A curious process for valuing land in Loudoun County

Questions focus on assessment board’s violations of state law

By

 Updated:

Officials in one of the nation’s fastest growing counties defeated a plan to purchase nearly 100 acres of land, at a cost of more than $200,000 per acre, from the largest developer in the county after the Center for Public Integrity reported that the developer was simultaneously claiming the land was worth only about $35,000 per acre for tax purposes.

The Loudoun County, Virginia, Board of Supervisors voted 5-4 on October 21 to reject plans that would have placed two schools on the site — pointing to inconsistencies with county planning while grumbling over the sale price and possible benefits the developer may have received. The action by the supervisors essentially kills a contract drawn by the county school board.

The county still faces the potential of seeing the 100-acre tract, and the rest of the more than 5,000 acres owned by the developer, Greenvest L.C., reduced in value for tax purposes, which would mean the loss of millions of dollars in county tax revenues. That’s because the county’s Board of Equalization, which rules when landowners challenge tax assessments in Loudoun, has a history of lowering tax rates for big developers, and doing so without the transparency required by state law.

The way the land valuation and development game is played in Loudoun has left some county officials muttering about the appearance, at least, of corruption, and a special FBI task force is now looking into land use practices there. The Center for Public Integrity has been reporting on activities in Loudoun County as part of its National Land Use Accountability Project, which is examining controversial land use policies and practices throughout the country. The Center revealed the discrepancy in land valuation on the Loudoun school parcel in mid-October.

According to county records, Greenvest is asking the Board of Equalization to reduce the value of nearly all of its undeveloped holdings to an average of about $26,000 an acre for tax purposes, and to agree that the proposed school site parcel, despite the proposed $200,000 per acre contract sale price, is worth an average of about $35,000 an acre for tax purposes.

Jack Carney, Greenvest’s vice president for finance, justifies the seemingly contradictory land value claims by explaining that under the contract, the developer was required to provide water and sewage services, as well as a new access road to serve the area, all of which increases the value of the land to the agreed-to price of more than $200,000 per acre. He acknowledges that those improvements are necessary, with or without the school construction, in order for Greenvest to move forward with its planned residential development of the area. But, he notes, Greenvest is required under the contract to provide those improvements earlier than it otherwise would have.

Carney also said that the assessed value of Greenvest’s land jumped significantly in January compared with the previous year, leading to the current appeal before the Board of Equalization.

But others in Loudoun County have a more cynical view of what’s taking place.

“They’re trying to screw us coming in and coming out,” said County Board of Supervisors Chairman Scott York.

Others raise graver concerns.

“It gives the perception that something shady is going on,” said Todd Kaufman, the Loudoun County assessor, who was hired by the Board of Supervisors in 2005 to bring the county’s real estate assessments in line with market values. “The whole thing stinks of corruption.”

Specifically, Kaufman points to the Board of Equalization’s reputation for doling out huge assessment reductions to developers without any clear explanation of its reasoning, and the board’s lax record-keeping, which is in violation of state laws.

Perhaps the best known example of BOE largess in recent years benefited the Ritz-Carlton-Jack Nicklaus luxury golf community, Creighton Farms, which had its tax exposure slashed to less than a third of the land’s true market value in 2004. A more recent example: Earlier this year, the BOE reduced by more than $13.5 million the value of 344 acres owned by California-based developer Resmark Equity Partners, providing even lower assessments than were requested. Resmark originally requested that land assessed at $18 million be reduced to $5.3 million; the BOE granted a value of $4.5 million, a 75 percent tax cut, from about $206,000 in taxes for the year to about $51,500.

When the Center for Public Integrity recently sought the records of the BOE’s deliberations on the Ritz-Carlton-Jack Nicklaus property and other sites, officials explained that no verbatim records of meetings are kept, nor are detailed minutes of the discussions recorded. The BOE secretary takes minutes, but they do not always include the reasoning behind the board’s decisions, nor a tally of the vote taken, which is required under state law.

“In some cases, you just didn’t know [how they reached a decision] because they didn’t give a reason for a third of their decisions,” complains Supervisor Jim Burton, a slow-growth advocate.

The FBI announced the creation of a special task force in May of this year to investigate land use practices in Loudoun County and, more generally, elsewhere in Northern Virginia. Several county officials declined to comment when asked if they had been questioned by federal authorities regarding the BOE.

