Commercial property boosts assessments
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'I view it as positive news. . . . Downtown is back.' - BRUNA MICHAUX
By BRIAN MEYER and SHARON LINSTEDT
News Staff Reporters
12/3/2006
Strong home sales in some Buffalo neighborhoods and new investment downtown are expected to result in thousands of property owners paying larger tax bills next July.
More than 12,000 homeowners and nearly 800 businesses started receiving letters Friday, announcing that the city has increased their assessments. About 15 percent of all properties in the city would see increases, although owners have the right to challenge new assessments. Another 2 percent would see decreases.
The tentative changes would add $807.6 million to the value of properties in Buffalo, including a $561.4 million increase in the value of commercial properties.
Most of the increase in commercial value occurred downtown, said Bruna Michaux, Assessment and Taxation commissioner.
"I view it as positive news," she said. "It's obvious that investors are optimistic about downtown Buffalo. Downtown is back."
Most properties in the business district haven't been reassessed in more than five years, she added.
The current value of all taxable land in the city is $5.7 billion. An additional $807.6 million in value would represent a 14 percent increase.
A look at assessment changes along downtown's Main Street provides a snapshot of the notices many businesses are finding in their mailboxes. Of 80 properties from the foot of Main Street through the 900 block, 15 saw their assessed valuations rise by more than $1 million.
Buffalo's tallest and most expensive office tower, the HSBC Center, leads the pack. The complex, which was sold to a New York City investment group for a record $85 million in 2005, is now assessed at $84 million, up from $50.77 million.
M&T Bank, which has two major buildings on Main Street, also saw steep increases. The assessment of the bank's headquarters building climbed from $12.7 million to $24 million, while its M&T Center complex, in the 500 block, saw a valuation leap from $16.5 million to $30.5 million.
It's premature to speculate on the impact of the increased values, said Keith Belanger, M&T's senior vice president for corporate services.
"We don't know what they mean in terms of the tax rate and individual tax bills," he said. "As long as they've been reasonably uniform in their assessment approach and we're all up, the fiscal impact will be spread among many property owners."
The increased valuations seem to show an improvement in downtown's business climate, said Belanger, who chairs Buffalo Place.
"This hopefully quantifies improved conditions downtown. It's something we've sensed, but this puts numbers to that observation," he added.
Not all property owners are upbeat about their revaluations.
Pat Hotung, of Main Place-Liberty Group, which owns the Main Place Mall and Tower, as well as the Liberty Building, said he doesn't even need to see the update to know it's off base.
The new assessment pegs the value of Hotung's properties at $29.7 million, up from $20.2 million.
"We will vigorously challenge any and all attempts to increase our assessments," said Hotung, who faces a vacancy rate approaching 50 percent in his properties.
A few thousand homeowners would see valuations increase by at least $10,000. Hundreds who live in upscale neighborhoods would see valuations increase by anywhere from $40,000 to $325,000. Howard T. Saperston Jr., who runs Saperston Real Estate, is one such example. The assessment on his Morris Avenue home would increase by $93,400 - or 33 percent. He thinks the new $373,400 assessment is too high and will likely challenge it.
Saperston said it's clear Buffalo is "significantly more healthy than it was" and that property values have been increasing.
"But the flip side is whether they're also doing this to balance the budget," he said, noting that raising assessments can be a back-door way of raising taxes.
At the current tax rate, every $10,000 increase in assessment would raise city tax bills by $207.50.
About 1,600 homeowners and 142 commercial properties would see assessment reductions, including some who live on affluent streets such as Nottingham and Middlesex.
"This only proves that we're doing our job. We just don't go out and raise everyone's assessments," Michaux said. "We don't determine the market value of properties. Buyers and sellers determine market values." Property owners have until Jan. 2 to file challenges. The Board of Assessment Review will hold hearings in January and February, then make decisions by the March 1 deadline for finalizing valuations.
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