Why Should Delaware Care?
After last year’s comprehensive reassessment of property, residential property carried more of New Castle County’s tax burden. That led critics to highlight a handful of commercial properties that were seemingly underassessed by tens of millions of dollars, shifting the burden to homeowners. A recent review by the county dramatically raised assessments on three of those properties.
Three of the most controversial properties from last year’s first-in-a-generation property reassessment have quietly increased by hundreds of millions of dollars in value – a change that could result in millions of dollars more for county and school district coffers.
Those properties – the massive Amazon warehouse near Newport, a newly-constructed Buccini Pollin Group apartment complex, and a downtown Wilmington parking garage owned by a banking giant – drew ire from residents and lawmakers alike as some of the biggest examples of a flawed reassessment process.
But legislation passed in January enabled New Castle County to reexamine some of these discrepancies. That review resulted in valuation jumps totaling nearly $346 million across the three properties.
A spokesperson for New Castle County confirmed the assessed value changes of the three properties, but said she could not comment on any others that are currently undergoing a review.
The Amazon warehouse alone jumped to more than $372 million in assessed value, an increase of nearly 250%, or more than $260 million, from its prior assessment.
The building was acquired by Macquarie, an Australian investment firm, four years ago for $392 million, a record for commercial real estate in Delaware. Amazon has a long-term lease for the building that could run decades, if fully executed.
A Spotlight Delaware analysis, using last year’s adjusted tax rates, found that Macquarie would have paid at least $2.5 million more in county and school taxes had its value been assessed at the higher value last fall.
Some elected officials said the assessment changes show the state’s ongoing efforts to provide residents with property tax relief are working.
“It’s nice to see it coming into effect,” said Rep. Cyndie Romer, who has sponsored a number of property tax relief bills throughout this year’s legislative session. “We’re talking about changes that are significantly going to increase the tax base and potentially lower [taxes] for everybody, and that includes small business.”
But other local leaders cautioned that the impact of these updated property values on future tax bills may be blunted by other factors.
For the Christina School District, which includes the Buccini Pollin apartment complex and downtown Wilmington parking garage, the increased property values will be largely offset by decreasing assessments on residences resulting from New Castle Castle County’s ongoing appeals process.
While assessment appeals and reviews remain ongoing, and numbers are subject to change, Christina’s Chief Financial Officer Bob Vacca said current data shows about a $600 million increase in non-residential property values and a $400 million decrease in residential values.
A net increase of only $200 million in value, Vacca said, when leveraged against recent legislation that would lower tax rates on commercial properties, could mean that residential tax bills are not dramatically decreased as a result.
“It’s a convoluted mathematical equation that is not just a straight line,” Vacca told Spotlight Delaware.
How much did property values change?
Along with the Amazon warehouse’s quarter-billion-dollar rise in value, two other contentious properties also dramatically increased.
The Press, a newly constructed 243-unit apartment complex off North Orange Street in downtown Wilmington, was valued last year at just more than $344,000.
Now, the property built by the city’s biggest developer, Buccini Pollin Group, is valued at more than $61 million.
And while the apartment complex was the subject of criticism both on social media and by local officials, a representative from BPG told Spotlight Delaware the critiques were misplaced.
“For people to suggest that a 20-story building, newly built in the city of Wilmington, is assessed at $344,000 is completely fallacious,” said Michael Hare, the vice president for development at BPG.
Since the building did not have a certificate of occupancy, Hare said, last year’s valuation was based only on land value, and not that of the building that sits on it.
Hare said the company believes the $61 million valuation “seems higher” compared to other similar properties based on an internal review. He did not confirm whether the developer plans to appeal its updated value to the county, saying the company is evaluating the decision.
Another property, a downtown Wilmington parking garage owned by JPMorganChase, was valued last year at $416,000 – roughly the equivalent of a modest Wilmington-area, single-family home.
The banking giant acquired the lot neighboring its Wilmington headquarters for $7 million in 2015 and spent an estimated $15 million to build a six-story, 703-space parking garage on the land.
Its previous value was based on the market rate for parking garage rentals at the time it was assessed, according to previous Spotlight Delaware reporting.
Now, the garage is valued at more than $21 million dollars.
Representatives for both JPMorganChase and Macquarie did not respond to requests for comment on Tuesday.
Jacob Owens contributed to this report.
