►
From YouTube: Board of Equalization Meeting | August 16, 2023
Description
No description was provided for this meeting.
If this is YOUR meeting, an easy way to fix this is to add a description to your video, wherever mtngs.io found it (probably YouTube).
A
A
B
Madam
chairwoman,
members
of
the
board,
members
of
the
DTA
good
morning,
1100
North
Glebe,
is
located
on
Glebe
Road,
just
north
of
Fairfax
Drive.
It
was
built
in
1989.
As
of
the
data
value,
it
was
41
bacon
to
start
I
want
to
speak
with
to
the
Capri
and
where
the
market
was.
As
of
the
data
value
by
looking
at
some
articles
published
at
the
end
of
2022,
this
was
all
included
in
the
board
book
with
the
appeal.
B
B
This
article
States
the
market
interest
rate
for
commercial
real
estate
financing
is
typically
established
using
the
10-year
treasury
as
a
starting
point
and
then
adding
a
spread
to
arrive
at
the
rate
paid
by
the
investor.
This
goes
on
to
state
that
the
fact
that
commercial
real
estate
is
a
financial
investment
where
a
buyer
is
purchasing
an
income
stream.
B
B
B
Again,
compare
this
to
the
2023
Drea
cap
rates,
which
are
the
lowest
they
have
been
at
any
point
over
the
past
15
years.
Next
article,
we
have
the
Forbes
money
article
explicitly
stating
that
there
is
generally
an
inverse
relationship
between
interest
rates
and
asset
values.
This
means
that
when
rates
rise,
asset
values
decrease.
B
It
follows
that,
when
the
cash
flow
generated
by
a
property
decreases,
the
value
of
the
property
also
decreases
again.
The
2023
Drea
cap
rates
remain
unchanged
and
at
the
lowest
level
of
any
of
the
past
15
years
now,
I
want
to
share
a
couple
of
quotes
from
last
November
as
well.
I
have
Peter
Rothman.
The
co-head
of
strategic
research
at
Green
Street
stated
that
higher
yields
on
Treasury
bonds
equals
higher
cap
rates.
B
There's
nothing
obscure
about
that
statement
again.
Higher
yields
on
Treasury
bonds
equals
higher
cap
rates,
Steve
Gilbert,
director
of
Applied
modeling
and
analytics
for
JPMorgan
Investment
Banking,
stated
also
in
November
that
cap
rate
levels
are
generally
a
reflection
of
other
larger
economic
factors,
including
rapidly
Rising
interest
rates
and
neighborhood
demand,
Supply
balance,
so
knowing
interest
rates
increase
significantly
over
2022
and
knowing
this
in
impacts,
the
cap
rate
for
commercial
properties,
we
have
conservatively
grown
the
2022
cap
rate
by
200
basis
points
based
on
first,
how
the
Drea
adjusted
cap
rates
the
last
time.
B
The
10-year
t-bill
interest
rates
increased
significantly
back
in
2009.,
then
the
10-year
t-bell
increased
by
only
160
basis
points.
The
subsequent
Drea
cap
rates
increased
by
175
basis
points.
The
Drea's
response
in
2022
was
to
increase
cap
rates
greater
than
the
10-year
T
build
rate
increase.
What
we're
arguing
for
this
year
is
lower
than
the
10-year
Tebow
rate
increase.
The
10-year
t-built
in
2022
increased
by
236
basis
points
we're
suggesting
200
basis
points
adjustments.
B
B
As
an
example,
Fairfax
County
applies
an
additional
125
basis
points
to
the
base
cap
rate
for
properties
with
greater
than
40
percent.
Vacancies
such
as
this
one.
Next
I
want
to
look
at
this
41
vacancy
in
the
prospects
of
leasing.
This
up
this
next
article
I
have
shown
shows
that
Arlington
County
ranks
number
two
in
the
nation
per
share
of
remote
workers.
This
had
compounded
the
vacancy
issues
in
the
county
brought
about
by
the
institutionalization
of
work
from
home.
As
a
result,
the
data
shows
the
market
vacancy
increase.
B
B
Additionally,
at
this
property,
the
largest
tenant
is
not
occupying
52
000
square
feet
of
its
lease
space
and
it's
actively
advertising
the
space
for
sublet
at
a
rate
of
only
25
dollars
per
square
foot
for
the
remaining
five
years
of
its
lease
term.
So
the
owner
has
to
compete
with
its
largest
tenant,
who
is
offering
their
space
at
a
fraction
of
Market
rent
in
order
to
lease
up
their
direct
vacant
space
This
Is
The,
New
Normal.
This
is
now
the
fourth
year
since
the
pandemic
hit.
B
B
the
Drea
reduced,
the
highest
vacancy
rate
used
to
25
percent
in
2020.,
with
average
vacancy
in
the
county
at
23
percent.
As
of
the
data
value,
a
maximum
vacancy
rate
of
25
percent
simply
does
not
capture
the
magnitude
of
the
issue.
We
request
the
board,
adopt
the
Drea's
prior
2019
guideline
vacancy
rate
of
30
for
this
property
or
add
125
basis
points
to
the
cap
rate
for
a
high
vacancy
adjustment.
B
The
absorption
period
should
also
be
a
minimum
of
two
years,
as
any
potential
buyer
would
not
impute
only
one
year
lease
up
to
this
property
with
41
vacancy
when
it's
competing
with
its
largest
tenant
for
new
tenants,
we
can
address
the
increase
in
the
cost
of
capital
by
increasing
the
cap
rate
by
200
basis
points
over
the
2022
rate.
This
is
again
is
in
line
with
what
the
Drea
did
in
2010..
B
Finally,
the
assessment
of
understates
operating
expenses
by
not
adjusting
the
actual
2022
Opex
for
stabilized
occupancy
at
this
property-
that's
41
vacant
if
we
grow
the
2022,
actual
operating
expense
rate
to
account
for
stabilizing
occupancy,
we
get
to
ten
dollars,
fifty
cents
per
square
foot
now.
Lastly,
a
brief
note
about
the
Drea's
test,
page
this
property
sold
at
the
end
of
2021,
so
the
data
that
Drea
provides
prior
to
this
sale
date,
the
2019
and
the
2020
columns
are
confidential
information
of
the
prior
owner
that
should
not
have
been
disclosed
in
this
case.
B
D
Just
in
case,
for
this
case,
you'll
see
for
all
the
cases
today,
the
department
tried
to
do
their
best
estimate
value.
In
the
test
column.
We
did
use
the
most
recent
2022
Ines
to
develop
the
test
in
preparation.
For
this
particular
case,
we
did
email
the
agent
several
questions
about
the
property
on
July
11th.
D
D
We
did
the
best
we
could
for
this,
for
the
test,
try
to
figure
out
the
new
value
or
the
revised
value.
If
you
will,
it
did
come
up
with
a
confirmation,
and
that
was
based
on
the
information
that
we
had.
So
if
we
take
a
look
at
our
reconstructed
column,
column
E1,
that
is,
to
kind
of
impute
the
vacancy
square
footage
income.
That
is
not
reported
irony
in
column
e.
So
when
you
look
at
that
being
simply
imputed,
the
agent's
number
for
the
vacant
office
income
and
that
number
is
located
on
A1.
D
So
the
difference
between
e
and
e
one
again
is
just
it
vacancy
income
property
and
that
changes
what
the
overall
noi
would
be.
If
projecting
you
know
for
that
vacant
square
footage.
So
when
you
compare
that
to
what
the
department
had
originally
in
the
2023
in
the
2023
assessment
in
column
d,
we
were
at
an
noi
that
was
slightly
higher
if
you
didn't
include
that
income
in
Colony
and
then
lower
than
that
income.
D
If
you
look
at
E1
when
it's
protecting
the
vacant
square
footage
income
in
comparison,
if
you
look
at
the
column,
G
the
appellants
column
G,
you
can
see
that
with
the
added
income
of
128
000
671
square
feet,
the
appellant
believes
that
they'll
generate
a
negative
net
operating
income
compared
to
what
they
reported
or
the
owners
reported
in
column
e.
You
can
see
that
there's
a
delta
in
column,
E
versus
column,
G
about
132
358..
