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<br />1'he Tax Assessment on the.property for 1975 is $6,355,200.00 of which $4,587,700.00
<br />is allocated to the improvements, and $1,777,500.00 to the land.
<br />The value of $4,587,700.00 placed on the improvements was derived by using a capital-
<br />ization method on income and resulted in what the Shopping 'Center Industry would recog-
<br />nize as a top dollar evaluation being placed on such improvements. There are two areas
<br />of concern about the value being placed on the improvements, and a more serious concern
<br />about the value placed on the land.
<br />Our two concerns with the vaiue placed on improvements stem from the fact that
<br />Mr. Laws indicated he felt there was 372,206 square feet of gross leasable area. Our
<br />review of more up-to-date as built plans, and, if necessary, our sworn guarantee as to
<br />the true sizes involved, will ultimately reduce the gross leasable area to 351,770 feet.
<br />Our second concern on the improvement value stems from the average income value
<br />assumed by Mr. Laws to be $3.48 per square foot. He used as an authority The ^ollars •-
<br />and Cents of Shopping Centers but selected a value for a center that is ' u~s~lished,
<br />rented, and operating' in a larger regional market than Chapel Hill. Our values per foot
<br />income do not approach $3.48, however, they are projected to reach that over the ten year
<br />period that such arrangements are normally programmed.
<br />As we turned our attention to the land value, which was the major source of concern,
<br />we felt it is excessive far many reasons. '
<br />1. The economic value is just not there - the true value_of any.. income
<br />producing property is the ability to earn net income. University Mall
<br />finds its income stabilized, and threatens to remain so due to the
<br />creation of additional retail space such as South Square, while at the
<br />same time experiencing tremendous expense increases, basically the high
<br />utility charges and the-rapidly escalating tax loads which greatly re-
<br />strict the ability of this kind of property to pay taxes that have been
<br />assessed under the current assessment rate.
<br />2. Com arable land values, when reviewed, would .indicate there is a very
<br />e finite re atzons p etween the size of a piece of property and its
<br />value per acre as developed property.. As our. plot plan clearly shows,
<br />although we have a 40 acre site, only 10 acres- of it are under roof
<br />or income producing; 9.1 acres .are allocated to parking spaces, and
<br />20.9 acres are in drives, aisles, planting areas, and other required
<br />design emenities which are not income producing, but rather expense
<br />producing, both to create and maintain. By the same token, all of
<br />those entities which I described, plus many other services, which I
<br />will discuss later, are normally supplied by Tax Authorities as opposed
<br />to, in this case, private ownership.
<br />3. Industr -wide statistics would indicate that the land values and tax
<br />rates w zc ,we a u geted, which we are capable and certainly are
<br />willing to pay, are much less than what has been assigned to the property
<br />in Orange County, and specifically, University Mall.
<br />4. The round rent which was negotiated and had to place a true market
<br />value on t~operty Boring that negotiation, and also was corroborated
<br />by an offer to buy, again clearly indicates that the value o~ the land
<br />is much lower than $1,777,500.00 assessed.
<br />5. Many shopping centers, and especiallq-Fniversity Mall, supply a great
<br />number of services which are very expensive to provide and save a great
<br />deal of tax money inasmuch as they are supplied by private ownership
<br />as apposed to being supplied by the taxing authority. The creation
<br />and maintenance of the ,parking area, the outdoor lighting, the policing
<br />and Eraffic control, snow removal, utilities, maintenance, repairs, etc...
<br />are all services which create a great deal of expense to properties that
<br />are designed and maintained in this fashion, as opposed to other 'comparable
<br />retail properties.'
<br />For all those reasons, we suggest that the University Mall improvements be re-
<br />valued to reflect the reduced grass leasable area and a review of the per foot charge of
<br />$3.48 that has been assigned to it, and that the land be given a value of $736,500.00.
<br />To arrive at that value, we assume three components of property on our site at different
<br />values:
<br />10 acres, under roof and income producing $45,000 per acre $450,000
<br />9.1 acres, under parking, at $20,000 per acre 182,000
<br />20.9 acres, aisles, driveways, planting areas, other public
<br />spaces at $5,000 per acre 100
<br />$736,500
<br />We realize the dilemma that Mr. Laws and the County Commissioners face in establish-
<br />ing true value, as well as the dileamia of what has become seemingly comparable values in
<br />the toxing area. As Mr. Laws pointed out, the very first assessment applied was $72,0^,G
<br />an acre, which I think we both agree, was ludicrous. It is our feeling that the proposed
<br />acreage assessment currently in effect is equally inappropriate, not only for University
<br />Mall, but the o-t'~er small Centers which, if they have accepted, are destined for very
<br />severe financisi difficulty if not bankruptcy, and loose their total capacity to accept
<br />these charges or any other charges."
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