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From YouTube: Board of Equalization Meeting | September 20, 2023
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A
Foreign
good
morning
today
is
Wednesday
September
20th
2023.
This
is
the
Arlington
County
Board
of
Equalization
hearing
six
cases
on
the
agenda
first
case.
Oh,
and
we
also
have
six
board
members
president
for
Quorum.
The
first
case
is
RPC
31025001
at
2400
South
Glebe,
Road,
Mr
Harmon.
You
can
start
with
your
eight
minutes
and
tell
us
about
this
property.
Sir.
B
C
Thank
you.
Thank
you,
madam
chairwoman.
Members
of
the
board
members
Andrea
good
morning,
2400
South,
Glebe
Road.
This
is
the
Alister
Arlington
Ridge
Apartments,
located
at
Glebe
and
395..
This
building
was
built
in
1965
and
has
227
units
physical
vacancy.
As
of
the
data
value
was
12
and
as
of
today,
it's
12.8
percent.
C
C
You'll
note
that
the
second
ground
listed
is
vacancy
and
collection
loss
at
the
property.
Looking
at
the
three-year
history
of
where
we
have
full
years
again,
2019
is
a
partial
year.
We
see
that
vacancy
and
collection
loss
has
averaged
over
11
percent.
There
are
two
reasons
for
this
hiring.
First,
the
property
typically
records
High
turnover.
Last
year
the
property
saw
141
units
turnover.
This
is
again
out
of
227
total
units.
This
means
that
last
year
alone,
62
percent
of
the
total
units
at
the
property
turned
over
in
2022..
C
C
The
proximity
to
395
is
why
people
choose
this
building
so
typically,
that's
a
lot
of
the
tenants
are
people
who
have
to
commute
to
work
in
DC
and
they
may
be
moving
to
the
area
from
outside
of
Northern
Virginia
and
pick
this
property
based
on
its
location.
It's
easy
to
get
in,
of
course,
with
remote
work
and
work
from
home
policies.
C
There's
less
demand
for
this
space,
which
you
know
the
primary
driver
is
its
location,
so
turnover
at
the
property
again
was
62
percent
of
2022,
which
of
course
increases
both
vacancy
and
collection
loss
and
the
operating
expenses
due
to
turnover
costs
the
proper.
Secondly,
the
property
has
been
renovating
the
units.
Over
the
past
few
years,
they've
been
painting
the
kitchen
cabinets,
adding
new
floors
and
new
appliances.
C
The
property
renovated
approximately
104
units
in
2022.
Now
we're
able
to
convert
this
to
see
what
effect
this
had
on
the
vacancy
laws.
If
we
drill
down
on
these
Renovations,
we
can
see
what
amount
they
contributed
in
2022,
so
104
units
were
renovated.
If
we
assume
each
renovation
took
say
one
month,
you
know
which,
which
they
would
not
take
longer
than
a
month.
That's
that's!
The
high
ends
to
complete.
That
means
that
an
average
of
8.7
units
were
offline
for
the
entire
year,
which
translates
to
3.8
percent
of
the
total.
C
So
3.8
percent
is
the
max
vacancy
in
collection
loss
that
could
be
attributable
to
Renovations
for
2022..
Of
course,
2022
actual
vacancy
and
collection
loss,
as
you
can
see,
was
11.7
percent.
So
if
we
take
out
this
Max
vacancy
and
collection
loss
due
to
Renovations
of
3.8
percent,
that
still
leaves
overall
vacancy
and
collection
loss
at
eight
percent
for
the
year
now.
C
So,
for
instance,
if
we
assume
only
two
weeks
to
turn
over
each
renovated
apartment,
then
it
means
the
overall
effect
on
vacancy
and
collection
loss
for
the
year
was
less
than
two
percent,
so
even
assuming
a
month
for
to
renovate
each
unit,
we
have
vacancy
and
collection
loss
at
eight
percent
in
2022..
This
could
possibly
be
higher
if,
if
we
assume
Renovations
took
two
weeks,
this
is
in
line
with
what
the
2022
assessment
used
for
vacancy
collection
loss
last
year.
The
assessment
assigns
eight
percent
for
vacancy
and
collection
loss.
Again.
C
This
property
actually
did
operate
at
that
rate
in
2022.,
the
2023
assessment
drops
the
vacancy
and
collection
loss
rate
to
only
six
percent
next,
so
the
assessment
under
States
vacancy
and
collection
loss
required
at
the
property
and
again
that's
due
to
the
high
turnover
nature
of
this
property.
It's
again
located
right
off
of
395
and
with
fewer
people
commuting
into
the
city,
it
loses
a
lot
of
its
appeal.
C
C
Finally,
the
assessment
understates
the
cap
rate
for
this
property.
This
property
has
again
had
high
vacancy
High
turnover
and
increasing
operating
expenses.
No
potential
purchaser,
as
of
the
data
value,
would
look
at
this
property,
knowing
the
vacancy
and
turnover
numbers
recorded
for
2022
and
value
it
at
exactly
the
same
cap
rate
they
used
in
2019,
2020,
2021
and
2022.
C
Add
to
the
vacancy
and
collection
issues,
the
fact
that
interest
rates
increase
by
425
basis
points
over
the
course
of
2022.
If
these
rate
increases
began
in
March
of
last
year,
it's
simply
not
logical
that
an
investor
would
impute
the
exact
same
required
rate
of
return
on
this
property,
as
it
has
for
each
of
the
past
five
years
and
at
the
lowest
rate
of
any
of
the
past
15
years.
C
D
County
board
members,
as
Mr
Harmon
mentioned,
we
went
out
and
inspected
this
property
this
year
in
July
and
we
were
able
to
walk
the
property
but
the
property
manager.
D
After
at
swampy
tour,
they
just
stated
that
there
were
Renovations
done
to
the
common
areas,
unit
updates
with
new
kitchen
that
there
was,
like
you
mentioned,
there's
some
Cabinetry
that
was
repainted
or
updated
when
necessary
appliances
or
updated
floors,
paint
they
renovated
the
pool
in
2019
and
pretty
much
been.
D
You
know
the
important
one
of
those
updates,
so
this
leads
to
why
I
increased
in
the
test
column,
I,
increased
the
effective
age
by
10
years,
pretty
modest,
basically
I'm
still
looking
at
this
property
as
it's
48
years
old.
That's
increasing
this
by
10.
as
the
original
age,
it's
1965
19.
D
So
basically,
the
the
big,
the
big
discrepancies
that
we
have
here
is
the
vacancy.
So
we
took
that
in
my
my
test
on
my
took
that
into
pieces
and
I
was
not
provided
a
rental.
D
If
you
read
the
email
correspondence
I
actually
requested
the
email
several
times,
I
even
requested
it.
When
we
were
on
site.
D
Attached
to
the
2022,
INE
and
so
I
looked
at
the
unit
Matrix
those
numbers,
those
average
rent
numbers
that
they
provided
are
much
higher
than
what
I've
used
in
the
test.
So
I
reduced
the
rent,
okay
to
account
for
the
excess
vacancy,
and
we
believe
that
that
excess
vacancy
that
the
high
turnovers
is
well
the
maintenance
or
Renovations
that
they
were
doing.
D
D
So
the
expenses
are
exceptionally
High
over
the
year
2022..
D
And
so,
when
you
look
at
the
little
grid
below
the
little
Grid
at
the
bottom,
we
figured
that
roughly
230
000
in
the
common
areas
is
the
capital
expenses.
Capital
Improvements,
like
I,
said
again.
I
did
ask
that
an
email
about
that
and
it
was
they
never
responded,
and
we
also
estimate
that
approximately
a
hundred
thousand
in
the
decorating
is
attributed
to
these
Renovations.
D
So
you
add
that
up
that's
about
340
000,
that
we
think
the
the
expenses
are
being
they're
they're,
not
typical
maintenance,
When
You
Subtract
that
330
000
from
the
two,
the
2022
their
noi,
is
within
five
thousand
dollars
of
our
noi
for
the
January.
D
The
other
thing
I'd
like
to
remind
you
is
that
or
ad
is
that
2019?
Yes,
it's
a
peak
year
of
a
2019
is
property
sold
for
55
million
by
the
apartments
have
not
done
terribly
at
all.
During
coven
I
mean
they
survived,
for
some
reason
are
there
10
rents
are
still
going
up
again.
E
I'd
like
to
can
I
can
I
just
add
something:
I
just
want
to
go
back
again
to
the
the
categories
of
Renovations
for
Effective
age
changes
again.
