Coralville Board of Adjustment

Minutes Board of Adjustment Meeting February 23, 2009 Meeting called to order 6:00 p.m. Members present: Snyder, Shannon, Rice, Syczech and Wells. Others present: Building Official Jim Kessler, City Attorney Kevin Olson, Attorney Kirsten Frey, Brian & Bessie Ho, Greg Downes, Bill Greazel, Tony Pederson and another business tenant from the area (name unknown). Minutes from January 28, 2009 meeting approved: Motion by: Rice 2nd by: Syczech Motion Carried 5 – 0 Item #4: Public Hearing requested by Hy-Vee for a Conditional Use Permit for a seasonal Lawn & Garden Center. Kessler explained that this was the same request as past years and no problems have occurred as a result of the Garden Center. Motion by: Wells 2nd by: Rice Motion Carried 5 – 0 Item #5: Public Hearing requested by Lenoch & Cilek Ace Hardware for a Conditional Use Permit for a seasonal Lawn & Garden Center. Kessler explained that this was the same request as past years and no problems have occurred as a result of the Garden Center. Motion by: Wells 2nd by: Shannon Motion Carried 5 – 0 Item #6: Public Hearing requested by Wal Mart for a Conditional Use Permit for a seasonal Lawn & Garden Center. Kessler explained that this was the same request as past years and no problems have occurred as a result of the Garden Center. Motion by: Shannon 2nd by: Syczech Motion Carried 5 – 0 1|Page Item #7 Public Hearing on a request for a Variance to City of Coralville Municipal Ordinance #165.21.6.B to reduce the front yard setback at 1987 2nd Street. Casey’s is not ready and has requested that this be pulled from the Agenda. Motion to remove Casey’s from Agenda by: Syczech 2nd by: Rice Motion Carried 5 – 0 Item #8 & 9: Public Hearing on a request to appeal the Building Officials decision of substantial damage pursuant to Chapter 160 of the City of Coralville Code of Ordinances for property located at 103 2nd Avenue and 105 & 105 ½ 2nd Avenue, Coralville, IA. Public Hearing Open. Kirsten Frey is representing Brian & Bessie Ho who is the owners of 103 2nd Avenue. She has prepared written comments for the Board, but has not separated the addresses as 103, 105 and 105 ½ 2nd Avenue. Kevin Olson said that would be okay to pass these out to the Commissioners and we would address one at a time. Kirsten Frey said her clients, Brian & Bessie Ho, are seeking to appeal the Building Departments issuant of a Certificate of Substantial Damage at properties located at 103, 105 and 105 ½ 2nd Avenue. They are here tonight along with Greg Downes their appraiser, a tenant that occupied one of these properties and the contractor who prepared the estimates for repair to these properties. These properties are located in the Flood Plain and were affected by the flood of 2008. When the owners went to the City of Coralville to obtain a building permit they were told that the permits could not be issued because the damage to the properties exceeded 50% of the fair market value of these buildings prior to the flooding. 103 Second Avenue is a Carwash, 105 is a building that contained two businesses and 105 ½ had a café/bar in it. The issue before you tonight is whether there was over 50% damage to the structure. Following the flooding the Ho’s contacted the National Flood Insurance Program as they had flood insurance on 105 and 105 ½ Second Avenue to see if they had any claims since they had been enrolled in that program. As part of that process an adjustor was sent out to look at those properties and they 2|Page calculated the amount of damage done to those properties which included the values of these buildings. The NFIP adjustor determined the value of the property at 105 Second Street was $369,172.00 prior to the flood and cash value of the loss was $62,793.00. 105 ½ the adjustor determined the pre-flood market value was $122,899.18 and the value of the loss was $30,871.00. 103 Second Avenue was not covered by flood insurance so no information was submitted to the City. The Ho’s then submitted the NFIP adjustor’s information to the City of Coralville Building Department. They learned later that the City thought that the NFIP adjustor’s figures were higher than the actual value of the properties and they asked for additional information. We then provided the City with documentation of the purchase of properties 103 and 105 in 2005 from Alan Poots for $325,000. We also provided the operating income from the properties prior to the flood. 103 showed a net monthly income of approx. $1200 after expenses. They had also leased a bay, prior to the flood, to an auto mechanic for $500 per month. So this property generated approx. $1000 - $1500 per month. The property at 105 Second Avenue was leased to Tyeeb Foods and Star Auto which generated $2, 250 per month lease payments. 