Cuyahoga County drops commercial property values by more than $200 million (Plain Dealer)

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Cuyahoga County drops commercial property values by more than $200 million (Plain Dealer)

CLEVELAND, Ohio — Cuyahoga County has wiped out more than $200 million in commercial property values since January 2011, a drop officials blame on a weak economy.

Owners of office buildings, stores, banks, apartments and manufacturing facilities have cited high vacancies or declining sales. And the county’s boards of revision — the same panels that decide challenges filed by homeowners — have granted the businesses sizable reductions in property values.

Over the last 20 months, the boards awarded their biggest reduction — $29.2 million — to the owners of 200 Public Square, formerly known as the BP Building. The office building and garage are now valued at $105 million.

The Plain Dealer came in at No. 3 on the list of top reductions with $13.3 million was deducted from the value of its printing plant, off Interstate 480 in Brooklyn.

Also on the list of top reductions are six stores and retail centers, 700 Beta Banquet and Conference Center in Mayfield and the Sugar Warehouse, which houses Shooters in the Flats West Bank.

The values set by the county are the basis for property taxes that support public schools, libraries, municipalities and other government institutions. By winning reductions, commercial property owners can save thousands of dollars in taxes.

As a result, schools sometimes contest requests for reductions. They also track commercial property sales. When buildings in their districts sell for significantly higher prices than their county values, districts file complaints with the boards of revision.

The boards of revision have added more than $100 million to the tax rolls since January 2011 on properties that include apartments, industrial properties and office buildings, with school district challenges accounting for some of that increase.

Recent reductions in commercial values were the result of complaints filed as far back at 2008.

The county aims to value houses and commercial buildings at fair market prices, said county Fiscal Officer Wade Steen, whose office oversees the valuation process. But unlike homes, commercial properties are not valued based on sales of comparable buildings in the neighborhood.

“It’s more the use of the building,” Steen said. “How are you going to use the structure in terms of economic gain?”

So a high number of vacancies can lower the value of an office building. Land value also plays a part. Land in bustling Beachwood, in general, is more valuable than land down the road in blighted North Randall, Steen said.

To back up arguments for lower values, owners of commercial buildings can present professional appraisals. They can also produce financial statements and tax documents, showing, for example, how much they earn in rent or income.

“You close a store. It sits empty,” Steen said. “It’s clearly information that’s would affect its value.”

Forest City Enterprises Inc. presented financial information, as well as an appraisal for its Avenue at Tower City Center mall to cut the value of the mall almost in half, to $8.9 million.

“Tower City has historically struggled as a retail center, and we didn’t think that was being taken into account,” said Forest City spokesman Jeff Linton. “Obviously retail was hit particularly hard in 2008 and 2009, when the economy went down. That’s why we appealed.”

The Plain Dealer’s printing plant, which opened in 1994, won its second board of revision reduction in June, primarily because so much of the building is vacant, Steen said.

“From the very beginning, it was overvalued,” said Virginia Wang, senior vice president and chief financial officer of the Plain Dealer.

Lincoln Electric, a welding materials company in Euclid, argued its building value was out of line with similar commercial sites throughout Ohio, said spokesman Roy Morrow. County hearing officers agreed and decreased the value by $10.1 million to $17 million.

“We always want to be accurate,” Steen said.

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