Calculations

My appraisal of the annual property tax bill National Church Residences would pay if their plans for a retirement center were realized on tax-liable land elsewhere in the Athens area used the following methodology:

Step 1. I selected four retirement facilities in the Athens area to serve as comparison properties. They were:
• The Lindley Inn, 9000 Hocking Hills Dr., The Plains, Ohio
• Hickory Creek Nursing Home, 51 4th St., The Plains, Ohio
• Kimes Convalescent Home, 75 Kimes Rd., Athens, Ohio
• Heritage Commons Low-Income Senior Housing, 22 Kurtz St. (off Stimson), Athens, Ohio

Step 2. I created a spreadsheet profile for each comparison property using Athens County 2007 property tax data:
•Lindley Inn Property Tax Card
•Hickory Creek Property Tax Card
•Kimes Property Tax Card
•Heritage Commons Property Tax Card

Each of the above properties falls into the "commercial" tax category. Athens County's method of assessing property taxes involves the following steps:
• Land and buildings are assessed separately. Square footage of a structure is a major component of structure tax value.
• The taxable value of a property is calculated by applying a 35% reduction to the assessed value of land and buildings.
• Tax is figured by applying the tax rate for the township district followed by a second reduction factor that varies by district. Athens City District has a 2007 tax rate of 9.026%, subject to a 33.8% reduction. For consistency's sake I calculated tax on each property using this rate and reduction factor. Actual 2007 taxes for the Lindley Inn and Hickory Creek were calculated using the Plains Fire District commercial rate of 9.756%, subject to a 31.8% reduction, so their real 2007 tax bills appear slightly different than my spreadsheet versions.


Step 3. Using the free global mapping software Google Earth, I calculated the area in square feet of NCR's building plans. To accomplish this I placed the Berardi and Partners site plan image as a ground-level overlay and matched the plan scale to Google Earth's satellite imagery of the Stimson area. I then used Google Earth's measurement tool to calculate the square footage of each building in the complex and added the resulting numbers. I measured inside the borders of each building and omitted several large architectural details such as the porch and entryway leading to the center's main lobby; as a result, the actual square footage if the plans were built would be higher, likely by several thousand square feet. This estimate is highlighted in blue in the spreadsheet tables. A visual record of my measurements and calculations can be downloaded here.

Step 4. Once a ballpark figure for the square footage of the complex was established, I made a value comparison of NCR's plans with each of the other four facilities using the formula N*(x/y), where N is the comparison property's building tax value, x is the NCR's development's building area, and y is the comparison property's building area, which produces a tax value for NCR's square footage. This formula assumes that assisted living buildings share a similarity in value per square foot, though it's probable that NCR's building would be appraised higher in this regard than any of the comparison properties I chose. Real data for area of existing buildings are located on the property's tax card under the "commercial" tab heading. NCR land value in each case is pegged at $480,000, the figure that OU recently had the 16-acre building site appraised at. Estimated numbers are highlighted in pale yellow, while the total theoretical 2007 fair market tax bill for NCR appears in the red box at the bottom right of each comparison.

Step 5. In the final section of the spreadsheet I summarize the financial impact on Athens County. The four fair market tax bill estimates are averaged. Since I don't know how many floors the final NCR development may have I created three scenarios; scenarios 2 and 3 double and triple the area (and hence the tax value) of the building footprint to account for extra stories above the ground floor. Annual loss to the County is calculated simply by adding the proposed "tax replacement" fee to the negative of the amount that NCR would owe under fair market conditions in each scenario.


Other Calculations
^¢1 Assumptions of income level of retirees are based on a $30,000/year cost for housing and transportation at the center ($2500/month for room, optional transport and one meal per day). If one assumes that all other living expenses (food, medical, car, taxes, etc.) add up to only $20,000 annually, and pensions are 90% of an employee's pre-retirement salary level, only persons making $55,000 and up prior to retirement could logically afford to live in NCR's center.

^¢2 The formula for finding the property tax due on commercial land appraised at $480,000 in the City of Athens is this:

$480,000*.35 reduction factor = $168,000* effective Athens City commercial tax rate of .0596628 = $10,023 annual tax bill for land only.


List of Downloads:

OUNCR Project Tax Review
In Microsoft Excel format with viewable formulas
In PDF format

NCR Floor Plan Measurements
In Microsoft Powerpoint format
In PDF format

You must keep in mind that the numbers used to for the formula are an average. $1000 does not actually represent what the bulk of OU's donors give. They generally pledge far less ($1-500), and the average is inflated by giant bequests of $100,000-$1 million from donors such as the Stocker family. The idea that every Traditions At Ohio University resident would contribute $2000 yearly to OU strikes me as wildly optimistic, but it serves to make my point about the earning potential of the center.

^¢1Ruler used for measurements is an enhanced version of the one found in the bottom right corner of the Athens GIS snapshot and is as accurate as the GIS data it is sourced from.

^¢2Acreage calculated at http://www.csgnetwork.com/lawnacrecalc.html

Western 275x215 chunk is 1.36 acres

Eastern 280x140 chunk is .9 acres

Combined area is 2.26 acres

2.26 acres is 14% of 16 acres

If the center begins making "surplus cash" (profit) at 83% occupancy, 17% (100%-83%) of resident fees will be profit at a full occupancy of 200 residents.

.17 * 200 residents
= 34 residents are that 17% group that NCR profits on

34 residents * $2500/mo * 12 months
= $1,020,000 annual profit for NCR

If the average resident fee is only $1500, which seems unlikely given the fact that NCR was collecting $2500 room deposits over two years ago, the numbers look like this:

.17 * 200 residents
= 34 residents

34 residents * $1500/mo * 12 months
= $612,000 annual profit for NCR