Accounting Standards Now Allow Upward Land Revaluation

[Patches_Pal]

Who pays property taxes on the land?

There is one small parcel the HOA pays taxes on. The rest is tax free.

 

[Tom D]

How much of the nonprofit does your unit own or control.

 

[Tom D]

And what is the non profit allowed to do with that land.

 

[Elliott]

Patches said, "I now wish to revalue it to its true value of many million dollars."

I think the short answer to your questions is, the 70-acres is a common element to the subdivision. I'm not sure I understand what your interest in having the property be appraised at its 'true value." I use to work in an assesor's office and we'd come across common elements to a subdivision frequently and we were essentially told to put our thumb up and say, it would be worth $x, but it was designated NTV which meant 'no taxable value' and get on with valuing the fee simple interests of homes, lots, or condos in the project. The reason we'd give it a guess value was to up the total bondable value of the state or something stupid like that.

In Summerlin NV there is a subdivision with a golf course running through it (where you drive the cart 1/4 mile to the next hole, to maximize golf course frontage lots). The course couldn't compete with the better courses in the area and it turned out there was a provision in the deed that would allow development of the golf course into new home lots. I haven't followed recent news, but the HOAs went ballistic that their golf course frontage lot would now be looking at the back of houses. I'm guessing many of the current homeowners in your subdivision would feel the same.

 

[George Hatch]

How about you tell us where this parcel is? Then we can see what the County is saying about it.

 

[jay trotta]

There are 1500 homes in the HOA. Vacant farm land in this county sells for $250K per acre. So, 77 acres would be about $20M. Some of this is prime, low-bank waterfront. You could carve out 20-30 waterfront lots. Those lots sell for about $800K for a 12,000 SF lot. I think the $30M number is conservative.

Thank you for the input, appears to be a large community, is everyone thinking in the same direction ?

It is owned by a nonprofit corporation and is not taxable.
Your initial comment; It is now possible under accounting rules to revalue land upward on a corporation Balance Sheet using International Financial Reporting Standards(IFRS)
My HOA has 70 acres of valuable waterfront property that has been recorded as worth $100 for the last 50 years.

So how long a Term does the corporation hold on the Land (100+)?? IMO-it would appear a Buy Out of the corporation ownership interest would be required 1st (without reviewing the Docs) by the unit owners. Also, a review of how the development/PZC approval were originated. Have seen different structures as to what and how

As noted by several here, we do the sticks & bricks, not Corporation owned property in a SFR appraisal. Did one a few months back, seasonal use cottages (direct waterfront) land owned by the Corporation, in which one could convert to year-round use, as long as you met the stipulations in the Corp By Laws and approval of the municipalities PZC.

 

[Patches_Pal]

How much of the nonprofit does your unit own or control.

As a member I own one share in the nonprofit corporation. There are 1400 members each with one share. As a Board member I have a little more influence over the decision making. The Board may do all things any other owner would with the land. They may buy, sell, rent, encumber with a loan, etc.

 

[George Hatch]

The question at hand is whether or not it is legally permissible to buy, sell, rent or encumber the land area which is in question. Just because the land area exists doesn't mean the HOA is free to do anything with it other than it's current use. Maybe they can, maybe they can't.

I appraise a lot of land. Trust me when I tell you that there's a lot to know about land if we want to develop an opinion of value on it. Aspects of which may not be readily apparent to even many of the brokers.

I'll tell you something else: even if the entire 70ac can be developed with new homes, the "as is" value of raw land without any subdivision mapping, street and utility improvements rough grading and such is just a fraction of the value upon completion.

Depending on the shape, some of the lots in such a subdivision map might not even have frontage to the water, so that changes the values of such parcels. The minimum lot sizes and setbacks of the waterfront lots might be a lot more restrictive than for non-frontage lots. Drainage and runoff could be an issue. Habitat could be an issue. There might be some flora or fauna protections in place. The frontage might come under the jurisdiction of the federal or state govt and their fish and game and require their approvals. There might already be an existing conservation easement or a wildlife transit corridor in place and if not the govt might impose one prior to any further development. So even if the sum of the retail values upon completion of a subdivision map + streets/util was $30M, the raw land value could easily be less than $8M when sold to a single buyer in a single transaction.

 

[Artemis Fowl]

The property being exempt from taxation is a big hint that there's something restrictive there.
Non-profit status does not automatically exempt anything that corporation owns.

 

[George Hatch]

That's the very first thing I would be looking for, up to and including walking into the local jurisdiction to check with their planning dept. What do they know that I don't know?

I just did that with a pending subdivision map this last week. 8-unit map that the property owner was telling me was recorded, but which I couldn't confirm using the online sources at the city and county. I started with the planning dept and ended at the bldg dept, which is where I pinned the exact status of the map and the exact items on the approval than haven't yet been met.

A professional appraiser NEVER wants to be the last person to find something out that everyone else already knows, especially when it comes to appraising land.