New owners of iconic city properties get tax breaks

Some of Portland's best known downtown properties changed hands in 2009, and in 2010 their new owners will be paying thousands of dollars less in property taxes.

The respective owners of the former Portland Press Herald building, Holiday Inn by the Bay and the Canal Plaza office towers asked for and received lower property valuations, which in turn led to lower property tax bills, according to the city assessor Rick Blackburn.

According to city records, Bangor-based Lafayette Hotels, the owner of Holiday Inn by the Bay on Spring Street and Holiday Inn West, near exit 48 off I-95, were given a $73,409 tax abatement for 2010. That's because the city lowered the assessed value of the two hotel properties by $4.14 million, to $23.7 million.

The value of three office towers that make up the Canal Plaza, at the corner of Temple and Middle streets, was also revised down. For tax purposes, the city now values the development at $29.8 million, about $4.1 million less than the previous assessed value. The development's new owners, the Soley brothers' East Brown Cow Management, will save $72,900 a year in property taxes.

John Cacoulidis, a developer who bought the former Portland Press Herald office building and its former printing press, both on Congress Street, also received revised valuations. Records show those two properties are now valued at $5.88 million, down from $8.15 million. His tax bill for the properties will be $40,382 lower than before.

"These property owners had significant data to give us [including] full appraisals and income statements," Blackburn said. "It's not just somebody coming in saying 'the economy sucks, everything is down in value.' That doesn't cut it, they would have to have legitimate information."

Under state law, all property owners have the right to appeal their tax bill. If someone thinks their property is overvalued, they can ask the city to review it or ask a state appeals board or the courts to get involved. Blackburn says it "takes work" for the property owner to prove the city's valuation is off.

Each year, the city receives about 150 applications from residential and commercial property owners looking to appeal their property tax valuations, about 100 of which are from residential property owners. Over the past five years, "adjustments" were made on 47 percent of those applications.

Blackburn, who works for the city but is officially an agent of the state, said his office reviews all documentation, including sale price, revenue projections, and appraisals before adjusting property valuation. He says it's mostly a coincidence that the three marquee commercial transactions from last year led received lower assessments.

Even with the lower values, he says, the city is still assessing these properties at values higher than what the new owners paid for them.

Attempts to reach officials at East Brown Cow and Lafayette Hotels were unsuccessful. In each case, emails to company officials seeking comment were not returned. Contact information for John Cacoulidis was not immediately available.

The two Holiday Inns, on Spring Street and on Riverside Street, were sold in two separate deals two months apart. According to city assessing records, Holiday Inn by the Bay was bought in May 2009 for $8.5 million. On July 1, 2009, the same owners bought Holiday Inn West, for just over $2 million, records show.

The Portland Press Herald properties changed hands twice in recent months. City records show the newspaper's Congress Street properties, including the office building and former press, sold for $6.3 million on June 15, 2009. On July 10, 2009, records show the office building sold for $3 million and the former press sold for $2 million.

Sale price information was not available for the Canal Street property.

Asked how these properties could be so overvalued by the city, Blackburn said a number of factors were at play.

He says Canal Plaza was revised down mostly because the aging property cannot collect the same level of rents as it could in previous years. If the new owners make improvements to the office buildings and rents increase, he says the city may then consider raising the valuation.

With the hotels, he said the Holiday Inn by the Bay on Spring Street is "an out of date style of hotel operation" that draws less revenue as a result of fewer conferences and events being held on-site.

Blackburn said the Press Herald properties received an abatement because the city "didn't recognize how out of date and obsolete the property is." He said the new owner is planning to "significantly gut" the building, and is looking at future development on the site of the former press, which is directly across the street from the Press Herald building.