Good Morning Cheyenne County,
We would love to hear your thoughts on this issue. This affects all our us and it determines how our county can move forward.
Property Value…
After our post the other day, we were contacted by a Nebraska-certified assessor that explained Nebraska requires 3 arm’s length sales as one method to determine the actual value of the property and that is why the old Cabela’s building on 13th that the city bought was valued at 2.5 million instead of the 1 million that is was bought for. Hence, $57,000 a year in taxes. Makes sense and we appreciate this assessor for reaching out to us and explaining.
The Problem…
Following the law, however, could kill our area if we are not very careful. We obviously have some very valuable buildings in our community that were previously owned by Cabela’s and other older, very old buildings like ours that need tremendous repair. What is the true value? As a business owner for many years, I would never pay 2.5 million for any building in this community unless it came with lots of tax incentives. There is just no way unless you have a very specialized company that you can recover those costs from the current condition of our local economy.
Looking at the Law,…
So we went digging into Nebraska Law a little further. 77-112 which I will put a link to below addresses the value of properties and how they are determined. If you follow the law directly, it could really impact our property values. Our area is in dire need of a boost. How can we follow the law and still boost our economy? There is just no way really in our opinion that any building downtown is worth 2.5 million with the current state of our economy. If you differ please make a comment. We should talk about this.
Understanding the Law….
So we dug a little deeper. In Xerox v Karnes (1984) the court held that Actual Value, Market Value, and Fair Market Value are the same thing. This was affirming another case Chudomelka v Board of Equalization (1971). So if this is all true is the value of that Cabela’s building 2.5 million because that is an awesome building or is it 1 million because it didn’t sell for a higher price because of the condition of the area around it.
Then in US Ecology, Inc. v Boyd County Board of Equalization (1999), the court found that actual value is not what an individual buyer may be willing to pay for the property, but rather, its market value in the ordinary course of trade. Which then supports valuing at a higher level. What the?
How does this affect us?
This affects every single homeowner in this area. What is the fair market value of our homes and buildings? If you look at Zillow now, we are declining and have been for a couple months. We went up because of COVID but that was a bubble and not true market valuations. You should look over a 20 or 30-year history to find those.
What do you think?
The question becomes with all this. Is the value of Cabela’s building 1 million from the sale or is it 2.5 million because that is what the building would be worth in the normal course of trade. It is an amazing building built though in a declining area.
Many in this area were very upset when Sidney bought this building. We didn’t need it. I agree. But, according to its valuation, the city made an excellent investment. I will say that again, as a business person, it was an excellent investment. The city could make a huge profit in the long run if we can turn this area around economically. So on one hand the investment is poor, but in the long run, the investment was fiscally sound and a very wise thing to do. It all depends on this area and our future.
Question….
What should be the value of that building? Right now it is taxed at 2.5 million. But, if we want to bring in new businesses its taxes should be lower because the current value of the building could be 1 million. The same applies to all our homes and businesses if you think about it. Under the law, we may not be able to lower a value but we may NEED to lower a value to get investment. Thus the problem. Our area is depressed and should be taxed that way.
What do you think the true value is of that building? 1 million, 2.5 million, lower, or higher? Should the city have made that investment or should they let the building sit vacant? Thoughts?
It is an interesting problem. Until we as a community figure this out and come together it makes it more difficult to improve our homes and downtown.
https://nebraskalegislature.gov/laws/statutes.php…
https://www.investopedia.com/terms/f/fairmarketvalue.asp