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From YouTube: Board of Equalization Meeting | August 30, 2023
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A
Morning
today
is
Wednesday
August
30th
2023.
This
is
the
Arlington
County
Board
of
Equalization
hearing.
We
have
six
cases
on
the
agenda
and
we
have
six
members
present
for
our
Quorum.
The
first
case
is
rpc14051016
property
located
at
4350,
Fairfax
Drive,
the
sport,
and
you
can
start
with
your
eight
minutes
and
tell
us
about
the
property.
B
Thank
you,
madam
chairwoman,
and
good
morning
board
and
members
of
Drea.
This
property
is
a
dated
1989
building
and
again
on
this
case.
The
department
refused
to
have
a
hearing
to
discuss
it
and
includes
information
through
July
of
2023.
On
pages
two
for
in
test
comment,
three
column
F
in
pages
32-39.
B
B
B
You
will
also
see
that
from
2021
to
2022,
income
fell
by
28,
yet
the
assessment
declined
by
only
3
percent
I'd,
also
like
to
point
out
that
the
stabilized
potential
noi
provided
by
the
taxpayer
is
two
hundred
thousand
net
dollars
greater
than
the
actual
2022
income.
So,
let's
dig
down
a
bit.
Why
has
this
happened?
Direct
vacancy
has
increased
from
a
low
of
23
percent
in
2020
in
2020
to
42.9
percent
in
2021
to
43.9
percent
in
2022,
which
is
where
it
remains
today,
and
that
vacancy
rate
doesn't
tell
the
full
story.
B
B
This
means
that
the
properties
net
effective
rent
on
the
Marine
Acoustics
lease
was
only
36.18,
as
shown
in
taxpayers,
stabilized
column
G1
of
the
pro
forma.
Despite
having
the
amendment
and
the
reduction
in
rent
being
set
forth
on
page
54
and
56
and
57.
Mr
Peralta
includes
the
old
rental
rate
on
page
seven
when
calculating
the
rent
on
occupied
square
feet.
B
B
B
Yet
Mr
Peralta
ignores
these
two
leases
and
uses
an
above
Market
rent
of
39
per
square
foot
in
the
test
for
vacant
space
in
the
test,
Mr
Peralta
reconstructed,
the
2022
operating
performance
of
the
property
in
E1,
the
Reconstruction
is
misleading
in
that
it
uses
phase
rent
on
existing
leases.
Instead
of
applying
a
uniform
concession
rate
fails
to
increase
operating
expenses
to
reflect
a
property.
Excuse
me,
it
happened,
75
occupancy,
while
the
property
was
only
fits
up,
54
percent
lease,
with
only
20
percent,
of
that
these
space
being
used
on
any
given
day.
B
The
next
item
I'd
like
to
address
is
the
cap
rate.
The
assessor
has
provided
no
support
for
the
cap
rate
other
than
the
assessment
sale
ratio,
which
establishes
that
the
cap
rate
is
wrong
and
a
dated
study
by
Mr
four
packs
market
cap
rate
used
on
this
assessment
is
only
5.9
percent
on
a
45
vacant.
Building
this
is
below
the
rate.
The
County's
own
expert
says,
is
appropriate
for
the
DARPA
building,
which
is
a
hundred
percent
occupied
by
a
credit
tenant.
B
Mr
corpak
says
that
the
rate
for
this
building
should
be
six
percent.
As
of
January
1
2023.,
that's
comparing
a
newer
building
with
a
older
building
that
was
built
in
2012
with
100
occupancy
to
the
US
government.
That
has
a
significant
amount
of
tenant
build
out
in
that
property.
It
also
passes
all
the
Homeland
Security
requirements
in
terms
of
pancaking
and
other
sorts
of
things.
B
The
Boe
has
said
we
need
to
go
back
in
time
to
January
1
2023.
There
were
c
three
sales
in
Arlington
in
the
fourth
quarter,
using
an
assessment,
sale
ratio.
We
know
that
the
guidelines
result
in
original
assessments
between
15
and
101
percent,
greater
than
the
sales
price.
We
don't
need
to
go
beyond
the
data
value
to
know
that
the
guidelines
are
flaws.
B
B
You
can
look
at
the
vacancy
rates
and
seismic
changes
in
the
way
people
work
and
know
that
demand
is
not
coming
back.
We
can
look
at
the
lack
of
sales
and
know
that
there
is
very
little
interest
in
buying
offices.
Mr
Peralta
has
implicitly
told
us
that
the
cap
rate
is
wrong.
He
has
said
that
the
county
lags
a
market
and
that
the
department
is
adjusting
rental
rates
downward
to
account
for
the
cap
rate.
B
That
means
using
Market
rental
and
bacon
space
operating
expenses
that
would
be
incurred
on
a
75
occupied
property
in
a
market
cap
rate,
in
this
case,
Mr
Peralta
overstated
rent
on
vacant
space
based
on
two
22
leases
signed
by
using
39
in
the
test
versus
the
36.50
market.
Rent
evidence
on
the
leases
appearing
on
page
56-59,
the
assessor
understated
operating
expenses
on
a
75
occupied
building,
ignore
the
seismic
changes
in
the
risk
associated
with
owning
Office
Buildings
and
the
cost
of
capital
by
keeping
the
capitalization
rate
at
the
2019
rate.
B
Despite
these
factors,
we
ask
that
the
board
adjusts
the
rent
on
vacant
space.
The
3653
is
shown
in
column,
f
and
g
increase,
the
operating
expenses
to
10.50
to
reflect
the
building,
leased
and
physically
occupied
at
75
percent
and
increase
the
capitalization
rate
used
by
the
assessor
by
200
basis
points.
Thank
you.
A
Thank
you,
Mr
Peralta,
for
the
county.
Please.
C
Yes,
good
morning,
for
this
case,
we
did
take
a
look
at
the
the
INE
that
was
submitted
for
2022
and
I'd
like
to
point
out
that
the
the
rent
roll
analysis
is
for
2022,
and
so
all
the
rents
that
are
supplied
in
the
rent
roll
are
are
depicted.
As
noted
in
the
2022
rent
roll.
C
The
appellant
had
asked
to
take
a
look
at
the
two
new
leases
in
the
in
the
subject:
property
and
the
county
did
just
that.
We
did
look
at.
We
did
look
at
the
the
Marine
Acoustics
lease.
C
We
did
take
a
look
at
what
the
abatement
would
do
over
the
term
of
the
lease
and
you,
if
you
see
on
page
seven
of
118,
the
county
does
show
that
that
overall,
if
you
were
to
look
at
the
net
effect
of
rent
for
this
prop
for
this
lease
alone,
it's
at
43.92
over
the
six
years
and
then
what
I
didn't
do
yesterday
and
I
I
kind
of
want
to
walk
the
board
through
this
and
just
kind
of
show
how
our
adjustments
to
the
market
rate
are
shown
in
the
test.
C
Page
page,
six
of
118..
So
if
you
take
a
look
at
the
the
office
line
item
or
row,
we
originally
had
a
rent.
There
indicated,
as
shown
on
page
six
of
118.
C
in
addition
to
that
that
rent
that
we
deducted
the
10
percent
concessions,
for
we
are
taking
an
additional
25
on
top
of
that.
C
So
if
you
take
a
look
at
that
rent
of
office
at
that
slightly
above
forty
dollars,
a
square
foot,
you
would
deduct
another
25
on
top
of
that
by
virtue
of
our
guidelines
and
the
lease
leases
in
place
would
have
a
a
rent
of
just
just
over
thirty
dollars,
a
square
foot,
and
if
you
take
that
down
to
the
next
line
item
vacant
office
and
Retail,
we're
deducting
10
for
concessions
and
then
another
25
on
top
of
that.
C
C
So
when
you
compare
that
to
what
they
believe
is
the
the
rent
for
the
new
leases
in
place.
You'll
see
that
because
of
our
guidelines,
because
we
make
that
deduction
for
concessions
and
on
top
of
that,
the
vacancy
that
is
the
rent
that
we're
applying
for
this
property.
So
when
you
go
back
to
the
summary
page
on
page
five
of
118
you'll
see
exactly
that
that
we're
deducting
almost
two
million
dollars
off
the
rents
for
vacancy
alone
and
that's
off
the
the
rents
that
we
include
and
note
there
in
column
f.
C
So
the
original
2022
INE
in
column
e
there
shows
no
rents
included
for
the
vacant
space.
Now,
when
you
compare
that
to
the
agent's
pro
forma
and
column,
G1
we're
imputing
in
E1
the
reconstructed
column,
we're
imputing
her
numbers
for
the
the
rents
that
aren't
accounted
for
in
the
original
2022
Ina.
So
to
say
that
these
numbers
are
imputed
and
not
accurate
I
mean
we're
using
their
numbers.
C
They're
showing
that
it's
a
hundred
about
150
or
100
200
000
less
than
what
the
original
or
two
hundred
thousand
more
than
what
it
shows
in
the
original
2022
Ina
and
again,
if
you
project
or
the
income,
that's
not
being
captured
in
the
2022
Ina
that
net
operating
income
has
changed,
and
it's
consistent
with
the
previous
histories
in
2022
I
mean
2021
2022
in
the
previous
years,
you'll
see
that
the
income
was
much
greater,
given
that
the
property
was
more
occupied.
C
Now,
if
you
look
at
the
the
test
column
I
like
to
focus
on
that
as
I
wrap
up
column,
f,
you'll
see
that
our
gross
potential
income
is
about
200
000
less
than
the
reconstructed
income
with
the
87
710
square
feet
included
you'll
see
that
the
expenses
have
increased
the
reported
income,
our
expenses
for
the
property
at
9.25
we've
increased
that
75
cents
Which
is
higher
than
the
average
for
the
past
four
years.
C
C
C
C
So
if
there
is
any
movement
in
an
upward
movement
in
expenses
that
the
board
would
consider,
I'd
also
ask
you
to
consider
that
as
well
that
once
the
property
is
stabilized,
that
income
and
the
rents
in
place
would
increase
based
on
contract
two
and
a
half
three
percent
increase
to
zero
over
year,
and
so
that
would
capture
about
ninety
five
thousand
seven
hundred
square
feet
of
leases
in
place
that
would
increase
over
time
year
over
year.
C
So
in
summation.
I
do
want
to
point
out
that
the
county
did
increase
the
effective
age.
This
property
was
original.
We
did
see
that
there
was
a
number
of
Renovations
done
to
the
property.
We
did
increase
the
effective
age
by
seven
seven
years
and
what
that
equated
to
is
a
cap
rate.
As
you
see
there
on
the
bottom
of
our
column,
F.
D
Through
the
department
you
didn't
say,
maybe
you
needed
another
10
seconds
to
say
it.
What
assessed
dollar
figure
are
you
recommending
be
put
forth
for
this
owner?
Because
these
member
is
different
than
what's
on
page
one
of
2010
19.
C
D
E
D
The
fact,
the
effective
age,
okay,
great
the
question
for
the
appellant
in
columns
a
through
I,
guess,
E1
the
operating
expenses,
so
those
real,
maybe
I-
should
excluding
one
because
that's
the
Department's
doing
so.
A3E
are
those
actual
expenses
that
is
correct,
that
they
achieved
and-
and
your
suggestion
is
that,
since
this
is
so
significantly
vacant,
it
should
be
a
greater
number
dollar
figure
to
to
account
for
the
what
if
they.
F
Question
for
the
appellant
you
mentioned
that
they're,
the
subleases
that
are
when
did
that
start?
When
do
they
go
to
subleasing.
B
C
Yes,
thank
you.
Even
at
the
18
vacancy
in
2019,
the
expenses
were
at
eight
dollars
a
square
foot.
The
county
is
recommending
two
dollars
more
than
that
in
our
test,
and
the
property
is
at
eighty,
seven
thousand
fifty
nine
square
feet
vacant,
which
equates
to
about
20
43.76
percent
vacant.
