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Old 02-05-2008, 10:14 AM   #21
bosdevelopment
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Re: Alexandra Hotel

?The question before me is: Do I keep a dilapidated building that has been an eyesore for 25 years or do I make it a gateway to our city? That?s a decision we?ll have to make. I would tend to think that a beautiful, architecturally redesigned building is what I would support. How can anyone be against that??


Who said it's his decision to make? Is this America?
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Old 02-05-2008, 10:21 AM   #22
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Re: Alexandra Hotel

I don't understand your question. What would you prefer be done here? (My preference would be for the city to seek a developer who would turn it back into a hotel.)
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Old 02-05-2008, 10:23 AM   #23
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Re: Alexandra Hotel

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I don't understand your question. What would you prefer be done here? (My preference would be for the city to seek a developer who would turn it back into a hotel.)

why should the city have any hand in this? The last time I checked the city doesn't own the building.
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Old 02-05-2008, 12:11 PM   #24
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Re: Alexandra Hotel

Because the city has an interest in ensuring that abandoned buildings are abated in some way. Preferably by having them sold to someone who will fix them up, less preferably by having them demolished. Abandoned buildings degrade the entire surrounding neighborhood.
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Old 02-05-2008, 02:13 PM   #25
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Re: Alexandra Hotel

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Because the city has an interest in ensuring that abandoned buildings are abated in some way. Preferably by having them sold to someone who will fix them up, less preferably by having them demolished. Abandoned buildings degrade the entire surrounding neighborhood.

it sounds as if you prefer neighborhood homogeny over constitutional rights.
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Old 02-05-2008, 02:21 PM   #26
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Re: Alexandra Hotel

I prefer that property owners keep their buildings in good repair and not drag down the neighborhood. It has nothing to do with "homogeny". A boarded-up, falling-apart, un-maintained building is a public nuisance.
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Old 02-05-2008, 07:28 PM   #27
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Re: Alexandra Hotel

Abandoned buildings and parking/vacant lots should face tax liens to encourage the sale or development of the property.
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Old 02-05-2008, 07:33 PM   #28
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Re: Alexandra Hotel

^ Yep, and they should be taxed according to the potential value of a building in their place by some formula.
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Old 02-05-2008, 08:10 PM   #29
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Re: Alexandra Hotel

Under M.G.L.c.59 and DOR guidelines, properties are to be assessed and taxed according to their "highest and best use". In some cases, it is possible that the highest and best use of a vacant site could be as a parking lot if the income stream generated exceeds the income of a structure the size and utility of which is limited by zoning.
That aside, property tax laws do not allow for the penalization of property owners who neglect their properties. In fact, the system rewards them for their neglect because a poorly maintained property generally is worth less under either the comparable sales or income approaches to valuation.
It is this dilemma that led to the creation of redevelopment authorities with the power of eminent domain (the stick) and preservation/rehabilitation subsidies (the carrot).
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Old 02-05-2008, 08:31 PM   #30
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Re: Alexandra Hotel

If the highest and best use of this abandoned building is a hotel or condominiums, surely it should be taxed as such? The problem here, I think, is that the property owner was current on taxes but seemed to have no interest in either developing or selling to a developer.
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Old 02-06-2008, 07:17 PM   #31
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Re: Alexandra Hotel

Ron, you are probably right that the highest and best use was a a residential development, etc. One of the things that would go into calculating the taxable assessment would be the cost of upgrading the structure, which, in some amortized fashion, would be deducted from the ideal value.
You also hit the nail on the head when you point out that this owner was probably current in his payments. If he were delinquent, the city could put the property into tax title, foreclose in Land Court, take title and auction it.
If an owner is current in his taxes but allows his property to decay so as to become a public safety threat, the building department can order improvements or condemn the property. At that point, the city can ask the court to appoint a receiver to make the repairs (the cost of which is secured by a priority lien on the property). In the alternative, the court can authorize the receiver to sell the property.
The toughest case is one where the owner is current on the taxes, the property has become an aesthetic blight, but is not actually a threat to public safety. In that case, if the aesthetic detraction is such that it is causing the area to become "open and blighted" (a subjective standard at best), eminent domain is the city's only real option.
Sorry to go all lawyer on you.
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Old 02-08-2008, 08:54 AM   #32
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Re: Alexandra Hotel