D
D
So
if
you
compare
the
two
that's
a
Delta
of
about
132
358,
whereas
the
department
believes
that
when
you
impute
that
income
and
project
it
going
forward
that
the
property
would
the
sub,
what
the
Reconstruction
shows
overall
you'll
see
that
the
department
had
a
conservative
estimate
based
on
the
new
information
and
it
ended
up
supporting
the
original
assessment,
whereas
the
appellant
believes
that
they
would
get
a
negative
income
if
they
were
to
lease
that
space
by
different
factors:
they're
imputing,
a
higher
vacancy
Computing,
a
higher
a
higher
expense
rate
Counting.
D
D
D
Given
you
know
the
the
vacancy
in
2019-2020
and
going
forward,
you
see
that
there
was
more
vacancy
that
occurred
in
2022,
but
we
did
account
for
that
vacancy
and
projected
forward
with
this
sale.
We
did
see
that
the
co-star
reported
a
sub
6
cap
rate
and
Drea's
current
cap
rate
is
7.1
on
that
property.
It
has
not
changed
for
Mr
Harmon.
E
Mr
Lawson,
two
from
the
county,
you
have
a
note
four
co-star
shows
at
least
how
much
was
that
square
foot.
D
Yeah,
that's
included
in
the
packet,
let's
see:
16
783,
Sweet
1600,
it's
on
my
rental
and
it's
one
of
the
questions.
I
asked
or
yeah.
E
Okay,
second
question:
the
applicant
has
said:
it'll
take
two
years
to
lease
out
so
they've
below
the
line.
They
have
less
rent
of
two
years
and
you
have
one.
D
E
Got
two
for
the
two
for
the
applicant
real,
quick
in
your
notes.
You
say
recent
assessment
and
methodology
you're
talking
about
the
fact
the
guidelines
place.
A
cap
on
vacation
25
percent
is
is
not
consistent
with
recent
assessment
methodology.
What
is
that
reason
in.
B
E
Next
question
and
and
I
may
have
been
doing
math
players,
so
I
apologize
if
I
missed
it
you're
talking
about
one
of
the
and
it's
what?
What's
that
on
the
market
for.
B
So
Jacob's
Engineering
leases
I
believe
it's
three
floors
and
they
have
two
of
them
available
for
sublet,
52,
000
square
feet,
they're
advertising
it
at
twenty
five
dollars
a
square
foot
and
at
least
that
their
lease
has
about
five
years
remaining
on
the
term.
So
it's
not
you
know
a
one-year
get
in
there.
Just
try
to
get
what
money
you
can
it's
it's
almost
five
years
remaining
release.
B
F
Madison
I
have
two
questions:
one
for
each
party.
The
poem
I
want
to
go
back
to
the
the
two-year
below
the
line.
Absorption
assumption.
This
is
certainly
not
novel,
as
everyone
is,
is
the
Department's
already
confirmed
what
happens
if
sure,
if
you
want
to
write
off
over
two
years,
what
happens
this
year?
If
you
give
back
next
year,
describe.
F
It
was
still
like
two
of
your
absorption
rate
for
a
lot
of
square
footage
and
and
therefore
you
want
to
take
a
deduction
now,
but
if
it
all
absorbs
this
year,
what
do
you
do
if
you
do
anything
about
the?
What
became
the
excess.
B
Absorption
from
that,
so
this
is
Mr
Madsen.
This
is
part
of
the
exercise
that
that
the
department,
the
Drea
and
we
disagree
on
so
state
law
says
what
would
this
sell
for?
How
would
a
buyer
value
this
property
as
of
January
1st?
So
that's
the
position
we
take
is
if
I'm,
a
buyer
in
the
market
and
I'm
valuing
this
property
I'm
not
going
to
impute
one
year,
Lisa
I'm,
going
to
say
negative
and
absorption
over
the
past
three
years.
B
Lack
of
demand
in
the
market
I'm
not
going
to
go
with
just
one
year
if
I'm,
a
buyer.
As
of
the
data
value
I'm
going
to
go
two
years
or
if
it's
Fairfax,
County
I'm
gonna
go
six
plus
years,
like
the
their
department
does
now.
If
I'm
trying
to
buy
it
again
the
next
year,
then
I'll
evaluate
it,
then,
but
that's
the
so.
B
F
You
I
appreciate
that
question
for
the
Department
the,
and
this
is
also
not
a
novel
argument
by
a
long
shot
where
you
assume
that
a
stabilized
building
is
is
presented
and
because
it
isn't
there's
my
vacancy
to
impute
what
Brent,
what
space
would
have
been
rented
for.
It's
all
over.
We
wonder
if
the
income
section,
but
the
the
appellant
argues,
didn't
take
that
same
rationale
for
the
operating
expenses
since
low
operating
expenses,
because
it's
a
low-use
building.
How
do
you
respond
to
assuming
stabilize
building
with,
therefore,
increased
operating
expenses.
D
So
if
you
made
it
adjustments
to
that
expense,
not
to
the
extent
of
the
appellant
going
upwards
of
10.50,
but
we
did
make
adjustments.
F
F
Exactly,
as
you
said,
the
test
it
turned
out,
other
numbers
turned
out
to
be
a
higher
evaluation,
which
happened
to
have
a
low
would,
you
admit,
is
a
too
low
operating
expense,
but.
D
Well,
if
you
look
at
the
history
which
in
2019
2020,
they
were
operating
this
building
with
a
hundred
thousand
square
feet
for
around
seven
dollars,
eight
dollars
per
square.
E
F
D
Thank
you
just
so,
overall
view
on
this
comparison
between
Andrea's
original
test
and
the
presented
by
the
appellants.
The
main
difference
is
the
vacancy
expenses.
In
the
cap
rate,
we
did
make
adjustments
to
the
vacancy
based
on
shown
on
the
rent
roll
and
that
vacancy
for
this
property
was
at
41,
so
we
did
adjust
to
the
maximum
of
25
percent.
Based
on
our
guidelines,
we
made
adjustments
below
the
line
they
can
see.
D
We
did
increase
the
expenses
to
20
based
on
the
history
that
is
reasonable
to
assume
that
this
property
100
000
square
feet.
E
D
B
Yes,
thank
you.
I
just
want
to
reiterate
that
what
the
county
claims
as
a
capri
and
what
they
State
as
a
capri
is
two
components:
it's
a
base
cap
rate
of
5.89
and
then
it's
the
tax
rate.
So
they
try
to
lump
on
that
tax
rate
and
say:
look
our
cap
rates
high.
It's
not
it's!
5.9
percent!
That's
the
lowest
level!
It's
been
in
the
past
15
years.
B
The
10-year
t-bill
does
have
a
an
impact
on
cap
routes.
The
tenure
t-bill
went
up
by
236
basis
points
last
year
now
for
the
operating
expenses.
This
property
was
60
occupied
over
2022
and
incurred
nine
dollars
per
square
foot
in
operating
expenses.
This
the
math
on
this
is
easy
to
get
it
to
the
county.
Stabilized
occupancy.
B
You
add
15
to
that
60
and
we're
at
75
percent
occupied
so
to
gross
up
the
actual
operating
expenses
we
look
at
15
is
one
quarter
of
60,
so
let's
grow
the
2022
operating
expenses
by
one
quarter
to
get
to
that.
75
percent
occupancy
you
get
to
eleven
dollars,
Thirty
cents
per
square
foot
in
operating
expenses,
we've
only
imputed
10.50.
Thank
you.
E
E
I
wonder
if
the
Jacobs
Engineering
I
was
subleasing
I,
guess
it
does
attempting
it
you
know.
I
would
think
the
landlord
might
have
a
problem
with
that.
Thanks.
E
This
yeah,
so
that
could
be
a
big
loss
between
the
parties,
but
if,
if
in
fact
they
are
marketing,
I
mean
you
got
50
of
this
building
and
so
I
guess.
First
thing:
we
as
a
board
decided,
are
we
willing
to
lower
effort
change
the
cap
rate
I
think
it
is
Justified,
but
I,
don't
know
enough
people
that
would
agree
on.
G
G
Maybe
unique
to
a
building
where
we're
adjusting
operating
expenses,
which
I
would
consider
and
again
you
know
the
rates
and
things
like
that
are
the
vacancies.