C
Now
the
county
again
tested,
and
we
have
the
projected
income
lower
than
what
we
said
in
what
we
show
in
column
E1,
and
we
do
see
that
the
renovations
do
change
the
effective
age,
and
we
ask
the
board
to
confirm
this
case.
Thank
you.
B
Is
required
by
law
and
it
is
not
a
compensation
for
the
cap
rate.
The
renovations,
the
county
references
are
listed
on
page
two
of
119..
It
includes
ninety
thousand
dollars
spent
in
2017
for
first
floor
restrooms,
a
construction
of
a
mother's
room
for
thirty
thousand
dollars
in
2019.
repaired
as
settlement
cracks
in
this
lab
interior
alterations.
B
Anyway,
the
total
is
339
000
and
the
county
is
saying
that
the
building
age
is
should
be
adjusted.
B
There
is
actual
rents
again
in
the
Reconstruction
I
believe
that
the
county
pulls
a
Cheap
Trick
In
that
it
is
used
to
Anchor
it's
cobbled
together
and
it's
used
to
Anchor
the
board's
minds
and
make
the
test
look
reasonable
by
comparison.
We
don't
believe
that
to
be
the
case
in
looking
at
the
ranks
on
the
two
new
leases,
as
shown
in
the
appeal
package,
Mr
Peralta
has
taken
the
total
rents
as
they
escalate
over
the
term
of
the
lease
the
rent
rates
that
I've
provided.
You
are
the
actual
that
effective
rental
rates.
B
As
of
the
dates
that
those
leases
were
signed,
expenses
should
go
up.
The
cap
rate
should
go
up.
This
property
has
had
declining
income
for
four
years
or
three
years,
and
buildings
now
are
not
being
sold
in
the
way
that
the
county
is
looking
at
it
they're
using
actual
income
tax.
Your.
G
I
mean
my
thinking
was
we
we
did
this
on
another
couple
of
high
vacancy
older
office
building
cases,
but
I'm
I'm
kind
of
looking
at
it
like.
We
need
to
add
100
basis,
points
to
the
cap
rate
and
I
I,
the
the
1989
versus
1996.
You
know
I
wandered
in
that
building,
probably
three
four
months
ago,
just
looked
in
the
lobby
and
it
really
doesn't
matter
89
to
96
is
just
old
right,
I
mean
as
far
as
office
standards
go
it
like
either.
G
G
Yeah
so
I'm
using
the
test
column,
noi,
I
use
the
cap
rate
of
8.095
percent
and
I
and
and
after
the
below
the
line,
deductions
I
get
48
million,
655
300.
A
Okay,
thank
you.
Mr.
H
Awesome
yeah,
Greg
I
did
the
same
thing
and
if
you
do
change
the
the
effect
of
age,
then
you
add
about
seven
thousand.
You
end
up
at
55
690
192,
which
is
just
about
where
the
county
is
on
its
original
intestine.
H
So
I
don't
know
if
we
should
up
the
age
or
not,
but
I
got
the
same
figure.
The
48,
655,
276
I
think.
D
There's
no
difference
in
this
bill
into
last
year
in
this
I
can't
I,
don't
know
whether
it's
updated
the
effective
age
is
seven
years
greater
or
more,
but
I
tend
to
agree
with
Greg
that
doesn't
matter
one
way
or
the
other.
Although
the
guidelines
you
have
to
have
a
fear,
demarcation,
I
respect
that,
but
my
and
again
it's
inductive
reasoning:
I,
don't
see
how
it
could
go
up.
Nine
percent
when
nothing's
changed
from
22
to
23.
D
the
63
million
plus
versus
the
last
year's
58
million
plus
so
I
was
fooling
around
with
expenses
but
I
in
his
wrap-up
Mr
Peralta
said
you
know
we
upped
it
25
from
eight
to
ten
dollars.
D
It
seems
appropriate,
so
I
can
go
further
to
get
a
number,
but
dropping
it
whatever
that
is
10,
1,
15
16
seems
inappropriate
right.
A
E
E
We
don't
really
see
where
you're
going
to
change,
that
the
only
change
I
made
is
to
the
vacant
space
rate,
which
I
think
you
know
based
on
Greece,
is
that
they
have
currently
I
will
give
the
benefit
of
the
doubt
that
that
may
be
a
little
higher
compared
to
you
know,
but
it
could
be
I
mean
their
sign
and
releases
at
41
to
begin
with,
but
I
made
that
change
to
36.50,
which
is
was
true
and
doing
all
the
changes
just
on
the
vacant
and
concessions
and
using
the
same
expenses
from
the
test
and
I
also
changed
the
effective
rate
effective
age.
A
H
I
did
some
thank
you
to
soul,
searching
after
getting
uploaded
constantly
yesterday,
and
you
know
it's
it's
when
you
have
this
much
vacancy
and
you
have
this
much
sublimacy,
it
seems
to
me
if
you're
not
going
to
change
the
cap
rate,
you've
got
to
change
the
below
the
line,
and
you
know
the
theory
is
that
they
less
rent
loss.
You
know
we
have
one
year,
there's
no
way,
I
mean
it
just
it's
impossible
that
you
could
at
least
60
percent
of
the
building
in
one
year.
A
D
I'm
thinking
about
it,
that's
kind
I
have
problems
fooling
with
the
camera
in
general,
too
complicated
for
us
to
just
sit
here
and
doing
it
so
but
I
well,
we
have
an
inspection
for
writing
off.
Two
years
is,
of
course,
that
next
year,
they'll
write
up
another
two
years
and
next
year,
if
they
are
unlucky
and
the
next
year,
another
two
years,
all
of
a
sudden
they've
written
off
the
entire
building-
and
you
know
a
certain
amount
of
time-
I
just
pull
over
the
line,
yeah
expenses
and
stuff
no
I
I
every
year.
D
So
but
but
if
there's
something
else,
not
two
years
Lisa
but
more
for
and
following
Barnes
logic,
more
for
TI,
for
instance,
because
they
got
to
do
a
bang-up
job
in
order
to
attract
somebody
kind
of
thing
or
I,
I,
I
I.
Really
the
answer
is
you
lower
the
rent,
which
is
exactly,
and
you
see
that
all
right,
no
just
lower
the
rim-
that
that's
that's
following
says
logic,
I,
guess:
I,
like
that,
the
best
yeah.
F
Like
sorry,
the
subleases,
as
she
said,
came
into
effect
recently.
They
weren't
there
during
this
period
of
review.
That's
one
reluctance.
Yeah.
H
F
My
wonderlication
I
said
it'll
get
hit
next
year
or
we
looked
at
next
year.
I
agree.
D
D
E
The
motion
to
reduce
the
assessment
to
54
million
490
700
by
adjusting
to
rate
on
the
vacant
space
the
36
feet.
A
A
B
B
A
B
See
the
599
000
square
foot
office
building
that
has
an
effective
age
of
two
thousand
as
of
January
1,
it
had
a
75.7
vacancy
rate.
Again
the
department
refused
to
have
a
hearing
to
discuss
this
case
and
includes
2023
information
through
this
month.
On
pages,
two,
three,
five,
six
seven
eleven
through
18.
before
we
continuing.
We
do
want
to
amend
our
request
to
the
Boe
and
Jordan.
If
you
can
share
the
first
screen.
B
Okay,
thank
you.
So,
in
our
request
and
in
order
to
save
a
little
bit
of
time,
we
reduce
the
vacancy
rate
and
are
appeal
from
35
percent
to
25
percent,
because
the
board
has
not
thought
about
that
change
at
all,
so
that
reduces
the
vacancy
to
5
million
three
hundred
and
thirty,
three
thousand.
As
you
can
see,
this
increases
the
stabilized
income
to
10
million
eight
fifteen.
It
also
increases
the
below
the
line.
Deductions
lost,
rent
to
3
million,
seven
sixty
leasing
commissions
to
one
million
one,
two,
eight
build
out
to
15
million
482.
B
and
deductions
for
vacant
space
greater
than
one
hundred
thousand
by
three
hundred
and
seventy
six
thousand
dollars.
Excuse
me
three
hundred
and
sixty
thousand
dollars
now.
B
B
Next,
let's
look
at
operating
expenses
while
remembering
that
this
property
was
more
than
75
percent
vacant
in
2022
and
of
the
25
leased
only
45
to
50
percent
of
the
lease
space
was
you
being
used
on
a
daily
basis?
Operating
expenses
at
that
time
are
seven
dollars
and
forty
cents
once
a
75
physical
occupancy
is
achieved.
Expenses
are
expected
to
be
much
greater
than
the
ten
dollars
used
by
the
taxpayer
in
column.
B
B
B
B
This
results
in
Lost
rent
on
the
coke
space
in
the
amount
of
four
million
663
348
dollars.
This
is
calculated
based
on
Coke's
net,
effective
rental
rate
of
34.44
cents
times
a
hundred
to
eighty
thousand
five
hundred
and
forty
square
feet
times.
75
percent,
because
that
is
a
time
period
during
2023
when
they
would
not
be
receiving
income.
B
B
There
are
a
couple
tiny
or
very
small
spec
spaces,
but
virtually
all
of
the
unoccupied
space
was
in
Shell
condition
and
would
need
to
be
built
out
before
it
could
be
occupied
deductions
for
this
space
are
made
on
column
G1,
which
we
can
explain
on
the
following
slide.
If
Jordan,
if
you
can
share
that
the
total
building
rentable
area
is
599,
000
square
feet,
stabilized
vacancy
would
be
equal
to
149
902
square
feet,
meaning
the
stabilized
occupancy
would
be
449
705
square
feet.
B
The
actual
lease
on
the
data
value
is
three
hundred
and
thirty
nine
thousand
113
leaving
an
excess
vacancy
of
a
hundred
and
ten
thousand
five.
Ninety
two:
we
use
34
dollars
per
square
foot,
which
is
on
a
one-year
lease
up
for
a
loss
rent
of
three
million
seven
sixty
One
Eleven
excess
vacancy.
We
use
the
same
110
592
square
feet.
B
Excuse
me
for
leasing
commissions,
thirty,
four
dollars
a
foot:
five
year
term:
six
percent,
one
million
128
000.
tenant
improvements
on
110,
000
square
feet,
592
110,
592,
Dole,
debt
rate
at
140,
which
is
what's
been
incurred
at
this
property
both
on
spec
space
and
on
the
on
for
the
quote.
Please,
and
what
that
brings
us
to.
We
can
go
to
the
next
slide.
B
leasing
commissions
on
other
than
the
code
space
of
one
million
one
hundred
and
twenty
eight
thousand
vacancy
on
over
a
hundred
thousand
square
feet
three
hundred
and
sixty
thousand
dollars.
Then
we
show
The
Lost
revenue
for
Coke
and
the
Tenant
improvements
required
for
Coke.
We
did
not
include
Coke
free
rent
and
we
did
not
include
I
I,
have
it
twice
in
there,
but
we
did
not
include
Coke
free
rent
and
that
results
in
a
value
of
70
million
258
572.
C
Yes,
thank
you.
This.
This
property
is
Boston
exchange
one
and
when
looking
at
these
rental
rates
that
the
county
used
in
the
tests,
if
you
compare
the
column,
F
figures,
the
column,
G1
you'll,
see
that
our
figures
are
are
lower.
In
the
least
vacant
I
mean
the
least
office
space,
we're
four
dollars
less
than
what
the
appellant
is
projecting
in
the
lease
space
and
then
we're
another
7.51
cents
less
than
what
the
appellant
is
projecting
for
the
industrious
place.
C
Now
we
included
Coke
because
the
appellant
did
so
as
well
as
part
of
the
the
tendency
in
the
building.
