A net loss of $988,775 in taxable assessed property is a contributing factor to Jamestown's budget troubles.
This year, there has been a large amount of loss in assessment. According to city officials, some annual loss in assessment is typical, however this year's numbers are skewed due to three assessment lawsuits being completed.
"It affects taxpayers any time we lose assessment in the loss of revenues that then needs to be made up either by a cut in services, or other people paying for that loss in revenue through other forms of taxation," said Mayor Sam Teresi.
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In his executive summary of the 2013 budget, Teresi lists six of the biggest contributing factors that received assessment reductions this year. Although there were hundreds of properties that lost value this year, Teresi said these six were primary examples, together losing a total of $1,567,285 in assessed value.
The three lawsuits that were completed this year came from the Furniture Mart Building on East Second Street, which received a $400,000 reduction in assessment; the Rite Aid on North Main Street, which saw a $250,000 reduction; and the Family Video, also on North Main Street, which had a reduction of $118,000 on its assessment.
Additionally, the former Crawford Furniture properties on Allen Street received a reduction of $290,000, due to the sale of the properties.
"The former Crawford Furniture property was bought for substantially lower than the assessment. That was an arm's length transaction, which means it was all valid, a willing seller and a willing buyer. So, we reduced that to the sale price," said Randall Holcomb, assessor.
Finally, miscellaneous residential demolitions in the city accounted for a loss of $328,100 and National Fuel received a reduction of $181,185.
"National Fuel did not have a lot of replacement or new gas lines around the city of Jamestown. Therefore, their assessment showed the depreciation of value. It was depreciated due to normal wear and tear," Holcomb said.
ASSESSMENT VALUES
Adding up all of the residential demolitions totals anywhere from 500 to 600 changes of assessment in residential and vacant land assessments over the year, according to Holcomb.
"There was some demolitions and some fires that caused this to add up to $328,100. That's not usual," Holcomb said.
By citing these six items as the contributing factors, Teresi said he is not calling out or picking on these particular businesses for anything other than contributing to the net loss.
"We have properties that lost value during the year, and then on the other side, we have properties that increased value," Teresi said. "The problem is that in 2012, the list of properties on the loss side was longer and of greater value than the properties on the gain side of the page. I just cited these as primary examples, they weren't the only examples."
Where the problem lies is that, in 2012, there were not as many gains as there were losses.
The property values do have potential to increase again, however. Holcomb said when the neighborhood goes through a complete re-evaluation, the assessment could increase once again, if the market values have increased.
"We haven't seen a whole lot appreciation," Holcomb said. "We've seen like 1 or 2 percent over several years. We increase assessments usually when they go up 5 to 10 percent. When they inch up a percent or 2 percent a year, that's awful hard to show that percentage."
LAWSUITS
The lawsuits from the Furniture Mart building, Rite Aid and Family Video have been two and three years in the making, Holcomb said. It just so happens that all three lawsuits are completing at the same time.
"It's not usual we have three in one year that are completed, though," Holcomb said.
Commercial assessment lawsuits are common. When a building owner feels they are overassessed, they have to work with the city to attempt to come to a common ground. Holcomb said they attend a grievance day, sometimes two and three years in a row.
Additionally, there are three different approaches to assess value for a commercial property. The building owner will perform all three approaches, then take the lowest value to contest their assessment and sue the city over it. The city has its own corporation council, who represents it in this occurrence.
"The biggest cost is off the tax assessment," Holcomb said.
EFFECT ON TAXPAYERS
The six properties listed resulted in an assessment reduction of more than $1.5 million. That loss, Teresi said, combined with the city's other property value decreases, results in a $22,000 loss in actual revenues to the city.
"What that means is that because we are losing those revenues, because we lost assessment, we either need to go out and find $22,000 of cuts, or $22,000 in other revenues, or a combination thereof, to make up for that loss in assessment," Teresi said.
According to Joseph Bellitto, city comptroller, the city's legal tax cap for this year's budget is about 4 percent. In the budget Teresi laid out Oct. 9, the tax levy increase was set at 6.26 percent.
Teresi blamed the net loss in assessment on a slowly recovering economy, the lack of economic activity and decreases in property values.
"As the economy gets stronger, virtually all of the revenue categories in this budget get stronger and improve," Teresi said. "As the economy stagnates or weakens, all of the revenue items in the city budget weaken or decline. That's what we're seeing here."
According to Teresi, had the six listed reductions not occurred, the city would have actually posted a slight $568,510 increase in taxable assessment for the coming year.