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2017-00247DECISION OF THE VALUE ADJUSTMENT BOARD VALUE PETITION County The actions below were taken on your petition. These actions are a recommendation only, not final These actions are a final decision of the VAB If you are not satisfied after you are notified of the final decision of the VAB, you have the right to file a lawsuit in circuit court to further contest your assessment. (See sections 193.155(8)(l), 194.036, 194.171(2), 196.151, and 197.2425, Florida Statutes.) Petition # Parcel ID Petitioner name The petitioner is: taxpayer of record taxpayer’s agent other, explain: Property address Decision Summary Denied your petition Granted your petition Granted your petition in part Value Lines 1 and 4 must be completed Value from TRIM Notice Before Board Action Value presented by property appraiser Rule 12D-9.025(10), F.A.C. After Board Action 1.Just value, required 2. Assessed or classified use value,* if applicable 3. Exempt value,* enter “0” if none 4. Taxable value,* required *All values entered should be county taxable values. School and other taxing authority values may differ. (Section 196.031(7), F.S.) Reasons for Decision Fill-in fields will expand or add pages, as needed. Findings of Fact Conclusions of Law Recommended Decision of Special Magistrate Finding and conclusions above are recommendations. Signature, special magistrate Print name Date Signature, VAB clerk or special representative Print name Date If this is a recommended decision, the board will consider the recommended decision on at Address If the line above is blank, the board does not yet know the date, time, and place when the recommended decision will be considered. To find the information, please call or visit our web site at Final Decision of the Value Adjustment Board Signature, chair, value adjustment board Print name Date of decision Signature, VAB clerk or representative Print name Date mailed to parties DR-485V R. 01/ 17 Rule 12D-16.0 02 F.A.C. Eff. 01/17 Findings of Fact for Petition 2017-00247: FINDINGS OF FACT: Present at Collier County offices was Property Appraiser (PAO) represented by Mr. Clyde Quinby, Mr. Jack Redding and Ms. Jenny Blaje. The Petitioner (PET) was not present but requested that their evidence and petition be heard and considered in their absence. PAO’s were sworn in. SM read the petitioner numbers. Three contiguous parcels were valued as one parcel. The property is improved with a one building which has 80 storage units and the remaining space is retail/warehouse space used as a U-Haul center. PAO confirmed the folio numbers, and just value of ($294,912 for petition # 2017-00247), a just value of ($243,484 for petition # 2017-00248) and a just value of ($607,681 for petition # 2017-00249) for a total just value of $1,146,077. The values have not changed since the TRIM notice. PAO described the property as a one story self-storage facility (80 units) and retail/ warehouse space. The building has an area of 12,198-sf. The land size is 53,456-sf or 1.23 acres. The building was built in 1962 and 1974. The properties are located at 2001 Tamiami Trail East, Naples FL. As part of PAO’s evidence, Ms. Blaje presented a 50-page report on the Level of Assessment and Equalization Support Data. Ms. Blaje presented this report once, on the first petition heard in 2017 only, and this report applies to all 2017 petitions and forms part of PAO’s evidence in every petition. The Level of Assessment and Equalization Support Data report contains Collier County’s statement of compliance, Florida real property guidelines, two Florida Department of Revenue Attorney opinion letters, attorney opinion letter on the eighth criterion, case law on the eighth criterion 2nd District Court of Appeals, Administrative court findings PTO Bulletin 11-01, Levy Law Firm, Bond Schoeneck & King (2016 VAB Attorney), Florida Department of Revenue Sales Qualification Study, Florida Department of Revenue Tax Roll Approval Letter, Form DR-493, Level of assessment statistics and graphs. This report explains the methods used in mass appraisals and how Collier County applies the eighth criteria. Ms. Blaje indicated that the just value of properties in Collier County includes the Cost of Sales adjustment of 15% made to the recorded selling prices or fair market value. Collier County groups their properties by stratum and the properties within a stratum are put on a bell curve-50% of the properties within a stratum are assessed at below market value and 50% are assessed above market value with the median being at about 85%. PAO, Mr. Redding presented a report containing 54 pages. The report included the evidence and witness list, summary of salient facts and conclusions, property information, definitions, limiting conditions and assumptions, scope of the appraisal, zoning, aerials and site