Now
that
to
me
would
actually
helps
the
the
overall
average
of
the
property.
As
you
see
on
our
page
page,
seven
of
the
rent
roll
analysis
that
rate
for
the
180
540
square
feet
total
that
the
code
tendency
least,
is
at
a
rental
rate
of
much
lower
than
the
other
tenancies
in
the
building.
C
You'll
see
it's
upwards
of,
or
actually
it's
less,
six
seven
dollars
per
square
foot
than
what
the
other
tenancy
is
in
the
building
for
the
leases
in
place
and
you'll
see
that
that
captured
again
in
page
seven
of
115.,
going
through
the
other
data
points.
For
this
case
again,
the
county
reconstructed
the
INE
again
in
almost
every
case.
This
is
the
situation
because
they're
not
projecting
the
income
for
the
property
for
the
vacant
space.
C
So
it
is
the
Department's
decision
to
reconstruct
it
to
allow
the
board
to
see
Apples
to
Apples
comparison
when,
when
evaluating,
you
know
the
subject
property
so
as
you
see
that
the
overall
noi
again
in
the
test
is
lower
than
the
protected
noi
in
column,
E1
again,
including
the
100
74
092
square
feet
of
vacant
space.
Now
that's
a
big
change
from
last
year
to
this
year.
C
So
what
the
county
did
is
we
looked
at
all
the
leases,
we
verified
the
information
upon
inspection
and
we
did
look
at
what
co-star
was
saying
was
leased
and
the
dates
that
they
were
leased.
So
when
evaluating
this
property,
we
did
see
that
the
vacancy
change
from
76
percent
in
2021
to
30
in
2022,
and
that
is
accounting
for
about
75
552
square
feet
that
was
leased,
that
the
county
researched
based
on
what
we
found
on
the
rent,
roll
and
cross-checking
that
with
co-stars.
C
So
you
can
see
on
our
page
seven
again
if
I
want,
if
you
want
to
refer
back
to
page
seven,
that
the
actual
vacancy
of
the
property,
as
reported
on
the
rent
roll
was
249
644
and
minus
the
Lisa's
found
co-star.
We
came
up
with
174
092
square
feet,
and
so
that's
the
change
between
what
we
did
originally
and
what
we
tested
in
our
column.
F.
So
to
say
that
you
know
absorption
is
the
issue.
C
It's
not
for
this
building
because
from
76
to
30
percent
in
in
one
year's
time
is
quite
a
bit
of
of
Lisa
from
one
year,
and
we
do
capture
that
and
we
do
project
that
this
property
will
get
the
income
that
is
projected
in
column
E1
and
on
top
of
the
the
county
where
within
20
20
000
in
noi,
comparing
E1
to
F,
and
then
on
top
of
that
we
do
take
the
additional
reductions
below
the
line
for
that
excess
vacancy
I.
C
Think
that's
all
I
had
for
this
case
and
I
do
recommend
that
the
county
confirmed
the
case
and
we're
open
for
questions.
Thank
you.
D
At
this
moment,
I
have
one
question
for
the
Department
this
case.
In
the
last
case,
the
the
Appellate,
the
accounts
agent
said
that
there
was
no
hearing
granted
or
agreed
to
between
I
guess
the
two
parties,
the
department
and
the
what's
agent.
C
Well,
what
we
found
in
given
the
volume
of
cases
that
we
have-
and
this
is
not
just
with
the
cases
that
I
have
with
the
the
appellant
in
in
all
all
the
cases
they
sort
of
regurgitate
the
same
information.
C
That's
in
the
packet,
we
don't
get
new
information,
and
so
it
was
a
the
department
of
decision
to
to
not
hold
the
hearings
based
on
not
having
new
information
provided,
and
you
know,
we
thought
that
it
was
a
better
use
of
our
time
to
kind
of
work
on
the
cases
now,
we're
still
open
and
you'll
see
in
all
the
cases
that
I
provide
I
email,
the
agents
and
and
ask
pertinent
questions
related
to
the
case,
and
at
that
point
they
had
the
time
to
kind
of
open
up
and
and
tell
us
what
their
points
of
view
are
for
the
case
as
well,
so
to
say
that
yeah
we've
denied
a
department
hearing
is
a
little
disingenuous,
but
you
know
thank
you.
C
C
Yes
again
for
this
property,
they
did
lease
up
from
76
percent
in
2021
to
30
in
2022
that
represents
about
100
50
000,
some
odd
vacant
square
feet,
150
000
square
feet
of
leased
up
space.
We
we
did
include
that
information
when
we
made
our
test,
and
we
asked
that
the
board
confirmed
this
case.
Based
on
that
information.
Thank
you.
B
B
They
are
offering
much
more
favorable
concessions
than
other
buildings.
As
I
said,
the
code
lease
was
at
20
concessions.
As
of
January
1,
there
was
a
75
vacancy
rate.
All
of
the
space
that
needs
to
be
leased
up
to
achieve
a
stabilized
occupancy
has
to
have
build
out
they're
going
to
have
incur-free
rent.
This
building
at
some
point
in
time
will
start
earning
money
as
of
January
1
2023
Coke
was
not
in
the
building.
B
Neither
were
any
of
the
other
tenants
and
many
of
those
leases
don't
start
for
another
year
and
a
half
to
two
years,
so
those
costs
need
to
be
deducted
below
the
line.
The
cap
rate
should
be
adjusted
on
this
building
and
every
building
for
changes
in
the
market,
and
we
ask
that
the
board
reduce
the
assessment
in
accordance
with
the
pro
forma.
Thank.
D
I
just
found
this
please
look,
maybe
Rosa
could
address
the
Navy
Mr
Pearl
that
can
address
it
done
column
d.
Growing
results
wouldn't
be
remote,
1B.
The
the
original
assessment,
of
course,
was
it
get
a
guest
submit
of
41,
but
look
at
the
square
footage,
24.79
I
think.
Maybe
it's
missing
a
digit
because
there's
a
comma
there
and
it
matters
in
my
you
know-
probably
going
to
go
on
I'm
thinking,
maybe
there's
a
typo.
D
Not
2400
plus
square
feet
all
right,
1B
column
d,
between
columns
d
e
d,
the
notations
41,
is
again
growing
results,
an
industrious,
tenant,
I'm.
Sorry.
D
I
D
So
I
don't
know
if
that's
typed
or
not,
because
my
suggestion
is
I'll
say
to
normal
I'd
like
column
d,
but
given
that
the
department
knows
what
the
Koch
industrious
and
and
growing
results
leases
are,
we
can
at
least
adapt
that
lower
figure
or
we
know
it
for
Coke
and
industries.
D
F
Thanks
I
I
tend
to
look
at
these
and
leases
being
signed
and
what
the
revenues
going
to
be,
but
the
fact
that
they,
you
know
they
weren't
in
there
at
the.
J
E
F
F
H
Kind
of
both
ways:
yeah,
if
we
have
a
lease
that's
going
to
expire
in
a
year,
the
assumption
is,
it
won't,
be
renewed
and
it
will
in
fact
expire
I'm,
not
exactly
sure
how
to
handle
it
either.
Yeah.
D
H
D
And
they
would
all
be
assume
to
be
called
vacant
office
and
imputed
rent
so
either
way
it's
true.
The
property
owner
isn't
getting
rent,
but
it's
accounted
for.
We
just
know
more
in
this
case
and
in
fact,
and
in
fact
the
department-
that's
why
there's
below
the
line
stuff
they're
saying
yes,
this
is
not
20.
This
is
way
more
than
25.
We
need
to
account
for
it
now.
D
F
I
H
D
F
F
G
On
on
this,
one
I
kind
of
get
a
sense
of
what
the
strategy
is.
If
you
look
at
their
anchor
tenant
and
then
I
think
the
co-tenancy
Between,
Coke
and
industrious
is
probably
intentional.
G
G
G
So
I
actually
think
you
know
where
they're
at
right
now
is
probably
pretty
close
to
fair
value
and
I'm
I'm
I'm,
with
the
Department
on
this
one,
I
I
think
the
owner
way
overpaid
for
the
building
in
2015,
but
they've
been
pumping
money
and
resources
into
it
ever
since
then
so
yeah,
I,
I,
actually
think
2022
assessment
was
pretty
good.
G
I
think
we
reduced
it
2023
you're,
just
kind
of
getting
closer
to
being
in
a
situation
where
you
can
really
start
to
make
money
by
bringing
in
smaller
tenants
and
groups,
and
so
I
think
it's
got
kind
of
a
positive
spin
to
it,
as
opposed
to
some
of
these
other
properties
which
just
need
to
be
torn
down.
D
Go
back
to
the
query
ad
on
the
writing
about
more
than
two
years,
because
we
have
space,
it's
not
going
to
generate
income.
Well,
I
mean
to
me
it's
the
same.
If
we
had
no
generate
income
for
a
while,
if
it
were
vacant,
there
were
no
Coke,
there
were
no
industrious.
We'd
have
space
that
weren't
generating
income
for
a
while,
and
we
write
it
off
every
single
year
that
it
doesn't
generate
income.
So
that's
my
response
to
your
your
question.
D
It
does
and
one
one
last
thing
taking
Greg's
positive
spin.
It
does
seem
that
this
building
unusual
is
showing
signs
of
life
and
potential
and
and
get
lots
of
tenants
to
talk
about
for
your
market
value.
There's
no
hope
it's
absorption
rate.
Well
here
there
is
I
mean
it's
true.
This
year,
it's
not
going
to
generate
a
lot
of
income,
but
it's
real
high,
significant
possibilities
that
will
with
sign
leases.
Okay,.
G
I
was
going
to
say
the
the
act
of
signing
that
lease
with
Coke.
It
generated
value,
it
didn't
generate
income,
but
it
generated
value
and
I
think
you're
starting
to
see
that
with
the
leasing
activity,
even
before
they've
moved
in.
G
If
I
was
to
Discount
the
next
two
years,
I
would
really
just
be
basically
putting
a
you
know,
a
discount
rate
on
the
rent
as
far
as
pushing
it
out
by
two
years,
for
when
that
cash
flow
stream
starts
to
come
in,
you
know
we're
talking
about
maybe
800
000
to
a
million
off
of
this
year's
assessment.
You
know
five
to
six
percent
discount
rate,
and
so
you
know
I'd
support
taking
a
million
off
of
the
assessment
below
the
line
and
going
to
like
158.
E
I
was
I'm
more
in
favor
of
just
confirming
the
current
assessment,
because
even
if
we
consider
the
rental
abatement,
the
Coke's
getting
you
know,
I
don't
think
I
would
take
the
full
two
years,
because
it's
about
almost
20
million
dollars.
E
E
A
F
H
D
I
mean
I
would
be
in
favor
of
reducing
a
bit
as
well,
but
I
I'm,
not
favor,
fooling
with
the
below
line
two
years
versus
one
years
versus
three
years
for
the
many
times
that
we've
brought
this
up.
You
know
but
but
I
wouldn't
mind
looking
for
a
number,
that's
legitimate
and
defensible
to
take
her
with
my
solitude.
F
F
A
A
B
You
this
is
185
000
square
foot,
building
that
was
repositioned
in
1999
after
NSF
left
and
moved
to
Alexandria
as
of
January
1
and
had
a
vacancy
rate
of
22.5
plus
percent
plus.
As
of
that
time,
the
entire
eighth
floor
or
16
974
square
feet
was
available
for
Subway
again
the
department
refused
to
have
a
hearing
to
discuss
this
case
and
includes
information
through
July
2023.
On
pages
two,
three,
four,
six,
seven,
eight,
nine
and
ten.
B
B
B
B
50
dollars
when
it
was
in
fact
at
ten
dollars
in
the
test,
the
assessor
does
he's
40
less
ten
percent
per
vacant
rental
rate
of
thirty
six
dollars.
