Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Industrial Property Valuation topic
No spam. Unsubscribe anytime.
Board Hears Dispute Over Valuation of Poe Road Warehouse; Parties Differ on Asset‑management Expense Treatment
Summary
At the June 23 BOE hearing, property owner and assessor clashed over valuation adjustments and whether an asset‑management fee is an allowable operating expense for a large warehouse at 8711 Poe Road. Assessor reduced its preliminary valuation; owner seeks a substantially lower value. The board postponed a decision.
The Board of Equalization reviewed an appeal June 23 concerning account number 140828497, a warehouse property at 8711 Poe Road. The assessor began the income‑approach valuation at $40,159,571, lowered it to $35,759,000; the owner sought a valuation of $25,049,746. A central disagreement centered on whether an asset‑management fee should be counted as an operating expense in an income capitalization approach.
The dispute matters because including or excluding asset‑management costs materially changes net operating income and therefore indicated market value under the income approach. The owner’s representative said the asset‑management fee is a real, recurring operating expense for a property with multiple high‑profile tenants such as Amazon and HomeGoods and should be included: “I think it’s an operating expense. I think I think the property does have to be managed … it is expensive.”
Assessor staff responded that the office treats asset‑management fees as financial rather than operational expenses, comparable to debt service, and therefore not allowable on their income statements for valuation: “the office’s opinion is that asset management fee … shouldn’t be an allowable expense. It’s a financial expense. It’s not an operational expense. It’s like debt service.” Staff also explained their comparable‑sales adjustments are based on total transaction value rather than per‑square‑foot metrics, and that some sales comps were carried over from prior cost guidance; differences in how size and quality adjustments were applied were a major point of contention.
Both sides discussed the choice and adjustment of comparable sales. The owner argued smaller buildings sell at higher dollar per square foot and that several of the assessor’s adjustments moved the comparable in the wrong direction; staff said their system makes total‑value adjustments (not per‑square‑foot) and that one comp’s age/quality required a significant positive adjustment. Both parties said they relied on submitted appraisal materials, and staff said they had reviewed a building permit and renovation but had pulled back an increase after review.
No final vote was taken. Board members asked follow‑up questions and signaled they will consider the submitted materials before issuing a final decision; the hearing was left open for later decision and notification by mail.