This
does
fall
in
line
with
our
renovations
to
common
areas
where
that
would
include
lobbies
or
conference
rooms,
bathrooms
kitchens
and
things
of
that
nature.
This
property
was
built
in
1965.
Again
we
used
a
very
conservative
10-year
increase
for
this
property
to
recognize
all
of
the
renovations
that
occurred
prior
to
January
1
2023.
E
Additionally,
there
were
questions
that
were
asked
in
the
email
that
Lori
has
provided
in
the
packet.
If
you
would
turn
to
that
email,
specifically
as
questions
regarding
providing
the
original
rent
roll
again,
that
was
not
provided,
providing
a
detailed
report
of
the
vacancy
for
the
operating
year
2022
and
the
number
of
units
that
were
offline
during
that
renovation
and
we're
just
hearing
that
information
today
from
Mr
Harmon.
E
Some
of
these
emails
are
sometimes
go
unrespond
to,
and
so,
therefore,
we
are
doing
the
best
we
can
to
Value
the
properties,
given
the
information
that
we
are
provided.
Thank
you
for
your
time.
A
All
right,
thank
you.
Go
to
questions
from
board
members.
I
mean
I'll
start
Mr
Herman.
Why
wasn't
the
information
provided
when
it
was
requested.
B
C
A
C
Understand
the
question:
thank
you,
madam
chairwoman.
What
we've
run
into
repeatedly
when
we
receive
these
questions
we
reach
out
to
the
owner,
ask
the
questions.
We
receive
a
confirmation
from
Drea
within
the
week
of
being
asked
these
questions
and
I'm,
not
sure
exactly
when
we
received
confirmation
on
this
property,
but
typically
within
five
business
days
of
being
passed,
we're
hit
with
the
confirmation.
We
don't
always
have
a
response
within
five
business
days.
Sometimes
it
takes
a
couple
of
weeks
to
hear
back
from
the
client
I
heard
back
this
week
from
the
owner
on
this.
C
D
Excuse
me
so
once
again,
by
increase
in
the
test
column,
I
increase
the
cap
rate
or
decreased
excuse
me:
I
increased
the
effect
of
age
modestly
by
10
years,
once
again,
I'm
looking
at
this
property
as
if
it
was
48
it's
good
and
based
on
the
little
Grid
at
the
bottom,
where
I
provided
a
little
breakdown
on
the
certain
expenses.
We
believe
that
the
2022
irony
is
overstated
or
it's
mixing
renovation
costs
in.
F
D
Operating
expenses
by
about
roughly
330
000,
and
so
once
again,
if
you
subtract
that
333
000,
that's
being
reported
for
expenses
in
in
the
2022
column,
it'll
bring
their
noi
within
five
thousand
dollars
of
our
original
assessment.
So
I'm
just
requesting
the
the
value
of
the
original
assessment
at
51.99.
C
Thank
you,
so
this
property
again
had
141
units
turn
over
last
year.
That's
because
it's
primary
appeal
is
its
proximity
to
I-395.
When
my
wife
lived
there,
that's
why
she
chose
this
location.
Other
tenants
did
the
same.
People
from
out
of
the
area
come
in,
they
commute
into
DC
and
then
back
now
that
work
from
home
has
taken
over.
It's
lost
one
of
its
main
drivers
for
appeal.
Even
if
we
smooth
vacancy
and
collection
loss
for
renovations
in
approximate
one
month
of
per
renovation,
vacancy
and
collection
loss
for
2022
is
still
eight
percent.
C
Now,
as
to
their
expense
contention,
capex
has
reported
separately,
you
can
see
they
reported
1.8
million
dollars
in
capex
for
2022.,
so
they're
not
reporting
renovation
costs
in
operating
expenses.
If
we
look
at
the
operating
expense
rate,
it's
been
steady
for
the
past
three
years:
2020
29,
2021,
34
2022,
36
percent.
These
increases
are
in
line
with
what's
to
be
expected
from
inflation.
Thank
you.
F
It
seems
the
department
did
what
it
often
does
and
kind
of
averages
out
over
a
number
of
years,
especially
starting
with
2019,
how
much
lower
it
is
than
2022
reporting
and
the
trend
is
up.
The
average
is
up
and
I
I'm
I'm
comfortable
with
that
I'm
also
comfortable,
with
lowering
the
in
the
test,
the
rents
to
offset
some
of
the
unusual
turnover.
F
I
thought
a
lot
about
the
total
vacancy
allowance
and
wrote
between
rows.
10
and
11
should
be
six
percent
or
eight
percent
because
they
seem
to
have
an
average.
An
experience
of
over
the
guideline,
so
I
kind
of
could
go
either
way
and
make
a
case
for
either
and
finally,
for
the
cap
rate,
a
the
the
effective
agents
never
changed
in
1965.
I
mean
nobody
could
possibly
believe
that.
G
F
Was
improved
in
this
thing
and
but
we're
just
55
years
58
years.
On
the
other
hand,
B
this
is
January
1st
2023
in
the
department
thought
at
the
time
that
nothing
had
ever
changed
and
I
and
and
clearly
that's
wrong
and
clearly
it
ought
to
be
shown
next.
January,
1st
2024,
but
I,
don't
believe
that
the
cap
rate,
based
on
information
gleaned
by
the
department
with
its
limited
resources
after
the
data
evaluation,
ought
to
factor
in
so
I
think
it
ought
to
State
the
5.8
rate
per
cap.
F
So
I
would
feel
comfortable
taking
the
test,
but
applying
a
5.8
cap
also
I
I
guess:
I
should
blood
with
this.
Almost
nine
percent
increase
one
year
over
another
in
a
very,
very
stabilized
building,
although
it
is
now
spending
money
to
improve
itself
in
real
time
to
seem
excessive,
but
I'm
aiming
therefore
the
remedy
to
that
to
the
of
maintaining
the
Gathering
for
this
one
year.
A
You
know
just
to
address
both
of
your
points
if
you
take
the
test
and
increase
the
vacancy
to
eight
percent
with
a
5.7
cap
rate
economy
at
51,
yeah
989,
which
is
slightly
higher
and
very
slightly
higher
than
the
original
right.
If
you
take
the
original
column
and
or
nothing
but
the
test
column
cabinet
5.8,
coming
at
52
768,
which
is
still
higher
than
the
original,
so
you're
really
your
response
that
Azure
with
the
original
assessment.
A
A
H
And
you,
you
gave
a
great
list
of
items
and
the
in
response
to
the
one-on-one
operating
expenses.
As
we
heard
the
other
day,
they
were
waiting
things
to
the
higher
increase
of
cost.
Today,
renovation
costs
versus
what
things
were
a
couple
years
ago,
just
the
increasing
construction
cost
to
take
an
average
of
expenses,
I
think
is
a
little
off
I
think
there
needs
to
be
a
waiting
to
that.
H
H
You
know
just
to
take
something's,
got
a
high
and
a
low
and
hit
the
middle
when
clearly
the
back
side
of
that's
a
little
heavier
I
think
I
think
the
weighting
should
be.
You
know
the
expenses
should
be
moved
a
little
that
direction,
and
you
know
the
original
at
33
percent.
I
understand
that
but
I'm
looking
at
22
at
41,
now
I
understand
what
she's
saying
too
about.
There
may
be
some
things
in
there
that
wouldn't
be,
but
I
still
think
that
33
might
be
low.
H
Right
and
I'm,
looking
at
some
of
the
dollars,
no,
it's
still
low,
recording
here,
yeah,
it's
totally
that's
the
one
area
I
saw
there
is
a
very
reasonable
adjustment,
see
the
other
one.
H
Oh
I'm
not
sure,
and
you
guys
may
have
a
better
feel
for
this
on
the
vacancy
when
you're
turning
renovating
lots
of
units
of
ability
and
we've
seen
a
couple
of
these
buildings.
Do
this
and
I
know
honestly
my
daughter's
both
experienced
it
where
they've
moved
them
at
the
end
of
their
lease
from
one
unit
to
another
yeah,
that's
a
turnover,
that's
a
new!
That's
a
vacancy
and
a
new
turnover
unit.
Was
it
really
a
turnover
or
did
they
go
from
the
first
floor
to
the
second
floor
kind
of
thing?
I
Yeah
I
mean
I,
looked
at
I'm,
just
a
little
nervous
about
being
going
up
over
Curry
million
on
both
of
the
counties
noi
the
test
and
the
original
assessment.
Just
because
the
you
know,
when
I
do
a
three
year,
average
it's
like
2.757
and
so
that's
a
pretty
big
jump.