Why
do
I
mention
these
items?
I
mentioned
them,
because
I
want
to
make
sure
that
it
does
not
look
like
the
county
is
being
generous
and
using
42.89
on
occupied
space
and
thirty
six
dollars
when
vacant.
Space
critical
importance
in
this
case
is
the
incorrect
use
or
adjustment
of
the
vacancy
rate
in
the
test
from
25
to
10
percent.
B
As
you
can
see,
on
page
six
and
page
83,
there
is
actually
41
709
square
feet
vacant
on
January
1..
This
is
22.46
percent
of
the
net
leasable
area.
Pursuant
to
County
guidelines,
a
rate
of
25
should
be
used
in
the
test.
Now,
in
the
last
case,
when
there
we
discussed,
this
is
a
double
standard.
Once
again,
in
the
last
case,
the
county,
the
board
mentioned
that
the
county
looks
forward
and
deducts
build
out
costs
for
space.
It
knows
is
vacating
in
the
future.
B
That
may
be
true,
and
that's
probably
correct,
but
it
does
not
adjust
the
vacancy
rate
above
the
line,
and
in
the
last
case
what
occurred
is
the
bank
is,
the
county
did
not
deduct
the
cost
for
build
out.
So
here
we
have
a
situation
where
the
county
knows
and
shows
in
its
own
word
that
the
actual
vacancy
was
41
709.
Yet
it
reduced
the
vacancy
rate
on
the
test
from
25
to
10
percent.
B
B
This
was
all
while
tenants
were
only
using
their
space
between
25
and
30
percent,
as
reported
by
the
owner
on
page
75.,
assuming
a
75
occupancy
together
with
inflation,
a
higher
expense
rate
is
certainly
required.
Finally,
I'd
like
to
address
the
cap
rate.
The
department
has
provided
no
support
for
the
cap
rate
other
than
the
assessment
sale
ratio,
which
establishes
that
the
rate
is
wrong
and
Mr
corpax,
which
also
indicates
that
the
Draya
rates
are
wrong.
B
The
market
cap
on
this
building
was
only
5.59
percent
the
year
built
of
1999
and
an
effective
age
of
2000..
This
is
below
the
rate
the
County's
own
expert
says
it's
appropriate
for
675
North
Randolph
Street,
the
Darby
building,
which
is
100
occupied
with
no
space
available
for
sublet
and
which
was
built
in
2012.
B
B
purely
a
rate
that
is
40
basis,
points
below
the
County's
own
expert
for
a
superiorly,
tenanted
and
newer
property
is
incorrect.
The
board
has
said
we
need
to
go
back
in
time
to
January
123..
We
can
do
that.
We
don't
need
to
go
beyond
the
valuation
date.
We
look
at
the
sales
that
occurred
in
the
fourth
quarter
and
the
2023
original
assessments,
which
were
between
15
percent
and
101
percent,
greater
than
the
sales
prices.
This
indicates
that
the
guidelines
create
erroneous
assessments.
B
We
can
look
at
repricing
and
notice
that
property
values
declined
year
over
year
by
40
percent.
We
know
that
the
10-year
T
bill
went
up
236
basis
points.
We
can
look
at
vacancy
rates
and
the
seismic
change
in
the
way
people
work
we
know
demand
is
not
coming
back.
We
know
there's
been
negative
absorption
for
the
last
three
years.
We
can
look
at
the
lack
of
sales.
We
know
there's
little
interest
in
buying
Office
Buildings.
B
B
The
department
has
adjusted
historically
Mr
rice,
adjusted
cap
rates
by
175
basis
points
to
reflect
the
last
financial
crisis.
Now
we
have
two
crises
affecting
the
office,
Market,
financing
and
reduction
in
demand.
We
ask
that
the
board
adjusts
the
vacancy
rate
to
25
percent,
to
reflect
the
values
of
January
12023
increase,
operating
expenses
and
increase
the
cap
rate
by
200
basis
points
to
reflect
the
office
Market
as
it
existed
on
the
first
of
the
year.
Thank.
C
C
They
were
at
64,
709
square
feet
vacant
and
in
the
Department's
estimation,
they're
at
nineteen
thousand
401
square
feet
vacant,
which
is
about
10
percent
vacant.
Now.
The
reason
why
I
did
make
that
change
based
on
the
information
that
I
found
and
in
an
inspection
is
because
the
majority
of
the
vacant
space
that
was
enlisted
on
the
rent
roll
does
show
that
the
releases
that
were
signed,
if
you
pay,
if
you
want
to
turn
to
page
six
of
93,
there's
a
lease
signed
for
102b.
C
The
suite
102b
in
July
of
2021
Kepler
sign
in
August
of
2022
and
epigen
on
that
Suite
400.
Well,
maybe
the
fourth
floor
and
ntca
occupies
the
whole
floor
on
the
ninth.
So
not
sure
why
there's
square
footage
vacant
there
when
they
occupy
the
whole
floor,
and
then
we
see
that
RMA
signed
in
May
of
2023
and
I
did
keep
that
as
vacant
as
part
of
the
the
vacant
square.
C
Footage
of
that
10
RMA
at
15
565
square
feet,
plus
the
Phil's
Coffee
that
terminated
and
we
have
that
at
2058
square
feet
so
that
those
two
those
two
spaces
are
what
I
indicate
as
the
10
vacant.
As
of
the
evaluation
date
of
January,
1,
2023,
and
so
therefore
I
did
make
the
change
based
on
the
information
that
I
had
to
ten
percent
before
capitalization.
C
Based
on
that
information
and
I
think
that's
a
fair
assessment
of
the
property
as
as
of
the
first
of
the
year,
those
leases
were
in
place.
We
did
make
the
change
in
our
test
and
we
do
see
that
you
know
all
our
rates
are
consistent
with
the
appellants.
So
this
whole,
you
know
as
part
of
her
eight
minutes.
C
She
said
our
rates
are,
are
inconsistent
all
over
the
place,
but
we're
using
the
same
race
as
she
is
for
the
most
part
dollar
for
Dollar
on
all
line
items
for
the
income
on
the
rentable
space.
We
do
make
that
change
to
10
percent
for
vacancy
and
we
do
increase
the
expenses
if
you
compared
it
from
the
previous
years.
We're
up.
You
know
three
dollars
two
to
three
dollars
based
on
the
history
of
this
property,
so
you
know
we.
C
We
do
feel
that
the
most
recent
ID
is
somewhat
stabilized.
We
stabilized
it
more
with
the
income
that
they
they
will
receive.
Based
on
the
leases
we
found,
and
we
equate
that
to
the
ten
dollars
a
square
foot
for
the
spaces
there.
So
we
do
see
that
the
the
test
did
show
an
increase
from
the
original
assessment
and
we
do
ask
the
board
to
confirm
the
case
based
on
the
original
assessment,
with
the
supporting
information
we
provided.
F
To
the
county,
there's
an
error
on
the
first
page,
a
2000
or
22
value
was
only
listed
as
67
000
of
the
tax
records
not
72..
C
You're
correct,
that
is,
it
should
have
been
67
I
I.
Do
I
didn't
mean
to
point
that
out
in
my
initial
response
to
you
guys,
the
2022
should
be
67
million
141
500.,
so
there
was
an
increase
from
last
year
this
year.
It
didn't
stay
the
same.
So
thank
you
for
pointing
this
out.
D
I'm
confused
on
vacancy
the
department
just
said
in
eight
minutes
that
it's
about
10,
19,
000
plus
square
feet,
deep
Ellen
said
in
her
eight
minutes
that
it's
25
a
little
bit
less
than
that
at
41,
000
plus
and
in
the
summary
sheet
and
Kyle
math.
It
says
it's
thirty,
seven
thousand,
almost
thirty,
eight
thousand,
which
is
twenty
percent,
so
I,
don't
know.
Is
it
10,
20
or
close
to
25
somebody's
got
to
hatch
that
out.
B
I
think
the
best
way
to
do
that
is
to
look
at
the
actual
rent
roll,
which
appears
on
page
83
of
100.
And
if
you
look
at
that
rent
roll,
you
can
see
what
is
listed
as
vacant
square
footage
which
ties
to
what
I
have
provided,
and
that
is
a
certified
rent.
Roll
from
the
owner
is
referencing
things
that
have
occurred
after
January
1
2023
in
getting
to
the
10
percent.
B
If
you
look
on
co-star
today,
you'll
see
that
the
property
is
currently
17
vacant,
so
I
think
that
the
board
has
made
a
decision
to
look
at
the
January
123
Rent
roll
in
determining
vacancy
and
occupancy
I.
Don't
believe
that
it
is
fair
or
reasonable
to
apply
one
standard
for
tenants
that
are
leaving
and
a
different
one.
Okay,.
D
C
Yeah
the
the
sign
when
I
all
right
so
for
every
case
we
do
the
inspection
and
a
lot
of
times
the
rent
roll
doesn't
coincide
with
what
I
see
and
what
I
found.
C
In
my
research
oftentimes
in
previous
cases,
there
was
amenity
space
in
the
vacant
space
that
they
reported
in
the
rent
roll,
and
so
this
is
part
of
our
discoveries
when
we
go
to
inspect
the
property
and
do
our
research,
so
oftentimes
I
do
make
the
the
the
difference
shown
on
the
rent
roll
analysis
that
I
conduct-
and
in
this
case
we
do
see
that
the
lease
is
on
page
six,
that
I
highlighted
there
that
the
lease
that
was
signed
in
July
2021.
There
wasn't
a
name
there.
C
I
do
recall
that
when
I
inspected
the
property,
the
Kepler
sign
was
on
The
Suite.
So
that
was
part
of
my
notes
that
when
I
inspected
and
then
the
the
appellant
responded
that
epigen
does
leave
space
I
thought
it
was
the
other
building.
They
said.
No,
it's
not
this
building,
so
they're.
Obviously,
in
this
building
and
and
epigen
is
on
the
fourth
floor
as
well
so
RMA
signed
when
I
was
there,
they
were
doing
construction
on
on
that
top
floor.
C
The
11th
floor
and
you
know
ntca,
is
on
the
entire
floor
of
the
ninth
floor.
So
you
know
this:
there's
the
inconsistencies
that
I
see
in
the
rent,
roll
and
and
that's
part
of
the
job-
that's
you
know
that's
part
of
a
difficult
part
of
the
job
to
decipher
what
is
there
and
what
should
be
included
in
the
rent
roll
as
of
the
first
of
the
year.
So
this
is
a
valid
analysis
that
I
conduct
on
every
case.
Okay,.
D
It's
follow
up
on
the
exact
same
question.
Nonetheless,
in
your
test,
you
have
a
20
vacancy
rate
that
you
were.
You
know
adding
up
as
computed
vacancy.
So,
first
of
all,
those
two
tenants
are
they
included,
who
aren't
paying
rent?
Are
they,
including
that
37
000
and
again?
How
does
20
become
10
percent.
C
What
is
that?
You
mean
the
19401,
you
kind
of
rounded
up
to.
D
Twenty
thousand
yeah,
the
thirty
seven
thousand
plus,
is
again
in
column
F
your
test
as
they
can
make
an
office.
C
Right
so
I
didn't
have
the
information
to
impute,
like
I
did.
In
the
last
case,
we
we
were
given
the
cloak
lease
and
and
all
that
information,
as
you
suggested,
that
we
have
a
more
accurate
figure
to
deduce
what
the
rent
is,
and,
in
this
case,
I
use
the
most
recent
leases
that
were
in
the
rent
roll
and
showed
what
the
rent
roll
shows
as
vacant
and
captured
that,
but
what
I
did
make
the
decision
on
is
this.
C
You
know
those
spaces
that
I
indicated
earlier
are
released,
based
on
the
information
that
I
found
and
these
leases
are
2021,
July,
2021,
August,
2022
and
then
the
whole
floor.