BTW...Good luck to the Mayor and neighborhood groups who might try to force the "church" to follow their bidding. As far as I know, Scientology is covered under the Religious Land Use and Institutionalized Persons Act which more or less exempts them from any and all local land use controls.
Menino's only shot is to sue on grounds that Scientology isn't a real religion and the US Courts agree with him. This is an incredibly long shot.
I'd like to see him try though. It would be a landmark case for sure.
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Old 02-08-2008, 09:41 AM   #33
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Re: Alexandra Hotel

I can't say I'm thrilled about this building going to the Scientologists --frankly, I could give a hoot about the Scientologists as they have zero impact on my life, unlike other organized religions that take a much more active role in civic life-- but I would bet that they do a bang up job of restoring this building. There's a Scientology center (church? temple?) near DuPont Circle in DC and it's kept up immaculately.
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Old 02-08-2008, 03:34 PM   #34
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Re: Alexandra Hotel

I find it a bit hypocritical that some of you seem to be against the Church of Scientology moving into this property. Sure it?s made up bs, but that?s religion for you.

?Oh my god does that suck. I'd rather see the building demolished than have them move into it. This is trading one kind of blight for another and won't help the neighborhood at all.?

And then:

?Because the city has an interest in ensuring that abandoned buildings are abated in some way. Preferably by having them sold to someone who will fix them up, less preferably by having them demolished. Abandoned buildings degrade the entire surrounding neighborhood.?

These quotes came from the same person. No one is questioning whether the scientologists will restore, maintain and inhabit the building, which is supposedly the most important issue here. The problem is that they have a different belief than you, or maybe that you paid to see MI3. They?re giving you exactly what you want but b/c they?re scientologists you?d rather throw your ethics out the window.
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Old 02-08-2008, 05:10 PM   #35
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Re: Alexandra Hotel

[quote=tobyjug]Under M.G.L.c.59 and DOR guidelines, properties are to be assessed and taxed according to their "highest and best use". In some cases, it is possible that the highest and best use of a vacant site could be as a parking lot if the income stream generated exceeds the income of a structure the size and utility of which is limited by zoning.
QUOTE]

Actually, the above is only true in theory, never in fact. You can look up the assessments on line. This property has an assessed value of $1.95 MM and a tax of $24K in 2008.

That's a joke, folks. Never mind the building's condition, I'll guarantee that the sales price was for a helluva lot more than that. And until very recently (the city has been putting the heat on, a bit) it was even more of a joke ... as recently as 2004 the assessment was only $715K and the tax proportionately trivial.

If you want to really piss yourself off, use the on-line tool and check out the valuation of parcels that are horribly underutilized downtown. You'll soon see why these are held for speculation ... the tax burden is trivial. Why build, when you can accumulate most of the value, as long-term capital gain, simply by holding on? It's particularly true for surface parking lots, where a modest income stream can offset the equally modest tax.

The corrolary is that it's not uncommon for assessed values to skyrocket tenfold when properties finally do change hands.

There are any number of properties downtown which I would happily pay two or three times their assessed value for, right now, without even an inspection. And you know what? I'll guarantee that none of the speculators who hold them would think of selling to me. That's the taxation dynamic that creates situations like the Alexandra, the Levin properties in DTX, etc.

To repeat: it's a joke.
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Old 02-08-2008, 05:53 PM   #36
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Re: Alexandra Hotel