I
I
know
they
did
three
million
in
2020,
but
that's
not
year
because
it
was
a
sold
in
19.
So
you
kind
of
get
a
transition
where
the
numbers
might
not
be
exactly
right,
because
you
got
one
one
group
doing
the
books
one
year
and
then
all
of
a
sudden
you
have
a
new
property
manager
coming
in
some
expenses
shift
to
the
year
before
the
year
after
or
whatever
so
I
mean
if
I
looked
at
the
three
year
average
and
try
to
kind
of
blend
through
that
I
meant.
I
G
J
G
Three
four
two
one
just
take
just
coming
up
with
different
ideas:
that's
one
of
the
things
I
did
Greg.
Another
thing
I
did
is
I,
took
the
operating
gear
and
I
deducted
I,
guess
vacancy
rent
loss
and
concessions
and
then
used
a
different
figure
and
then
kept
that
at
5103,
3421,
so
I,
don't
know,
I
think
a
very
slight
decreases
in
order.
K
You've,
you
know
giving
them
the
better
the
doubt
that
the
expenses
are
high,
235
000,
that
Nebraska
state
you
take
that
all
I
didn't
just
take
that
on
my
own.
Just
so,
and
what
I
do
is
I
increase
the
expenses
on
the
test
at
35
and
it
comes
to
a
million
five,
and
then
you
hate
it's.
You
know
pretty
much
taken
to
235
volt
cabinet
at
five,
eight,
it's
51.93,
400.
K
I
thought
that
was
more
reasonable
than
you
know.
It's
dealing
with
the
vacancies,
if
simpler,
is
better
yeah,
yeah.
K
K
A
A
B
C
L
We
asked
to
withdraw
a
different
case.
We
asked
to
withdraw
332,
which
is
1812
North,
Fort
Myer.
I
L
A
A
A
A
C
Yes,
thank
you
so
1515
Wilson
Boulevard.
This
is
a
126
000
square
foot
office.
Building
it's
located
next
to
the
Safeway
in
Roslyn
and
across
the
street
from
the
target
it
was
built
in
1970
vacancy
at
the
property
increased
from
under
two
percent
on
January
1
2022
to
over
eight
percent
on
January
1
of
this
year.
C
Despite
this
increase
in
vacancy
the
assessment
increased
year
over
year,
the
Draya
test
provides
a
value
that
is
an
even
greater
increase
in
the
assessment.
A
departmental
hearing
was
again
requested
and
denied.
Looking
at
the
board
pack,
I'll
again
request
that
you
direct
your
attention
to
the
appellants
pro
formal.
This
is
on
page
29
of
the
appeal
now
here.
I
want
to
walk
you
through
how
we
arrived
at
each
of
our
figures
on
that
stabilized
potential
column
to
the
right,
starting
at
the
top.
The
property
has
140
000
square
feet
of
lease
office
space.
C
C
If
we
take
the
Draya
Drea's
own
conclusion
of
average
leased
office
space,
which
is
noted
in
comic
one
as
being
40.85
cents
per
square
foot,
and
then
we
deduct
the
uniform
10
concessions
we
get
to
at
least
office
per
square
foot
average
of
36.77,
not
the
forty
dollars.
The
assessment
imputes,
not
the
39.50.
The
test
imputes
but
36.77
you'll.
Note
that
the
appellant's
average
office
rate
of
37.24
is
higher
than
what
the
government's
after
conception
rate
of
36.77
would
be.
This
is
because
we
included
two
retail
tenants
as
office
space.
C
This
was
simply
a
reporting
oversight,
but
even
still
it's
still
much
lower
than
what
the
assessment
implant
imputes.
Next
for
the
8
000
square
feet
of
vacant
office
space,
we
imputed
the
leased
office
rate
of
37.24
cents
per
square
foot
for
the
retail
income.
We
imputed
that
space
at
59.13
per
square
foot.
This
drops
to
53.42
if
all
the
retail
tenants
are
included
on
this
line
and
not
the
to
their
are
included
as
office.
C
Now,
looking
at
the
pass-through
in
parking
income,
next
you'll
see
that
we
imputed
the
2022
actual
received
consistent
with
how
other
properties
are
assessed
in
the
county.
We
impute
the
guideline
vacancy
rate
of
10
percent
then
use
the
assessments
operating
expenses
of
1.577
million
you'll
notice
on
the
Drea
test
that
the
operating
expenses
were
decreased
by
over
two
hundred
thousand
dollars
from
the
initial
assessment,
so
that
the
expenses
would
match
the
2022
actual
operating
expenses.
C
they're,
essentially
stating
that
January
2023
expenses
will
be
exactly
the
same
as
January
2022
expenses.
February
2023
expenses
will
be
exactly
the
same
as
February
2022
expenses
and
so
on.
Finally,
the
cap
rate-
we
imputed
is
the
2022
guideline
rate
plus
200
basis
points
to
account
for
the
systemic
risk
inherent
in
the
office
Market,
due
to
both
the
institutionalization
of
work
from
home
policies,
which
has
crushed
demand
for
office
space
and
due
to
the
increased
cost
of
capital
and
Tighter
lending
requirements
related
to
the
Federal
Reserve.
C
Raising
interest
rates
by
425
basis
points
which
began
in
March
of
2022.
Now
we're
now
in
year,
four
after
covet,
hit
and
sent
everyone
home
return
to
office
still
hasn't
happened.
As
of
the
end
of
last
year,
offices
were
about
45
utilized
in
the
DC
region.
2020,
we
were
told
that
in
2020
was
an
aberration.
That
would
go
away.
Once
vaccines
came
out,
everybody
would
come
back
to
the
office.
Vaccines
were
came
out
in
December
of
2020,
and
large
portions
of
the
population
were
vaccinated
in
2021,
but
there
is
still
no
return
to
office.
C
We've
heard
from
Drea's
own
agents
that
covet
is
over
the
pandemic
is
over,
yet
we
are
still
not
seeing
a
return
to
work.
This
is
a
reflected
event
in
the
negative
net
absorption
the
county
has
experienced
over
the
past
three
years,
the
increase
in
sublet
space
available
and
the
new
leases
that
are
for
smaller
footprints.
C
C
Increased
interest
rates
increase
the
cost
of
capital,
as
we
have
heard
from
industry
experts
over
the
15
years
prior
to
2022
interest
rates
on
10-year
T
bills
fluctuated
by
an
average
of
only
75
basis,
points
either
up
or
down.
In
2022,
the
10-year
t-bill
increased
by
236
basis
points.
This
is
over
three
times
the
historical
rate.
This
will
have
an
effect
on
the
market,
in
addition
to
the
cost
of
capital.
Increasing
lending
requirements
have
also
changed
where
loan
to
value
ratios
may
have
been
around
70
percent
before
now,
they're
much
lower.
C
C
Stabilized
potential
column
value
is
231
dollars
per
square
foot.
This
is
well
above
this
recent
sale
now
I
want
to
address.
Finally,
a
discrepancy
between
the
appraiser
comments
on
page
three
of
the
appeal
and
appraiser
comments
on
the
test:
page
of
the
appeal.
First,
as
of
the
data
value,
the
property
had
over
10
000
square
feet
vacant.
The
appraiser
comments
stayed
only
2,
000
square
feet
were
vacant,
but
then,
if
you
look
at
the
analysis,
you
see
that
the
appraiser
States
over
ten
thousand
square
feet
were
actually
vacant.
C
This
matches
the
vacancy
rate
imputed
on
both
the
assessment
and
the
test
column.
On
page
four
of
the
appeal.
Next,
the
appraiser
comments
state
that
the
2022
I-80
shows
new
leases,
average
42.50
per
square
foot.
The
2022
ID
rent
roll
begins
on
page
35
of
the
appeal.
Here.
You
can
see
that
there
were
no
new
leases
in
2022,
so
assuming
Draya
is
referring
to
2021
leases
when
they
state
that
new
leases
were
at
42.50.
C
M
Thank
you.
When
the
county
originally
assessed
this
property,
we
did
take
a
look
at
the
prior
review
in
2022
and
based
on
that,
we
looked
at
the
expenses
in
particular,
and
the
appellant
at
the
time
I
noted
in
column
G
that
they
reported
13
would
be
the
protected
expenses
for
this
property,
although
in
2021
the
summary
I
mean
the
owner
only
reported
ten
dollars
a
square
feet.
M
So
when
we
looked
at
the
assessment
and-
and
we
said
okay
well-
we'll
take
that
in
consideration-
we
did
project
a
lot
higher
than
what
they
reported
in
2021
and
what
they
actually
reported
in
2022.