On
in.
On
the
ninth
floor,
what
I
didn't
include
was
the
11th
floor,
which
RMA
signed
in
2023
of
May
and
the
the
Phils
coffee
terminated
lease.
C
It
as
the
overall
square
foot
square
feet
vacant
for
the
property.
C
What
what
I'm
saying
is
is
two
out
of
the
three
that
I
used
was
occupied,
so
Kepler
had
to
sign
on
the
building
on
the
suite
and
then
ntca
occupies
the
whole
floor.
So
the
only
one
in
question,
which
is
a
lease
that
is
in
July
2021.
It
was
for
1778
square
feet.
C
D
C
C
D
Great,
so
that's
part
of
your
and
the
other,
the
the
Third
tenant
that
signed
the
middle
of
2022
they're,
not
paying
rent.
Now
in
the
last
case,
which
is
of
course
incredibly
relevant
because
it's
the
same
project
so.
C
D
Okay,
it's
not
renovate
it's
not
formalized
by
the
suite
there.
Okay,
that
that's
different
than
the
prior,
the
three
big
tenants
that
we
talked
about
in
the
last
case.
Okay,
other
questions
does
everybody
understand
I'm,
not
sure
I
understand
the
vacancy,
but
if
you
guys
do
I'm
going
to
shut
up
shut
up
as
much.
C
As
noted
on
the
vacant,
the
rent
roll
of
the
2022
INE
39
651
square
feet
was
vacant
upon
review
upon
inspection
and
upon
my
research,
I
reduced
that
amount
by
1778
square
feet
which
at
least
signed
in
July
of
2021
and
then
again,
18
525
square
feet,
which
Kepler
and
epigen
are
located
on
the
fourth
floor
and
again,
I
reduce
it
3783
square
feet
for
ntca
who
occupies
the
entire
ninth
floor,
which
leaves
fifteen
thousand
five
sixty
five
square
feet
for
RMA
that
sign
in
May
in
2023
and
Phil's
Coffee
that
terminated
at
least
for
2
500
2058
square
feet,
which,
in
total
the
last
the
the
only
two
left
remaining
in
that
vacancy
was
the
10
percent
vacant
for
the
building.
B
If
that
is
to
happen,
if
we're
going
to
have
a
moving
valuation
date,
let's
look
at
cap
rates
today,
let's
look
at
what's
going
on
in
the
market
today
the
board
has
adopted
and
has
used
occupancy
as
of
January
1.
As
of
January
1,
this
property
was
more
than
20
percent
vacant.
It's
shown
on
the
County's
test,
Pages,
it's
shown
on
the
County's
rent
Rule,
and
it's
shown
on
the
certified
income
statement
provided
by
the
taxpayer
on
page
83
of
the
board
case.
If
we
want
a
move-in
valuation
date,
that's
fine!
B
If
the
board
wants
to
look
at
cases
and
and
use
a
higher
vacancy
rate
on
properties
where
tenants
are
moving
out
mid-year,
that's
fine
too,
but
it
needs
to
be
consistent
for
the
taxpayer
and
the
county
and
on
January
1.
This
property
had
a
greater
than
20
percent
vacancy
rate,
and
that
is
not
disputed.
A
A
D
F
F
D
D
In
the
last
case,
the
twin
building,
we
had
a
bunch
of
a
lot
of
good
information
on
leased
spaces
that
weren't
generating
income.
I
said
what
do
we
do
about
this?
The
answer
is
well
if
they
weren't
leased,
it'd
be
good
space,
so
we're
capturing
the
amount
of
numbers
in
the
income
section
of
the
summary
sheet
and
I
assume
we're
doing
it
here
either
he
has
their
income
in
line
one
or
he
has
them
as
vacant
space
in
one
one
a
either
way
we're
counting
they're,
either
actual
income
or
imputed
income.
D
My
problem
is
again:
I
didn't
know
how
the
37
000
that
19,
000
plus
got
to
be
down
at
by
nine,
got
to
be
thirty,
seven
thousand
plus
in
line
1A.
I
A
E
H
D
F
D
D
H
F
Last
year,
mark
67
million
141.
H
F
F
F
D
A
A
A
In
a
second
solid
page
opposed
Mr
Buckman
has
left
meeting,
so
it
is
a
unanimous
Five-0.
The
assessment
is
reduced
to
68
million
636
600,
based
on
the
original
assessment,
increasing
expenses
to
9.50
in
square
strike.
Thank.
A
J
Yes,
thank
you
so
this
this
property
sold
on
September
9th
of
2021
for
190
million
five
hundred
thirty
five
thousand
dollars.
We
heard
this
case
last
year
and
argued
for
a
sale
price
of
196
million
dollars.
New
information
regarding
the
sale
price
has
since
come
to
light
and
the
actual
sale
price
was
190
million
five
hundred
thirty
five
thousand
dollars.
This
is
due
to
the
listed
purchase
price
of
196
million
dollars.
That
includes
a
six
million
dollar
cost
for
the
buyer
to
assume
a
loan
from
the
seller.
Now
the
Drea
knew
about
this
information.
J
This
was
included
in
the
expert
report
they
commissioned
from
Peter
corbex.
They
had
this
information.
They
chose
to
ignore
it
since
the
time
of
purchase.
This
property
has
not
increased
in
value
due
to
the
lease
having
one
1.25
years,
less
on
their
lease
term
and
the
overall
market
conditions
deteriorating.
J
The
corpax
report
also
concluded
the
cap
rate
on
this
property
at
sale
was
7.2
percent.
The
Drea
has
assessed
this
property
at
a
cap
rate
of
only
6.6
percent
for
both
tax
years
after
the
sale,
2022
and
again
2023.
the
owner
told
us
that
that
the
Capri
has
increased
by
100
basis
points
since
the
sale
to
8.2
percent.
J
We've
heard
the
Drea
testify
on
multiple
occasions
that
they
rely
on
sales
in
the
county
to
determine
cap
rates.
This
is
a
sale
in
in
the
county.
That
is
a
great
example
of
what
market
cap
rates
are.
This
property
was
one
of
the
best
tenanted
buildings
in
the
county.
It
is
fully
leased
to
the
GSA
and
at
the
time
of
sale,
the
lease
had
five
years
remaining,
so
a
fully
leased
building
to
a
high
credit
tenant
with
five
years
remaining
had
a
sale
cap
of
7.2
percent.
J
The
Drea
apparently
used
this
sale
to
determine
that
market
cap
rates
should
be
60
basis.
Points
lower,
I,
can't
think
of
a
variable
that
would
improve
this
property
at
sale
by
60
basis
points
it
couldn't
have
had
higher
occupancy.
It
was
fully
leased,
couldn't
have
had
a
better
tenant
GSA
and
it's
paying
above
Market
rents.
Yet
the
Drea
tells
us
the
sale
cap
was
too
high.
If
anything,
we
know
this.
The
sale
cap
was
too
low.
J
Now
we've
heard
the
Drea
make
two
claims
in
regards
to
office
cap
groups.
First,
we've
heard
the
Dr
that
the
Drea
cap
rates
were
too
high
in
Prior
years,
so
no
adjustments
are
needed
this
year,
because
the
rates
are
now
accurately
capturing
the
market.
This
is
clearly
false,
given
the
sale
cap
on
this
property,
which
is
60
basis
points
above
where
the
Drea
cap
rates
were
for
each
of
the
past
four
years,
the
sale
proves
that
the
Drea
cap
rates
were
actually
too
low
over
this
period.
J
That
cap
rates
need
to
be
increased,
has
been
confirmed
by
sales
in
2022..
We've
also
heard
the
Drea
claimed
that
it
is
adjusting
rental
rates
and
operating
expenses
to
compensate
for
a
change
in
cap
rates.
This
is
yet
another
tacit
acknowledgment
that
cap
rates
have
changed
year
over
year
in
the
market,
but
not
in
the
guidelines.
This
method
of
adjustment
also
hasn't
actually
been
adopted
by
the
Drea.
In
practice,
we
have
not
seen
rental
rates
imputed
by
an
assessment
that
are
below
market
rate.
J
To
the
contrary,
we
have
routinely
seen
rental
rates
imputed
by
the
assessment
that
are
above
the
market
rate.
Additionally,
Assessments
in
Virginia
are
required
to
be
at
Market
rental
rates,
with
contract
rental
rates,
considered
with
Market
rates
and
contract
rents
decreasing
in
the
county,
simply
decreasing.
The
assessed
rates
upon
appeal
to
reflect
what
is
actually
happening
in
the
market
doesn't
compensate
for
the
cap
rate
being
too
low.
This
change
only
captures
the
actual
change
in
the
market,
which
is
required
to
happen
by
law.
J
It's
it's.
A
red
herring
meant
to
distract
from
the
lack
of
movement
on
cap
rates
this
year.
If
the
Drea
does
want
to
adjust
income
instead
of
adjusting
cap
rates,
they
need
to
lower
the
contract
rental
rates
by
another
20
percent,
which
would
be
eight
dollars
per
square
foot
for
this
property
below
what
the
marketing
contract
rates
indicate
to
achieve
the
same
adjustment
as
the
200
basis
point
increase
in
cap
rates
that
has
occurred
in
the
market.
This,
obviously
we
have
not
seen
happening
now.
J
We've
also
heard
the
Drea
state
that
uniform
vacancy
rate
applied
to
the
assessments
as
required
by
law,
is
actually
then
reducing
the
rent
to
compensate
for
cap
rate
changes.
This
adjustment
is
required
independent
of
category
exchanges.
It
is
not
an
adjustment
that
the
Drea
has
made
in
2023
to
compensate
for
cap
rate
changes.
J
The
reduced
rent
to
compensate
for
Cadbury
is
again
it's
it's.
A
red
herring
meant
to
distract
from
the
fact
that
they
missed
the
marking
on
cat
breeds
this
year.
This
methodology
also
has
not
actually
been
implemented
on
any
assessments.
We've
reviewed
this
year
now
I've
also
been
disheartened
to
hear
the
fallback
Claim
by
the
Drea
for
not
adjusting
cap
routes,
which
is
that
the
data
they
use
is
lagging
the
market
and
that
because
of
this,
they
will
capture
category
changes
in
2024..
J
This
claim
doesn't
hold
water
first,
we've
been
told
by
the
Drea
in
a
departmental
hearing
that
they
submit
their
assessments
at
the
end
of
September
and
beginning
of
October,
after
which
they
do
not
adjust
them.
As
a
reminder,
the
law
is
fair
market
value.
As
of
January
1
2023,
not
October,
1
2022.,
the
Drea
only
assesses
154
Office
Buildings
in
the
county.
The
cap
rate
can
easily
be
changed
in
short
order
for
this
set
of
properties.
J
Clearly,
the
Drea's
assessment
schedule
misses
any
Market
changes
that
occur
in
the
fourth
quarter.
We
see
this
with
the
three
office
sales
that
occurred
in
Q4
2022
in
the
subsequent
2023
assessments
for
these
properties
that
came
in
at
assessment
to
sale,
ratios
of
200
percent,
140
percent
and
115
percent.
Now,
even
with
the
timeline
ignoring
Q4
data,
we
saw
changes
occur
over
the
course
of
2022,
beginning
in
in
March,
with
the
first
interest
rate
hub.
J
The
deterioration
of
the
office
Market
was
a
slow-moving
train
wreck
that
occurred
over
the
course
of
2022,
due
to
both
rapidly
Rising
interest
rates
and
the
institutionalization
of
work
from
home
policies.
All
of
this
was
available
to
the
government
before
their
arbitrary
self-imposed
deadline
by
October
of
2022.
We
knew
interest
rates
had
written
risen
and
would
continue
to
rise.
We
knew
vacancy
was
increasing
and
returned.