“I have no idea how [the BOE arrives] at their values,” said Kaufman, the county assessor, who charges that the BOE process undermines his constitutional duties and has a lasting impact on the county’s revenue stream. In many cases, he said, the year after the BOE cuts an assessment, he bumps it back to what he determines to be market value, which sometimes results in a renewed appeal to the BOE — and so it goes, year after year, he said.

Loudoun assesses property annually at 100 percent of market value. Some communities conduct assessments less frequently, for example, every other year or every five years. And some communities engage in a system of assessing at a percentage of market value. For example, assessing at 50 percent of market value, a property likely to sell for about $500,000 is assessed at about $250,000, and county officials then set tax rates as needed to bring in the revenues necessary to provide services.

On the Greenvest appeal to the BOE, Kaufman said, the problem is not as much with the proposed $200,000-per-acre contract with the county as it is with the developer’s contention that the land is worth so much less for tax assessment purposes. Kaufman’s own assessment of the 99.3 acres comes in around $150,000 per acre. His assessments on some neighboring land ranged from about $136,000 per acre to just over $150,000 per acre.

In the current appeal, developer Greenvest stands to cut the taxes it pays to the county by nearly $3 million for the current year — from $4.38 million to $1.52 million — a 65 percent reduction, according to Kaufman and the appeal documents.

Any reductions in assessed values result in reduced county revenues. Currently the County Board of Supervisors is scrambling to close a projected $176 million shortfall in next year’s budget.

Andrew Bogle, current chairman of the BOE, said that real estate values can be very hard to figure out, particularly in a shaky housing market.

“Everyone’s case is different,” Bogle said, explaining that each appeal must be considered on its own merits, including a variety of improvements. “If you don’t have a platted subdivision, it makes a difference, [and] the closer it is to the point where you can build on it . . . it has more value.”

“It’s really hard,” he continued. “Comparables and sales are all you have to go on. . . . In 2004, people were putting in contracts for $150,000, then turning around and selling for $50,000 more just months later. Now, it’s going just the opposite way.”

The BOE consists of five members appointed by the Loudoun County Circuit Court who serve three-year terms, not to exceed three consecutive terms. They are required to take a basic course on taxation and assessment procedures provided by the state as well as continuing-education courses every four years.

No verbatim records of meetings are kept nor are detailed minutes of discussions recorded.

Questions about BOE procedures are nothing new. Supervisor Burton raised concerns about the BOE’s operations during 2004-2005, when Dale Polen Myers served on the panel. Myers, a former county Board chairman, was instrumental in the 2003 election of a pro-development majority of the Board of Supervisors. Myers, a real estate broker active in several major land deals involving county oversight while the pro-development board ruled, declined to comment for this story. She has previously acknowledged that she was questioned in the continuing FBI investigation of land development practices in Loudoun County, but she maintained that she scrupulously avoided conflicts of interest between her civic duties and her real estate interests.

A story in The Washington Post last year raised questions about Myers’ influence on land use decisions. One of the developers involved with the Ritz-Carlton-Jack Nicklaus collaboration named Myers as a consultant. The Creighton Farm property sits along historic Route 15 across from Oak Hill, designed by Thomas Jefferson for his friend James Monroe, who lived there after his presidency.

Myers, as a member of the BOE, was present in October 2004 when the board voted to reduce assessments on the Creighton Farm property from $9.4 million to $4.49 million, after the former owners sold the property to developers of the Ritz-Carlton project in two transactions, in February and June of that year for a total of $18.2 million. The records kept by the BOE do not indicate which members voted for or against this decision, simply stating that the board agreed with the owner on the value.

Burton was sufficiently distressed by the BOE’s decisions on Creighton Farm and other appeals that he contacted Commonwealth’s Attorney Jim Plowman in 2005 requesting an investigation. While agreeing with Burton’s concerns regarding inconsistencies in BOE decisions, Plowman chose not to launch an investigation. Explaining that decision to the Center, he noted that “I don’t have the background to say, ‘That’s an improper assessment.’”

“If [Burton] thinks someone is taking bribes or kickbacks, yeah, I’d love to know that,” Plowman said. “Nobody’s provided me with information of probable cause that a crime has occurred.”