As
you
see
in
the
previous
years,
expenses
have
been
going
down
from
2019
to
2021..
Despite
that,
we
did
project
low
higher.
We
did
correct
that
in
the
test
to
make
it
more
accurate,
as
we
see
in
the
the
history
of
this
property.
M
Now,
when
looking
at
the
when
comparing
the
original
assessment
versus
the
test,
we
did
make
the
adjustment
and
add
vacant
square
footage
to
this
property.
We
went
from
8090
square
feet
to
10
255
square
feet
and
I
would
like
to
note
that
in
the
rent
roll
in
the
2021
rent
roll,
the
the
space
of
about
8074
square
feet
was
occupied
by
Summit,
Ridge,
Energy
LLC,
and
that
lease
was
set
to
expire
in
2025..
Now,
I'm
I'm
not
sure
how
the
the
appellant
achieved
their
least
square
footage.
104
163.
M
They
only
made
a
comment
and
said
that
it
was
an
error
on
their
part,
but
maybe
some
of
the
summit
space
was
still
occupied
at
the
time,
I'm,
not
sure.
But
there
is
a
discrepancy
there
between
what
was
shown
in
the
2021
rent
roll
and
in
the
2022
rent
world.
Where
we
don't
see,
we
didn't
see
a
termination
fee
reported
in
2022.
We
didn't
see
any
termination
Clause
that
we
asked
for
with
all
the
the
terminations
that
they
are
reporting
in
their
supporting
documents.
M
So
with
that,
we
still
included
the
10
255
square
feet
as
vacant.
We
do
know
that
as
the
the
property
stabilizes
we
do
know
that,
because
of
our
guidelines
in
our
sliding
vacancy
that
we
do
know
that
if
this
property
was
stabilized
at
a
minimum,
it
would
be
five
percent
vacant
which
would
eliminate
about
381
240
634
dollars
from
the
projected
vacancy
once
stabilized.
So
in
doing
so,
it
would
kind
of
counterbalance
what
the
projected
expenses
are
for.
M
This
property
would
be
so
I
made
that
comment
last
week
where,
because,
if
you
increase
expenses,
you
have
to
consider
what
this
property
would
be
as
stabilize
again,
if
it
was
stabilized,
it
would
have
more
income.
It
had
10
255
square
feet
of
income
ingested
or
computed
into
the
income
of
this
property
to
give
the
an
overall
projected
income
of
381
896
more
than
what
we
have
stated
in
our
test
column.
M
G
Yeah,
hey
Jordan:
what
happened?
What
is
the
deal
on
this
Summit
Ridge
Energy.
C
They
left
in
2022,
they
went
to
another
building
of
under
the
same
ownership,
so
there
was
no
termination
fee
income.
They
just
moved
from
one
building
to
the
other.
You
know
that
they
asked
for
a
termination
fee.
There
was
no
termination
fee,
they
just
moved
from
one
building
to
another
within
the
same
ownership
group
and.
F
A
F
About
a
question
for
the
Department
this
even
before
cobit
this
building
has
a
history
of
offering
concessions
to
get
people
in
and
pay
and
oftentimes.
You
include
concessions,
not
always
sometimes
you
adjust
the
render
you
use
the
guidelines.
Which
is
higher
than
the
actual
vacancy.
Why
are
there
no
concessions
listed
here?
Given
the
history.
M
Well,
that
looks
like
they
in
the
past
years,
they've
front
loaded
and
especially
in
2021,
where
they
front
load
the
expenses
they
report
I
mean
they
report
the
concessions
in
the
one
year,
but
it's
spread
out
through
the
remainder
of
the
term
of
the
lease
when
we
look
at
it
and
try
to
stabilize
the
property,
given
that
this
property
has
the
the
net
operating
income
that
it
has,
we
did
project
lower
than
what
the
appellant
has
shown
by
about
two
dollars
is
what
they
projected
lower
than
what
we
have,
but
given
what
the
noi
and
and
what
this
property
has
achieved
over
the
years.
F
H
M
Overall,
this
property
increased
from
last
year
this
year
of
0.43
now,
given
that
we
know
that
leases
have
an
average
of
two
and
a
half
three
percent
year
over
year
in
the
contract
leases.
This
is
a
minimal
increase
from
last
year.
We
do
see
that
you
know
in
previous
years.
This
property
was
stabilized
at
10,
255
square
feet
vacant.
It
still
represents
only
eight
percent
vacancy
of
this
property.
You
know
the
market
that
we
know
in
Arlington
is
about
22.
This
is
you
know
over
performing.
M
As
far
as
you
know,
a
vacancy
is
concerned,
we
do
see
that
this
property
is
somewhat
stabilized.
With
the
you
know,
10
244
square
feet,
but
previous
years
it
was
even
more
stabilized,
so
we
do
ask
the
board
to
confirm
this
case.
Thank
you.
B
C
Thank
you.
So
they
mentioned
that
rents
increase
year
over
year,
so
do
expenses,
this
property
had
vacancy
increase
year
over
year
as
well.
The
big
issue
is,
is
Mr
Mastin
hit
the
nail
on
the
head
is
the
concessions
Market
concessions
of
10
were
applied
to
other
properties
in
the
county,
not
this
one
that
is
unequal
treatment
and
the
Supreme
Court
has
ruled
that
when
a
discount
is
given
to
an
assessment
for
one
owner,
neighboring
owners
who
are
entitled
to
the
same
discount
to
the
assessment-
that's
what's
happening
here.
C
A
Thank
you
system
on
the
board.
Okay,
I'll
start
I
mean
I,
look
at
this
and
think
I'm,
not
sure
why
we're
here
on
this
case,
when
you
look
at
the
original
assessment
with
the
county,
not
having
the
2022
information,
they
were
pretty
dead
on,
for
what
they
came
up
with.
I
mean
they're
lower
than
what
was
reported,
and
even
if
you
want
to
break
it
out,
the
vacancy
and
concessions
I
mean
they're
reporting
300,
oh
well,
you
can
see
what
they're
reporting
online
do
that
online
10..
A
Those
two
numbers
combined
are
less
than
what
the
County's
given
them.
So
I,
I
guess
I,
just
don't
see
like
I
said:
I,
don't
see
why
we're
here
and
I
think
the
appellants
projection
of
the
noi
is
extremely
low
compared
to
how
the
property
has
performed
and
how
it
specifically
performed
in
2022
when
they
were
talking
about
the
vacancy
that
was
I'm
fine,
with
English
assessment.
G
Yeah
you
know
I
continue
to
think
that
overall,
the
cap
rates
ought
to
be
adjusted
on
office.
Putting
that
aside-
because
that's
not
going
to
happen
here-
I'm
fine,
but
the
test
I
thought
it
was
right
on.
G
F
A
A
I
Yeah
I
mean
I've
I've,
heard
a
lot
about
this
building
over
the
years.
I
think
it's
very
attractive
for
a
lot
of
companies
that
want
to
work
with
State
Department
because
of
that
kind
of
core
GSA
tenant.
That's
in
there
and
as
long
as
they're,
there
I
think
it's
it's
always
going
to
be
kind
of
more
valuable
than
some
of
the
other
buildings
around
there.
So
I'm,
okay
with
it
too.
F
C
C
C
We
inspected
this
property
on
August
18th
and
the
department
hearing
was
requested
and
denied
now
to
Value
this
property
as
an
operating
office.
Building
I
ask
that
you
direct
your
attention
to
the
appellants
pro
forma
on
page
53
of
the
appeal,
which
is
page
52
of
the
PDF
here,
you'll
see
that
the
four-year
operating
history
of
the
property,
the
2022
assessment,
the
2023
assessment
and
the
stabilized
potential.
C
Looking
at
the
operating
history
of
this
property,
two
items
stick
out.
First
reported
noi
has
decreased
precipitously
over
the
past
four
years
and
was
less
than
four
hundred
thousand
dollars
in
2022..
Second,
vacancy
has
increased
significantly
each
year
going
from
51
on
January
1
2020
to
over
74
percent
on
January
1
2023..
The
assessment
cap
rate
over
this
period
that
saw
noi
decrease
by
72
percent
and
vacancy
increase
by
45
percent
has
remained
exactly
the
same.
C
Looking
at
the
stabilized
potential
column,
you
can
see
that
we
imputed
off
occupied
office
space
at
the
actual
average
lease
rates,
less
uniform
Market
concessions
of
10
percent
imputed
vacant
office
at
the
assessments
rate,
imputed
retail
income
at
the
average
In-Place
ring
imputed,
pastor
and
parking
income
at
the
2022.
