Corporate landowners appeal appraisals

Reductions would cost homeowners

Aug. 21, 2008
By Greg Elias
Observer staff

Williston homeowners have shouldered an increasing share of the property tax burden in recent years as residential values rose rapidly and commercial land inched up slowly.

A town-wide appraisal this spring continued the trend, with home prices increasing an average of 43 percent and commercial property up just 20 percent.

But some of Williston’s largest corporate landowners still think their property is overvalued. If successful, their appeals would shift more of the tax burden onto residents and strain the town’s budget.

Among those appealing is IBM, which owns the second most expensive property in town. The company designs computer chips at the 482-acre complex off Redmond Road.

IBM said the town’s $31.6 million valuation is too high, even though it represents an increase of just 0.2 percent from the town’s last appraisal five years ago.

In a letter to the town, IBM asserts that the appraisal is inaccurate because the town failed to consider the facility’s actual market value and did not physically inspect and consider the condition of buildings.

Jeff Couture, an IBM spokesman, said the company simply wants to be treated the same as any other taxpayer.

“We just want to pay our fair share,” he said. “The same set of rules should apply. Taxation is taxation.”

IBM asked the town to reduce the appraisal to $18.4 million, a 42 percent decrease. The request was denied, and now the company has appealed to the town’s Board of Civil Authority.

IBM is one of a dozen businesses that were unsatisfied with the results of the grievance process, which includes a chance to informally meet with the town’s appraiser and then have a hearing before the Board of Listers. Each has appealed to the Board of Civil Authority.

They include Pizzagalli Properties LLC, which owns property valued at $8.9 million on Harvest Lane, and BankNorth, which has property on St. George Road valued at $5.2 million.

The highest-valued property in town is Maple Tree Place, the huge retail center at Taft Corners. The town’s appraisal valued it at $80.9 million.

The owner, Inland Western, initially appealed but dropped the matter after the town refused to reduce the value.

Bill Hinman, Williston’s assessor, said the appraisal was fair. Inland bought the property three years ago for $102.3 million.

“I said, ‘Look, you guys paid a lot more than we assessed you for,’” Hinman said. “You have to assume that the company is at least not crazy, that it must of put a lot of thought into it before plunking down a hundred million.”

Matt Tramel, a spokesman for Illinois-based Inland Group of Companies, which is affiliated with Inland Western, would say little about the aborted appeal.

“Inland thoroughly reviewed all the documentation and decided not to pursue the appeal,” Tramel said. He declined to further elaborate.

The town appraised Maple Tree Place for $42.2 million just before it was sold in 2005, raising questions about the accuracy of commercial valuations. Hinman has said he thought there were other business considerations in the deal, driving the price paid for Maple Tree Place beyond its actual market value.

Residents vs. corporations?

At least one resident believes the town has a bias favoring businesses to the detriment of residents’ wallets.

“What’s happening is that these are corporate bullies and they intimidate us,” said Jeffrey Haslett, president of the neighborhood association in the Eastview condominium development. “If they can’t get concessions, they threaten to leave town.”

Haslett, whose own valuation rose 44 percent, said many residents have neither the time nor the money to contest their property values, but big companies don’t have that problem.

Hinman said the appraisals are determined largely by looking at sales of comparable properties, and home prices have increased more than those for commercial and industrial properties. He said no special consideration is given to corporations, even IBM, the state’s largest private employer.

“It does not come into play whatsoever,” Hinman said. “It is not a thought on our radar, not even a blip.”

Hinman did not know exactly how much commercial property values have been reduced during the appeal process to date, but he said adjustments are comparable to those done for homeowners.

Municipal finance considerations

Williston officials have expressed concern about the impact of appeals on the town’s budget. Earlier this year, Town Manager Rick McGuire urged the Selectboard to be conservative in setting the tax rate because successful appeals by a couple of large business properties could reduce revenue and create a budget crunch.

A reduction in the appraised value of IBM caused an uproar in Essex Junction last year. The town dropped the value of the aging computer chip manufacturing facility located just across the Winooski River from Williston and other IBM-owned properties from $147 million to $104 million, according to Randy Viens, Essex’s assessor.

The decrease, combined with a quirk in the way the state funds education through property taxes, drove up taxes for homeowners. Jeff Carr, a Williston economist and the former chairman of the Essex Selectboard, remembers many residents accusing officials of “sticking it to the village’s taxpayers.”

On average, Essex homeowners saw an increase of $200 to $250 in property tax bills after the reappraisal, Carr said.

Viens said one reason the affect was so dramatic was because IBM’s plant – 3 million square feet – comprised more than 20 percent of Essex’s grand list, the total value of all property. In Williston, the impact of a devaluation of IBM’s 435,000-square-foot complex would be much smaller because it accounts for only a small fraction of the $1.6 billion grand list.

Still, IBM has drawn parallels between the Williston and Essex facilities and is seeking an even larger percentage devaluation here.

“The reappraisal overvalues the property significantly, in great contrast to a very recent, independently performed, and very thorough appraisal of IBM property in Essex Junction, Vermont,” wrote John DiToro, senior location executive, in the company’s notice of appeal. “IBM notes that the value attributed to square footage of building space in Williston is about 2X the value attributed to building space in Essex Junction.”

The Board of Civil Authority begins hearing appeals filed by commercial property owners next week. The IBM hearing is scheduled to take place Sept. 16 at Williston Town Hall.

Biggest property owners

Here are the 10 highest-valued commercial properties in Williston and the percentage increase in the town’s appraisal.

Property Owner/Location                            Value                    Increase
Inland Western/Maple Tree Place                  $80.9 million        19%
IBM Corp./Chip Alley                                   $31.6 million        0.2%
Miller Realty/Marshall Ave.                          $14.2 million        28%
Taft Corners Associates/Harvest Lane           $9.5 million        26%
Pizzagalli Properties/Harvest Lane.                $8.9 million        28%
Allen Brook Development/Cornerstone Dr.   $8.9 million        12%
Home Depot/Harvest Lane                            $8.7 million        26%
ST Griswold/Industrial Ave.                         $8.2 million        22%
Winter Development/Interstate Corp. Ctr.     $7.6 million        21%
The Miller Group/Holly Court                      $7.5 million        25%