You may misunderstand the full import of the theory behind tax assessment, but you are right to say that commercial properties tax assessents are not reflective of the market values when a real estate market is rising. This can been particularly acute for commercial properties, which are typically valued by the income approach. Residential properties are valued by the comparable sales approach. In a rising real estate market, sales prices will always rise more quicly than income streams, which means that residential values rise more quickly than commercial values. This phenomenon means that in communities that have a significant commercial base and a unified tax rate (as opposed to a split tax rate, i.e. different rates for commerial/residential), the tax burden has been shifting on to residential properies.
The phenomenon of a property tax assessment jumping after a property is sold is known in appraisal circles as "chasing sales". In theory, the system is not supposed to work that way, because individual sales are supposed to provide guidance for the assessment of the same general type of property through out the municipality. The value of all similar properties should go up by some measure. Because the total amount of municipal taxes that can be raised in any one year is limited by 59:23C (Prop. 2 1/2), the across the board total assessment increases, but the tax rate must decrease. Why? Because 59:23C limits the amount of the property tax increase in any one year. The only way that you can comply when the municipal wide aggregate valuation is increasing is to decrease the tax rate. In the alternative, you can artificially deflate assessments, but keep the tax rate high. Under either scenario, if the municipal officials "chase sales", individual property owners get zinged, and the the tax burden is not properly spread across the property base.
Because of these variables, tax assessments are rarely taken as a true indication of fair market value.
I think I just put myself to slee....................zzzz.
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Old 02-10-2008, 12:21 PM   #37
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Re: Alexandra Hotel

^ Not boring at all. I'll go back and read this one a few times to really wrap my mind around it. I was at a family party in Stoneham last night and my father and I were talking to a woman who is involved in town politics there. A number of years ago now, the town wiped out a small neighborhood of homes in the square to make a town common, but they left about a dozen properties adjacent to the common leading into the square that are really run down. When we asked why they did that, this woman told us that the town needed the taxes from the commercial properties. They're mostly 1-3 story properties, and the commercial is small time barbershops and things like this; maybe 8 businesses total. She claims that they pay a much higher taxes than residential would. Does this make sense?
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Old 02-10-2008, 12:59 PM   #38
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Re: Alexandra Hotel

Another reason to keep them might be that people in the town patronize those businesses.

But I never before heard of tearing down houses to create a common. Usually the common comes first and the town develops around it.
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Old 02-10-2008, 01:50 PM   #39
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Re: Alexandra Hotel

Nico,
From a purely tax assessment point of view, small retail probably wouldn't have much of an impact. Lower rental income equals lower value.* If that town has a split tax rate, and the rate for commercial properties is higher, perhaps the tax revenue would be a little higher. Municipalities love industrial parks and shopping malls because the properties often have high revenue streams. Of course, this doesn't make for great urban planning. (I often muse that deperate city officials in a comparatively poor 60's and 70's Boston were co-conspirators in aesthetic murder by giving preference to 40 story packing crates rather than more elegantly massed but less profitable highrises.)
Toby

* Income approach to valuation simplified with this hypothetical:
1) Suppose the prevailing rate of return which a prudent investor could expect is 5%.
2) Now in our hypothetical, let's suppose that we are considering the purchase of a commercial property which yields $50,000 per year in rent, net of reasonable and customary expenses and vacancy.
3) What amount invested at 5% would return $50,000 per year?
4) Answer: $1,000,000. So our hypothetical commercial property is worth $1,000,000.

When you are picking one of these appraisals apart, alot more goes into it. For example, you struggle to determine whether the appraiser is using the right investment return rate (the capitalization rate). There is always alot of debate about what expenses are reasonable to deduct from the gross income, for example, utilities, repairs, reserves for replacement-o.k.; if the property pays himself and brother-in-law a salary for imaginary or overpriced services and deducts it as an expense-not o.k. Claiming a "typical for that type of property" vacancy deduction-o.k. Leaving your building vacant and claiming a 100% deduction-forget about it.
Because you usually can't up commercial rents that much (other than for grade A properties in a hot market), commercial values are less volatile that residential values. Add in the fact that as a commercial property ages its condition worsens, etc., so the expense to income ratio is likely to suffer...I guess you see where it is going.
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Old 02-10-2008, 01:56 PM   #40
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Re: Alexandra Hotel

P.S. If those little Stoneham shops had some income, and they were spared in preference to some residential properties that were real dumps, I could see the logic that they'd get more taxes from the shops than the dumps. Plus, as Ron suggests, it would be nicer planning. But overall, the decision probably didn't render much unto Caesar.
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