Office building appraisals stabilize in Baltimore Co.

A HINT THAT THE WORST IS OVER

December 29, 1992|By Timothy J. Mullaney | Timothy J. Mullaney,Maryland Department of Assessments and TaxationStaff Writer

In another sign of the apparent bottoming out of the real estate recession, new office building tax appraisals in Baltimore County assert that values have more or less stopped falling in districts that include Towson, Hunt Valley and Owings Mills.

The new appraisals are the new assessments from the state's Department of Assessments and Taxation, which were scheduled to be mailed yesterday. While the state was not able to offer comprehensive numbers on the total value of office buildings in the county, new assessments for a broad sampling of individual buildings were virtually the same as the old figures, which date back as far as 1989.

"They didn't go down," said James W. Roesner, assessor supervisor for commercial and industrial properties in the department's Towson office. "They didn't change much at all."

The situation in the county was sharply different than what the state faced in Baltimore last year, when appraisals of downtown office buildings were forced sharply lower after building owners contested the state's valuations.

Mr. Roesner said the recession has pushed building values lower in the county, just as it had in the city. But, he said, nearly 300 owners of commercial properties in the county asked the state in to adjust their values before this year's reassessment, through a process called out-of-cycle reviews.

"We usually get 50 [in a year] if we're lucky," said Mr. Roesner, who said fewer than 100 commercial property owners have filed petitions for out-of-cycle reviews since January. "They didn't wait for the reassessment. They came in and gave us what we needed to know and in many cases we made adjustments."

Some of the biggest assessment cuts granted during the out-of-cycle appeals earlier this year were made to some of the most troubled properties in the county.

Dulaney Center I in Towson, a building that a partnership led by developer Lawrence Rachuba was forced to give back to construction lender Maryland National Bank, saw its appraisal cut to $7.5 million from nearly $11 million earlier this year. Dulaney Center II, part of the same development, saw its appraisal slashed to $10.6 million from $21 million, Mr. Roesner -- said.

303 International Circle in Hunt Valley, a Rouse & Associates development that was also given back to its lender before being resold, saw its appraisal cut to $10.3 million from $15 million.

The appraisals released yesterday showed Dulaney Center I and II's value staying the same while 303 International Circle's value rose to $10.8 million. In effect, that means the state concedes they lost value from 1989 to 1991 but contends that values even of once-troubled projects have stabilized.

That view got a partial endorsement from Ronald Lipman, one of the area's leading private appraisers, who frequently works for developerscontesting their appraisals.

"If the number was right as of Jan. 1, 1992, I don't see a dramatic change in the last 12 months," Mr. Lipman said.

But Mr. Lipman said that about 4,000 Baltimore County commercial properties were due for a new tax assessment this )) year, and said the state is likely to get a number of appeals from the owners of the 3,700 properties who did not ask for out-of-cycle reviews.

Values of stronger county office projects have remained stable since 1989, the state contends. This is especially true of buildings that are owned by the companies that occupy them -- such as NCR Corp.'s building in Hunt Valley at 301 International Circle, whose value the state said remained at $3.64 million. Speculative, multitenant buildings have held -- or regained -- their value if they have managed to hold on to tenants. Heaver Plaza, a 20-year-old building on York Road in Lutherville that is 100 percent leased, saw its tax appraisal remain stable at $10.2 million.

"If they left it where we were, that's probably not inappropriate," said Allan B. Heaver, managing general partner of Heaver Properties L.P., which owns the building. "We thought [the old appraisal] was equal to or lower than the full market value."

Towson Commons, the new mixed-use complex at York Road and Pennsylvania Avenue in Towson, has joined the tax rolls as the most valuable office property in the county, Mr. Roesner said. Its value was set at $43.5 million, which Mr. Roesner said will rise as the half-empty office portion of the building is leased.

All real property in the state is required by law to be appraised for tax purposes every three years. The state divided each county and Baltimore City into districts and evaluates the property in approximately one-third of the tax districts in each jurisdiction each year.

Last year happened to be the year when the downtown office district was reassessed, following a scheduled cycle that was planned before the recession's impact on real estate became clear, as were major office districts in Howard County.

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