maps, and sketch of the property-site plan and building sketches. PAO developed the Cost Approach, Sales Comparison Approach and Income Approach. PAO included PET’s Income Approach worksheet. The addenda contains the deed with legal description, supporting income data, photos of the subject property, comparable building sales photos, impact fees, and the property record cards. On page 7 of PAO’s evidence is the Future Land Use-the property is located in the Commercial Mixed Use Development in the Gateway Triangle. This district is intended to revitalize the commercial and residential development, promote urban design with human scale, pedestrian-oriented interconnected projects. PAO considered the 8 criteria from Section 193.011 F.S. The evidence presented by PAO was considered credible, relevant and was admitted for consideration. PAO’s presented the Cost Approach which consisted of 5 land sales, a cost summary and supporting Marshall and Swift cost estimate for the building. The land sales are as follows: PAO Land Sales Sale # Location Date Price Land/SF Price/sf land 1 3147 Davis Blvd 12/16 $2,300,000 93,820 $24.52 2 2672 Davis Blvd 9/16 $675,000 45,136 $14.95 3 1841-85 Frederick St 6/16 $1,800,000 78,612 $22.90 4 1807 Tamiami Tr E 4/15 $1,500,000 70,567 $21.26 5 1705 Tamiami Tr E 4/15 $650,000 16,324 $39.82 Subject 53,456 $23.00 Indicated Value $1,229,488 Sale # 1 is a larger parcel being developed with a car dealership; Sale # 2 is a vacant parcel; Sale # 3 is a combination of sites that were purchased for development of a Race Trac gas station; Sale #4 consists of two parcels and Sale # 5 is a smaller parcel, similar in location and access to the subject. All the sales have similar zoning and are located in Naples in close proximity to the subject. The sales have a mean price/sf of $24.69/sf and a median price/sf of $22.90/sf. PAO estimated the property at $23.00/sf of land area or $1,229,000 rounded for all the parcels. PAO developed the cost using Marshall and Swift, a recognized construction cost manual. The Cost Approach is summarized as follows and includes the value for all parcels: Cost Summary Land Value $1,229,488 Impact Fees Estimate $262,263 Improvement Costs $631,299 Total $2,123,050 Rounded $2,123,000 PAO presents the Sales Comparison Approach and includes 9 sales of shopping centers in Collier County. The following sales were utilized. PAO Building Sales Sale # Location Date Price Size/SF Land/SF Price/sf bldg 1 3891 Davis Blvd 12/16 $2,100,000 27,146 120,000 $77.36 2 11412 Tamiami Tr E 9/16 $1,075,000 5,171 180,340 $207.89 3 4200 Tamiami Tr N 8/16 $2,800,000 12,415 44,765 $225.53 4 2360 Shadowlawn Dr 1/15 $640,000 5,000 24,625 $128.00 5 3555 Bayshore 1/16 $860,000 5,000 45,650 $172.00 6 2571 Tamiami Tr E 1/16 $200,000 2,450 14,004 $81.63 7 4751 Tamiami Tr N 6/15 $3,200,000 27,830 85,081 $114.98 8 2059 Tamiami Tr E 12/14 $1,100,000 7,681 45,738 $143.21 Subject 12,198 $136.00 Value Est $1,658,928 The sales vary in building size, occupancy and location. Sale # 3 is similar in size, but is a superior location. Sale # 8 is located next to the subject but is a restaurant building. The mean sale price for all the sales was estimated at $135/sf and the medium price was $135/sf. PAO reconciled at $135.00/sf based on the condition and location of the property, however utilized $136.00/sf or $1,659,000 rounded for all parcels. PAO’s Income Approach included supporting income data in the addenda. PAO summarizes retail rents, vacancies and cap rates from CBRE, Cushman & Wakefield, Calcain Research, CoStar and Valbridge Property Advisors for 4th quarter 2016 and 1st quarter 2017, these are real estate firms who research the market. The rents range from $7.47 to $25.00/sf with rents in Collier County and SW Florida being in the $13.00 to $16.86/sf range. PAO utilized a rent of $14.00/sf including common area maintenance (CAM). PAO the vacancy rate ranges from 5% to 7.34% with an average of 5.35% to 6.43% in Collier County and SW Florida. PAO used a vacancy rate of 5% for the subject. PAO used 30% of the effective income for operating expenses. The cap rates from the survey range from 6.43% to 7%. PAO uses a loaded cap rate of 7.5% (6.3% cap rate + 1.2% mill rate=7.5%) Following is a summary of PAO’s income approach. PAO Income & Expenses 12,198-sf x $14.00 $170,772 Less Vacancy 5% $8,539 Eff. Gross Inc. $162,233 Less Expenses at 30% of EGI $48,670 NOI $113,563 Overall Cap Rate 7.50% MK Value $1,514,178 Rounded $1,514,000 The Property Appraiser is required by Florida Statutes (F.S.) to assess real property at its just value as of January 1 of each year, F.S. 192.042 (1). The phrase “just value” has been determined to be synonymous with “fair market value”. See Valencia Center, Inc. v. Bystrom, 543 So.2d 214, 216 (Fla. 1989). Further, an assessment challenge must stand or fall on its own validity, unconnected