Further, Plowman said he told Burton that the Board of Supervisors could mandate improved record keeping practices by the BOE. But, Burton said, he did not feel the Board of Supervisors was inclined to take any action at that time, and he had hoped a new administrative assistant assigned to the BOE would address his concerns.

Terri Smithson, who took over the administrative duties of the BOE about three years ago, said she attempted to improve the record-keeping system in light of Burton’s concerns. When she asked the County Attorney’s Office whether the BOE was in compliance with state open meeting laws, there was no response regarding the lack of recorded votes. The secretary of the BOE, not the administrative assistant, records the minutes.

According to Alan Gernhardt, an attorney with the Virginia FOIA Advisory Council, state law requires minutes to be taken by any public body and that they should include the date, time, and location of the meeting; the members of the pubic body recorded as present and absent; and a summary of the discussion on matters proposed, deliberated or decided, and a record of any votes taken.

In addition, Loudoun County policy requires that the BOE act by majority vote, rather than simply reaching consensus, on any appeal. But the BOE’s minutes do not include vote tallies to demonstrate that any actual vote occurred. Summaries included in the minutes rarely include any details about what individual BOE members said during discussions. To date, the minutes of BOE meetings continue to lack vote tallies, Smithson said.

“As of July 1, 2004, they are required to list a record of any votes,” Gernhardt said, explaining the provisions added to the Virginia Freedom of Information Act in 2004. “If there was a vote taken after July 1, 2004, there’s no question it’s required.”

Myers, in addition to sitting on the BOE in 2004-2005, also helped Greenvest coordinate its real estate assessment appeals this year, according to Kaufman, who said he is focused on the inconsistencies at the BOE and is not pointing fingers at individuals.

“She’s always conducted herself professionally whenever I’ve dealt with her,” Kaufman said about Myers. “Some people may be looking for a scapegoat. I’m trying to fix assessment problems. The problem is [that] the system is allowing corruption to occur.”

While Kaufman focuses on the long-term, systemic problem of setting and appealing assessments, he expressed no opinion on the defeated purchase of 99.3 acres from the developer for two new schools proposed in Lenah, a far southwestern portion of the county.

The agreement reached for the property in July was between Greenvest and the Loudoun School Board. And, while only the school board can withdraw from the contract, the County Board of Supervisors holds the purse strings for proposed school construction, which was the subject of the October 21 vote. The Loudoun Planning Commission, which guides the Board of Supervisors on land use decisions, recommended it oppose construction of the schools because the site lies outside the area planned for suburban development.

Supervisors said their decisions were based on the validity of the school board’s land use requests, rather than on the price the school system agreed to pay for the property, though comments by some supervisors seemed to indicate that the price rose during previous discussions.

Even so, said county Vice Chairman Susan Klimek Buckley, “Price is not a basis for denial today. Price is not before us.”

During a public input session about the site, dozens of residents expressed support for the purchase because they are concerned about overcrowding in existing schools. Several of those supporters of the site told supervisors that a discrepancy between the sale price and the assessment was not enough to block the purchase of the school site.

Along with Buckley, Chairman York and Supervisor Burton, despite concerns about the sale price, said they could not come up with a legitimate reason to deny the school system’s request.

“There have been some concerns expressed via the cost of the property, as well as location,” York said. Even so, before voting against the motion, he explained that cost was not a good enough reason to deny the request.

School Board member J. Warren Geurin said he was not sure what would happen next.

“It’s disappointing,” he said, adding that the vote may have been more against Greenvest than on valid reasoning. “It could be a member, or members, of that board doesn’t like the owner of the property.”

School Board member Robert Ohneiser opposed the Lenah purchase from its inception. When told of Greenvest’s appeal to the BOE, Ohneiser said the land purchase was made as “a pre-construction, wholesale purchase of many lots,” and “if they’re not worth [the agreed price] the deal should be halted.”

Supervisor Stevens Miller, who represents the district where the proposed school site sits, argued that the value of the land cannot be both the upper limit Greenvest wants for the school sale and the lower limit the developer claims for tax purposes.

“It’s got to be one or the other,” Miller said.

Asked if he was familiar with the concerns being expressed by a host of officials regarding the BOE, Bogle, the panel’s current chairman, said such complaints are rarely communicated to the BOE’s members.

“We’re probably the last ones to hear,” he said.

Care about freedom of the press? Support independent investigative journalism.

Donate now
Donate now