Actual
rates
used
a
thirty
percent
vacancy
rate
based
on
the
2019
Draya
guidelines
for
Rosalind
and
I
know.
There's
we've
mentioned
this
several
times,
so
I
want
to
share
my
screen
and
show
just
where
this
this
came
from
this.
C
So
here's
the
2019
office
guidelines,
you
can
see
I've
highlighted
Rosalind
thirty
percent
vacancy
rate
applied
now
that
rate
was
decreased
in
2020.
right
as
vacancy
began
to
Skyrocket.
So
we,
the
vacancy
rate
for
this
property
and
for
most
properties
given
what's
happened
in
the
past
three
years
with
Leasing
and
vacancy,
should
go
back
to
the
30
percent
that
Drea
used
as
recently
as
2019..
C
C
C
This
results
in
a
value
of
just
under
seven
million
dollars,
using
the
income
approach.
Given
this
and
knowing
that
this
parcel
is
part
of
site
plan,
422
its
highest
and
best
uses
as
future
Redevelopment,
if
you'd
be
so
kind
to
direct
your
attention
to
page
55
of
the
appeal,
you'll
see
a
land
value
analysis
that
reflects
the
market
value
of
the
site
plan.
As
of
the
data
value,
the
existing
density
is
imputed
at
fifty
dollars.
C
Sixty
cents
per
square
foot
for
office,
Land
Based
on
the
residual
land
analysis,
that's
provided
on
page
56
of
the
appeal
retail
is
imputed
at
the
same
rate
as
office,
and
the
apartment
density
is
imputed
at
the
same
rate
as
the
assessment
for
the
additional
pdsp
density
that
has
not
yet
been
purchased.
The
site
plan
analysis
adjusts
the
apartment
and
hotel
density
at
the
same
rate
as
the
assessment,
and
it
adjusts
the
office
and
Retail
additional
density
at
25
percent
to
account
for
the
reduced
demand
for
office
space
in
the
market.
C
C
Since
the
improvements
are
less
valuable
than
the
land's
value,
they
have
no
contributive
contributory
value
to
the
person.
This
is
an
appropriate
adjustment.
Given
the
high
vacancy
present
in
the
county,
the
three
years
of
negative
net
absorption,
the
county
has
experienced
the
lack
of
return
to
office
by
employees,
lower
profitability
of
office
properties
and
the
overall
lack
of
demand
for
office
space
in
the
market.
The
demand
simply
does
not
exist
for
development,
as
proposed
by
the
site
plan,
and
the
assessment
should
be
adjusted
to
account
for
the
reduced
demand
for
Office
Space.
C
Now,
looking
at
the
Drea
test,
we
see
that
their
income
relies
upon
a
major
error.
If
you
take
a
look
at
page,
six
of
the
appeal
you'll
see
Draya's
original.
If
you
scan
down
the
per
square
foot
lease
rate
for
office,
tenants
you'll
notice
that
one
of
them
sticks
out
to
you
going
down
the
least
office
space
you'll
see
the
the
rents
are
in
the
30
range
they're
from
Thirty
One
dollars
at
the
low
end
to
38.54
at
the
high
end,
and
then
you
see
one
tenant
in
the
middle
who's,
paying
63.78
per
square
foot.
C
This
tenant
again
listed
at
nearly
64
dollars
per
square
foot
in
rent
is
actually
paying
only
35
dollars
per
square
foot.
Correcting
for
this
error
decreases:
Draya's
average
In-Place
rent
by
nearly
one
dollar
fifty
cents
per
square
foot.
This
also
decreases
their
vacant
office
ribbon
rate.
Next
Drey
makes
another
error
on
their
comments
by
stating
that
co-star
has
vacant
space
advertised
at
forty
dollars
per
square
foot.
In
reality,
CoStar
has
space
advertised
at
anywhere
from
1950
per
square
foot
to
thirty
four
dollars.
C
The
vacant
space
is
also
being
advertised
for
up
to
seven
years
for
lease
term
as
well.
Now,
several
times
in
the
comments,
Draya
mentions
that
this
building
has
spec
suites
available.
This
is
not
true.
We
inspected
this
property
in
August
and,
as
we
saw
on
the
inspection
this
space
that
they're
calling
spec
Suites
is
actually
vacant
space
that
was
built
out
for
the
prior
tenant
and
has
yet
to
be
demised
or
re-led.
It's
not
custom
built
spec
Suites
meant
for
marketing.
It's
it's.
The
prior
tenants
build
up.
Oh.
M
Thank
you.
This
property
was
inspected
with
his
sister
property
1601
and
1611
North
Kent
Street.
Now
it's
unfortunate
that
we're
not
hearing
those
other
cases
along
with
this
case,
because
they
they
somewhat
coincide.
M
My
only
guess
is
keeping
this
property
occupied
is,
is
sort
of
to
pay
for
the
the
utilities
and
to
keep
the
other
buildings
afloat.
As
is
now,
this
vacancy
is
somewhat
managed
induced
in
a
way
where
they
keep
saying
that
this
property
is
undergoing
issues
with
vacancy
year
over
year,
but
it's
to
the
Management's
discretion,
whether
they
try
to
lease
these
spaces
or
not.
M
In
my
opinion,
now
the
the
comment
that
the
the
appellant
made
that
there's
an
error
on
my
part,
there
might
be
an
arrow
on
the
owner's
part
for
reporting
that
exact
rent
on
this
tenant,
the
xco
group,
because
if
you
look
on
page
63
of
96,
that's
the
exact
rent
that
they
report.
So
no
issue
was
made
in
the
discussion
of
or
in
the
supporting
documents
of
the
appellant
to
suggest.
M
That
was
an
error
on
the
rent
roll,
so
I'm,
using
exactly
what
was
provided
in
the
rent
role
and
that's
the
outcome
that
we
have
so
in
looking
at
this
case.
Overall,
when
you're
projecting
the
income
of
this
property,
we
do
so
with
the
other
properties
the
same
way
where
we're
looking
at
the
most
current
ine
and
then
looking
at
the
previous
years
of
of
reportings.
Now
it's
somewhat
misleading
to
say
this
is
the
income
that
they're
they
can
receive.
If
they're,
not,
you
know
actively
pursuing
to
lease
these
spaces.
M
So
if
you
project
this
property
and
reconstruct
the
most
recent
2022
INE,
that's
in
column
e
there's
an
error
there.
It
should
be
2022,
not
2023
operating
here.
So
if
you
project
that
forward
and
use
exactly
what
the
appellant
uses
as
far
as
the
rent
per
square
feet,
we're
using
thirty
dollars
a
square
feet
for
the
projected
income
of
the
vacant
space,
you
see
that
the
overall
noi
of
the
property
it's
much
higher
than
what
they're
actually
reporting
much
higher
than
the
past
four
years
of
what
they've
been
reporting
now.
M
Compare
that
to
our
test
and
compare
that
to
what
the
performers
are
for
the
appellant
in
in
2022
and
2023
they're
under
projecting
this
property
making
it
seem
that
this
property
can
only
achieve
so
much
but
again,
it's
the
Management's
discretion,
whether
they
try
to
actively
release
this
or
not,
or
keep
this
somewhat
afloat
to
keep.
You
know
the
lights
on
and
buy
time
until
they're
actually
willing
to.
You
know,
act
on
this
site
plan
422..
M
So
in
doing
so,
the
county
is
treating
this
problem
just
like
any
other
property
where,
if
there's
excessive
vacancy
on
the
property,
we
would
include
excess
vacancy
adjustments
below
the
line
and
that's
what
we
did
we're
actually
using
a
higher
per
square
foot
at
thirty
four
dollars,
a
square
foot
as
Mr
Harmon
pointed
out.
That's
the
projected
asking
rents
that
they
were
asking
for
this
property
now,
given
that
we
are
slightly
higher
than
what
the
the
appellant
has
projected
at
34
versus
their
thirty
dollars.
M
We
are
discounting
that
rent
just
to
go
through
our
our
test.
If
you
look
at
the
actual
discount
on
page
five,
you'll
see
exactly
what
I'm
stating
here
is
we're
reducing
those
rents
even
more
by
1.289336
as
a
vacancy
adjustment,
and
then
we're
imputing,
a
nine
dollars
per
square
foot
expenses.
M
Again
in
the
past,
you
see
that
the
average
is
in
line
with
what
we
initially
reported
at
9.75
and
then
in
the
test.