105 ½ Second Avenue was also leased and that tenant was paying $750 per month. All three combined generated $4,250 per month. We asked the City why permits were still not issued. The City said that they believed the NFIP values were excessive. They believed the actual value was more accurate with the Assessors value. Assessed value on the building 103 was $40,700 and 105 was $63,400 and 105 ½ $28,800. The Certificates of Substantial Damage were issued based on these figures. I feel that these properties were not valued appropriately. Those assessed values had not been modified from 2002 to 2008 which wouldn’t reflect the true market value. 103 2nd Avenue is a cement block building and there wasn’t anything in that building that was damaged. There was just electrical and plumbing, no structure damage. Build to Suit gave an estimate on repairs to building 105 and 105 ½ and that total was $55,465. There were not any repair costs given at that time for building 103. Tony later did produce paperwork for building 103 regarding repair costs of approx. $19,000. 3|Page  Greg Downs did a full appraisal for these three properties and came up with the properties at a higher value then the NFIP. I used an income approach to put a value on these and compared to other properties that were older to get a base line for commercial rental per square footage. If these were repaired they would be occupied again. Building 103 … Building 105…$164,000 with the land value attributed at $105,000 Building 105 ½…$42,430 and land value attributed at $45,500 Kirsten handed out some charts and the Certificates of Substantial Damage for 105 & 105 ½. The letter from Kevin about 103 will be coming later. She showed prices that her clients paid for the properties, assessment records and project costs for repair from Build to Suit. Also included is Mr. Downes letter of the property value. Kirsten Frey: We believe that Mr. Downes appraisal values should be consider as the true values of these properties and that the Board of Adjustment Commission should base their decision on these figures and overrule the City’s decision of Substantial Damage on these properties. We also feel that the 103 2nd Avenue building should not be considered as having substantial damage as it is a block structure and nothing was affected except some minor electric and plumbing repairs. Rice: Do you have any sense on the County assessment of the buildings compare to the sell price of the buildings? Jim Kessler: We used the assessed value of these buildings and did not use NFIP estimates of damage. I used Build to Suit repair estimates to determine substantial damage. The Car Wash at 103 2nd Avenue has to be re-stored to pre-flood condition and those estimates need to include the carwash equipment. FEMA has told us that is what formula we need to use to restore to pre-flood condition. 105 2nd Avenue value was $63,400 and $28,800 for 105 ½. We then totaled those up, took the estimated repair bids from Build to Suit that were $55,645 and that is where we determined that their repairs were over 50% of the valued total and issued the Certificate of Substantial Damage. Refer to Exhibit F. 4|Page 103 2nd Ave assessed value of $40,700 with estimated bids from Build to Suit of $19,900, which did not include equipment, we determined that damages were over 50% and that is why a Certificate of Substantial Damage will be issued for that property, too. Refer to Exhibit #3. Bill Greazel, Johnson County Assessor is asked to speak. Bill Greazel: We look at these properties as the land value. Most of these properties, if purchased, would have the building torn down and have something else built. The reason the values look so low is that we feel these buildings are a detriment to the land. We understand that the Ho’s bought these separate parcels at a premium price. You normally do that when you assemble smaller parcels to make a larger piece of ground. We don’t access the equipment in the car wash anymore (by law), so in our value there isn’t any equipment included. We feel that our assessed value is more on target then the NFIP Adjustors value, as we have seen that building pre-flood. They estimate what that looked like before the flood. We have more of a value on the land, not the building or its use. Syczech: So your assessed value on 103 2nd Avenue does not include the building? Greazel: yes, that is correct. We also based the value on income value of that property. The other two properties were not done on an income approach because part of that property was being leased out by a church and they are tax exempt. We look at equitability of similar properties and similar tax and the fair market value of the building in the market. Rice: How often do you look at those incomes based properties? Greazel: We look at those income and expense statements every two years. Rice: Does the City have an interest in this for insurance or what does it matter? Olson: The City participates in the National Flood Insurance Program and this property is in the Flood Plain. If you upheld Mr. Kessler’s ruling on this matter, they would have an opportunity to rebuild this property by