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HomeMy WebLinkAboutA057 - memo from City Assessor with estimates of value PK-I5 3 - q c, " 515 Clark Avenue City Assessor Ames,Iowa 50010 Phone (515)239-5370 Fax (515)239-5376 C—ingF ptr q atuy Prng— EmepO-1 S-4. DATE: March 7, 2001 TO: Ames City Council FROM: Richard Horn, City Assessor FbW RE: Somerset Village Tax Abatement At the February 27, 2001 meeting, you requested estimates of the value that may be eligible for abatement in Somerset under revised guidelines. The current configuration of the subdivision includes up to 33 additional single family detached houses designated as "Village House" and "Country House". A few are under construction but most of the added value is potentially eligible. The"Village Cottages" are variable lot sizes, and the potential is up to 22 houses, but none have yet been constructed. New structures in the commercial center will be eligible if used for retail use. This includes restaurants, convenience store/station, and other retail uses. It does not include office and service establishment uses. Values are estimated for January 1, 2001. The rollback percentages are for the 2000 assessment; future years are unknown. Values and rollback adjustments may be higher or lower in future years. Actual abatements will be based on the increase in building value on the assessment date. ■ The actual size, quality, and functionality of the structures may vary from these assumptions. Building style, size, quality, and functionality are based on estimates using similar buildings already constructed in the subdivision, other parts of Ames, and materials provided by staff. ■ Value mentioned are improvement values including garages. Land values are not subject to the revitalization program and were not included in the estimated value. ■ Commercial lots assumed to be typical commercial quality for Ames. Brian O'Connell provided the potential build-out area of the remaining commercial land area that could be improved with qualifying retail structures. The architect indicated variable 2❑d floor areas that would be possible if the parking is to be maximized. ■ Commercial parking is in shared-use outlots and not considered eligible for abatement. ■ Certain lots may have foundations and partial building improvements present when the abatement is approved. The value of these improvements would be deducted from the amount eligible for abatement. ■ The values are estimated based on the best information available to me today. Single-family "Country" and "Village" houses recently built in Somerset have been appraised for tax purposes at approximately $86 per square foot of above grade living area and have averaged about 1,710 sq.ft. for an average building value (subject to potential abatement) of $147,000. The number of these houses will depend on final configuration of the subdivision. The current effective tax rate (after rollback) is about 1.66%per year, or about $2,440 in taxes per C:\MSOFFICE\WINWORD\DOC\EXEMPTIsomerset ur0103.DOC Mafj 7, 2001 Somerset Abatement continued: house per year of the abatement period. The abatement on 33 houses for 3 years would be about $241,500. This would be spread over a total time period of 5 to 6 years. However, it is likely that more expensive houses will be constructed and/or higher prices will be charged due to the property tax abatement available to these buyers that will not be available to competing existing structures or in competing subdivisions. More expensive houses would result in a higher abatement figure. Single-family "Village Cottages" are estimated to be potentially smaller houses on smaller lots; I had earlier estimated an average size of 960 sq.ft. and a value of$92 per sq. ft. for a building value of about $88,300 each with annual taxes on the building value of about$1,465 each. 22 of these structures with a three-year abatement would be a potential abatement of about $96,700. However, none of these has yet been built, so the final size and value could vary substantially. This abatement would also span five to six tax years. Retail & restaurant buildings have not yet been constructed in Somerset so there is no assessment history. Values can vary widely with the type of occupancy: ■ About $60 for open retail buildings such as the DrugTown space downtown. ■ About $80 to $85 for retail buildings with more finish such as Hollywood Video or MediCap Pharmacy. ■ $90 up to $160 for restaurant finish depending on the size of the building. The higher cost is due to extra plumbing, wiring, and finish items. A small convenience store/station would also be in this price range, but would not cover the entire lot due to the need for vehicle access to the pump islands. ■ Second floor apartments would be approximately $55 to $60 per square foot. The amount of potential abatement for these structures depends entirely on the rate of build-out and the mix of building types constructed. So far, there have been no qualifying retail or restaurant occupancies in Somerset. The architect's estimates of building area for the remaining commercial area are about 76,520 sq.ft. of first floor area and up to 16,770 sq.ft. of second floor area. The second floor area is the area allowed with the parking provided. Historically, the rollback for commercial has fluctuated between 0% and 3%, so the effective tax rate on the value would be about 2.9%per year. If substantial construction occurred during the abatement period, for instance 15,000 sq.ft. at an average value of$60, the total abatement would be $78,000. If most of the area was franchise-style retail or restaurant, with an average value of$110 per sq.ft. the total abatement would be $143,500. Those numbers represent the high and low range for about 20%build-out of the available area. These figures are for illustration only. There is no reasonable way to estimate the actual build-out of this area. Previous discussion of the abatement included a sunset on the eligibility for the abatement. The economy, competing developments, marketing efforts, changes to the village plan, and several other variables will determine how much qualifying new construction takes place in the commercial sector of Somerset during the next two or three years. In summary, the amount of potential abatement for the commercial sector cannot reasonably be estimated in advance.