The Flats – C-VILLE Weekly

With the University of Virginia back in session next week, students are returning to Charlottesville—including the several hundred who live at 852 W. Main St. The first residents of the building known as The Flats at West Village moved in 10 years ago, beginning a trend of students moving into an area where they had not previously lived.

Riverbend Development and an out-of-town group took the project through the approval process in December 2012, during which City Council voted 4-1 on a special use permit to allow the building to be eight stories high and to have up to 595 bedrooms. Councilor Dede Smith voted against the permit that night, arguing that the project would have negative impacts on surrounding neighborhoods.

“Charlottesville was told that a large student complex on West Main would moderate rents across town, stimulate a vibrant mixed-use community, and reintegrate Westhaven and Fifeville into Main Street,” Smith says. “Unfortunately, few, if any, of these benefits have occurred.”

The current owner is an entity called Madison Loft LLC that purchased the property in November 2016 for $77.5 million. Previous structures on the property were automotive in nature, reflecting the role West Main Street played in the 20th century.

Since people began living at the Flats, the city has collected $6.35 million in taxes, with a bill this year of $821,143.96. The property is now managed by Asset Living, one of the largest property maintenance firms in the United States.

The Flats was followed by what’s now called The Lark on West Main and The Standard at Charlottesville, adding more students and millions more in tax revenue.

Previous zoning on the property required the ground floors to be commercial, but that has not been a total success. The Flats opened with a restaurant called World of Beer that folded before the pandemic, and the space was vacant for many years until Mejicali recently opened. The convenience store next door has been the only permanent fixture, but another retail space on the ground floor has never had an occupant.

The same is true across the street at the Standard, where two retail spaces sit vacant. The retail space at the Lark is currently occupied by Devil’s Backbone Backyard after two similar businesses failed at the location.

Other buildings constructed to the east include the former Quirk Hotel (now The Doyle Hotel), the Marriott Residence Inn, and the apartment complex at 600 W. Main St. that preserved Blue Moon Diner. That project also has a retail space that has proved difficult to keep rented.

More buildings constructed on West Main will not need approval from the city council because the new zoning code allows taller heights without special permission. Residential density is unlimited, but the new rules require 10 percent of units to be affordable to households or individuals whose incomes are 60 percent below the area median income.

Meanwhile, UVA is moving ahead with plans to build new residence halls for second-year students as part of an initiative to house more people on Grounds. This spring, the Office of Facilities Management asked firms to submit qualifications to build up to 2,000 new bedrooms either on Ivy Road or Emmet Street. The bid documents state that UVA would like those units to be in place by the fall of 2027.

Feelin’ the squeeze: Hundreds appeal new commercial tax assessments

No one likes paying taxes. And Charlottesville property owners who saw their commercial assessments go up 65 percent, 90 percent or 100 percent really don’t like it—and they’re letting the city know with a record number of appeals.

“Totally outrageous,” says Downtown Business Association of Charlottesville president Joan Fenton, who owns a “little bitty” parcel on Third Street where “there’s nothing you can do with it.” That .032-acre parcel went up 30 percent, the average commercial increase, compared with the 4 percent residential real estate bump.

A Water Street property Fenton owns went up 50 percent. “I appealed both,” she says.

Bob Archer has owned Bob’s Wheel Alignment on Market Street for 36 years, and says, “I’ve never seen a jump like this.” His assessment went up 65 percent—nearly $1 million. “That’s quite a jump,” he says. “I can’t raise my prices. I’ll have to absorb it.” Archer, too, is one of the appealers.

Keith Woodard owns a number of rental properties, including the cache of affordable housing he bought from Dogwood Properties in 2007, and says he’s submitted several appeals. “It’s upward pressure on rents for those with low incomes,” he says.

Management Services Corporation, which dominates the student housing rental market, saw staggering increases of 147 percent and 190 percent on two Corner area parcels, and its Preston Square Apartments jumped 83 percent and Cambridge Square Apartments soared 70 percent, according to vice chair Rick Jones. “Our increased tax is just under $400,000,” he says.

His point to the city: “Hey, if you have people’s assessments going up 68 percent, 90 percent, 100 percent—you’ve kind of messed up.”

Jones contends Management Services’ older rental properties are being assessed at the same capitalization rate as newer rentals like The Flats, which sold for $77.5 million in November and which doesn’t have the same maintenance expenses as the 50-year-old buildings he manages.

The cap rate is a ratio of sales price and net operating income. The city, says Jones, uses a cap rate of 6.25 percent, but for older properties, 8 percent might be more appropriate.

No one budgets for increases like that, says Jones, and with rentals, “You’re locked into a lease for a year.”

Jeff Davis is the city assessor taking the heat for the skyrocketing assessments. He worked for Albemarle County for around 30 years before moving to the city in December 2015. Davis brought in his former boss, Bruce Woodzell, former president of the International Association of Assessing Officers and a man who’s gotten his own share of flak in the county, to help with the commercial assessments and the 400 appeals.

And although Jones isn’t happy with the assessments, he is pleased to see Woodzell, a nationally known figure in the real estate valuation world, working for the city.

Davis explains the jump: “We had an overwhelming amount of sales evidence showing we were low on our assessments.”

He also says cap rates are low around Charlottesville, but says the city uses different rates for different types of properties. “We do give consideration, we do recognize older properties have greater expenses,” he says. “We do allow more for older properties.”

Says Davis, “This is not one size fits all.” At the same time, land values in Charlottesville are soaring. “It’s very expensive,” he says.

And while a lot of people are upset about the amount of the assessment increase, he says, “We have not heard people say, ‘My property is not worth that.’”

For those contesting their assessments, the first stop is Davis’ office. “If the appraiser is not able to satisfy them, they file an appeal form,” he says. His office will either affirm, reduce or, in some cases, increase the assessment, he says. If that still doesn’t placate the property owner, the next steps are the Board of Equalization and circuit court.

Management Services’ Jones sees a disturbing correlation between the spike in assessments and the city’s nearly $6 million surplus last year and $4.3 million surplus in 2015.

Not related, says Mayor Mike Signer. Last year’s surplus was 2 percent of the budget. “It was a reasonable surplus,” he says, and the city is required to spend it and close out the books for that fiscal year. “You don’t, like, stash the cash,” he says. Instead, the city put it into the capital budget, the Robert E. Lee statue fund and public safety employees’ salary increases.

Signer is aware of the sting of the increased tax bills, and he proposed lowering the property tax rate from 95 cents per $100 of value to 93 cents—a proposal that drew no support from his four fellow councilors.

“I’m principally interested in the effects of the cost of doing business for small businesses and medium-sized businesses,” he says. “The question is what you do as a policy when you have historic jumps.”

A 2-cent reduction in the tax rate would give back $1.4 million out of this year’s budget and means it would go up 5 percent rather than 6 percent, says Signer. “I think you could get that without too much pain,” he says, and give a “modest but significant amount back.”

For Jones, it’s all too much. “I wish there had been an assessor who said, ‘Wow, there’s a problem here, let’s raise rates gradually.’”

Rent forecast: Going up

The Flats

2016 assessment: $38,509,000
2017 increase: $73,864,600 or 92%

Preston Square Apartments

2016 assessment: $2,784,300
2017 increase: $5,157,400 or 85%

Bob’s Wheel Alignment

2016 assessment: $1,440,200
2017 increase: $2,381,634 or 65%

Barracks Road Shopping Center

2016 assessment: $123,353,400
2017 increase: $166,813,200 or 35%