Friday, June 15, 2007

Super Size Me

In reading today’s paper, it’s easy to chortle with delight at the city’s Board of Assessment Review decision affirming John Breyo’s property value. It’s also easy to imagine the board members giving each other high-fives as they quickly decided the multi-millionaire could take his grievance and shove it where the McMansions don’t shine.

But the truth of the matter is the grievance process isn’t equipped to handle an assessment of more than $24 million; one Breyo believes to be $6.1 million or roughly $2.1 million more than he paid in materials alone to build the Winding Brook Road residence. Assistant City Assessor Anthony Popolizio sheepishly admitted this spring he wasn’t equipped to value such a behemoth.

“It's a very unique challenge,” he told the Daily Gazette in May. “We don't have a lot of examples to look at.”

Simply put, there is no precedent for valuing a dwelling larger than the standard Wal-Mart Supercenter, or reaffirming that value when it is contested. This means Breyo’s contesting of his assessment and the board’s subsequent denial of his grievance are nothing more than a formality preceding a state Supreme Court law suit. Just watch. It will happen this year, then again next year, and in every year that follows that mansion’s existence on the tax rolls.

See, as vogue as Saratoga Springs has become to the uber-wealthy, there are still sparsely few billionaires flocking to the metropolis. This means there really isn’t much of a market for mansions boasting something to the tune of 61,000 square-feet. If Breyo’s supercenter were ever to go on the market for the $24 million it’s assessed at, the property would probably stay empty until it’s donated to some not-for-profit artists’ cult as a tax write-off.

Likewise with large commercial properties, such as the Quad Graphics plant off Geyser Road. Were the plant to be vacated for whatever reason, it’s highly doubtful that a new tenant would pay the $32.1 million price tag the city placed on the property in 2004. True, the machinery inside the building, the building itself and the acres upon acres of developable land make this price realistic. But finding another gargantuan printing company to jump in to Quad’s shoes if they left is very unrealistic.

Try scanning through the court wrangling between the city and Quad and you’re likely to find the printer making a similar argument. Three years ago, Quad asked the city to dip it’s assessment down to an eye-popping $19.4 million, which is a dip of more than $13 million. This is commonplace for Quad, so much so that grieving their assessment is a mere formality to move on toward a courtroom showdown; the board rubber stamps their affirmation and moves the case on for the lawyers to wrangle out.

Unlike Quad, however, Breyo’s mansion doesn’t employ hundreds of Spa City residents at good paying jobs. While he’s certain to have a staff manning the mansion, it’s doubtful the residence could be considered a large regional employer. So the only beneficial reason to have a mansion of such grandeur is to pump a cash infusion into the city’s tax coffers.

Surely, part of the impetus of the city’s decision to allow such an atrocity of upper class sloth was the level of taxes the owner would eventually pay. Accounts Commissioner John Franck estimated $98,000 in city taxes, $56,000 in county taxes and a whopping $282,000 in school taxes. All this from a property that was valued at $286,000 prior to construction.

Here’s the problem: Breyo will pay his $436,000-per-year share of taxes over the next several years as his case drips through the court system like molasses in January. Then in five years or so, he’ll work out a settlement with the city or receive a court ruling, which is likely to find a middle ground, say at $18 million.

When the ruling or settlement comes down, Breyo will then be owed what is bound to be a multi-million dollar refund. For the city and county, it won’t be a big deal, aside from the tens of thousands of dollars worth of legal bills. But for the school district, it will be a budget landmine years down the road; just ask the district administrators about their recent settlement with Quad.

Hopefully the district budgets for such a calamity as the glacier of Breyo’s opulence creeps ominously onto the tax rolls. And hopefully, members of the various boards that allowed this boondoggle will think hard before approving another one to be built.

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