with the assessment of any prior or subsequent year. See Keith Investments, Inc. v. James, 220 So.2d 695 (Fla. 4th DCA 1969). The Department of Revenue (DOR) has developed specific evidence rules for presenting relevant and credible evidence. See Rule 12D-9.025 (1), Florida Administrative Code (F.A.C.). Generally, “relevant evidence” is evidence that is reasonably related, directly or indirectly, to the statutory criteria that apply to the issue under review. This description means the evidence meets or exceeds a minimum level of relevance necessary to be admitted for consideration, although it does not necessarily mean that the evidence has sufficient relevance to legally justify a particular conclusion. See Rule 12D-9.025(2)(b), F.A.C. The Legislature has enacted eight factors which a property appraiser must consider when determining just valuation, which are enumerated in F. S. 193.011. In any administrative or judicial action in which a taxpayer challenges an ad valorem tax assessment of value, the property appraiser’s assessment is presumed correct if the appraiser proves by a preponderance of the evidence that the assessment was arrived at by complying with F.S. 193.011, any other applicable statutory requirements relating to classified use values or assessment caps, and professionally accepted appraisal practices, including mass appraisal standards, if appropriate. See Section 194.301, F.S., as amended by Chapter 2009-121, Laws of Florida (House Bill 521), and Section 193.011, F.S. A taxpayer who challenges an assessment is entitled to a determination by the value adjustment board or court of the appropriateness of the appraisal methodology used in making the assessment. F.S. 193.011outlines eight factors that must be considered to make a just value determination for each property. Refer to F.S.194.301, as amended by Chapter 2009-121, Laws of Florida (House Bill 521) and F.S. 193.011. The eight criteria specified in Florida Statute 193.011 were considered by the PAO in the following manner: (1) Present cash value - the PAO applied the Sales Comparison Approach to the subject utilizing arm’s length transfers of competitive properties presumably under normal market conditions. (2) Highest and best use - land use and building codes representing highest and best use of the property were applied which were consistent with the current use; (3) Location - The PAO considers locational features of the subject through the use of neighborhood codes as identified on the Property Record Card (PRC); (4) Quantity or size - the subject’s size was considered based primarily on land and building areas as identified on the PRC; (5) Cost and present placement value - PAO includes a land value from recent sales and replacement cost for the building; (6) Condition - The condition of the subject was factored into the estimated value via the Sales Comparison Approach, Cost Approach and Income Approach; (7) Income – PAO applied the Income Approach using current market rents in the subject neighborhood, current vacancy rates and expenses as well as current capitalization rates; (8) Net proceeds of sale - the PAO considers costs of sale as previously explained in the 50-page report submitted. The weight given to each of the factors is within the discretion of the property appraiser; reliance on a particular approach is dependent upon the type of property being assessed. Id.: Atlantic International Inv. Corp. v. Turner, 383 So.2d 919,929 (Fla. 5th DCA 1980). Ultimately, the proof of the correctness of value is paramount over the emphasis placed on the applicability of one particular method of value over another. Special Magistrate determined the appraisal methodology used in making the assessment was appropriate and in compliance with criteria of F.S. 193.011, as well as consistent with professionally accepted appraisal practices. PAO is entitled to the Presumption of Correctness. PAO’s Just Value Conclusion: $294,912 for petition# 2017-00247 PET was not present, PAO, Mr. Quinby presented PET’s evidence. PET’s evidence was a 12-page report which consisted of a cover letter, facility utilization summary report, occupancy/vacancy unit mix report, occupancy/vacancy unit mix graph counts and percentages, profit and loss statement for 7 years and the Income Approach. PET’s evidence was considered credible, relevant and was admitted for consideration. PET estimated the value of the property by the Income Approach only. In estimating value, PET utilized a net leasable area of 12,057-sf for the building. PET used $17.32/sf for the self-storage area of 6,245-sf and $4.50/sf for the warehouse space of 5,812-sf. PET used a 15% vacancy and 48% of the effective gross income for the operating expenses. PET used a cap rate of 8.50%. PET does not provide support for the rents, vacancy, operating expenses and cap rate. Following