That's
a
building
issue
if
we're
playing
with
the
camera.
Some
of
these,
a
given
building
I
think
cap
rate
is
across
the
board
kind
of
issue
that
just
I
know
we
can,
but
that
doesn't
mean
we
should,
and
it's
just
I,
because
that
really
impacts
everyone
else
and
everyone
I.
Just
it's
something.
We
need
to
push
the
county
on
much
better.
A
G
Well,
even
if
you
go
back
to
19,
his
expenses
are
not
that
big
of
adjustment
time
period
I
the
expenses
were,
is
where
I
see
the
adjustment.
I,
think
they're,
arguing
about
vacancy
and
the
rates
and
things
that
are
used
are
valid,
but
I
do
think
that
evens
out
in
in
the
original
assessment,
it's
just
the
expenses
I.
A
A
F
E
I
would
make
one
suggestion
Madam
chair
on
below
the
line,
I
think
I,
don't
think
a
year
is
accurate.
I
think
the
applicants
pay
here
at
27.
11
is
probably
more
accurate.
Well.
A
E
E
E
Let
me
let
me
let
me
share
why
I
think
this
we
have
the
landlord
and
so
the
landlord's
not
going
to
be
able
to
reduce
their
their
vacancy
until
the
tenant
leases
up
because
they're
they're
marketing
is
somebody
yeah.
So
that's
why
I
think
it
is.
G
F
I
I
agree,
I
think
celebrates
our
position
that
we
look
at
this
annually.
We
can't
protect
political
absorption
is
going
to
be
in
the
future
and
and
the
way
we
handle
it,
then,
is
below
the
line.
G
C
Yes,
good
morning
because
of
the
income
that
was
reported,
I
didn't
use
the
original
assessment,
but
I
also
I
mean
I
used
the
test
column
that
Mr
Peralta
did
and
I
thought
that
the
expenses
were
also
low,
so
I
did
increase
and
I
tested
that
at
ten
dollars
per
square
foot,
but
even
at
that
rate,
the
final
value
after
the
below
the
line.
Deductions
comes
to
106.,
106
million
20
000,
so
I
thought
the
original
assessment
was
low
compared
to
everything
else.
F
F
That
it's
all
about
how
much
somebody
would
buy
it.
Almost
you
know,
and
now
I
haven't
read
the
entire
finding
it
around
the
entire
law.
Maybe
there's
some
upsetting
positions.
F
Has
provided,
but
it
seems
like
it's
all
about
from
that
who's
gonna
buy
it,
and
therefore
the
alliance
argument
well
we're
looking
at
this
huge
amount
of
vacancy
compounded
by
a
YouTube
on
the
sub
vacancy
and
they'd,
be
crazy
not
to
right
off
stuff
below
the
line
for
two
years,
three
years,
four
years
but
I'm
I'm
having
a
tough
time
saying
that
that's
appraisal
that
we
get
to
you
know
surveying
buyers.
What
would
you
pay
for
this?
F
E
F
E
A
A
So
it's
three
to
two:
that's
that's!.
A
H
Madam
chairwoman,
before
we
begin
the
audio
from
the
board
is
cutting
in.
So
we
only
heard
like
three
numbers
just
now
so
I
don't
know
if
there's
anything
that
the
audio
people
at
the
county
can
do
but
are.
A
H
A
Thank
you,
rpc14014016
4401,
Fairfax
Drive,
and
you
can
start
with
your
eight
minutes.
Okay,.
B
B
The
issues
on
appeal
are
the
office
income,
the
vacancy
rate,
the
operating
expenses,
the
cap
rate
and
the
absorption
period.
Now,
if
you'd
be
so
kind
as
to
direct
your
attention
to
page
six
of
the
appeal
pack,
you'll
see
the
rent
roll
the
Drea
used
to
impute
the
rents.
It's
here
that
we
see
a
math
error
that
results
in
office
income
being
overstated.
B
B
Now
the
base
listed
at
4240
takes
out
the
management
office
space,
which
inflates
the
per
square
foot
grade,
including
the
management
office.
Space
drops
the
rental
rate
to
37.79
per
square
foot,
which
is
what's
shown
on
the
appellance
pro
formula
for
the
vacant
office
space.
We
imputed
the
net
effective
rental
rate
of
the
two
most
recent
leases
at
this
property.
These
were
at
a
weighted
average
of
34.18
cents
per
square
foot.
B
These
leases
for
CRC
had
it
in
sessions
of
12
and
a
half
percent
in
the
form
of
free
grant,
abatements
and
then
Linden
property
had
abatements
of
14.3
percent.
So
next,
as
I
mentioned
previously
vacancy.
We
spoke
about
this
on
the
last
case
that
but
this
property
has
been
40
percent
vacant
each
of
the
last
four
years,
the
Drea
again
apt
vacancy
rate
at
25,
beginning
in
2020
prior
to
that
they
had
used
a
30
vacancy
rate.
B
B
We
can
add
a
high
vacancy
adjustment
to
the
cap
rate
as
Fairfax
County
does,
or
we
can
do
a
combination
of
both
an
increase,
the
vacancy
rate
and
the
cap
rate,
the
operating
expenses.
The
assessment
makes
two
errors.
The
assessment
does
not
impute
any
operating
expenses
on
the
amenity
space.
This
building
has
a
fitness
center
and
a
conference
center.
Clearly,
these
spaces
incur
costs
to
operate
and
maintain.
B
B
For
this
property
we
again
say
the
Drea
has
not
adjusted
cap
rates
from
one
year
prior
and
assesses
it
at
the
lowest
base
cap
rate
of
any
of
the
past
15
years.
It's
assessed
at
a
base
cap
rate
of
just
5.9
percent.
This
is
the
cap
weight
cap
rate
we
used
compared
in
other
market
cap
rates,
because
this
does
not
include
the
tax
rate
which
the
Drea
likes
to
include
to
artificially
make
it
look
like
it's
higher
than
it
is
this
5.9
percent
cap
rate
is
despite
the
Soffer.
B
At
the
end
of
2022,
we
knew
more,
increases
were
coming
in,
2023.,
add
to
the
increase
in
the
cost
of
capital.
The
fact
that
the
Drea
that
per
the
Drea
the
pandemic
is
over
yet
we're
still
seeing
chronic
softness
in
office
demand,
as
evidenced
by
higher
vacancy
more
space
available
for
sublet,
lower
rents,
higher
concessions,
shorter,
lease
terms,
more
product
being
produced
and
coming
online
in
the
market.
B
There
is
simply
no
support
for
the
cap
rate
to
not
have
changed
at
all
from
2022
to
2023.,
looking
at
the
spread
between
the
10-year
t-bill
and
the
which
is,
of
course,
the
risk-free
rate
of
return
and
the
base
cap
rate,
we
see,
the
Drea
has
only
included
a
spread
of
two
percent
to
account
for
risk
for
an
office
property.
That's
been
forty
percent
vacant
each
of
the
past
four
years
in
a
market
that
has
had
negative
absorption
each
of
the
past
three
years
now,
I
want
to
speak
briefly
to
uniformity.
B
The
Supreme
Court
of
Virginia
has
spoken
on
this
on
multiple
occasions,
so
there
are
instances,
obviously
where
stable,
we're.
Equalization
and
fair
market
value
come
in
conflict
with
each
other
and
the
question
becomes
which
one
gets
priority.
Well,
the
Supreme
Court
of
Virginia
has
ruled
on
this
they've
stated.
The
preference
for
uniformity
must
stop
short
of
an
assessment
at
greater
than
fair
market
value
not
to
be
redundant,
but
I
want
to
read
that
again.
The
preference
for
uniformity
must
stop
short
of
assessment
at
greater
than
fair
market
value.
B
They
also
state
in
another
case
if
it
is
Impractical
or
impossible
to
enforce
both
the
standard
of
True
Value
and
the
standard
of
uniformity
and
equality.
The
latter
provision
is
to
be
preferred
as
the
just
an
ultimate
in
to
be
attained,
but
that
does
not
mean
that
property
in
any
taxing
jurisdiction
may
be
assessed
in
excess
of
and
without
relation
to
its
fair
market
value,
as
required
by
the
Constitution.