Office
policies
were
not
working.
We
provided
numerous
articles
in
the
board
book
articulating
the
impact
of
increased
interest
rates
and
lack
of
demand
for
office
space.
J
These
articles
are
from
throughout
the
year.
This
is
not
a
New
Year,
New
Year's
Eve
data
dump.
These
issues
were
known.
We've
heard
from
the
Drea
that
the
pandemic
is
over.
Covet
is
over,
yet
we
still
see
low
office
usage,
increase
vacancy
lower
rental
rates,
shorter
terms,
smaller
spaces
and
higher
sublet
space
available.
J
The
second
issue
with
claiming
the
adjustment
will
be
made
in
2024
assessments
is
that
the
data
value
is
January,
1
2023
and
these
owners
are
entitled
to
relief
this
year.
Content
to
next
year
does
not
alleviate
any
of
the
burden
this
year
and
does
not
comply
with
the
legal
definition
of
fair
market
value.
The
market
began
to
change
in
March
2022
then
continued
to
deteriorate
throughout
the.
I
C
For
this
case,
the
county
did
not
test
the
the
new
information,
because
there
was
really
no
information.
When
you
look
at
this
property.
Is
this
again,
the
the
property
is
100
occupied
and
you'll
see
that
the
the
guidelines
that
we
apply
across
the
board
is
more
apparent
here
in
in
what
I
was
saying
in
the
previous
case
is
that
we
reduced
the
rent
compared
to
what
is
actually
there
to
adjust
for
the
market
rents
on
this
property.
C
As
you
see
this
property
we're
about
a
million
275
100
lower
in
noi
than
their
most
recent
2022
INE
at
the
time
of
the
sale
in
2021
you'll,
see
on
my
page
three
my
comments
there,
it's
a
little
more
involved
with
the
the
figures
there.
C
So,
if
I
would
ask
the
board
to
just
kind
of
read
that
to
yourself
to
get
a
better
picture
of
what
was
the
the
noi
for
that
year
in
2021
reported
by
the
previous
owners
and
what
we
had
as
far
as
the
assessment
and
the
assessment
I
could
speak
to
because
it's
on
our
internet
page,
our
assessment
in
2021
was
195
387
200,
which
included
the
current
cap
rate
slightly
above
six
and
a
half
percent,
and
the
noi
indicated
there
for
2021.
C
Now
it
wasn't
reported
in
the
2020
one
INE,
the
new
purchaser
only
reported
the
partial
income.
So
if
you
look
at
that
column,
column
C
that
that
will
show
only
a
partial
year,
but
the
true
noi
for
that
Year
from
the
previous
owner,
as
they
reported,
was
the
the
figure
that
I
show
on
page
three
of
70.
and
so
therefore,
given
that
information,
given
that
the
the
sale
supported
the
current
cap
rate
that
we
used
at
that
time
period,
we
used
the
same
cap
rate.
As
the
appellants
have
stated.
C
We
didn't
change
our
cap
rate
so
that
same
cap
rate
is
applied
in
the
2023
INE
2023
assessment,
and
we
asked
that
the
board
confirmed
this
case
based
on
that
information,
and
so
we
asked
we're
open
for
questions.
Thank
you.
J
Thank
you.
So
again,
this
property
sold
September
of
2021
for
190
million
five
hundred
thousand
dollars.
This
property
has
not
gone
up.
Since
then
the
market
has
tanked.
The
tenant
has
one
one
and
a
quarter
years,
less
of
tenancy
left
on
their
lease
and
looking
at
the
the
assessments
less
than
three
months
after
this
property
sold
for
190
million
dollars,
the
following
assessment
came
in
at
203
million
dollars,
so
they
they
overstate
the
sale
price
by
six
and
a
half
seven
percent
less
than
three
months
after
it
sells.
J
F
Fine,
let's
see
the
County's
assessment,
you
know
100
billion.
They
gave
him
the
five
percent
on
top
of
that
they
they
parking.
You
know
it's
less
than
their
22..
Even
expenses
I
mean
I,
think
everything
is
Fallen
to
their
favor
and
increase
above
even
what's
here.
D
I
can
Echo
that
just
a
little
bit
different
from
my
professional
experience,
perspective
I
mean
nothing's
changed
at
all,
except
the
rent's
going
up
a
bit
and
I,
don't
know
what
it
is,
but
it's
probably
something
the
one
and
a
half
or
two
percent
range
GSA
gets
a
better
deal
than
most
everybody
else,
as
they
should
and
the
assessments
going
up,
one
percent
plus
or
minus.
D
I
D
Would
add
that
I
it
it
is
relevant,
is
relevant
to
pay
attention
to
this.
Is
this
is
a
fairly
new
sale?
It's
not
brand
new,
but
we
ought
to
pay
attention
to
it
because,
within
you
know,
two
three
percent
of
the
assessment
I
mean
that's
a
hundred
percent.
You
shouldn't
use
that
it's
totally
tolerable
I
mean
we.
We
don't
talk
around
here.
Sales
price
is
the
assessment,
but
we
do
compare
them
right
and
it's
a
good
member.
F
F
A
E
All
right
we're
back
to
the
fifth
case
in
this:
creating
the
RPC
number
is
14053062:
it's
at
800,
North,
Glebe,
Road
and
Mr
Harmon.
If
you
want
to
start
with
your
eight
minutes,
please.
J
Yes,
thank
you
so
800
North
Cleve.
This
is
a
305
000
square
foot
office.
Building
it's
located
at
the
intersection
of
Glebe
and
Wilson
departmental
hearing
was
requested
and
denied.
The
test
column
represents
an
18
increase
from
the
2022
assessment,
despite
the
only
change
that
occurred
in
2022
was
that
the
largest
tenant
renegotiated
a
lower
rental
rate
and
a
small
retail
tenant
took
occupancy,
so
largest
tents,
paying
less
in
rent
small
retail
tenant
moved
in
in
the
assessment
suggested
by
the
Drea
recommends
an
18
increase.
J
Now
this
Renewal
by
the
largest
tenant
Accenture
appears
to
be
the
source
of
some
confusion
from
the
Department.
Accenture
has
been
at
this
property
since
2012..
Last
year
they
executed
an
early
renewal
at
lower
rental
rates
and
a
new
free
rent
period.
It
appears
the
test
column
has
double
counted:
income
attributable
to
Accenture.
J
If
we
look
at
the
Drea
test
in
column
F,
we
see
that
accenture's
pass-through
income
is
double
counted
to
the
tune
of
1.63
million
dollars.
This
is
because
accenture's
least
rate
listed
on
row
A1
for
both
the
test,
column,
F
and
the
appellants
column.
G
has
been
grossed
up
to
include
the
pass-through
income,
so
the
4206
per
square
foot
shown
for
Accenture
is
the
base
rate
plus
the
pass-through
income
expected
from
that
10..
J
J
Next,
the
test
column
does
not
apply,
marking
concessions
to
other
leases
in
the
building
that
are
not
Accenture.
Failure.
Failure
to
include
Market
concessions
treats
this
property
in
a
non-uniform,
non-equalized
manner
from
other
properties
in
the
county.
Correcting
for
this
error
reduces
GPI
by
an
additional
six
hundred
thousand
dollars.
The
test
column
also
double
counts.
The
Citizens
Bank
ring
so
on
page
six
of
the
appeal
pack,
you
can
see
the
Drea's
rent
roll.
J
If
you
add
up
the
annual
rent
listed
for
each
retail
tenant,
including
Citizens
Bank,
you
get
a
total
annual
rent
of
944
dollars
or
I'm.
Sorry
944
654,
which
you
can
see
on
page
six
at
the
bottom
right
hand,
side
of
the
Drea's
rent
roll
the
test
column
takes
this
number
and
applies
it
on
column,
F
row
2..
The
test
column
then
adds
citizens
bank's
rent
a
second
time
on
column,
F,
row
2B.
J
J
Next,
you
can
see
the
test
column
imputes,
the
actual
2022
operating
expenses,
with
no
anticipated
growth
for
2023.
inflation
was
6.5
over
the
course
of
2022
by
only
imputing
what
the
property
incurred
in
2022.
The
assessment
ignores
the
effects
of
inflation
and
gives
too
much
weight
to
operating
expenses
that
were
incurred
at
lower
levels
in
January
February
of
2022
versus
those
incurred.
At
the
end
of
2022.,
we've
grown
the
2022
operating
expenses
by
five
percent
to
account
for
anticipated
2023
expenses.
J
As
shown
in
column,
G,
that's
the
cap
rate
we
just
saw
in
the
last
property
the
property
sold
at
a
7.2
percent
cap
rate,
the
Drea
assisted
as
6.6
percent
cap
Greek.
Their
uniform
guidelines
are
incorrect
with
marketing
cap
rates
they're
not
taking
into
account
market
sales,
as
recorded
by
their
own
expert
report.
J
This
property
had
no
change
to
the
cap
rate
to
reflect
the
turmoil
that
affected
the
office
Market
over
the
course
of
2022..
The
taxpayer
we've
conservatively
imputed
an
increase
of
200
basis
points
to
account
for
the
Drea's
cap,
reads,
not
being
reflective
of
the
market
and
increased
cost
of
capital.
Finally,
I
want
to
address
the
Drea's
column
E1,
which
they
caption
open
year.
J
2022
Drea
reconstructed,
this
column
is
not
reflective
of
fair
market
value
and
it
appears
to
be
provided
in
an
attempt
to
Anchor
your
expectations
at
a
higher
amount
so
that
by
comparison,
the
Drea
assessment
values
appear
reasonable.
This
column
was
cobbled
together
from
many
other
columns
on
the
sheet
and,
as
a
result,
it
double
counts.
Income
attributable
to
Accenture
and
the
bank.
This
column
assumes
Accenture
did
not
pay
rent
in
2022,
which
is
not
the
case.
Accenture
did
pay
rent
in
2022.
J
as
a
result,
this
column,
overstates
income.
This
column
completely
ignores
rent
concessions
at
this
property,
which
have
averaged
over
1.4
million
dollars
over
the
past
four
years,
some
of
the
accenture's
rent
that
was
paid
in
2022
was
given
back
as
a
concession
which
the
reconstructed
column
does
not
include,
so
they
double
count
the
rent
that
Accenture
pay
they
discount
the
concessions
that
Accenture
received
the
reconstructed
column,
also
under
States
operating
expenses,
so
don't
be
distracted
by
this
cobbled
together
income
approach
provided
by
you,
know
the
professional
appraisers
at
the
Drea.
J
It's
an
attempt
to
Anchor
your
expectations
to
make
their
test
values
appear
reasonable.
So,
to
summarize,
the
test
column,
the
test
column,
double
counts,
pass-through
income
attributable
to
Accenture.
It
fails
to
apply
Market
concessions
to
the
leased
office
space,
as
the
Drea
has
done
on
other
properties.
It
double
counts,
the
rental
income
attributable
to
the
bank
and
it
assumes
no
increase
in
operating
expenses
for
2022..
J
E
C
Thank
you,
I'll
take
I
would
like
to
take
the
time
to
Anchor
the
board
in
a
different
direction.
That
is
a
little
more
reasonable
to
digest
when
considering
this
case,
we're
looking
at
what
they
actually
reported
in
in
2022
column
e.
They
report
a
figure
about
nine
point
under
10
million.
C
So
when
we're
looking
at
the
income
of
this
property
and
noting
exactly
what
should
be
included
in
potential
gross
income,
the
column
E1
is
needed
for
the
board
to
come.
Make
a
a
fair
comparison.
Apples
to
Apples
you'll
see
that
despite
the
appellant's
comments,
they
also
have
increased
the
gross
potential
income
of
this
property
by
their
standards
on
column.
G1.