is a summary of PET’s Income Approach: PET Income & Expenses # of Units 80 Net Leasable SF 6,245 Lease rate $17.32 Storage Income $108,157 Other Income $925 Warehouse Income 5,812-sf @ $4.40 $26,154 PGI $135,236 Less Vacancy 15% $20,285 Eff. Gross Inc. $114,951 Less Expenses at 48% of EGI $55,176 NOI $59,774 Overall Cap Rate 8.50% Indicated Value $703,227 As rebuttal, PAO indicated that PET’s warehouse area is mostly retail space and $4.50/sf utilized by PET is on the low side for the space. The Income, vacancy, expenses and cap rate are all higher in PET’s analysis which indicates a lower value. PAO indicated on page 7 of evidence that the Future Land Use is for a Commercial Mixed Use Development in the Gateway Triangle. The district where the property is located is intended to revitalize the commercial and residential development, promote urban design with human scale, pedestrian-oriented interconnected projects. The subject property, according to PAO is dated and needs to be enhanced. PAO is of the opinion that the land value supports the value for the property. PET was not present and no rebuttal evidence was submitted. PET estimated the value of the property by the Income Approach only. PET does not show support for rents, vacancy and cap rate. PET used low rents, high vacancy and expenses and a high cap rate, all providing a lower value. Considering the age of the property and the location in an area of revitalization, an estimate of the land value would be appropriate. PET did not demonstrate that PET’s evidence was more credible, more relevant and or more sufficient than PAO’s evidence. PET did not overcome the presumption of correctness. Conclusions of Law for Petition 2017-00247: CONCLUSIONS OF LAW: Pursuant to Section 194.301 and Rule 12D-9.027(2)(a), the Property Appraiser’s assessment shall be entitled to a Presumption of Correctness if PAO shows, by a preponderance of the evidence, that PAO considered each of the eight criteria set forth in Section 193.011 and that the appraisal methodology utilized by the PAO in making the assessment is appropriate and that PAO did not use appraisal practices which are different than the appraisal practices generally applied by the PAO to comparable properties in the same county. The Presumption of Correctness is not established unless the admitted evidence proves by a preponderance of the evidence that the PAO’s valuation methodology complies with Section 193.011, FS. and professionally accepted appraisal practices, including mass appraisal standards, if appropriate. In this case, PAO used proper methodology and properly considered the 8 criteria in establishing value. PAO is entitled to the presumption of correctness. In administrative reviews of just valuation, the Petitioner can overcome the Presumption of Correctness by showing that the PAO’s assessed value: A. Is arbitrarily based upon appraisal practices that are different than the appraisal practices generally applied by the PAO to comparable properties within the same county: or B. Does not represent the just value of the property after taking into account any applicable limits on annual increases in the value of the property. (See subsection 194.301(2), F.S., as amended by Chapter 2009-121, Laws of Florida (House Bill 521). PAO’S value is well supported in the development of the Cost, Income and Sales Comparison Approaches. PET did not demonstrate that PET’s evidence was more credible, more relevant and or more sufficient than PAO’s evidence. PET did not overcome the presumption of correctness. PET estimated the value of the property by the Income Approach only. PET does not show support for rents, vacancy and cap rate. PET used low rents, high vacancy and expenses and a high cap rate, all providing a lower value. Considering the age of the property and the location in an area of revitalization, an estimate of the land value would be appropriate. Special Magistrate has determined that there is competent and substantial evidence on the record in compliance with the criteria of 193.011 and professionally acceptable appraisal practices to support the just value by the Property Appraiser’s Office (PAO). The preponderance of the evidence demonstrates that the Property Appraiser has met the burden to maintain the presumption of correctness by complying with FS 193.011, and the Petitioner has not demonstrated that the just valuation by the Property Appraiser exceeds the just value of the subject property or that the just value is arbitrarily based on appraisal practices that are different from the appraisal practices generally applied by the Property Appraiser to comparable property within the same county. In view of the foregoing, the Special Magistrate recommends that the just value by the Property Appraiser for petition 2017-00247 at $294,912 be upheld and further relief be denied for this Petition.