E
B
Case
it
seems
logical
to
give
fair
market
value
priority,
to
the
extent
that
uniformity
and
fair
market
value
cannot
both
be
accomplished
in
an
assessment.
So
we
have
three
different
instances
of
the
Supreme
Court
telling
us
when
we
have
a
conflict
between
uniformity
or
Equalization
and
fair
market
value.
They've
told
us
repeatedly.
Fair
market
value
is
what
the
constitution
of
Virginia
States,
and
that
is
to
be
given
the
preference.
B
So,
finally,
the
absorption
period
again,
this
property
has
been
over
40
percent
vacant
each
of
the
past
four
years,
absorption
in
the
county
has
been
negative
each
of
the
past
three
years.
Demand
is
non-existent.
It's
fallen
off
a
cliff,
there's
simply
no
way
a
one-year
lease
up
period
is
reasonable.
No
potential
purchaser,
as
of
the
data
value,
would
look
at
this
chronically
vacant
property
and
assume
it's
going
to
lease
up
in
one
year.
B
H
I'd
just
like
to
add
a
couple
things
since
we
have
a
couple:
the
Mr
matskin
has
mentioned
Mass
appraisal.
There
is
only
154
Office
Buildings
in
the
county
pursuant
to
their
guidelines,
and
you
know
my
firm.
We
value
six
or
seven
hundred
every
year
and
it's
it's.
Each
individual
property
is
assessed
and
in
terms
of
the
absorption
period,
there
is
not
a
single
building,
every
building
competes
with
every
other
building
in
the
county.
H
Each
building
absorption
should
be
based
on
the
absorption
in
the
county
and
there
was
not
a
single
lease
last
year
for
over
a
hundred
thousand
square
feet.
There
was
not
a
single
building
that
absorbed
over
a
hundred
thousand
square
feet.
Okay
and
the
county
uses
a
two-year
absorption
period
on
individual
buildings
with
over
a
hundred
thousand
square
feet.
It
should
do
so
on
the
in
all
buildings,
because
in
fact,
all
buildings
compete
with
each
other.
Thank.
D
D
10
years,
you'll
see
that
I've
attached
pictures
poster
has
shown
here
that
kind
of
show
the
renovations
made
to
the
property.
The
addition
they
do
have
fitness
center.
They
made
spec
Suites
on
third
and
some
of
those
spec
Suites
did
lease.
We
did
ask
for
those
leases
for
the
spec
squeeze,
because
it
would
give
us
a
better
indication
of
what
the
current
market
is
with
the
current
market.
D
Rent
would
be
for
this
property
that
was
not
and
I
believe
that
had
we
had
that
information
would,
you
know,
be
able
to
speak
to
the
market
rent
more
effectively
and
kind
of
test,
a
better
indication
of
what
that
specs,
those
specs
we
would
show
for
the
market
and
not
only
that
it
would
decrease
the
amount
of
vacancy
for
the
product
depending
on
when
the
lease
occurred,
and
then,
in
addition
to
that,
we
did
see
that
if
you
did
make
the
Cabaret
change
current
cap
rate
7.095
it'd
be
6.895
for
this
property.
D
So
we
didn't
make
that
change
effective
for
this
test.
Had
we
done
that
the
value
would
come
out
slightly
different,
and
you
know
that
that
is
what
the
county
is
attempting
to
do
aggressively
this
year
by
inspecting
every
property
that
we
haven't
done.
D
View
this
property
last
year
to
make
the
effective
base
change
then,
but
we
will
do
so
going
forward
with
other
properties
as
well.
The.
D
D
So
we
do
feel
that
the
the
income
projected
in
in
the
Drea's
test
column
f,
is
reasonable,
given
what
they
report
as
actual
income
and
when
you
look
at
how
we
compare
in
the
vacant
square
footage
versus
with
what
the
county
reported
and
test
versus
what
the
pro
former
the
accountants
stating
where
you
know
of
some
sense,
50
50,
some
cents
different
from
a
projecting
when
it
comes
down
to
it
again,
it's
85
of
any
other
property
in
the
county
prior
guidelines.
We
did
increase.
D
The
expense
is
a
hundred
thousand.
You
know
for
this
property:
it
has
remained
vacant
for
quite
some
time.
They
did
lease
up
from
last
year
to
this
year.
Some
square
footage
there.
So
there
is
an
there
was
no
increase
when
you
look
at
the
per
square
foot
rate,
if
you
compare
2021
to
2022
you're
still
at
the
eight
dollars
based
on
the
increase
in
net
leaseable
area,
you
see
that
over
the
years
they
did
increase
that
noticeable
area
from
2019
to
2020,
to
2020,
21
and
now
in
2020
22..
D
So
there's
there's
more
at
least
area,
so
that
that
expense
rate
remained
the
same
from
21
to
22..
Now
granted
it
was
a
lot
of
square
foot
that
they
placed,
but
that
goes
to
show
that
I
mean
the
increase.
There
did
capture
and
recognize
that
increase
and
above
that
to
show
that
the
stabilized
expenses
would
average.
D
In
addition
to
that,
based
on
the
amount
of
square
foot
banking,
the
county
did
a
lot
for
the
excess
vacancy
below
mine.
We
increased
the
vacancy
adjustment
from
our
original
assessment
to
the
test
of
about
1
1
million
250
000
to
account
for
that
excess
space.
Even
though,
from
last
year
this
year,
we
originally
had
a
lower
amount
of
square
footage
in
our
original
test.
Now
that.
E
D
Is
accounting
for
what
I
believe
is
that
those
spec
Suites
that
we
I
talked
about
and
I
asked
the
appellants?
Are
these
spaces
at
least
you
know?
Can
I
have
the
leases
for
this
property
so
with
the
information
I
had
I
resulted
or
sorted
to
just
using.
F
Easy
questions
you
mentioned
a
couple
of
times
that
the
long-term
Trend
in
four
years
of
vacancy
in
this
building
is
an
excess
of
40
percent
on
the
inec
in
page
four
there's
a
word
on
the
right
hand,
column
called
total
between
rows,
11
and
12..
If
you
go
to
the
right,
starting
in
2018
onward
to
projection,
there
will
be
single
digit
vacancy
plus
concessions,
Plus
Rentals,
so
where's
the
40
something
percent.
What
am
I
missing.
F
Yes,
but
but
it's
all
the
years,
starting
in
20.,
19.,
again
look
to
the
left
on
page
four
and
the
top,
which
is
Arlington
Square,
4400,
4401,
right,
Fairfax,
Drive
top
left
Summers.
H
B
F
B
Matskin,
the
the
owner
reports
actuals,
they
don't
impute
loss
of
income
on
vacant
space
when
they're
reporting
their
their
income,
so
they're
reporting
the
leases
that
were
in
there.
So
vacancy
will
not
show
up
on
that
row.
Nine,
because
you
know
it's
tough
who's
who's,
their
ass.
What
the
County's
asking
them
to
do
is
to
come
up
with.
What
do
you
think
this
will
at
least
for
and
then
we're
going
to
impute
that?
So
you
know
it's
kind
of
it's
too
it's
too
hypothetical
to
ask
him
to
do
that.
B
H
If
you
look
up
at
the
top
of
this
column
of
each
of
the
columns
you
referenced,
you
can
see
the
total
nla,
as
well
as
the
vacant
nla
right
and
if
you
divide
the
vacant
in
La
by
the
total
nla.
You'll
come
up
with
the
40
plus
percent
vacancy.
F
You
know,
in
fact,
I
mean
I.
I
believed
you
I
said
what
am
I
missing
and
you've
told
me
okay.
So
the
question
to
the
department
is
guidelines.
This
is
a
long
way.
My
assumption
is,
this
is
excess
of
40.
fairly
long
term
four
years,
the
guideline:
don't
the
guidelines
assume.
D
It
just
like
the
last
kids.
We
do
see
what
happens
every
year.
Our
guidelines
account
for
anything
in
excess
of
you
know,
30
percent.
D
For
this
case
we
had
38
for
this
property
and
anything
in
excess.
We
deduct
and
load
a
lot
with
respect
to
the
early
question
about
the
the
the
vacancy
we
do.
The
county
does
ask
for
that:
Financial
vacancy
for
every
property.