If
you
compare
row,
seven
gross
potential
income
and
go
across
the
board
you'll
see
that
the
the
original
2023
assessment
is
in
line
with
what
they
reported
in
2021.
C
You'll,
see
that
it's
in
line
with
what
we
tested
in
column
F,
and
then
you
see
that
in
column
E1,
when
you
include
this
projected
income
based
on
the
the
information
that
was
provided.
You'll
see
that
about
not
the
the
county
is
about
3
million
577
400
less
than
what
they
actually
reported.
C
If
you
just
compare
the
the
line,
one
in
the
office,
lease
space,
they're
reporting,
300
three
million
five
hundred,
seventy
seven
thousand
four
hundred
more
in
the
actual
income,
and
so
for
the
the
appellant
to
suggest
that
our
numbers
are
wrong
and
we
have
three
million
dollars
to
sort
of
play
around
with.
If,
if
the
board
wanted
to
make
some
adjustments,
we
reduced
that
amount
based
on
our
guidelines
again
and
this
building
is,
you
know
well
occupied.
C
C
To
me,
it
doesn't
make
sense
on
on
the
you
know,
a
high
level
view
of
this
of
this
summary
page.
If
you
look
online
19
or
row
19..
If
you
look
at
this,
you
can
see
that
this
property
has
been
increasing
year
over
year
and
yet
the
County's
recommendation
and
the
original
assessment
is
about
seven
seven
percent
less
than
what
they've
reported
in
the
previous
years-
and
you
can
see
that
even
in
the
test
you'll
see
that,
based
on
the
projections
that
we
set,
we
show
in
column
E1.
C
The
projection
should
be
much
higher
because
they
did
lease
up
some
space.
They
went
from
6051
square
feet
to
a
thousand
1999
square
feet
now.
I
know
that's
not
much,
but
then,
coupled
with
the
increases
in
in
in
the
contract
rent
and
coupled
with
signing
a
Citizens
Bank,
which
is
you
know,
it
wasn't
given
in
the
rent
roll
as
to
what
the
the
rent
would
be
for
the
property.
C
So
we
did
go
into
the
market
and
we
did
find
a
couple
banks,
a
TD,
TD
Amer,
TD
Bank,
which
is
across
the
street,
and
at
that
the
the
couple
rates
that
we
did,
we
average
and
we
factored
that
into
the
calculation
for
the
the
Citizens
Bank.
So
we
do
see
that
this
shows
a
confirmation
based
on
the
information
we
provided
again
when
you
look
at
the
expenses
year
over
year,
we're
in
line
with
the
expenses
and
the
property
is
stabilized,
so
we
do
ask
Although.
C
H
F
To
the
county,
your
amount
for
pass-through,
could
you
touch
on
that?
A
little
bit
I
mean
you
know,
I
understand
that
you
were
looking
at
0.81,
but
is
that
the
only
reason
it's
the
number?
It
is.
C
If,
if
you
want
to
focus
on,
let's,
let's
focus
on
column,
D,
first
and
and
that's
what
we're
originally
asking
the
board
to
do
is
confirm
the
original
So
based
on
what
we
had
in
for
the
2023
assessment
in
column.
D.
If
you
look
at
column
c,
as
the
pass-through
income
for
the
property
that
was
reported
is
spot
on
with
what
we
we
included
in
the
original
assessment.
So
I
mean
it's
not
too
far
off
from
what
we
we
think
they
should
be
able
to
make.
C
We
know
that
passthrough
should
increase
over
time
and
you
know
had
the
I
guess
yeah,
so
it
we're
accurate
with
the
column
d.
As
far
as
the
projection
in
column
F,
we
did
include
pass-throughs
for
the
the
bank
that
they
would
incur
based
on
the
information
we
had,
and
that
shows
still
a
about
a
2
million
dollars
less
than
what
the
Reconstruction
would
have
been
had.
They
included
that
income.
E
D
Masking
first,
maybe
you're
all
for
the
Department.
Let
me
start
there:
the
department,
the
appellant
says
that
this
you're
proposing
an
18
increase.
If
I
look
at
page
one
of
103,
it
shows
that
seven
and
a
quarter
or
so
percent
increase.
C
I'm
not
sure
your
question,
so
you
you're
standing
by
the
2022..
What.
C
It's
on
typo,
that's
not
a
misinterpretation.
Let
me
just
make
sure
I
think
the
internet
page.
We
include
in
every
case.
So
if
there
is
an
error
there,
then
yeah.
I
D
That's:
okay,
we'll
let
that
one
go
great.
Could
you
then
still
the
department
you
respond
to
the
key
elements
in
your
the
appellants
appeal,
namely
that
there's
double
counting
of
passives
for
both
citizens
and
Accenture
and
double
rent
for
Citizens
I
mean
this
is
key
stuff.
C
I
mean
I
I
explained
my
position
with
respect
to
the
the
appellants
position:
they're
projecting
a
two
million
dollar-
let's
say
two
million
dollar
less
in
noi.
That's
exactly
what.
J
C
Right
but
we're
still
capturing
what
was
made
in
most
current
Years
and
we're
three
million
dollars
less
than
what
they
reported
in
in
2022..
D
But
this
this
this
extension
lease
extension,
the
lower
rate.
When
did
that
kick
in
what
date.
J
It
was
in
2022
I
believe
it
was
May.
They
did
have
some
maneuverability
to
where
it
was
retroactive
back
to
the
first
based
on
the
old
rent,
and
that's
why
the
concessions
were
a
little
higher,
so
Mr
matskin
if
I
would
suggest
open
year.
2022
is
skewed
because
of
that,
so
they
had
free
rent
applied
in
2022.
They
had
passed
throughs
reduced
in
2022
because
of
this
extension
going
forward
this
new
lease
that
they
signed.
J
It's
on
33
of
leeston
of
nla
total
at
the
building
Accenture
occupies
the
the
rental
rate
decreases
from
62
dollars,
a
square
foot
to
4206
per
square
foot.
It's
a
reduced
by
a
third,
so
their
rent
going
forward
is
not
going
to
be
what
it
was
in
the
past
again.
D
C
For
the
rent
that
we
used
Accenture,
the
current
lease
was
45.66
dollars
per
square
foot
and
that
is
per
year
until
October
2024.,
so
miss
Mr
Harmon
is
incorrect.
It's
shown
on
the
lease
current
lease
is
at
45.
If
you
look
on
page
six
of
100
current
lease
is
45.66
per
square
foot,
plus
three
percent
per
year
until
October
2024.
and
that's
noted
in
the
rent
roll,
and
in
addition
to
that,
it's
a
it's
good
that
he
pointed
out.
J
D
J
C
And
it's
it's
good
that
Mr
Harmon
pointed
out
the
rent
abatement
for
operating
year.
2022,
they
front
load
the
concessions
as
if
it
occurred
all
in
2022,
so
that
figure
of
the
noi
reported
in
the
original
in
the
2022
INE
is
off
by
that
2
million
because
they
didn't
receive.
They
didn't
issue
that
a
statement
in
this
one
year,
they're
issuing
over
the
course
of
the
term,
which
is
usually
the
case
when,
when
they
sign
in
leases,
they
they
kind
of
spread
it
out
through
the
terms.
C
So
it's
not
a
huge
impact
to
the
income
of
the
property,
so
that
number
should
be.
The
noi
reported
in
2022
should
be
increased
by
that
abatement
amount,
because
that
is
not
all
incurred
during
that
2022
period.
So
then,
again,
there's
another.
You
know
it's
sort
of
misleading
to
suggest
that
this
is
the
potential
income
of
the
property.
When
really
in
fact
it
isn't.
J
C
A
D
This
so
there's
what
were
the
two
I
heard,
60.62
Mr
Peralta
down
to
30.?
Then
you
said
it
was
a
third
change.
J
E
J
E
Let
him
answer
the
question
please
Mr
Peralta,
so
just
to
summarize,
in
the
original
assessment,
the
lease
for
Accenture
is
still
included
there
at
the
at
the
rate
of
38
dollars.
J
F
E
Which
he
had?
Okay,
any
other
questions,
wow.
D
J
Still,
yes,
sir,
the
least
began
on
citizens
September
1st,
and
it
was
being
built
out
when
we
inspected
it
this
year.
D
And
but
you
would
asserted
a
couple
of
times
that
citizen
rent
is
being
double
counted.
Yes,
can
you
explain
that
again?
Yes,.
J
Absolutely
so,
on
page
six
of
the
appeal
you'll
see
the
the
Drea
wrinkle
in
the
bottom
right.
They
have
a
column
that
says
retail
basement.
This
adds
up
all
of
the
retail
tenants.
That
total
is
nine
hundred
forty
four
thousand
dollars.
That's
accurate!
That's
the
same
number
I
get
to
so
944
000
for
retail
income,
including
Citizens
Bank.
J
D
C
J
E
C
Thank
you,
I'm,
a
director
board
page
five.
If
there's
any
questions
about
the
square
footage,
we
have
the
total
square
footage
correct
at
305
154,
and
that
includes
a
separate
line
item
for
Citizen
Bank,
a
separate
line
item
for
Accenture.
We,
you
know
the
board
had
noted
that
we
used
originally
38
across
the
board
for
all
office.
In
the
original
assessment.
You
know
we
showed
an
increase
based
on
what
is
shown
in
the
rent
roll,
as
testified
by
the
the
agent.
C
It
was
at
a
higher
rate
when
they
reported
2022
at
46
dollars
a
square
foot
we
use
4230
in
the
test.
We
asked
the
board
to
confirm
this
case
based
on
the
noi,
the
original
assessment.
If
you
only
look
at
that,
the
original
assessment
based
on
the
information
we
had
in
2021,
we
are
under
assessing
the
property
based
on
the
noi
alone.
We
asked
the
board
to
confirm
this
case.
Thank.
J
Thank
you
so
the
the
big
issue
here
is
Accenture.
They
they
renewed
that
they
did
an
early
renewal,
effective,
May
1st
of
2022..
With
this
early
renewal,
their
growth
stock
rental
rate
dropped
from
62
dollars
per
square
foot
to
42
dollars
per
square
foot.
What
will
this
do
to
the
income
going
forward?
Well,
at
the
prior
rate,
Accenture
was
paying
6.2
million
dollars
per
year.
At
the
new
rate.
They
will
be
paying
4.2
million
dollars
per
year.
They
are
paying
2
million
dollars
less
going
forward
than
they
have
in
the
past.
J
This
is
what
it
takes
to
resign
tenants.
These
days
they
had
leverage.
They
were
able
to
renegotiate
their
lease
down
from
a
grossed
up
value
of
62
down
to
42,
and
those
numbers
include
the
pass-through
with
this
specific
tenant
based
on
the
business
terms
of
the
lease.
So
you
know
the
income
from
Accenture
is
going
down
by
two
million
dollars.
The
assessment
fails
to
take
any
of
that
into
account.
Thank.
E
You,
okay,
some
of
the
board.
Where
do
we
stand.
D
I
F
Look
at
the
appellants
numbers
or
the
office
in
Accenture
I
mean
that
your
10
million
we're
calling
you
yeah
gee
the
total
of
those
two
top
two
numbers
I
mean
you're
back
to
World
accounting.
It's
just
about.
Oh.
F
F
D
And
the
retail's
lower
by
by
more
than
half
of
that
difference,
one
thing
I
pass
through
is
I
want
to
just
remind
you
just
to
make
sure
you
got
passwords
can
change
from
year
to
year,
because
they
significantly
when
there's
new
tenants
coming
in,
who
don't
pay
the
first
year
at
all
and
the
Tenant
might
have
moved
out,
have
been
paying
for
10
years.
Their
pass-throughs
were
enormous
in
their
last
year.
So
let's
just
always
bear
that
blind.
E
Yeah
I
think
that's
one
of
the
main
differences,
the
passwords,
but
you
know,
based
on
past
years,
I
don't
think
the
county
is.
