Wednesday, December 16, 2009

Officials say ballooning property prices reflect high hopes

By Keith Lawrence, Messenger-Inquirer
Published: Sunday, December 13, 2009 12:00 AM CST

Downtown property values -- or at least the asking prices for downtown property -- are soaring as $120 million worth of downtown projects get started.
The $40 million riverfront redevelopment is well under way, and work should start next year on $80 million worth of projects that include a new hotel and convention center.
"When we have people come in looking for a downtown location, they're finding that the asking price is considerably more than the assessed value," Fred Reeves, downtown development director, said last week.
* Theatre Workshop of Owensboro recently entered into an 18-month lease with an option to buy Goldie's Best Little Opryhouse in Kentucky, 418 Frederica St., for $250,000.
The price also includes the theater's light, sound and video equipment.
But the Opryhouse is assessed for tax purposes at $85,300.
* Don Moore recently announced that the property at 600 W. Second St., where his new vehicle dealership has been since 1945, is for sale for $988,000. He's moving to Kentucky 54.
The downtown property -- on the south side of Second Street -- is assessed at $383,000.
* James L. Yates American Legion Post 9, 118 Veterans Blvd. W., is across the street from Smothers Park and the riverfront development.
It's for sale for $1.5 million. It's assessed at $300,000.
* The building at 420 Frederica St., home of Barney's Cafe & Grill, has an asking price of $200,000.
It's assessed at $85,000.
* The building at 119 E. Second St., home of Bacchus Bar & Grill, has an asking price of $525,000.
The assessed value is $300,000.
* And the building at 111 E. Third St., home of the McCarroll Nunley & Hartz law firm, has an asking price of $575,000.
It's assessed at $225,000.
Asking is not selling
"Asking and selling are two different things," said Terry Woodward, chairman of Owensboro's Downtown Development Corp.
"If you pay too much for property, you'll never make it," he said. "But if they think their property is worth that, I'd assess it at the asking price,"
Woodward said, "When Dad (LeRoy Woodward) was mayor, GE was wanting to expand, but one property owner wanted five times what his property was assessed at.
"Dad went to see the man and asked him, 'Is your property really worth that much?' The man said, 'It sure is.' So, Dad told him that as soon as he got back to his office, he would get the property reassessed for that amount. The man came around really quick then," he said with a laugh.
But assessments don't work that way these days, according to Sandy Dawdy, Daviess County property valuation administrator.
"With commercial property, the use is so important in determining the assessment," she said. "We have a lot of small offices downtown, and some of the buildings are in pretty poor shape. Others have been fixed up really great."
Many times, Dawdy said, "it's the intangibles that give a piece of property more value. With Goldie's, you're buying a piece of history. Everybody knows where Goldie's is," and it's the only privately owned theater downtown.
"With Don Moore's property, $900,000 might seem ridiculous now," she said. "But it could be a bargain in a few years. There's just no way to know."
Assessments are partly based on square footage and the conditions of a building, Dawdy said, as well as recent sales in the vicinity.
Can't factor in speculation
"The only thing we can prove is the physical property, not what it's worth to someone else," she said. "We can't factor in speculation."
Moore hasn't yet sold his property, across Second from the old Executive Inn Rivermont. But he says, "Tax assessments are probably a little undervalued. It's hard to increase it fast enough. The city appraised my used car lot across the street at $595,000."
It's assessed for tax purposes at $126,400.
"Prices are going up downtown now," Moore said.
But Dawdy said a used car lot is basically a paved parking lot.
Rising prices have more to do with what's planned in the area than what's there now, she said.
"In commercial appraisals, we look at what property in that area has sold for and renovations to the property," said Dana Thornberry, a local real estate appraiser. "A lot of what's happening now is speculation. People think something big is going to happen downtown, and that makes the prices they're asking go up."
But she said: "We can't do appraisals based on speculation. We can tell the client and the lender about the plans that have been announced for that area, and they can take it into consideration if they want."
In downtown Owensboro right now, Thornberry said, "The appraised value and the asking price for a piece of property probably aren't the same."
Larry and Rosemary Conder have bought four downtown buildings since 2007.
The Conders bought what's now the Creme Coffee House, 109 E. Second St., for $292,160 and The Crowne at 107 E. Second for $240,000 in 2007.
Last year, they bought the Smith-Werner Building at 116, 118, 120 and 122 W. Second St. from Daviess Fiscal Court for $56,960.
And this year, they bought the building at 221 St. Ann St. from Independence Bank $58,000.
"We thought that was a fair price for a building that wasn't in good shape," Rosemary Conder said of the St. Ann Street property.
"We looked at the Bates Building (at 101 W. Second St., most recently home to River City Church), but they were asking $2.4 million for it," she said. "We couldn't afford that."
Conder said: "I'm sure property owners are trying to take advantage of speculation. There are a lot of differences in property values downtown now. It just depends on the individual property owner and how much they think they can get."
Lots of people are looking
"There are an awful lot of people looking at downtown property now," Reeves said. "I was just on the phone with a developer who wants to buy downtown property.
"I haven't heard of anybody giving up on downtown because of the asking price for property. Nobody has said they can't afford it. But we're finding that people aren't coming down very much on their asking prices. They know something is going to happen, and they're willing to wait for someone who will pay what they want," he said.
Woodward is one of downtown's biggest property owners. He has 15 pieces of property -- mostly east of the Glover H. Cary Bridge.
"Nobody has approached me about buying any of my buildings," he said, "but I'm out of the mainstream down here. The hub will be around the new hotel" at Second and Frederica streets.
"Wait till something starts happening," Dawdy said. "When things start selling, we'll be better able to determine values. It's going to be exciting."