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Ward Cove Land Values
by David Landis


July 31, 2004

I'd like to respond to Mr. Walt Bolling's "Viewpoint" piece. Mr. Bolling phoned me on this subject several months ago; we had a cordial conversation, but it was clear that we disagreed on several points. Reasonable people can have differing opinions on any number of subjects, and this subject of broad community interest is certainly one fitting into that category. Here's my take on a single aspect of Mr. Bolling's letter - comparative land values. There are simply too many debatable aspects to address all of the assertions in his letter, but I feel it's important to hear the "other side of the story".
What is land worth? Fair enough question... When land is owned by a government but not used, it is a "non-performing asset" at best; however, holding costs - sometimes substantial -- will mount if there happen to be improvements to or liabilities associated with the property. There is also a lost opportunity cost if property is not taxable. The real value of land, though, is whatever someone will pay for it! Let me illustrate:

The subject parcels currently have a disparity in assessed value - the Downtown Lot is on the books at approximately $235,000 and the Ward Cove Parcels are to be taxed at $1,180,000. These figures are the start of valuation, but don't tell the whole story ­ for instance; the Borough Assessor was asked to hypothetically update the Downtown Lot assessment and calculated an approximate current taxable value of $550,000. There was also a recent, bonafide offer (the Assembly was provide with paperwork from a local realty firm) to purchase the Downtown Lot for tourist-related retail shops for $1,300,000! So what is this lot worth? Whatever someone will pay for it! Is this an unusual situation? Not at all! A local businessman related to me recently that his corporate group had just purchased a similar piece of local improved real estate at 200% of the assessed value. Is this fraud, mismanagement, waste or collusion? Of course not. Neither is the value that the majority of the Assembly placed on the Downtown Lot.

Let's turn to the Ward Cove Parcels and use the property sale methodology that was established during the Gateway Forest Products liquidation: An "orderly sale" amount was figured at 50% of the assessed value, or $590,000 for the Ward Cove parcels. A so-called "quick sale" amount was figured at 35%, or $413,000. So, again, what are these lots worth? We now know that no one is willing to pay more than the assessed $1,180,000 for them, since the Assembly directed Borough staff to advertise the lots for bidding starting at that price. The Borough can now, however, trade the land, causing no expense to the Borough whatsoever.

So then, if the Downtown Lot is the same approximate value as the Ward Cove parcels, are there other considerations? Yes - there is a small amount of revenue generated from rents, which mostly offset each other. The greater impact, ironically, comes from the Borough's net effect of having a greater assessed value of land on the tax rolls. A taxable value of $1,180,000 brings in substantially more than $235,000 does!
The end result is that both pieces of property will now be DEVELOPED, bringing jobs, taxes and a measure of prosperity back to the community -- at no cost to the taxpayer. Isn't that just what we need here in Ketchikan right about now? 

I appreciate Mr. Bolling bringing this matter to the attention of the community once again because it is an opportunity to showcase responsible development of Ward Cove and Downtown in accordance with the input of the community. There were many hours of discussion and input involved in this process, contrary to the "hasty" procedure which Mr. Bolling asserts. Walt asks you to "say what?" and now you know what to say! Ketchikan can grow and prosper with responsible development, and that's exactly what this transaction accomplishes.

David Landis
Ketchikan, AK - USA


Related Viewpoint:

Re-think Ward Cove Land Swap by Walt Bolling - Ketchikan, AK


Note: Comments published on Viewpoints are the opinions of the writer
and do not necessarily reflect the opinions of Sitnews.



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