F
All
and
then
throwing
the
expenses
at
that
at
ten
dollars
in
in
D
I,
don't
see
the
counties
off
compared
to,
but.
I
G
D
F
E
F
D
H
E
I
H
I
H
I
H
Use
the
3-0
1-0,
oh
from
there's,
okay,
yeah
and
then
and
then
on
the
they're,
not
just
for
a
check.
I
took
the
the
test
and
then
I
capped
it
at
seven
point:
seven.
I
E
F
What,
if
you
adjusted
the
pass-throughs
and
used
the
pass-through
number
more
of
what
the
appellant
had
that
brings
it
back
without
increasing
you
know
your
own
stabilized
building.
H
I
F
E
H
E
G
H
Last
year
was
like
empty
and
that
parking
lot
was
empty,
but
now
it's
full
I
can't
hardly
find
a
space.
But
just
what
I'm
saying
so?
The
parking
is
going
to
go
up
this
year
and.
D
F
H
Again,
but
what
if
you
took
out
the?
What
do
you
use
the
pass
through
of
the
actual
and
up
the
parking.
H
D
H
E
E
E
J
This
property
is
a
179
000
square
foot
office
located
at
the
northeast
corner
of
Wilson
and
Randolph.
As
of
the
data
value,
three
tenants
were
known
to
be
vacating
upon
expiration
of
their
leases.
This
year,
these
tenants
are
Citizens
Bank,
which
we
saw
had
a
lease
effective
September
of
2022
at
the
property
we
just
discussed
800
North
Glee,
apogee
research,
this
this
tenant,
we
saw
in
a
prior
case
today
too.
They
have
a
lease
in
place
at
4201
Fairfax,
which
was
being
built
out
when
Rob
and
I
inspected
that
property.
J
We
also
saw
that
tenant
is
moving
to
that
property
and
the
Drea
comments
for
4201
Fairfax.
So
both
of
these
tenants
have
known
leases
as
of
the
data
value
at
other
properties
and
will
be
vacating
decision
lens
is
the
third
tenant
leaving
they've
advertised
their
space
for
sublet
since
early
2022.,
a
fourth
tenant,
Federated
Wireless
executed
an
early
termination
option
to
terminate
their
lease
this
year.
Combined.
These
pending
vacancies
will
cause
the
vacancy
rate
to
increase
to
over
42
percent,
the
vacancy
rate
on
July
20th
when
Rob
and
I
inspected,
the
property
was
42
percent.
J
Additionally,
another
tenant
was
negotiating
for
a
smaller
footprint.
This
vacant
space
was
known
as
of
the
data
value.
The
issue
on
appeal
is
how
would
the
market
value
this
property,
knowing
that
this
tidal
weight
of
tidal
wave
of
vacancy
was
about
to
inundate
it?
Well,
no
potential
purchaser
would
evaluate
this
as
if
these
vacating
tenants
may
end
up
staying,
especially
knowing
that
these
tenants
are
building
out
space
and
have
signed
leases
at
other
properties.
These
tenants
are
not
staying.
J
The
issue
is
not
whether
these
vacating
tenants
are
occupied
or
vacant
for
rental
income.
It
matters
more
for
the
cap
rate,
for
the
vacancy
loss
rate
and
for
the
dfl
Network.
Now
we're
tasked
with
determining
the
fair
market
value
of
this
property.
As
of
the
data
value,
which,
of
course
is
the
price
the
property
will
bring
when
offered
for
sale
by
a
seller
who
desires
but
is
not
obliged
to
sell
and
bought
by
a
buyer
under
no
necessity
of
purchasing.
J
J
An
example
of
high
vacancy
adjustments
is
neighboring
County
Fairfax
County
increases
the
cap
rate
by
125
basis
points
for
properties
with
greater
than
40
percent
vacancy.
Just
like
this
one,
we
also
need
to
factor
in
the
difficulty
of
financing
such
a
high
risk
property
in
the
financial
environment.
The
market
was
in
on
as
of
January.
1.
lenders
are
already
hesitant
to
lend
for
office
purchases,
and
when
they
do,
they
either
have
to
be
at
very
discounted
rates,
values
from
prior
years,
or
they
have
to
increase
the
the
return.
J
You
know
it's
risky
to
make
a
loan
on
a
high
vacancy
property.
It's
going
to
affect
the
value.
An
appropriate
cap
rate
adjustment
is
200
basis
points
from
the
cap
rate
that
the
Drea
used
in
2022
when
this
property
didn't
have
the
vacancy
issues
that
it
does
January
1
2023,
and
when
this
property
didn't
have
the
mark,
the
capital
markets
issues
that
it
did
on
January,
1
2023..
J
Next,
the
vacancy
rate
should
be
increased
to
the
guideline
rate
of
25
percent
to
reflect
the
property
that
is
going.
We
knew
was
going
to
be
42
vacant.
Third,
the
assessment
needs
to
take
the
dfl
to
account
for
the
17
percent
of
nla,
that
is
above
the
25
vacancy
rate,
also
known
as
the
excess
vacancy.
J
Fourth,
the
assessment
needs
to
include
the
spaces
vacant
for
the
office
income
and
impute
a
market
rental
rate
of
35
dollars
per
square
foot
on
the
space.
This
is
above
what
the
Drea
has
in
their
guidelines
as
the
market
rate.
Fifth,
the
assessment
should
account
for
the
remaining
rent
owed
by
the
known
to
be
vacating.
Tenants
below
the
line
as
no
potential
purchaser
again
is
going
to
assume
that
these
tenants,
who
have
signed
leases
elsewhere
are
going
to
stay
at
this
property
in
perpetuity.
J
J
So
that's
what's
going
on
at
this
property,
the
owner
knew
in
any
potential
purchaser
would
have
known
as
the
data
value
that
four
tenants
were
set
to
vacate
this
property
and
the
direct
vacancy
rate
would
jump
to
42
percent.
As
such,
we
respectfully
request
that
the
assessment
be
reduced
as
set
forth
in
the
appeal.
Thank
you.
C
Yes,
thank
you
for
this
case.
We
do
see
that
there's
a
shift
in
the
appellants
I
guess
account
of
the
vacant
space
versus
lease
space
here,
they're
saying
that
you
should
count
these
leases
as
vacant.
Although
they're
in
the
building
on
the
other
cases,
they
were
quite
opposite
in
their.
You
know,
they're
eight
minutes
and
how
they
position
the
property
they're,
always
talking
about
the
purchaser
of
said
building
for
this
property.
What
they're
not
saying
is
what
the
owner
would
do.
C
Would
the
owner
shortchange
himself
and
suggests
that
they
are
not
operating
or
they're,
not
receiving
an
noi
of
2.8
million
less
than
what
they
are
actually
reporting
in
in
2022?
So
if
you
compare
column
e
to
column
G1,
what
they're
saying
is
we
believe
that
although
we
bought
the
property
at
91
million
in
2019
renovated
the
property
and
leased
up
the
property
to
the
point
where
after
they
purchased
it,
they
were
at
a
little
little
under
what
five
percent
or
10
percent
for
the
property
is
being
vacant.
C
The
the
pellet
is
stating
that
they
should
receive
three
million
less,
so
the
purchaser
wouldn't
Short
Change
themselves
saying
these
leases.
Aren't
in
place
and
we're
going
to
receive
rent
up
until
the
end
of
the
year
in
which
Mr
Harmon
pointed
out
apogee's
lease
their
lease
isn't
up
until
the
end
of
this
year,
2023
and
as
we've
done
with
other
cases,
we
still
capture
the
income
received
for
that.
C
You
know
for
the
2023
year,
in
our
test
and
in
2022
they're
still
reporting
an
income,
that's
much
more
than
what
we've
stated
in
our
20
original
2023
assessment.
C
If
you
compare
columns
D
to
e
and
on
top
of
that,
the
counties
giving
excess
concessions
below
the
line,
even
though
you
know,
as
of
the
Year
2021,
when
they
reported
their
their
INE,
they
were
actually
a
lot
less
vacant
than
what
we
projected
in
2023
in
the
original
assessment,
so
I
mean
going
forward
we're
looking
at
this
property
as
if
we
did
increase
the
vacancy,
we
did
account
for
the
vacant
square
footage
from
five
to
ten
percent.
C
And
again,
if
you
compare
the
nois
throughout
the
years,
the
column
A
is
is
a
partial
year,
so
I
wouldn't
hold
too
much
weight
for
that
column.
But
if
you
compare
comms,
b
c
and
e
operating
years,
20
to
2022
you'll
see
that
the
counties
in
line
with
the
net
operating
income
year
over
year
in
an
original
assessment
and
in
the
test.
So
we
do
ask
that
the
board
take
that
in
consideration
and
confirm
this
case.
Thank
you.
C
E
He
I
had
one,
he
answered
it.
Okay,
we
are
well
since
we
we
don't
have
any
questions.
Mr
perante,
if
you
want
to
take
your
minute
to
wrap
up.
Yes,.
C
Thank
you
as
a
point
of
contention.
I
do
ask
you
know
if
these
Pro,
if
these
leases
are
termiting
I,
do
ask
the
appellant
for
these
termination
options
so
that
I
can
review
them
and
then
take
them
account.
That
was
not
afforded
me
on
this
case.
C
So
I
did
like
to
point
that
out
and
given
the
test
column,
we
do
support
the
original
assessment
and
ask
the
board
to
confirm
this
case.
Thank
you.
E
J
Thank
you,
so
I
I
want
to
address
the
Drea's
position
that
the
2019
sale
is
a
is
still
reflective
of
market
value
in
2023..
We
all
know
what's
happened
since
then.
The
pandemic
hit
work,
life
has
changed.
Office
demand
has
cratered.
Profitability
has
cratered
this
property
by
the
way
sold
at
a
7.4
cap
rate.
In
2019.,
it's
assessed
below
seven
this
year.
J
The
cap
rate's
wrong.
It's
not
reflective
of
better
times
for
office
properties.
It
was
95
occupied
at
sale.
We
know
that
vacancy
is
going
to
go
up
to
42
percent.
It's
pretty
clear
that
these
tenants
are
vacating
when
they
sign
leases
at
buildings
that
we've
discussed
today
and
they're
building
them
out
that
we've
seen
on
inspections,
we,
the
Drea,
knew
these
tenants
were
leaving.
Why
would
they
sign
two
leases
for
a
bank
when
they're
not
going
to
have
two
branches?
This
was
known.
This
property,
you
know,
has
gone
down
since
2019.
J
H
Here's.
What
I
did
I
took
the
below
the
line
on
the
assessment
column,
d
and
I
took
the
117
000
I
made
it
766
000.
115,
that
was
for
the
rent
loss.
I
took
the
301
made
it
one
million
970..
H
G
H
G
D
F
D
D
E
D
H
D
You
end
up,
then,
because
the
the
department
recognizes
that
10
is
a
better
number
with
more
information
and
I
agree.
Apparently,
the
Department's
not
getting
all
the
relevant
information
on
leases
and
when
they're
changing
haters
initiated.
H
I
I
D
H
I
D
F
H
F
D
He's
one
might
say,
he's
taking
in
the
the
court
mandated
responsibility
to
consider
fair
market
value.
But
when.
F
D
D
Looking
at
this,
this
Call
of
Duty
with
five
percent,
is
it
supposed
to
be
five
percent
of
GPI
tips.
I
100
the
numbers.
D
H
H
D
I,
like
your
stuff
I,
like
your
goal,
a
lot
I'm
feeling
uncomfortable
saying
well
in
this
case
we're
going
to
make
some
accounting
for
future
terminations
terminations
future,
meaning
after
January.
H
E
D
I
H
H
D
F
I
will
forces
and
that
we
accept
the
county
and
we're
378
200.
12.