Developer Devalues Old School; County Agrees
After the Town of Cape Charles sold its only basketball court to a developer, it also removed the hoops and backboards for “safekeeping.” The purchaser, J. David McCormack, then argued to the county that he should not have to pay property tax on the court because it no longer had any value. (Wave photo)
By GEORGE SOUTHERN
Cape Charles Wave
July 14, 2014
The Old School in Central Park was valued on the tax rolls at $921,000 when the Town of Cape Charles sold it for $10 in December 2012 to a developer. J. David McCormack promised to invest over $2 million to convert the school into a 17-unit apartment building, and town officials saw dollar signs in increased property tax.
But after taking ownership of the building, McCormack informed County officials that while he still plans to spend $2 million, he nevertheless estimates the ultimate value of the school and property to be as low as $750,000. McCormack made that statement in an appeal to Northampton County to lower his tax assessment, and the county complied.
The 2013 county-wide reassessment dropped the school property from $921,000 to $510,900. But McCormack argued that the value should be much less. He noted that the basketball court was valued at $8,000, but pointed out that “the basketball hoops have been dismantled by the Town of Cape Charles, and the courts are no longer in use.” (The Wave reported in December 2012 that after the town sold the school property, it removed the basketball hoops at town expense, even though the hoops no longer belonged to the town.)
McCormack claimed that due to the removal of the hoops the court should have a value of zero, but the county would not go that far. It did, however, drop the assessed court value from $8,000 down to $2,500.
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McCormack also complained that he was being assessed for the adjoining tennis courts, which remain town property. In response, the county removed another $25,000 from his assessment.
But the biggest drop in assessment came from the school building itself: from a pre-2013 value of almost $684,000 down to $295,400 in 2013, down to a final assessment of $129,250.
The land sold with the school comprises seven lots now zoned R-1 (single family residential). The pre-2013 assessed value of the lots was $200,000, which dropped to $150,000 in 2013. McCormack argued that the presence of the school building was a liability, and that the lots therefore should be valued at less than nearby lots. The county complied by reducing the valuation to $150,000, or an average of $21,500 per lot. For comparison, the county valued the vacant lot across the street on Madison Avenue at $32,000.
As a result of McCormack’s appeal, the total value of the Old School property is now assessed at $285,000. And on May 28 the county approved his application for “Tax Assessment Rehabilitation,” which locks in the $285,000 assessment for 10 years, no matter how valuable the property may become. That means McCormack will pay only about $1,900 county tax annually on his 17-unit apartment building for the next 10 years – less than most other town property owners pay for a single family residence.
The nearest comparable to McCormack’s planned apartment building is Seabreeze Apartments on Washington Avenue, valued at $964,500, with a county tax bill of almost $6,500.
One might still wonder why McCormack would be willing to spend $2 million on a property he claims will only be worth $750,000 when he is finished. One answer may be that he intends to obtain 45 percent federal and state tax credits for “rehabilitating” the historic building. If he spends $2 million he could receive $900,000 back, reducing his investment to $1.1 million.
Of that $1.1 million, a substantial amount could be “administrative costs,” which McCormack would effectively pay to himself, and which nevertheless could qualify for the 45 percent tax credit.
Love the photo. For those of us who never seem to qualify for ANY kind of meaningful tax avoidance, it is a continuous poke in the eye, but it is a reality of our pro-business trickle down policies.
This is wrong in so many ways. This is why the city is constantly fighting money woes. What a great idea…put the tax burden on residential, let businesses by without paying their fair share and see how long it will take residents to find a better place to live.
The city needs to get its act together and stop this type of highway robbery.
Rather than a business trickledown effect, this is more like Governmental ABL (Accidental Bowel Leakage). It should be noted that due to the amount of fraud associated with deals like this, Virginia House Bill 995 proposed an expiration date of July 1, 2016, for the historic rehabilitation tax credit program (vote expected in 2015 General Assembly). AS Don Glowinski pointed out, where exactly are we supposed to make up the lost revenue the developer was supposed to be paying? Oh yeah, I forgot, the burden just gets shifted over to those who have ‘no standing’ to fight back against it. Governmental ABL does seem to be trending and all the rage here in Cape Charles and Northampton: almost $200k in tax relief given to Daddy Warbuck’s Southport to pollute our harbor and wetlands with toxic boatyard chemicals (guess who’ll get to pay for the clean-up?), not to mention relieving Bay Creek of any movement to pay their fair share of the Sullivan-Panek Molecular Fragrance Intensifier (Stinking Wastewater Plant). The scary thing is that so many residents seem so willing to accept this high seas buggery, and like a lobotomy gone awry, keep gleefully electing the very perpetrators of these heinous crimes.
This seems like a slap in the face to the very town officials that fought so hard to hand the building to David McCormack! Now the building will only be valued at $285,000 for the next 10 years? So much for tax revenues. I pay more than that in town tax on my house.
If this all seems crazy to you people reading the article — you have just voted back into office the very people that made this little deal happen. Now all of us will have to make it up with our taxes. Thanks so much. It will be impossible for honest, intelligent people to get into office as long as the ones that are in there now continue to run dirty campaigns. And believe me when I say it was a dirty campaign!
Anyone that believes ANYTHING that a official says should quickly make an appointment with Dr. Paschall to make sure their own brain is fully functional.
I would like to know why the town continues to hand over property to developers and get nothing in return?
I would like to know why Charon Ventures has not been sent a water bill yet? Everyone else that buys a property that has a water meter on it HAS to start paying a water bill right away; however, David McCormack seems to have some sort of “pull” and he doesn’t have to pay a water bill. Hmmm — wonder why?
I can hardly wait for the next town meeting to see how our new mayor handles all of this.
This is what happens when you sell to a “developer” who doesn’t even have an existing office. This guy is going to make his money and disappear before one lick of work gets done on any “developing”. What a joke this has been.
If I read the article correctly, I’d just like to point out that the town of Cape Charles had nothing to do with the assessment. The assessment was done at the County level and not the town level.
The town of Cape Charles had plenty to do with giving our Historic 100 year old school, a street, and part of the park to these “Men of Honor.” It was a dirty, underhanded deal and everyone knows it. Of course the county is who lowered the assessment. The people on Town Council led everyone to believe that our taxes would go up if the school became a community center, so naturally a lot of the Bay Creek people flipped out. Well, we didn’t get our community center and our taxes went up anyway.
How much taxes are the Baldwins paying on the more then 160 acres (Industrial Park) in Cape Charles, now a yacht repair, for which they paid hardly nothing from the then Board of Supervisors led by the Tankards, near ZERO TAX.
I asked a businessman in Cape Charles, “How do you get rich here?” His answer was, “become a politician.”
The old school in Capeville was sold by the Board of Supervisors years back for $10,000. The buyer sold it a few months later for $100,000.
This town and county is near to being corrupt — or just plain stupid.
Seems as if a few folks who ran for Town Council, and their supporters, have a bad case of gas/sour grapes. I would suggest a large warm glass of prune juice to perhaps make them feel better.
Jockamo: Unless you have been here for quite awhile you probably don’t know much about the “Old school debacle”. That being said I for one don’t really care that I lost the election. You probably don’t know any of the people that fought for the community center. If you think this town is doing the right thing by raising taxes constantly, gouging us on the water and sewer bills, having way too many people sitting around in the town office doing nothing and getting paid for it — well good for you. I said this during the election to many people: The reality is that I am far more DANGEROUS off town council than on town council.
Maybe an enema for you is the answer.