Commercial property owners feel tax bite

Molly Ball

Monday, Jan. 31, 2005 | 10:50 a.m.

Much ado has been made of the effect on Las Vegas Valley homeowners of increases in property taxes.

But owners of commercial property -- businesses, businesses' landlords, and landowners -- are feeling the pinch too.

And officials say that while the housing bubble appears to have deflated, commercial property's boom year could still be coming up.

For small landowners, rising prices mean some are sitting on a gold mine -- but they can't necessarily afford to keep sitting there.

Jacklyn Dallin is an example. The 58-year-old retired Clark County School District administrator bought a 1.25-acre vacant lot more than 20 years ago in what was then practically the middle of nowhere.

Now the land is next to Interstate 215 and surrounded by thriving residential and commercial properties around the area of Maryland Parkway and Pebble Road. This year, she expects to be billed more than $3,000 in taxes on the land.

But Dallin, who originally bought the land expecting to build a house on it, isn't making any money off her purchase, and she doesn't want to be forced to sell, either.

"If I sell it, sure, I'll make money," she said. "But until then, it's just a liability."

Dallin tried to get the Clark County Board of Equalization, the volunteer panel that hears appeals of property value assessments, to find that her land was worth less than the $354,000 the county assessor's office said she could sell it for.

The board met on Friday for the second time this year. The board's first day of hearings, on Jan. 14, consisted mainly of homeowners, many of them simply outraged by the 30 to 50 percent increases in value that have hiked up their taxes.

But Friday's hearings were mostly commercial properties, from humble downtown storefronts to the enormous Hughes Center, purchased from the Rouse Company in 2003 by Texas-based Crescent Real Estate Equities.

The board can only fix assessments that have overestimated a property's worth -- it can't help that so many local properties are worth so much more now than they were a year ago.

The board told Dallin that her property was worth about double last year's value because, based on its location, it could be lucratively developed for commercial purposes or as multi-family housing. And properties like Dallin's are likely to increase in value in the near future, according to Deputy Assessor Rob Helling.

It's common sense: As population migrates to an area, as it has in droves to Las Vegas in recent years, it creates demand for stores, offices, restaurants and the like. But the commercial development takes a few years to catch up with the residential development.

"The value of land in areas near the Strip went up as much as 100 percent last year," Helling said. "But some residential property land values have gone up 200 or 300 percent.

"Next year, residential property's not going to have a huge increase, but commercial property's going to continue to see big increases."

The rising tide does not necessarily lift all boats, however. That was the point made by 74-year-old Bernie Matusow, who used to run a furniture store out of his property near Charleston Boulevard and Fremont Street.

Matusow sold the business about a year ago but still serves as landlord of the two-story, 10,000-square-foot building, which also contains a used appliance store and a charity's offices.

The assessor's determination that the property is worth $14,000 more this year than last is preposterous, Matusow said. "This area's going down, not up," he said. "It'll be 10 years before the value starts going back up."

The inner-city area has absorbed much of the poverty and crime that has migrated to Las Vegas -- the dark side of growth. Now, drunks spilling out of the saloon on the corner frequently hurl rocks through the building's windows, Matusow said.

By a vote of 3-2, the board did Matusow a favor. They returned the property to the value at which it was assessed last year.

Helling said it was all part of the "real estate cycle."

"Specific areas in town are going through a transition," he said.

While the Legislature faces immense pressure to act on property taxes when it convenes in a week, it won't be easy. More than a dozen proposals are circulating.

Those that aim to give a break to people like Matusow and Dallin while keeping big corporations like Crescent on the hook will have a problem, as the Nevada Constitution requires all property to be taxed equally. Some of the proposals involve a constitutional amendment.

The assessor's office and the board have expressed hope that legislative action will placate or nullify many of this year's record number of tax appeals, many of which are aimed at protesting the taxes' effect on senior citizens.

"We hear a lot of sad stories," Helling said. "I understand what's happening to these people."