It's
slightly
lower
at
nine
dollars
due
to
the
projections
that
they
incurred
in
2022.
Now
the
original
assessment
is
in
line
with
what
we
had
as
the
test,
and
we
do
feel
that
that,
given
the
lower
rents
that
we
do
see
in
the
original
assessment
versus
the
test,
because
granted
the
the
leases
in
place
did
increase
in
in
the
rent
per
square
foot.
M
So
we
did
make
that
adjustment
in
the
test,
but
we
are
asking
the
board
to
confirm
the
original
assessment
and
given
all
the
the
points
that
I
brought
up
and
we're
open
to
question,
thank
you.
A
L
E
There's
a
phase
development
plan
for
this
particular
property.
What
Mr
Peralta
was
saying
as
far
as
the
vacancy,
we
are
just
treating
the
fact
that
they.
A
F
A
A
M
Because
it's
a
phase
development
site
plan
right
now,
it's
still
operating
as
an
office
building
and
as
the
phase
phases
come
through,
where
they're
arranging
for
different
density
and
stuff,
like
that,
we
do
make
the
changes
as
it
occurs.
E
If
the
board
will
look
at
page
nine
of
the
packet,
it
also
includes
the
phase
development
land
sheet,
which
shows
the
allocations
based
on
the
parcels
and
the
density
for
this
particular
phase
development.
So
that
is
part
of
that
should
have
been
brought
up
in
the
case,
and
we
do
apologize
for
that.
But
there
is
the
land
itself
is
based
off
of
that
phase
development.
We
are
recognizing
that
there's
still
income
attributed
to
this
property,
and
so
that
is
what
Mr
Peralta
was
speaking
to.
E
G
E
E
K
E
M
C
M
You'll
see
the
calculation
there
when
you,
when
we
value
the
the
land
density,
we
do
discount
that
land
sixty
percent
or.
A
J
A
It
just
seems,
like
we've
always
said:
it's
got
a
site
plan
on
it,
it's
going
to
be
assessed
at
that,
but
it
seems
like
now
it's
kind
of
like
you
have
your
cake
and
you
want
to
eat
it
too,
well,
they're
higher
on
an
income.
So
we're
going
to
do
this
as
an
income.
I've,
never
seen
this
in
15
years,
I've
never
heard
anyone.
In
fact,
I
didn't
hear
any
testimony
from
the
county
that
we're
not
even
looking
at
it.
This
way
so
I'm
a
little
confused.
Why
it's
kind
of
on
the
back
burner.
G
E
So
gonna,
if
I
can
just
if
I
could
just
speak
before
Mr
Rawls
Mr
Harmon
jump
in
this
really
should
have
been
presented.
First,
based
on
the
phase
development
side
plan
to
discuss
the
fact
that
the
county
is
factoring
in
other
additional
Parcels
that
were
approved
in
that
phase
development.
The
difference
between
a
current
active
site
plan
is
that
they're
able
to
move
it's
actionable
now
they're
approved
of
a
certain
date.
They
have
to
have
the
work
done
by
a
certain
time.
E
Phase
development
tends
to
take
a
little
bit
longer,
there's
a
number
more
part,
there's
more
Parcels
involved,
it's
similar
to
Potomac
Yard
and
some
of
these
larger
projects
which
go
through
a
number
of
kind
of
reorganizations
of
parcels
before
they
actually
start
the
work.
So
what
we're
recognizing
here
is
a
time
that's
involved
for
these
Parcels
for
these
properties,
for
this
particular
development
to
actually
come
to
fruition.
E
It
does
not
have
it
does
have
a
timeline
for
it,
but
it's
different
from
the
active
site
plans
that
we
value.
So
when
we
say
phases,
it
could
be
five
or
six
different
phases
for
this
one,
so
we
treat
them
a
little
bit
differently
by
discounting
the
the
land,
in
this
case
we're
discounted
by
60
percent.
E
So
we
should
have
discussed
that
and
again
this
should
have
been
heard,
but
the
other
I
think
three
other
cases
that
are
going
to
be
heard
before
the
board,
because
they
all
have
very
similar
Natures
with
the
land
value
itself.
This
particular
property,
though,
has
income
attributed
to
it,
and
it's
not
the
first
case
that
we've
seen,
but
it
may
be
the
first
case
that
the
board
has
seen
where
we
are
recognizing
that
they're
still
operating
on
this
particular
property.
E
Therefore,
we're
valuing
the
land
piece
of
it
and
then
also
accounting
for
the
income
that
that
building
is
attributed
to
that
property.
A
A
H
I
hear
that
Jordan
that
they,
you
don't
control
all
this
property.
Yet
in
this
site
plan.
C
A
Mr
lesson.
G
C
L
M
Yes
again
we're
looking
at
this
property
as
a
phase
development
site
plan,
we
do
discount
the
Land
Based
on
the
overall
density
of
the
property
we
did
discount
it
60,
based
on
the
chart
that
you
see
when
looking
at
this
property
as
an
income
producing
property,
we
did
look
at
the
the
income
that
was
reported.
Historically,
we
do
project
going
forward
in
in
2022.
The
INE
has
projected
income.
Well
did
not
protect
income
for
the
vacant
space.
We
did
that
on
the
Reconstruction
in
E1.
C
Yes,
thank
you.
So
to
summarize
our
position,
we
did
appeal
based
on
the
site
plan
value.
What
we
did
with
the
income
approach
that
we
provided
was
show
that
the
value
as
an
operating
office
building
is
below
the
value
as
a
Redevelopment
site.
That's
why
that
proforma
pages
in
there
it
gets
to
a
value
of
seven
million
dollars.
The
appealed
value
was
14
million
dollars
based
on
the
potential
Redevelopment.
C
Now
we
provided
our
own
site
plan
analysis
on
page
55
of
the
appeal
you
can
see
that
the
county
has
not
discounted
the
actual
density
that
was
in
place
as
of
the
first
of
the
year,
so
when
they
say
that
that's
not
the
case,
they're
discounting
the
potential
density
that
had
not
been
purchased
as
of
the
first
of
the
year.
So
this
analysis
of
hours
on
page
55
of
the
appeal
does
make
an
adjustment
to
lower
the
rates
of
office
potential
density
based
on
reduced
demand
for
office
space
in
the
market.
C
G
We
Pentagon
City,
is
a
base
development
site
plan
that
my
dad
did
gosh
30
years
ago,
and
what
it
does
is
it
says:
okay,
this
area
of
land
we're
going
to
give
this
amount
of
density
office,
Hotel
residential,
but
it's
not
allocated
it's
just
this
whole
area
gets
this
and
it's
not
until
you
come
in
with
your
4.1
final
site
plan
that
the
property
rights
or
the
the
land
use
rights
are
established
for
the
individual
parcel
and
so
I,
don't
think
the
face
development
site
plan
has
any
relevance
Because
unless
and
until
they
do
the
4.1
it's
just
out
there
and
it's
not
available
to
anybody
until
and
that
they
use
the
term
purchase
I
think
what
they
meant
is
the
county
is
expecting
affordable,
housing
contributions,
undergrounding
and
a
whole
series
of
of
things.
J
H
G
I
I
can
speak
to
the
office.
Okay
go
ahead
because
I
actually
was
talking
to
somebody
who
hadn't
owned
a
business
and
looked
at
the
property
a
while
ago.
Liked
it
wanted
to
move
in.
The
issue
is:
there's
a
six-month
demo,
Applause
yeah,
so.
B
I
So
as
an
existing
property,
that
definitely
hinders
it,
and
you
know
that's
kind
of
a
landlord's
decision.
That's
not
necessarily
just
a
market
so,
and
you
have
to
take
into
account
that
that's
the
the
ground,
it's
fantastic
real
estate.
You
have
an
office
building
there,
that's
generating,
you
know:
1.8
million
in
noi
after
taxes,
almost
a
million
and
a
half
or
a
million
and
a
quarter,
it's
a
covered
land
play
long
term.
I.
Think
it's
great
ground
I,
don't
think
the
owner
would
even
consider
selling
it
for
21
million
dollars.
I
I
think
the
number
would
be
a
lot
higher
if
they
put
it
to
Market.
So
I'm,
okay,
with
the
assessment.
F
G
I
J
F
Been
a
kickoff
Plus,
or
at
least
a
dozen
years
it
used
to
be
16
months.
20
months
got
down
to
1412
at
now,
it's
down
to
six
because
they're
getting
closer
to
finally
pulling
the
trigger,
but
so
so
my
take
on
that
is
I
agree
with
everything
you
said,
but
I
think
that
at
best
the
valuation
should
should
be
flat
because
it's
deteriorating.
