I'm told his assessment appeal (you can read it here) has been filed by Judge Davison's firm. I've got news for you. It's former Judge Davison's firm. He now shits again, just like the rest of us. Neither he nor his firm is entitled to any deference. But this is the prevailing attitude these days.
By the way, those Allentown school district lawyers from King Spry were nowhere to be found when Reilly asked for a reduction. So far as I know, Allentown sent no legal opposition, either.
Maybe King, Spry was busy, advising some Superintendent NOT to report criminal activity by a teacher or administrator. City lawyers were probably busy denying RTK requests.
You'll never believe the main argument on appeal. Reilly claims he is being denied equal protection.
Say what? If the urban growth regime cared one bit about equal protection, there'd be no NIZ at all.
The NIZ ia s a special tax tool - only one of its kind in the state - that enables Reilly to use millions in state taxes to pay his mortgage. This includes cigarette taxes at a business that he and Joe Topper moved in there, along with the fitness center. You can buy a pack of smokes right after working out. If you're a nonsmoker, you can drop in at Shula's (poached from a fake promenade) for a steak that's guaranteed to clog your arteries.
If Reilly cared about equal protection, he'd set up suites of affordable housing for the Latinos who are making minimum wage to serve the beautiful people, under the watchful eyes of a Reilly-financed security corps.
Reilly is using state taxes to create artificially low rents and lure tenants into his mega-buildings.
If you want to know the biggest story in the Lehigh Valley right now, it is the NIZ. It exists because equal protection was denied to everyone else.
Dr. Stephen Thode, director of the Murray H. Goodman Center for Real Estate Studies at Lehigh University,knows a bit about assessments. He told me that income-producing properties are usually judged by the income approach.
Simple example, suppose Bernie and Steve (HOT Properties) owns a building projected to return $1 million a year in NOI in perpetuity (forever). Suppose HOT requires a 10% return given the risks of the property. The building would have an estimated fair market value (FMV) of $10 million ($1 million/10%) before adjusting for special circumstances [deferred maintenance].Reilly contends in his appeal that this property is lower in fair market value than comparable properties, but Thode discounts that approach.
On the other side, suppose HOT has a fairy godfather, JB O'Browne, who promises to pay $500,000 a year toward HOT's expenses on the building for a very long period of time (oh, say, 30 or more years). JB's gift to HOT makes the property worth almost $5 million more ($500,000/10%) than the building would be worth without JB's gift. It's actually a tad less than $5 million since 30 years isn't "forever."
The Comparables approach (the method used to appraise owner-occupied residential properties) compares the subject property to nearby, recently-sold, similar properties. Adjustments are made to the sales prices of "comps" to produce an estimate of value for the subject. One of those adjustments is for below market financing (which obviously skews what someone is willing to pay for a property). It is often difficult to find good "comps" - especially in a "thin" market like the Allentown office market.One person who has consistently cast a spotlight on the hypocrisy of the NIZ is Allentown blogger Michael Molovinsky. Here's an excerpt to his own story on Reilly's assessment appeal.
All our local politicians are complicit in Reilly's appeal to the assessment board. The NIZ was essentially designed with him in mind, and the entire NIZ Board has been carrying his water. I doubt that he would make this assessment appeal without their knowledge and approval. If the city and school district doesn't get the full anticipated taxes, WHAT IS THE COMMUNITY BENEFIT? Pat Browne, Ed Pawlowski, Michael Schlossberg, Sy Taub, ETC. should be ashamed."Though I expect to see the assessments reduced, I do believe it will be difficult for JB to explain to a judge why he built a building for $56 million that was only worth $34 million when the doors opened. Sy Traub should explain why ANIZDA would be
a party to such a transaction.
One other thing...
Having poached tenants from so many other office landlords, I suspect a successful appeal by JB could open the floodgates to countless assessment appeals from those poached landlords. So, Lehigh County (and also, perhaps, Northampton County) could take it in the shorts from many landlord appeals. Guess what happens then? Yup, homeowners see their property tax bills rise to make up the difference. That will focus the pain of the NIZ a little more sharply.
Gordon Gecko is alive and well.