We
did
have
that
information
in
the
past
if,
since
not
I'm,
not
sure
about
this
particular
property
but
they've
since
moved
away
from
that,
because
you
know
it's
hard
to
say
this
is
what
they're
asking-
and
this
is
what
the
county
is
assessing.
D
So
now
you
know
the
the
appellant
or
the
agents.
Do
you
know
project
what
that
income
is
for
that
vacant,
space
I.
D
F
D
Thank
you
for
this
property.
We
did
see.
The
the
leases
that
we
didn't
receive
would
have
made
profound
effect
on
the
test
of
this
property.
We
didn't
afforded
that
information.
The
county
did
the
best
we
could.
As
far
as
our
projections
and
again
I'd
like
to
state
that
you
know
the
square.
D
Above
and
beyond
that
we're
taking
excess
deductions
below
the
line,
even
though
the
analyzers
lower
than.
H
I'm
going
to
actually
just
jump
in
for
a
quick
sec,
you
know:
Mr
Peralta
keeps
referencing
information
that
he
asked
for.
He
asked
for
a
July
lease
in
23
for
2500
square
feet
has
nothing
to
do
with
the
January
1
value
and
only
indicates
that
a
2500
square
foot
lease
is
a
big
deal.
I'm,
sorry
Mr
Harmon,
please
consider
conclude.
Yes,.
B
Thank
you.
So,
looking
at
the
four-year
operating
history,
noi
has
averaged
1.8
million
dollars.
The
assessment
is
at
three
million
dollars.
Secondly,
as
as
Miss
Boardman
was
stating,
the
Drea
is
requesting
July
of
2023
information
and
then
saying
well,
be
me:
I
can't
make
the
adjustments
because
I
don't
know
what
happened
in
July
after
the
data
valued.
Now
we
did
inspect
this
property
twice
in
the
past
two
years
past
three
years,
they've
had
two
opportunities
to
adjust
the
effective
age.
They
have
done
it
neither
times
now
they
come
in
here
and
say:
oh
well.
B
A
You
know
he
had
said,
and
he
had
seen
the
property
last
year
and
didn't
change
the
page.
So
to
me,
that's
the
tape
that
this
is
what
the
effect
of
H
is
now.
If
they
do
that
next
year,
I
guess
we'll
figure
different
arguments
from
everybody.
The
chitter
should
have
happened
so
I'm,
not
all
that
concerned
with
what
information
wasn't
given
from
the
same
point
of
Equalization
and
trying
to
assess
these
proper
properties
equally
with
other
properties.
A
I
think
we
look
at
what's
before
us
to
be
honest,
I,
don't
think
the
original
assessment
is
all
that
off
from
what
was
reported
and
reconstructed.
It's
just
my
thought,
but
so
where's
everybody
else.
F
Again,
first
one
is
again
on
the
Supreme
Court
pronouncing
on.
What's
most
important:
that's
okay,
but
I
I,
don't
know
I'm
not
prepared
as
a
member
of
the
board
to
go
to
determine
fair
market
value
property
and
when
I
talk
about
every
property
that
in
combining
with
massive
phrases,
I
don't
mean.
150
I
saw
this
building
about
everything
in
the
county
that
it's
not
a
resident
owned
residence,
that's
thousands
of
property.
F
Now,
if
we
had
I
guess
a
couple
of
more
assessors,
then
we
could
how
to
get
free
market
value,
but
I
I'm,
not
denying
Supreme
Court
has
the
right
to
do
this.
I'm
just
saying
that
determine
what
the
fair
market
value
might
be,
any
individual
property
or
all
so
I
got
it
stayed
with
Imes
and
finally,
I
tell
you
I,
don't
see
anything
that
changed
in
this
building
at
all
assessment
and
the
numbers
are
coaching
cut
up
by
and
multiply,
but
it's
a
10
increase,
even
just
there's.
E
E
But
my
colleague
just
said,
I
hear
what
you're
saying,
but
I
mean
we
know
that
they
could
40
percent
counties
using
25..
We
know
it's
going
to
take
longer
than
a
year
to
lease
up,
40
vacant
office
building
and
so
I
think
adjustments
of
that
nature.
You
can
and
shouldn't.
A
C
You
know,
minor
increases,
really
don't
make
that
much
difference
increasing
it
at
925
the
value
comes
to
39
153,
which
is
you
know,
five
hundred
thousand
dollars
less.
But
to
me
that
was
the
only
thing
that
kind
of
caught
my
attention
a
little
bit
but
overall
I'm
I'm.
Okay,
with
the
original
assessment.
F
E
E
G
F
E
B
Yes,
thank
you
4100
Fairfax
Drive.
This
is
located
at
Fairfax
and
Randolph
in
Boston.
This
is
the
building
with
the
Bronson
beer
hall
on
the
ground
floor
and
it's
directly
next
to
that
IHOP
there.
This
property
has
had
above
Market
vacancy
for
each
of
the
past
two
years.
B
B
These
vacancies
represent
a
twenty
percent
increase
in
the
vacancy
rate
over
the
past
three
years,
so
knowing
that
noi
dropped
by
15
in
2022,
what
do
we
see?
The
2023
assessment?
Do
the
2023
assessment
increases
by
eight
percent
over
the
2022
assessment?
The
test
column
compounds
this
error
by
suggesting
an
even
greater
increase.
B
So
how
did
a
property
with
increasing
vacancies
and
decreasing
nois
increase
by
eight
percent
year
over
year?
Three
reasons.
First,
the
assessment
Boulder
States,
the
potential
income
based
on
Market
leases.
Second,
the
assessment
under
States
operating
expenses.
Third,
the
assessment
applies
A
5.6
market
cap
rate
to
this
21
year
old
property,
with
above
Market
vacancy
looking
at
these
issues.
In
order,
we
see
that
the
lease
office
income
is
overstated.
B
The
Drea's
rent
roll
is
on
page
six
of
the
appeal
and
it
overstates
the
rents
in
place
by
two
tenths
by
not
using
the
January
1
rental
rate
in
place,
but
rather
it
selects
the
escalated
rent
that
takes
place
later
in
the
year
from
the
rent
roll.
So
the
the
owner
submitted
their
rent
roll
beginning
on
page
43
of
the
appeal.
Looking
at
this
page
and
the
Drea's
rent
rule,
we
see
that
canon
in
Suite
200
is
mistranscribed
on
the
Drea's
rent
rule.
They
don't
use
the
January
1
ring.
B
They
use
the
escalated
rent
from
that
occurs
later
in
the
year.
This
is
inconsistent
with
the
rest
of
the
properties
that
are
assessed
in
the
county.
We
use
the
January
1
In-Place,
rent
the
second
tenant
kitware.
The
Drea
again
uses
the
escalated
rent
from
later
in
the
year.
Instead
of
the
January
1
2023
rental
rate,
that's
for
the
eighth
floor
space.
Now
this
tenant
also,
they
they
moved
floors.
At
the
beginning
of
the
year
end
of
last
year,
beginning
of
this
year,
this
tenant
vacated
the
third
floor
and
moved
into
space.
B
On
the
eighth
floor
at
a
lower
rental
rate,
the
assessment
imputes
this
tenant
as
occupying
both
spaces.
We
did
tour
this
property.
We
did
see
that
they
were
in
on
the
eighth
floor
and
the
rent
roll
states
that
their
their
third
floor
space
was
ending
in
2022
and
the
Drea
just
counts
both
of
those
spaces.
No
follow-up
questions
were
asked
regarding
kitware's
movement
from
the
third
to
the
eighth
floor.
B
Next,
the
assessment
overstates,
the
rental
rate
on
vacant
Office
Space.
The
most
recently
said
this
property
was
at
a
net
effective
rate
of
only
38
dollars
per
square
foot.
This
is
what
we
use
on
column
G
for
vacant
office
space
as
the
most
recent
leasing
activity
at
the
property.
This
is
what's
most
indicative
of
Market,
of
what
the
market
will
support
now.
I
want
to
briefly
touch
on
the
Ines
and
how
vacant
office
income
is
not
imputed
by
the
owners.
B
The
county,
the
Drea
does
request
that
the
owners
do
not
provide
that
because
it's
not
required
by
law
and
it's
hypothetical.