F
Maybe
the
counter
is
well,
but
the
owners
decided
to
deteriorate
the
retails
go
on
the
buildings.
Next
door
gone.
They
can
you
know
it's.
As
you
know,
it's
combined
retail
on
the
first
floor
and
and
the
parking
lots
of
wreck
they're,
not
fixing
stuff,
and
it
all
makes
sense,
and
so
I
can't
imagine
that
the
value
should
go
up
in
a
deteriorating
Wasteland.
That's
what
it
was
kind
of.
F
But
you
might
that's
right:
I
mean
you
could
revert
to
the
land,
the
lens
land
and
site
plan,
but
I
understand,
Barnes
and
and
let's
just
avoid
that
and
and
and
go
along
the
the
Department's
rationale
make
sense,
but
but
your
counter
might
be.
But
the
reason
it's
deteriorating
is
because
the
management,
the
property
owner
is
doing
stuff
and
they're
doing
intelligent,
reasonable
stuff
and
they're,
letting
it
go,
and
then
they
should
be
rewarded
for
today
for
long-term
Richardson.
So
if
you
stop
and
I'll
just
I.
I
H
K
A
F
C
Yes,
thank
you
2014
Street
North.
This
is
a
115
000
square
foot
office,
building
it's
located
at
14th
and
Taft
and
Courthouse.
It
was
built
in
1987
and
was
44
vacant.
As
of
the
data
value,
it
is
62
vacant.
As
of
today,
again,
a
departmental
hearing
was
not
allowed
here
again.
I
want
to
request
that
you
turn
your
attention
to
page
48
of
the
appeal
where
you'll
see
the
appellants
pro
forma
page
with
four-year
operating
history,
the
2022
assessment,
the
2023
assessment
and
the
stabilized
potential
of
the
property.
C
Looking
at
this
page,
we
see
a
familiar
theme
noi
decreasing
year
after
year
after
year
and
vacancy
increasing
year
after
year
after
year,
noi
decreased
by
25
from
2019
to
2022
and
was
below
1.3
million
dollars
in
2022.
the
assessment
imputes
noi
at
just
under
2.1
million
dollars,
vacancy
increased
by
22
percent,
from
2019
to
2022
to
over
44
vacant
as
of
January
1
and
over
62
percent
vacant.
C
As
of
today,
as
of
the
data
value,
this
property
had
less
occupancy
than
4601
Fairfax
Drive,
which
sold
recently
for
104
dollars
per
square
foot
and
was
62
percent
occupied
at
the
time
of
sale,
which
GSA
is
the
main
team.
The
assessment
values
this
property
at
more
than
double
the
amount
of
4601
fairfax's
sale
price
coming
in
at
209
dollars
per
square
foot.
C
Now,
looking
at
the
stabilized
potential
column
on
page
48
of
the
appeal,
we
see
that
the
total
potential
rental
income
imputed
is
above
the
assessment.
The
pass-through
parking
and
other
income
is
imputed
at
the
actual
2022
rates.
Vacancy
and
collection
loss
is
imputed
at
30
percent,
based
on
the
2019
Draya
guidelines.
That
I
showed
you
in
the
last
case.
These
were
reduced
in
2020,
just
as
vacancy
began
to
rapidly
increase
in
the
county.
C
C
Put
simply
the
office
market
in
Arlington
County
was
far
more
risky
and
much
less
profitable
as
of
the
data
value
than
it
has
been
in
many
years.
Yet
the
assessments
cap
rate
implies
that
the
January
1
2023
Market,
is
stronger
than
the
2017.
Market
is
exactly
the
same
as
the
2018
through
2022
markets.
C
We
all
know
this
is
not
the
case
and
a
potential
purchaser
would
not
impute
the
same
Capri
as
the
assessment
has
for
this
property.
Now,
that's
just
the
market
demand
side
of
the
equation.
We
also
have
to
look
at
Capital
markets.
As
of
the
data
value,
the
cost
of
capital
was
much
more
costly
and
lending
standards
were
much
tighter
than
in
Prior
years,
but
the
assessment
again
makes
no
adjustment
for
this
massive
change
in
the
market.
C
It
was
widely
anticipated
at
the
beginning
of
2022
that
the
Federal
Reserve
would
raise
interest
rates
and
in
fact
the
FED
did
begin
aggressively
raising
interest
rates
beginning
in
mid-march
of
2022..
Overall,
the
FED
raised
interest
rates
seven
different
times
throughout
2022
for
an
overall
increase
of
425
basis
points.
C
This
increase
was
matched
point
for
Point
by
the
sofa.
An
increase
in
interest
rates
of
this
magnitude
does
affect
commercial
property
values.
We
know
this
and
any
potential
purchaser
would
know
this.
Peter
Rothman,
the
co-head
of
strategic
research
at
Green
Street,
stated
that
higher
yields
on
Treasury
bonds
equals
higher
cap
rates.
C
Steve
Gilbert,
director
of
Applied
modeling
and
analytics
for
JPMorgan
Investment
Banking,
stated
that
cap
rate
levels
are
generally
a
reflection
of
other
larger
economic
factors,
including
rapidly
Rising
interest
rates
and
neighborhood
Supply
demand
balance.
So
we
know
increased
interest
rates,
do
affect
cap
rates
by
increasing
the
cost
of
capital,
which
necessitates
a
higher
required
return.
C
Now
the
question
is:
how
much
is
the
cap
rate
affected?
It's
not
a
one
for
one
increase
and,
as
you
can
see,
we've
only
provided
we've
provided
support
for
only
a
200
basis.
Point
increase
to
the
cap
rate.
We've
provided
an
article
with
the
appeal
that
states
the
10-year
treasury
bond
is
a
useful
barometer
for
cap
rates,
where
a
spread
is
added
to
the
10-year
t-bill
rate
to
arrive
at
the
cap
rate.
Looking
at
this,
the
10-year
treasury
increased
by
236
basis
points
over
the
course
of
2022..
C
Historically,
Drea
has
made
adjustments
when
interest
rates
fluctuated
significantly,
as
they
did
last
year.
Most
recently
in
2009,
the
10-year
t-bill
increased
by
160
basis
points.
Drea
responded
the
following
year
by
increasing
cap
rates
by
175
basis
points
this
time
around.
The
10-year
t-bill
increased
by
a
greater
now
236
basis
points.
Yet
there
was
no
change
to
the
category
over
the
past
15
assessment
years,
excluding
2023
the
spread
between
the
10-year
t-bill
and
the
Drea
cap
rate
has
averaged
345
basis
points
for
2023.
C
The
spread
is
152
basis
points
Which
is
less
than
half
the
historical
average.
This
is
especially
egregious
given
the
turmoil
the
market
experienced
over
the
course
of
2022.
sales.
Additionally,
sales
from
the
Peter
corpax
Report,
the
County's
commissioned
expert
support
higher
cap
rates
than
what
the
what
Drea
has
assumed
cortex
concluded
based
on
Arlington
sales
at
January,
1
2023
cap
rigs
were
at
an
average
of
8.5
percent.
C
So
the
final
value
on
that
stabilized
potential
column
is
112
dollars
per
square
foot.
This
is
nearly
an
eight
percent
premium
to
the
price
paid
for
the
better
teneted
building
down
the
road.
What
GSA
as
a
primary
tenant
at
4601
Fairfax
that
sold
recently
for
104
dollars
per
square
foot?
Now?
Finally,
I
want
to
address
the
Drea
comments
in
the
rent:
roll,
the
create
a
test
uses,
escalated,
rinse,
not
January,
1,
2023
rents
in
place.
C
An
example
of
this
is
a
rental
rate
imputed
for
the
Alliance
Group,
that
real
rate
they've
used
doesn't
actually
take
effect
until
May
of
2024,
so
that
January
1
and
that's
not
the
rate.
As
of
January
1..
Next
comment:
four
on
the
Draya
test,
page
states
that
the
appellant
included
Boma
adjustments
as
vacant
space
and
imputed
operating
expenses
on
this
space
as
well.
This
is
simply
not
true.
You
know,
I
had
a
departmental
hearing
been
held.
We
could
have
addressed
this,
but
it
was
not
what
they
assume
is.
Bowman.
C
M
Yes,
thank
you
for
this
case
the
original
assessment.
We
did
overshoot
the
amount
of
vacant
square
feet
that
was
reported
as
vacant.
If
you
compare
our
column
D
to
column
F,
we
did
make
adjustments
from
61
060
square
feet
to
what
is
reported
at
54
414
square
feet.
