Monday, February 9, 2009

Is F & M's campus worth only ½ the cost of Convention Center Project?

Information received from the City of Lancaster established the total tax assessment for the campus and all of the other taxable and non-taxable real estate owned by Franklin and Marshall College at $63,824,800.

Each year the State Board of Real Estate Tax Equalization provides and updated ratio of Assessments to Market Values for each county. For 2007, Lancaster’s ratio was 73.6%. Thus the theoretical Market Value for all of F & M’s holdings amounts to $63,824.800 / .736 = $86,718, 478.

If $86,718,478 truly represents the market value of all of F & M’s holdings, campus plus numerous satellite buildings, then the approximately $180 million Convention Center Project is worth twice as much.

Doesn’t this defy common sense? Can the convention center project really be worth twice as much as all of F & M’s real estate holdings? Not likely.

A drive around campus by an experience real estate developer and investor, NewsLanc’s publisher, suggested at least $120 million in market value, even after taking age into consideration. (It could be much more.) If the many off campus real estate holdings were included, the figure would likely be close to $130 million.

Why is the county assessment value out of line? Since much of F & M's holdings are not taxable, there has never been a need to precisely value them. Furthermore, setting values on campuses requires a lot of added work and expertise because the buildings tend to be for 'special use.'

Assuming that the assessment is only two-thirds of what it should be: The 33% payment in lieu of taxes instead of being $161,200 - $44,655 (for services in kind) = $116,545 might well be $241,800 - $44,655 (for services in kind) = $197,145.

Therefore, to indeed pay 33% in lieu of taxes, F & M owes the City an additional $80,600 annually!