Thursday, August 25, 2016

Playing The Price Is Right

What is a property worth? How about your house? Is it worth what you paid? More? Less? Suppose you found someone who'd pay three times what you paid only two years ago, would you sell? Would you feel the least little bit bad about taking advantage of a fool?

Probably not. Not if you have "Dunwoody Values." Especially when those values mean you overpay for an asset and then in an effort to appear thrifty you deliberately under-deliver on commitments to tenants in order to drive them out without promised compensation.

But what is this bad boy we want to call City Hall really worth? Hard to tell, but there is always the sales history.

While it is hard to use this track record to justify the money that Staff, Council and Mayor are getting all wet over spending, the "over-pay" assertion is based on a notion of "arms length purchase" that doesn't exist. Businesses, the owners and renters of commercial property, operate in a community bordering on incestuous. Chambers of commerce and industry organizations are the most obvious public facing entities but for every one of these there are ten less formal but no less potent "networking" associations. Commercial real estate transactions take place at the benefit of both parties and may be structured in such a way that the full value to each party is not reflected in the recorded sale price.

The County has, as it must for tax purposes, its own opinion.

Today's opinion is around $5.2 million, a year-over-year increase of thirty percent over last year's $4.0 million. This might explain why the co-owners are appealing the assessment.

On the afternoon of September 16 the Board of Equalization is THE place to be. It would be very interesting to play back a recording of the owners' argument that $5 million is too high during the meetings with Dunwoody where they argue that over $8 million is a real bargain. Should the City persist in their argument that the County valuation is low by sixty percent what do the City have to say about other properties in the area? How about yours? Is our entire property digest low by fifty percent or more? Who are these fools trying to fool?

We can be certain of one thing: the City of Dunwoody is paying an outrageous premium for this property. What we do not know is who, on the buying side of this deal, is making out like a bandit.

Our only consolation is that the City cannot claim that enormous tax giveaways are necessary to encourage development in the Perimeter area while at the same time justifying overpaying for this property because real estate is booming in the area.