Vacant
I'm,
not
sure
where
the
appellant
is
coming
up
with
63,
000
434,
but
I
believe
that's
where
my
climate
came
from
where
they're,
including
that
in
their
their
their
calculation
there,
the
county
does
not
impute
an
income
for
that
Boma
space.
M
So
if
you
turn
to
page
six,
there's
no
income
associated
with
that
Obama
space.
Now,
if
Mr
Harmon
believes
that
it's
vacant
space,
then
there
should
be
income
attributable
to
that
on
the
other
side
as
well.
If
you
pay
attention
to
the
the
amount
of
expenses
correlated
with
that
bonus,
space
you'll
see
that
they're
imputing
an
expense
for
that
space
of
twelve
dollars
per
square
foot,
so
that
income
in
that
expenses
is
somewhat
inflated
because
they're
imputing
of
about
81
888
dollars
associated
with
that
boneless
space.
M
M
So
again,
if
we
go
back
to
the
overall
data
points,
for
this
case,
you'll
see
that
the
county
had
the
original
assessment
at
actually
a
lower
per
square
foot
for
the
income
compared
to
what
we
see
in
the
test
and
compared
to
what
the
appellant
is
projecting
in
the
pro
forma
we're
originally
at
forty
dollars
and
fifty
cents
in
in
the
test,
based
on
the
INE
that
we
show
that
that
was
shown
we're
at
42.60
and
then
the
accountants
project
in
43.98
for
the
projected
income
higher
than
our
test
higher
than
our
original
assessment.
M
So,
when
we're
looking
at
the
comparison
of
our
original
assessment
and
our
test,
we
do
see
that
the
the
income
is
somewhat
in
line
with
what
we
originally
had
now.
Given
that
we
reconstructed
the
income,
you
you'll
see
that
the
original
2022
INE,
as
well
as
the
previous
three
years,
does
not
report
any
income
for
the
vacant
space.
So
it's
a
little
misleading
and
there's
a
huge
Distinction
on
what
they're
reporting
versus
what
a
property
can
actually
project.
M
As
far
as
the
income
is
concerned
and
as
far
as
the
apartments
job
is
to
project
this
property
and
attribute
per
square
foot
rent
for
all
spaces,
not
just
actual
lease
spaces,
so
there's
a
huge
disparity
between
what
they're
reporting,
what
we're
asking
for,
and
so,
when
you
look
at
these,
these
cases
you'll
see
that
because
we're
reconstructing
the
Ines,
we
it's
a
better
indication
what
the
property
should
receive
as
far
as
income
is
concerned,
and
so
the
bottom
line.
M
When
you
look
at
row,
19
and
oi
you'll
see
that
they're
projecting
in
2022
that
they
would
only
receive
389
848
and
with
the
added
income,
there's
a
figure
much
larger
than
that
again.
The
original
assessment
and
the
test
does
capture
exactly
what
the
property
should
achieve.
Should
it
impute
the
income
of
the
vacant
space
now
again,
I'd
like
to
reiterate
that
we
did
project
higher.
M
As
far
as
the
expenses
we
went
from
11
to
11.50
in
the
test
and
I
did
note
earlier
that
the
appellant
is
projecting
a
higher
expense
or
income
expense
number,
because
they're
equating
the
the
Boma
square
footage
as
expensed.
Like
you
know
it
would
they
were
treating
that
as
vacant
space
as
he
noted,
but
we
didn't
include
that
as
income
and
we
didn't
include
it
for
the
expenses.
Thank.
E
You
can
actually
say
one
thing,
I'm,
sorry
to
interrupt,
if,
if
you,
when
you're
looking
at
columns
a
b
and
c
this
is
these
are
unadjusted
numbers,
so
these
numbers
do
not
include
that
vacant
office
amount,
so
those
nois
are
lower
than
what
they
they
appear
lower
than
what
they
actually
are
so
I
just
want
that
to
be
recognized
in
your
deliberation.
Thank
you.
F
Start
off
with
the
easy
one,
how
is
a
b
and
c
is:
is
B
supposed
to
be
the
year
2020
and
see
the
year
2021
Mr.
F
I
just
want
to
make
sure
for
the
Appellate
on
on
those
columns.
I
mean
see
as
well
as
e
your
actuals,
our
retail
rent
income
included
in
that
Top
Line
Row,
one
called
office.
It
is
yes,
it
is
okay,
great
and,
and
then
the
department,
of
course,
that
ferretted
it
out
after
the
fact,
okay,
great
and
oh,
that's
all
I
have
for
now.
Thank
you.
A
H
M
M
G
G
This
is
vacancies
is
contrary
to
recent
assessment
methodology.
Are
you
talking
about
the
county
years
ago
used
to
put
it
at
30?
Is
that
is
that
the
point?
That's.
C
M
Thank
you
just
going
off
the
comment
that
Mr
Harmon
made
about
the
legal
adjustment
on
2022
zione.
If
you
were
to
extract
out
the
million
99
474,
the
per
square
foot
expenses
for
that
calendar
year
will
be
9.89.
M
So
if
you
compare
that
to
what
they
previously
have
shown
in
the
previous
years,
2019
2020
and
2021
they're
reporting
much
lower
than
they
have
so.
The
county
at
11
is
reasonable.
We
even
went
a
step
further
at
11.50
in
the
test,
and
so
with
that
we
do
ask
that
the
board
confirmed
the
assessment
based
on
the
nois
that
have
been
reported
and
when
you
gross
up
to
make
the
income
what
it
should
be
with
the
vacant
space.
The
county
is
in
line
with
that
in
the
original
and
in
the
test.
Thank
you.
C
You
it's,
you
know,
we've
heard
a
lot
of
subterfuge
from
the
Andrea
with
regards
to
Beaumont
and
what
is
legally
required
to
be
reported
versus
what
they
want
the
owners
to
report.
This
is
all
this
is
all
missing
the
point,
this
property,
the
important
matter,
is
noi
at
the
property,
has
average
1.59
million
dollars
over
the
past
four
years.
Noi
was
1.29
million
dollars
in
2022..
C
The
assessment
is
at
2.1
million
dollars.
Vacancy
increased
over
2022
was
known
to
be
increasing
at
the
beginning
of
2023,
yet
the
assessment
is
projecting
noi
to
increase
63
percent
year
over
year.
This
property
again
has
been
at
1.6
million
over
the
past
four
years
was
at
1.3
million
last
year,
assessments
projecting
a
63
percent
increase
in.
F
I
got
my
hackles
up.
Those
nois
that
the
developed
mentions
doesn't
include
potential
vacancy
income
for
offices.
Row
two
does
include
retail
and
what
they
call
office
repellent.
F
F
F
F
If
we're
looking
at
a
lower
number,
the
original
assessment,
it
ought
to
be
increased
by
the
twenty
one
thousand
dollars
of
twenty
dollars
of
TI
per
vacant
square
foot,
therefore
lowered
by
that
twenty
one
thousand
dollars.
This
is
column.
D.
Was
that
clear
interesting
because
they
made
a
an
administrative
error,
it
happens
and
if
they
had
caught
in
it
the
original
would
have
been
21
000,
less.
G
G
G
F
G
K
F
G
A
Started
to
do
that,
645
yeah.
B
F
K
F
A
H
I
A
F
Sure
I
I,
don't
have
the
final
number
though,
but
I
I,
move
and
Jose
is
going
to
give
you
the
number
to
lower
the
the
assessment
to
25
million
25.
A
A
J
J
Yeah
we
it's
not
that
we're
not
providing
a
meeting,
we're
always
available
for
information
sent
received
anytime.
They
want
to
reach
out
and
have
discussion
with
us,
we're
always
making
sure
our
staff
is
always
available
for
that.
Just
given
the
time
constraints
and
the
information
being
brought
up
in
the
meetings,
the
you
know
form
formal
meetings
that
were
being
scheduled
and
held.
J
We
had
to
make
a
decision
to.
You
know,
move
to
a
different
format
of
processing
information
received.
You
know
keeping
open
lines
of
communication,
it's
not
that
we're
denying
Communication
in
any
way.
We
just
couldn't
go
to
our
formal
standard
process
of
setting
up
meetings,
scheduling
that
in
our
schedule.
You
know
we
didn't
have
time
for
that,
given
the
caseload,
so
we're
certainly
open.
You
know
to
any
information
sent
received
from
Mr,
Harmon
or
any
agent.
You
know
our
communication
lines
are
always
open
and
we're
always
available.
So.