Ix Art Park owners appeal assessment to equalization board

The owners of the Ix property in Charlottesville told a review panel Tuesday that the future of the Art Park could be in jeopardy if the city’s 2017 real estate assessment is not further reduced.

“We will stop everything and we will do nothing,” said Ludwig Kuttner, one of the partners behind Monticello Associates, a limited-liability company that purchased the former Frank Ix and Sons textile factory in June 2000.

“It’s costing us hundreds of thousands of dollars to do this for the public,” he added. “If you don’t want to take this into consideration, it’s your right.”

Kuttner and others appeared before the city’s Board of Equalization Tuesday to appeal triple-digit increases in the assessed value of two parcels of land that make up the Ix site.

Board members are appointed by the Charlottesville Circuit Court to settle disputes between landowners and city assessors.

“Boards of Equalization across the state of Virginia tend to be made up of people within the real estate industry,” said Paul Muhlberger, a licensed realtor in his 11th year on the board. “We don’t work for the city and we don’t work for the appealers.”

The Art Park was created in 2014 soon after the city commissioned a master plan to guide redevelopment of what’s known as the Strategic Investment Area. The idea for the park was to serve as the civic space called for in the plan even though the land is privately held.

“In 2016, we held 125 cultural and civic events,” said Susan Krischel, one of Kuttner’s employees. “We celebrated music and art and culture and diversity and education and theater. Everything you want this neighborhood to be, we tried to make it happen.”

Krischel said the city is punishing IX with sharp increases in city assessments.

A acre parcel known as IX Phase I that contains the remaining portion of the former Frank Ix and Sons Factory originally had its land value increase from $1.8 million in 2016 to $ million in 2017.

The acre parcel known as IX Phase 2 that contains the art park increased from $ million in 2016 to $ million in 2017.

Upon appeal, the assessor reduced the increases to $5 million for Phase 1 and $4.5 million for Phase 2. That is still an increase of 182 percent for Phase 1 and a 302 percent increase for Phase 2.

Krischel argued before the equalization board that the assessed land value for Phase 2 should be around $1.5 million due to physical constraints, a potential downzoning and the presence of the Art Park.

City assessments are based on the “highest and best use” of a piece of property. That can be calculated by looking at recent sales data and Krischel said all three properties used for comparisons are mismatches.

In one example, developer Keith Woodard paid $5 million in 2014 for acres on South Street in the same block as the city market. Krischel said that property was necessary for Woodard to construct a nine-story condominium that will have units that sell for over a million dollars.

“It’s really hard for us to understand how this could be a comparable to IX,” Krischel said. “It’s not the same size, it’s not the same location and it’s not the same condition.”

The assessment for IX and other commercial properties in the city was conducted by Bruce Woodzell.

“To say they’re not comparable might be true in a sense, but it’s an indicator,” Woodzell said. “All sales are indicators of the market. Then you have to determine how to apply it.”

Woodzell said there are many examples of where investors are willing to spend higher than the assessed value. For instance, 943 Preston Avenue sold for nearly $2.8 million in June 2016 with an assessment that year of $1.8 million. This January, the city purchased 801 East Market Street for $2.8 million, double the 2016 assessment of $ million. The city plans to eventually build a parking garage on the land.

Krischel said the land value at IX should also be lower because Pollocks Branch runs underneath the property through a culvert. Woodzell said he gave a 20 percent discount as a result, but one equalization board member said it should be higher.

“You dig that up, you don’t know what you’re going to find,” Muhlberger said.

Krischel also said the assessment should reflect the city’s decision to seek a rezoning for the property. Currently a nine-story building could be built, but City Council has paid a firm $228,000 to rewrite the zoning ordinance that could result in lower maximums.

“What does that mean for our property?” Krischel asked. “We have no idea. What will the height be? Anybody’s guess.”

Krischel said no one would purchase the property given that uncertainty.

Muhlberger said he frequently attends events at IX with his family and appreciates its value to the city, but the Board of Equalization is charged with reviewing the methodology.

“Although your summary is very appealing emotionally and us being residents of the city, our task isn’t to really give credence to the emotional part,” Muhlberger said.

“We’re really looking at just the value,” said fellow board member Eric Horton. “There are a lot of things people are bringing up that are pertinent to the property but they do not affect the assessors and how they value the property.”

City assessor Jeffrey Davis explains his office’s methodology to Ludwig Kuttner

When Horton asked Kuttner if he would sell Phase 2 for $1.5 million, Kuttner responded that he may give it to a nonprofit, prompting applause from those in attendance.

“That would be commendable,” Horton said. “But would the typical investor who owned that property, do you think they would advertise that for sale at $1.5 million for a parcel that large and that close to downtown Charlottesville?”

Muhlberger said the board needed to confer more and a decision was not reached.

The director of the Art Park said the space is intended to encourage people to think of possibilities. He wanted the board to take that into account.

“What is the best possible use of that property?” asked Brian Wimer. “Is it the thing that brings in the most money for the city or the thing that is best for the city’s community? I would argue the Art Park is and not to raise it to its highest value and sell luxury apartments.”

But Horton reminded the audience that assessors and the Board of Equalization are charged with evaluating value. He said without a covenant or restriction that would guarantee the park in perpetuity, the property could be developed at any point.

“Even though it is not developed to its highest and best use today, it’s being valued at what its highest and best use is,” Horton said.

Krischel said she is frustrated by a lack of vision in the city.

“Who at the top is looking at this from a holistic stand-point?” she asked. “Who is looking at the future of this city?”

“The voters,” Horton responded.