So
if
the
owner
imputes
a
low
number
on
there,
the
Drea
is
going
likely
to
disregard
that
and
impute
a
higher
number
that
they
say
is
reflected
by
the
market.
If
the
owner
reports
a
higher
number
they're
likely
to
use
that
and
say
this
is
what
the
owner
says
So
to
avoid
that
whole
back
and
forth.
B
You
know
the
owner
does
not
impute
income
on
vacant
space;
instead
they
report
the
actual
income
and
expenses,
which
is
what
is
required
by
law.
So
the
Drea
asks
for
more
information
than
is
required,
and
it's
hypothetical
and
and
not
supportive.
So
the
owners
don't
provide
that
and
then,
when
we
provide
the
appeal,
we
do
stabilize
it
based
on
recent
leasing
activities.
So
the
county
does
have
that
information
for
operating
expenses.
This
assessment
makes
two
errors
again.
First,
it
doesn't
impute
any
operating
expenses
on
amenity
space.
B
These
spaces
do
incur
costs.
You
know,
we've
toured
a
lot
of
these
properties.
We've
seen
them
being
cleaned
as
we
go
through
them.
They're.
Definitely
air
conditioned
as
we
go
through
them
as
well.
They
incur
costs
they
need
to
have
operating
expenses
imputed
on
them.
Second,
the
assessment
imputes
operating
expenses
below
what
this
property
actually
incurred
in
2022.,
we're
all
aware
of
the
effects
of
inflation
over
the
course
of
2022
and
the
anticipated
effects
of
2023
accounting.
B
For
this
we
use
the
2022
actual
operating
expenses
grown
by
the
inflation
rate
experienced
by
the
market
over
2022..
Finally,
the
Capri.
Here
again,
we
see
this
issue.
The
Drea
assesses
this
property
at
the
same
rate
as
the
past
six
years
and
the
lowest
rate
in
the
past
15
years.
A
base
cap
rate
of
only
5.95
percent
we've
heard
the
Drea
respond
again
in
the
past
cases
with
their
loaded.
They
add
the
tax
rate
to
it
and
say:
look
it's
not
5.5.
It's
7..
The
base
cap
rate
is
5.595.
B
As
of
the
data
value,
the
10-year
t-bill,
the
risk-free
rate
of
return
was
3.88
percent.
This
5.595
the
same
again
as
it's
been
the
past
six
years,
the
lowest
it's
been
in
the
past
15
years.
This
completely
ignores
it
misses
the
mark
of
the
increased
cost
of
capital
and
the
deterioration
in
the
office
Market
over
the
past
few
years.
B
I
want
to
wrap
up
by
stating,
in
addition
to
the
Supreme
Court,
stating
that
fair
market
value
is
the
standard
to
be
achieved.
The
Supreme
Court
has
also
ruled
that
Boards
of
Equalization
need
to
exercise
their
power
to
adjust
assessments.
Otherwise
the
fear
is
that
courts
will
become
de
facto
Boards
of
Equalization.
B
So,
looking
at
the
fair
market
value
of
this,
we
have
support.
We
have
sales
in
the
county
at
the
end
of
last
year
that
support
higher
cap
rates.
We
see
that
the
the
County's
assessment
methodology
does
not
accurately
capture
these
market
sales
that
occurred
at
the
end
of
2022..
These
sales
occurred
after
the
Drea
had
a
chance
to
go
in
there
and
adjust
the
2023
assessments.
We
see
these
sales
two
of
them
listed
in
the
Drea
support.
1776
Wilson
was
assessed
at
a
assessment
to
sale
ratio
of
115
percent.
B
The
1805
Clarendon
was
assessed
at
201
and
2445
Army
Navy
Drive
was
assessed
at
140
percent
of
the
sale
price,
so
the
Drea
guideline
cap
rates
do
not
capture
the
market
as
it
existed.
On
the
first
of
the
year,
the
interest
rates
had
increased
significantly.
This
does
impact
tap
rates.
The
Drea
just
disregarded
that
information.
Thank
you.
D
You
in
arriving
at
the
original
2023,
the
county,
looked
at
the
2021
ine
and
if
you
see
in
column
C
the
noi
there
compared
to
what
the
the
department
projected
was
much
lower.
In
addition
to
that,
we
had
excess
vacancy,
which
we
now
know
was
not
the
case
for
this
property.
We
actually
imputed
a
higher
vacancy
square
footage.
D
In
the
original
assessment.
We
made
adjustments
in
the
test
to
reflect
what
is
actually
vacant
in
the
property
and
our
vacancy
is
higher
than
what
the
appellant
is
projecting
in
their
pro
forma.
We
do
arrive
at
a
lower
protective
agency
based
on
and
my
rental
does
show
one
of
the
main
I
guess
tenants.
D
If
you
will
was
occupying
space,
that
the
kit,
where
that
Mr
Harmon
did
point
out
now,
even
in
the
test,
our
our
nois
lower
than
what
was
shown
in
the
original
2020
IV
and
that's
an
INE,
not
imputing
the
vacant
square
footage.
D
So
even
at
that
point,
if
you
compare
the
noises
test
and
then
compare
that
to
what
they
were
projecting
in
the
2022
ionine
in
which
Mr
Harmon
pointed
out,
they
do
not
report.
They
can
see
for
their
Ines
that
the
county
has
requested.
So
even
though
they
don't
do
that,
they
come
up
with
an
noi
higher
than
what
we
had
originally
in
the
2023
assessment
and
even
in
the
test.
So
I
asked
the
board
to
take
that
in
consideration
from
the
case.
E
B
So
as
we're
all
aware,
since
the
pandemic
work
from
home
has
been,
you
know,
it's
it's
been.
The
law
of
the
land
we've
seen
office
is
being
very
sparsely
utilized.
Of
course,
2020
everybody
went
home,
it
was
mandated.
You
couldn't
work
from
the
office
2021.
We
saw
attempts
to
come
back
to
the
office
that
sputtered
out
and
flailed.
We
saw
the
same
in
2022,
so
these
properties
have
not
been
physically
occupied,
and
that
makes
a
difference
in
the
operating
expenses
that
are
reporting.
B
Of
course,
when
you're
not
in
the
office,
you
don't
need
janitorial
staff
coming
by
and
emptying
your
trash
cans
at
night.
You
don't
use
the
lights
as
much.
You
know
the
facilities,
it's
has
an
impact
on
operating
expenses.
It
also
is
a
Harbinger
for
these
tenants
not
renewing
at
the
same
amount
of
space
or
at
the
same
rate,
if
they're
not
using
their
space,
that
they
have
least
you
know
they're
likely
not
going
to
renew
at
the
same
amount.
F
B
D
You
in
2019
we
would
assume
that
pre-pandemic
the
expenses
property
as
if
the
employees
were
in
the
property
were
at
nine
dollars
and
that's
at
a
lower.
D
So
the
current
square
footage
bacon
is
higher,
but
for
projecting
at
9.50
the
appellants
upwards
of
11
15,
2020
and
10
11
in
2029.
D
We
did
project
based
on
what
property
and
we
do
expect
that
Benz
is
at
9.
50
is
reasonable
for
this
property,
given
what
the
noi
has
shown
over
the
years
and
the
most
recent.
B
Thank
you,
so
the
Drea
we
saw
their
methodology.
We
just
heard
it
they're,
relying
on
2019
expenses
to
project
2023
expenses.
What
has
happened
between
2019
and
2023?
That
would
impact
that
you
know
what
would
throw
that
off.
We've
been
living
through
record
inflation,
the
past
several
years.
We
see
this.
We
see
interest
rates,
increasing
them
the
most
of
any
year
of
the
past
60
on
the
10-year
t-build
to
address
inflation.
B
Now
that
goes
hand
in
hand
with
the
cap
room.
The
10-year
t-bill
again,
as
I
stated
on
the
first
case,
is
known
in
the
market
to
closely
tie
to
the
Capri
it
increased
by
the
most
it's
ever
increased
for
the
past
60
years.
The
Drea
has
said
that
has
no
impact
on
the
cap
rates.
This
is
clearly
not
true,
as
we
can
see
by
the
three
late
2022
sales.
B
A
Okay,
thank
you.
It's
just
yeah!
That's
right.
