you the truth,” said Titus Cramer, property manager for Smokestack Realty. “As far as I can tell, the economic climate hasn’t improved that much here in New Hampshire. So I don’t know where they got the assessment from.”
Commercial property assessments increased in part because the city updated its review of costs, income, expenses, vacancies and capitalization rates this year for the first time since 2010, said Kathryn Temchack, the city’s director of real estate assessments.
“So the thing that is important to look at is the information that we would have used in 2010 would have been (from) late 2008 and 2009, which you remember was at the time that Lehman Brothers collapsed . . . times have improved since then. The cost of money’s become cheaper and lending institutions have become a little more willing to loan, whereas before it was extremely tight.”
This spring, Temchack said, the city asked commercial property owners to provide updated information. That process was voluntary, Temchack said; The city cannot require property owners to provide financial information to its assessors.
The new review showed that vacancy rates and capitalization rates decreased while building costs increased, Temchack wrote in an October report to the mayor and city council.
“It would sort of indicate that the market is turning around,” she said last week.
But several commercial property owners said they do not feel the economy has improved enough to merit a substantial increase in their assessments.
“It’s not like the economy is doing wonderful out there,” said Tim Lanphear, who owns a strip mall at 374 Loudon Road. His tenants include Supercuts, Princess Nails & Spa and a small cafe. This year his assessed property value increased 22.4 percent, after decreasing between 2010 and 2011.
Temchack said commercial property assessments were calculated based on both cost and income numbers.
“I think that (commercial property owners) have not seen this kind of increase in some time, so I think it maybe is a surprise to them,” she said.
Not all commercial properties increased in value this year. Steeplegate Mall, one of the city’s most valuable properties, decreased in assessed value by 5.71 percent, from $69.56 million to $65.58 million. Fort Eddy Plaza’s value decreased 5.56 percent, and the strip mall on Fort Eddy Road that includes L.L. Bean decreased in assessed value by 10.52 percent.
For property owners like Mark Sargent, the latest tax bills were upsetting. Sargent owns a building at 214 North State St., which he rents to his own company, Richard Bartlett Associates. He said he typically expects to see his property value increase by about 5 percent, and saves money to pay for the corresponding tax increase. But this year, he received an assessment about 30 percent higher than it was in 2011.
“We expected it to start going up because the market is getting a little bit better, but a 30 percent increase just isn’t realistic,” he said. “There’s no way I could sell this property today for the amount of money they have it assessed for.”
William Ulbrich, who owns an office building at 314 S. Main St. that had a 20.86 percent increase in assessed value, said he worries the new property assessments and resulting tax increases will drive business out of Concord.
“And they will be more inclined, in order to maintain that business, to find a better market or location for what they’re doing,” he said.
Tim Sink, president of the Greater Concord Chamber of Commerce, said he plans to host a meeting this month between property owners and a representative from the Assessing Department.
“I’ve heard from probably nine or 10 (property owners), and that’s primarily unsolicited,” Sink said. “So it’s an issue. It’s a real issue, and I think that dialogue needs to take place.”
The overall assessed value of residential properties decreased 2.64 percent between 2011 and 2012, according to the Assessing Department. The percent decrease was less than last year, when the overall assessment of residential property in Concord decreased 6.84 percent.
“Everybody’s hoping that things are going to start getting better on the residential side, too,” Temchack said.
In November, the city set its 2012 tax rate, which is the same for commercial and residential properties. Concord property owners will pay $24.37 per $1,000 in assessed property value this year – nearly a 1 percent decrease from last year’s tax rate. Penacook residents in the Merrimack Valley School District will pay $27.52 per $1,000 in assessed property value – a 2.88 percent increase over the 2011 tax rate.
Despite a decrease in the tax rate, Concord commercial property owners with increased assessments recently received higher tax bills.
Republican state Sen. Andy Sanborn, who owns commercial property in Concord, said the new assessments “shift burden of the cost of operating the city of Concord onto the small-business owners and the job creators.”
The assessed value for Sanborn’s building on South Main Street that houses The Draft sports bar increased by nearly 30 percent this year, according to assessment records. His assessed property value and the new tax rate result in a more than 50 percent increase in tax payments. Sanborn’s quarterly tax bill for the 67 S. Main St. building was $4,619 in 2011, but his January tax bill totals $7,136, according to the city’s online tax bill database.
“So specifically as it relates to the city making a decision to tax the small-business community, obviously as a property owner I’m discouraged by it,” Sanborn said.
The property tax bill for the Smokestack Center on North State Street nearly tripled, said Cheryl Gochez, one of Smokestack Realty’s property managers.
“It kind of . . . hurts us, big time,” Gochez said.
Gochez and several other commercial property owners told the Monitor last week that they plan to appeal their assessments to the city’s Board of Assessors.
Temchack said applications for abatements must be “an appeal that the value is not representative of market value – not that their tax bill went up or that their tax bill is too high.”
Property owners have until March 1 to file for tax abatements. Temchack expects to see more from commercial property owners than in recent years.
“It’s like when we were seeing increases in residential property, I could pretty much tell you which neighborhoods we were going to get the most appeals from,” she said. “(This year) we would expect to see a lot more commercial (and) industrial property appeals than residentials.”