Tuesday, December 29, 2009

The Danger of Making Assumptions

July 10th, 2009
The Danger of Making Assumptions

An attorney had been working on a tax appeal for 4 years. The final
settlement is offered from the County. Included is a strip of land that is
zoned residential and has enough existing frontage on a public street to
plat 6 wooded single family lots. I was very familiar with the neighborhood,
having developed property a quick walk down the road.

The attorney engaged me to review the assessor's valuation for the 6
proposed lots at $70,000 each. I did the research and agreed with the
$70,000 value or $420,000 overall. IF, in fact, these were platted ready to
build lots.

But then I went where few appraisers dare to tread-the Engineering
Department. From my extensive development experience in mature communities,
I suspected that the there were no connections to the water and sewer for
these 6 proposed lots. This entails cutting up the street and dragging pipe.
So the lots are worth $70,000 less the cost of extending utilities.

Not only was there no sewer and water connections to the proposed lots-but
the sewer and water pipes were owned by the city across the road. And its
totally up to the discretion of that city to extend utilities to the 6
proposed lots.

And this is a city that had so much neighborhood objection to my little lot
division, even though it complied 100% with their code, my approval squeaked
by on a 3-2 vote. And the 3rd vote was from the lame duck Mayor, as my
controversial proposal had been tabled until after the election.

Say you lived in a house for many years and your view across the street was
this beautiful wooded vacant land. Would you come to the City Council
meeting with all your neighbors upset that someone is proposing to cut down
the woods and build 6 houses?

Now just imagine you're on that City Council, the neighbors are up in arms.
If you grant the utility extension proposal for the developer in the
neighboring city:

a) Your residents will be really upset about losing their beautiful view

b) Your road gets chopped up and you have to disrupt traffic to do it

c) You get no property tax revenue from the new houses.

As an appraiser I was uncomfortable assuming that these 6 proposed lots
were, in fact, buildable. I dug through the zoning ordinance and concluded
they could have one lot with well and septic. Instead of the $420,000
valuation I arrived at $80,000.

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