I,
disagree
with
the
last
statement
for
the
appellant
that
the
county
is
using.
2019
expenses
I
mean
I,
think
it's
it's
looking
at
the
trend,
but
I
mean
if
you
look
fences
from
2019
to
three
two
one,
two
three
with
the
absence
of
having
the
2020
to
information.
I
think
the
county
was
pretty
much
online
at
2.4,
so
I,
don't
think
that
argument
holds
any
water.
E
A
G
F
We
talked
about
the
cap
rate
counting
repeatedly,
not
today,
but
many
other
times
that
is
applicable
today
saying
well,
we
have
an
assessment
period
of
you
know,
late
2020
for
this
case
2021
to
late
2022.
You
can't
get
stuck
involved
on
New
York
sold
on
New
Year's
Eve.
This
game
lead
residential,
but
it's
certainly
type
of
people.
It's
a
commercial
and
non-resident
other
non-residents
and
and
what
the
Apollo
brings
up
is
is
certainly
for
the
first
year
and
legitimately.
F
So
these
guys
just
can't
spend
New
Year's
Eve
doing
all
these
first
day
for
January
first
publication,
so
I
agree
that
it
appears
too
hard
too
high.
F
A
E
The
slight
difference,
though,
is
if,
if
your
value
is
going
down,
you're
going
to
hold
on
to
it
and
hold
on
to
it,
whereas
if
values
gone
up,
you
might
think
okay
can
sell,
because
they,
you
may
have
bones
that
are
greater
than
what
you
can
sell
for,
and
so
that
would
encourage
an
owner
to
just
hold
it.
That's
that's
what
we're
seeing
and
now
buildings
have
just
now
started
at
these
greatly
reduced.
C
A
B
Thank
you.
So
this
is
4245.
It's
The
Nature
Conservancy
building
in
Ballston
it
is
a
163
000
square
foot
office,
building
built
in
1998.,
Rob
and
I
toured
this
property
in
August
of
2022
and
again
in
July
of
2023.
The
issues
on
appeal
are
the
office:
rental
income,
the
vacancy
rate,
the
operating
expenses
and
the
cap
rate.
This
property
has
four
tenants
with
the
owner
previously
occupying
68
percent
of
the
building.
B
This
is
the
rate
most
reflective
of
the
market.
As
of
the
data
value
for
this
property-
and
this
is
the
rate
we've
imputed
for
both
the
owner
occupied
space
and
the
vacant
space.
Next
going
back
to
the
owner
occupied
space.
As
of
the
data
value,
it
was
known
that
the
owner
was
going
to
be
reducing
its
footprint.
It
was
going
to
be
vacating
the
fifth
floor.
B
This
was
not
captured
by
the
assessment,
knowing
that
the
fifth
floor
was
going
to
be
vacant
and
available
for
lease.
It
should
be
counted
in
the
vacancy
rate
applied
next.
The
assessment
understates
the
operating
expenses.
This
property
saw
an
increase
in
operating
expenses
in
2022
due
to
the
owner,
not
having
previously
allocated
payroll
to
the
building
operations.
B
This
expense
was
added
in
2022
because
they
hired
an
on-site
manager
and
were
using
another
manager
on
their
staff
to
help
with
the
building
operations.
This
is
tied
to
the
owner
occupied
space.
Decreasing
the
owner
is
trying
to
attract
new
tenants
and
hopes
to
do
so
by
offering
on-site
building
management
Additionally
the
cost
of
insurance
for
this
property
increased
in
2022
we've
seen
that
consistently
across
the
market.
B
B
This
cap
rate
fails
to
capture
any
of
the
interest
rate
hikes
experienced
in
2022
now,
looking
at
the
interest
rate
hikes,
these
did
not
all
occur
in
in
December.
These
began.
March
17th
was
the
first
interest
rate
hike
of
2022.
there.
It
was
followed
by
May,
5th
June
16th
July
28
September,
22nd,
November
3rd,
culminating
for
the
year
on
December
15th.
We
knew
throughout
the
year.
Interest
rates
were
going
up,
they
went
up
by
25
basis
points,
then
50,
then
75,
75,
75,
75
and
then
another
50..
B
So
this
wasn't
a
New
Year's
Eve,
you
know
dump
of
425
basis
points
to
the
interest
rate.
This
was
a
consistent
theme
throughout
2022..
This
is
something
that
the
market
was
captured.
You
can
see
that
in
the
sales
that
the
Drea
has
provided
us
support
a
lot
of
sales
before
March
and
then
no
sales
until
the
end
of
the
year.
What
happened
once
those
sales
started
happening?
The
values
plummeted,
a
lot
that
was
the
interest
rates
known
to
the
market.
B
They
increased
again
from
March
through
November
that
was
of
the
425
basis
points
by
November
3rd
375
of
that
88
percent
of
the
yearly
of
the
annual
increases
had
occurred
by
the
beginning
of
November.
So
that's
two
months
that
we
can
adjust
cap
rates
and
you
know
we
have
to
adjust
cap
rates.
We
have
to
get
the
fair
market
value
yeah.
These
owners
are
suffering.
These
properties
are
going
back
to
the
lenders.
The
trades
are
as
significantly
the
the
year
in
2022.
Sales
are
at
significantly
decreased
values.
B
This
is
due
to
the
interest
rate
increases
again
this
case
also,
the
the
Drea
includes
information
from
after
the
data
value,
so
I
think
it's
only
fair
to
include
information
after
the
data
value
that
benefits
the
appellant
as
well.
Today's
silver
rate,
the
cost
of
lending
the
minimum
amount
that
you
can
take
out.
A
loan
for
this
type
of
property
is
at
5.3
percent
5.3.
The
assessment
imputes
and
op
cap
rate
of
5.7
percent-
that
means
you
have
a
40
basis,
point
spread
to
account
for
profit
and
risk.
B
Now
what's
happened
to
to
both
of
those
variables
over
the
course
of
2022,
as
I
spoke
on
the
last
case,
we
saw
that
work
from
home
has
become
institutionalized.
You
know
we
had
fits
and
starts
in
2020
2021.
Oh
we're
going
to
come
back
to
the
office
by
2022.
It
was
known,
as
the
Drea
has
said.
The
pandemic
is
over.
Covet
is
over
the
market.
New
work
from
home
is
here
it's
ingrained,
so
demands
and
therefore
profit
was
down.
Significantly.
Risk
was
up
significantly,
yet
the
spread
decreased
significantly.
B
So
it
did
the
opposite
of
what
any
Financial
models
would
would
anticipate.
Because
again,
this
is
this:
is
a
financial
investment
that
you're
buying.
It's
not
you're
not
buying
the
stones
and
the
windows
you're
buying
an
income
stream,
the
risk
of
that
income
stream,
the
durability
of
that
income
stream,
the
profitability
of
that
income
stream
had
all
decreased
to
the
these
dual
factors
of
increasing
interest
rates,
as
we
heard
in
the
first
case
that
directly
affects
cap
rates.
It
reduces
your
your
return,
so
it
necessarily
lowers
the
value.
The
other
other
instance
was.
B
You
know
institutionalization
of
work
from
home.
This
became
engrained
in
2022.
It
was
no
longer
a
temporary
blip.
It
was
no
longer
we're
coming
back,
it
was
known
to
be
in
the
market,
and
Arlington
is
number
two
in
the
nation
for
work
from
home,
so
this
Market,
even
more
so
than
the
broader
Market,
was
affected.
Thank
you.
D
Thank
you
for
this
property
I
believe
the
the
appellant
mentioned,
the
the
market
rent
that
we're
using
is
higher
than
theirs
they're
at
32.35
we're
at
33
dollars.
As
you
recall,
in
the
previous
cases,
the
market
ran
in
this
General
sub-market
first
case
was
39
a
square
foot
used
34.
in
the
second
case
and
again
39
in
the
third
case,
with.
H
D
Case
we're
at
33
dollars.
We
believe
that's
a
fair
assessment
of
what
this
property
can
achieve.
Given
the
sub
Market
rates
I
just
mentioned.
When
you
look
at
the
overall
history
of
this
property,
we
can
see
that
it's
pretty
stabilized
now
with
the
owner,
not
occupying
a
space.
D
We
did
not.