raising the 5|Page lowest floor elevation 1 foot above the 100 year Flood Plain as established by FEMA Maps. Kessler: We do participate in the National Flood Insurance Program. If we did not have a flood plain ordinance and did not enforce their rules we couldn’t participate in their program. There wouldn’t be a single person or business that could obtain flood insurance. The only interest the City has in this is to stay in good standing with the National Flood Insurance Program. Rice: So all the businesses that were affected by the flood were looked at, like Walgreen’s, for the same 50% damages figure to determine if there was substantial damage? Kessler: Yes. Anyone that was damage by the flood had to apply for a Flood Plain Development Permit. Olson: One example was Peking Buffet. They had over 50% damage and had to tear down and elevate their building at least 1 foot above whatever the Flood Plain map says. If you determine that the Ho’s properties are not Substantially Damaged and over rule Mr. Kessler’s decision, then they do not have to raise their building above the flood plain. They can get their building permit and do the repairs without the additional work or cost. Kirsten Frey: If the Johnson County assessed values on 105 and 105 ½ are correct then we have about 60% damage, if Mr. Downes appraisal is correct then we have about 27%. I think we have such a difference here in values that it’s hard to determine who is correct. It often happens that appraisers disagree on the value of properties. Even if we split the two values, the appraised and the assessed, in the middle it doesn’t come to 50% or above. As far as 103 2nd Avenue you need to consider the structure damage, not the equipment damage as Mr. Kessler says needs to be included in the repair costs. Snyder: I think the equipment is what makes it a car wash and without that equipment you can’t restore the carwash to the pre-flood stage. So that should be considered part of the repair costs. It has to be based on the assessed value by income and you can’t have income if there isn’t equipment in the building. Tony: We have given bids that would restore the building back to the carwash pre-flood and those totals had that in mind. 6|Page Syczech: Are Mr. Downes appraisals building only or do they include the land? Downes: They include both land and buildings. Kirsten Frey: Even though the assessor may have the opinion that these buildings don’t have much value my clients have a value as they were bringing in $4000 a month. They would like to get their building permits and re-open. Kessler: We need to keep in good standing with the NFIP so I want to be sure the bid estimates include the repairs to pre-flood condition. With the carwash building there was also an office in that building and I am sure those estimates are not included on the bid for 103 2nd Avenue. When we issue building permits for these flood damaged buildings we have to make sure that we meet the rules of FEMA and the NFIP. So if we allow a building to go back that was border line and they audit these buildings as being previously flooded, we need to make sure that if they were issued an occupancy that they have accurate bids. Public Hearing Closed. Motion to uphold the Building Officials decision of Substantial Damage to 103 2nd Avenue by: Syczech 2nd Motion by: Shannon Vote by roll call: Snyder – Aye Syczech – Aye Rice – Aye Shannon – Aye Wells - Aye Motion Carried 5 – 0 Snyder: Regarding 105 and 105 ½ 2nd Avenue we need to base our decision on the assessed value and that makes it over 50% to repair to the pre-flood condition. 7|Page Wells: Not sure if the value of the appraisal is fair. Rice: if you take both repair figures the combined estimate of repair is $105, 000 which by assessed value it puts it over 50%, but if you split the appraised value and the assessed value it would be less than 50%. Syczech: We as a Board have always used the assessed value because the City has used it in past history. Snyder: Property values were assessed 2 years ago and they all went up. So even if you figured 10% addition to the assessed value the appraised value is still very high. Olson: FEMA set up these guidelines and we are following their rules. Rice: Are all of the estimates included in this bid? It appears that Build to Suit may not have estimated enough and some are with incomplete costs. It’s hard to figure out the appraisals since there is a big difference in the assessed value. Motion to uphold the Building Officials decision of Substantial Damage to 105 and 105 ½ 2nd Avenue by: Syczech 2nd by: Shannon Vote by roll call: Snyder – Aye Syczech – Aye Rice – Aye Shannon – Aye Wells - Aye Motion Carried 5 – 0 Kessler: We may have a look at Casey’s in March on the 16th if they bring plans back in. Tom Rice will not be able to make that meeting Motion to adjourn by: Wells 2nd Motion by: Syczech Motion Carried 5 – 0 8|Page Adjourned at 8:13 p.m. Respectfully Submitted, Carla M. Friis 9|Page