We,
we
did
account
for
what
was
reported
in
ramp
roll
at
10
791
square
feet
that
is
similar
to
what
the
appellant
has
shown
in
their
Pro
former
10
7991
square
feet.
So
that's
not
an
issue
that
we
feel
should
be
addressed
since
they're,
stating
the
same
vacancy
Square
footages.
We
have
in
our
test
and
somewhat
similar
to
what
we
had
in.
E
D
Slight
difference
on
what
they're
reporting
in
2022.
again
they're,
not
reporting
the
financial
vacancy
well,
actually,
because
it's
owner
occupied
they're,
not
reporting
income
for
this
property,
so
you'll
see
that
nois
reported
aren't
reflective
of
what
this
property
could
project
as
income.
D
We
did
project
that
income
when
we
reconstructed
the
INE
based
upon
what
the
agent
projected
for
the
first
square
foot
at
3235,
you'll
see
that
in
column
E1
and
given
that
that's
the
projection,
we
did
somewhat
close
in
the
test
in
the
original
assessment,
where
Within
about
fifty
thousand
dollars
of
what
that
projected
income
would
have
been
at
that
lower
rate
compared
to
the
sub
Market.
That
I
just
mentioned
with
the
previous
cases.
So.
E
A
A
F
I,
just
I
thought
that
there's
certainly
going
to
be
in
a
competitive
advantage
in
Boston
submarket,
if
they're,
asking
33
or
so
a
square
foot,
so
I've
got
a
lesson
I,
don't
think
they
pull
it
off.
Two
questions
for
the
appellant
first,
one
is
I've
seen
this
before
so
I
know,
there's
a
coaching
answer:
I
just
don't
know
what
it
is.
How.
E
B
F
Other
question
is
the
confirmation
you
had
mentioned
that
the
expenses
to
operate
the
building
went
up
last
year
because
they
chose
to
have
on-site
management
and
then
I.
Insight
management
costs
a
half
a
million
dollars
a
year.
It
was,
it
was
managed
off-site
before.
Let
me
just
add
why
I'm
asking
this
it
was
managed
before
just
not
on
site.
So
a
half
a
million
dollars
Delta,
that's
a
real
number.
B
So
I
can
get
you
the
exact
number
Mr
metzkin
it
did
and
they
previously
for
the
off-site
management.
They
weren't
allocating
any
to
this
property,
which
they
probably
should
have
been.
You
know
not
the
full
on-site
rate,
but
that
would
have
lessened
the
Delta
between
last
year
and
this
year
they
did
so
the
the
on-site
manager-
and
they
also
had
a
second
manager
to
help
get
it
up
and
running,
was
425
000
for
2022.
B
B
For
so
on,
the
admin
payroll
I
can't
speak
to
why
the
increase
just
that
it
did
increase.
H
B
H
Address
it,
what
what
happened
was
nature
conservancy
when
they
used
to
occupy
so
much
of
the
property
they
basically
handled
the
management
and
other
things
using
nature,
conservancy
personnel,
and
they
should
have
been
allocating
to
the
building
now
because
they
have
a
lot
of
you
know
they
occupy
less
space
and
because
nature
conservancy,
like
so
many
places,
have
had
to
reduce
staff
for
that
organization.
They're
correctly
now
allocating
that
expense
to
the
building
versus
not.
A
D
Thank
you,
I
guess.
The
only
point
of
contention
is
that
the
the
admin
expense
the
county
did
take
into
account
that
most
recent
increase,
but
you
know
it
remains
to
see
be
seen
what
that
pattern
should
be,
as
the
talent
has
stated,
they're
still
working
it
out
in
the
previous
cases.
As
comparison,
there
was
admin
expense
of
about
three
hundred
thousand
and
five
hundred
thousand
this
case
is
at
700
000
for
that
increase
in
admin
so
relative
to
the
market,
I
think
the
County's
adjustment
is
a
fair
adjustment
with
expenses
and.
A
B
B
You
know
this
owner
is
professionally
represented
in
the
market.
This
is
what
the
market
rate
is
for
this
property.
Next,
the
vacancy
rate
was
known
to
be
increasing.
As
of
the
data
value,
you
can
see
on
the
test
page,
the
appellants
pro
forma
has
15
vacancy
applied.
The
Drea
test
has
10
percent.
We
do
not
agree
on
that.
The
vacancy
was
known
to
be
increasing.
They
took
on
these
extra
expenses
of
getting
an
on-site
manager
in
anticipation
of
this
as
such.
B
That
needs
to
be
increased
to
be
equalized
with
other
properties
in
accounting,
the
operating
expenses.
Again,
this
property's
operating
expenses
are
going
up
due
to
that
on-site
management
and
then
the
cap
rate,
the
property.
You
know
the
spread
between
the
risk-free
rate
and
the
Drea's
cap
rates.
This
was
known
in
the
market
as
of
the
first
of
the
year.
It
was
known
in
the
market
as
of
November,
beginning
of
November
end
of
September.
It
was
known
that
they
were
going
up.
They
made
no
adjustment,
didn't
even
try
to
track
it
at
all.
Thank
you.
C
A
F
Have
a
bit
of
an
issue,
though:
with
operating
expenses
not
not
with
income,
I
I
mean
I,
said:
500
000,
it's
534
000
increase
from
22
from
21
to
22,
because
lots
of
management
it
seems
like
an
awful
lot
of
money.
Nonetheless,
it's
more
explained
that
they
just
weren't
charging
it
off
before.
It's
certainly
more
than
the
the
increase
that
the
department
has
between
the
assessment,
the
test
of
40
673
dollars,
I'm,
assuming
everything
else
is
held.
F
Equal
I
can't
know
that,
because
there
are
no
individual
lines,
but
it's
sure
more
than
that
and
I
would
love
to
bump
up
operating
expenses
to
some
reasonable
amount
that
more
than
40
000,
maybe
250
000.
If
it's
really
accounting
for
two
people,
plus
personnel
and
all
this
kind
of
stuff,
it's
a
little
bit
of
a
Skyhawk,
but
it's
not
as
high
as
534
000.
It's
certainly
higher
than
40
000.
A
G
I
looked
at
some
of
the
other
buildings
of
that
size
and
vacancy
and
there
am
I,
but
their
suggestion
is
that
lying
with
other
governments
right
now,
there's
the
way
they
can
only
get
yeah
I,
don't
know
where
the
county
had
just
became
from.
What's
in
line
of
the
operating
expenses,
the
idea
expenses
yeah
and
in
in
the
administrative
and
means
that
they've
added
they're
not
outline.
E
That
supports
what
you're
saying
you
know
what
one
of
the
interesting
things
about
this
particular
building
its
owner
occupied
and
and
it's
let's
see
it's
the
rent-
is
that
32.?
E
So
if
they
you
know,
if
things
are
Conservancy,
it
wants
to
sell
it
and
they
got
a
dilemma
because
do
they
just
sell
it
the
way
it
is
or
do
they
lease
back
to
more
area
than
they
actually
want,
or
do
they
lease
it
back
at
a
higher
figure?
Then
then,
is
out
there
in
the
marketplace,
and
so
you
know
this
owner
occupied
I.
Just
don't
think
it's
as
valuable
as
something
that
is
not
going
to
occupy
and
has
more
Market
break
leases.
E
E
E
F
Back
to
to
Mark's
point
the
1050,
based
on
what
we've
seen
today,
1050
is
a
perfectly
reasonable
operating
expense
for
a
building
just
like
that
in
that
sub
Market,
but
I
guess,
they're
allowed
to
yeah,
honestly
legitimately
spend
more
on
operating
expenses
than
their
next
door.
Neighbors
and
literally
and
I
mean
that
literally,
you
know
again
I'm
just
looking
at
the
admin
expense.
If
we
buy
all
the
operating
expenses
in
the
prior
years
and
assume
oh
they're,
it's
legitimate
that
their
admin
expense
went
up
for
that.
F
E
G
A
Second,
it's
based
on
increasing
expenses
to
11
and
a
half
okay,
so
motion
a
second
by
Mr
matskin,
all
in
favor,
aye
opposed
okay,
it's
unanimous!
The
assessment
is
reduced
to
46
million
one
hundred
and
nineteen
thousand
two
hundred.