Please support the Valley News during the COVID-19 pandemic

The COVID-19 pandemic has brought the local economy — and many of the advertisers who support our work — to a near standstill. During this unprecedented challenge, we continue to make our coronavirus coverage free to everyone at www.vnews.com/coronavirus because we feel our most critical mission is to deliver vital information to our communities.

If you believe local news is essential, especially during this crisis, we are asking for your support. Please consider subscribing or making a donation today. Learn more at the links below.

Thank you for your support of the Valley News.

Dan McClory, publisher


Some Hanover building owners shocked by 50% jump in property assessments

  • Frank Pizzuti, of Etna, answers questions from his new tenant Lauren Andrews, of Barre, who is preparing to open her third location of AroMed Essentials, a store that sells aromatherapy and CBD products, in his Allen Street building in Hanover, N.H., Wednesday, July 24, 2019. "It all floats downhill," said Andrews about the impact of the town's 42% property tax assessment increase for Pizzuti's building. "This is a time when you want to support downtown businesses," she said. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • A customer's turntable waits for repair at Michael's Audio-Video in Hanover, N.H., Wednesday, July 24, 2019. "I putter. I come to work because I enjoy interfacing with people," said Pizzuti who bought the business from his father Michael in 1970. "Sales are a secondary component of my work I'm afraid." (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

  • Frank Pizzuti, of Etna, and his family have owned the building where he runs his business, Michael's Audio-Video, on Allen Street in Hanover, N.H., since 1963. The building also houses Stinson's Village Store, the SamosaMan commercial kitchen and is gaining the new tenant AroMed Essentials this month. He said the new assessment that he received from the Town of Hanover at the end of the year increased from $952,000 to $1.35 million. Pizzuti was photographed at the Hanover store Wednesday, July 24, 2019. (Valley News - James M. Patterson) Copyright Valley News. May not be reprinted or used online without permission. Send requests to permission@vnews.com.

Valley News Business Writer
Published: 7/27/2019 10:18:11 PM
Modified: 7/27/2019 10:39:46 PM

sBy JOHN LIPPMAN

HANOVER — If gentrification has transformed White River Junction into the Brooklyn of the Upper Valley, then a red-hot real estate market may be turning Hanover into Manhattan.

A post-recession run-up in Hanover home prices in recent years, driven by an influx of well-heeled buyers, has caused a leap in property assessments and bewilderment among downtown building owners who say the numbers are out of sync with the decline in retail business they face as landlords.

Commercial property owners said they were stunned late last year when they received their property reassessments, which the town is required to undertake every five years under state law. In some cases they jumped more than 50% and in a few cases more than doubled.

Thetford resident Kenny Fabrikant, who owns the building where his Rosey Jekes boutique apparel store was located on Lebanon Street and which he now leases to other businesses, saw the assessment spike 78% — which he said caused his annual tax bill to jump 63% from $24,000 to $39,000.

“Outrageous,” he called the spike.

He said a more gradual increase on the property would not have hit him so hard.

“It would be a lot better to anticipate increases every year rather than five years when it becomes so shocking,” he said.

Indeed, what a difference five years makes.

The assessment on Fabrikant’s historic two-story clapboard building at 15 Lebanon St. shot up $865,500 to $1.98 million, according to town assessment records.

Next door at 13 Lebanon St., the assessment on the building where the League of New Hampshire Craftsmen is located more than doubled from $824,000 to $1,684,200 (but as a nonprofit it is exempt from paying property tax). One door east at 27 Lebanon St., the assessment on the Indian restaurant Jewel of India restaurant building rocketed from $474,000 to $1.9 million.

Along the main artery of downtown Hanover, the leaps in assessment were no less severe: The CVS pharmacy and convenience store property at 79 S. Main St., owned by real estate developer and investor Bayne Stevenson’s Bayson Properties, saw its assessment mushroom $2.3 million to $5.45 million, while four units at Bayson’s signature building at 35-39 S. Main St., where Von Bargen’s jewelry store, Farmhouse Pottery and the eatery Boloco are located, collectively went from $4 million to $5.5 million.

“I’d call them radical,” Jim Rubens, who owns many of the commercial condominium spaces in the Hanover Park building at 3 Lebanon St., said of the reassessments. Rubens himself ducked a sharp increase on his property’s $3.6 million assessment because he had an intra-period reassessment owing to interior refurbishing to accommodate a change in tenants that had already increased his tax rate.

“I guess it’s good for the town,” Rubens said of the higher tax revenue Hanover will be receiving as a result of the town’s quinquennial reassessment on property. “But it’s not good for business.”

The problem, Rubens said, is that when the assessment increases it compels landlords to pass along the costs to tenants, and many commercial tenants, especially those in retail or with a restaurant who are already operating on the thinnest of margins, get forced out of the market. They become displaced by financial firms, real estate agencies and other service businesses, which results in a change to the character of the downtown as it becomes less welcoming to shoppers and diners.

“It affects the quality of life downtown because it makes it harder for local owners, local shops, the family business or the family lawyer to do business,” he said.

Not all assessments went up, however, and some on premier commercial properties even went down, adding to confusion over how it was conducted.

The building where Starbucks is located on South Main Street declined $799,000 from $5.26 million to $4.46 million, and the former Dartmouth Bookstore building fell $275,000 from just under $4 million to $3.72 million. Both buildings are owned by theCampion family, who have a longtime presence as Hanover commercial property owners.

“Both properties are under construction with large areas of unleased space,” Jay Campion said in an email. “I’m confident they will go right back up when I’m finished renovating and leased up.”

The former Dartmouth Bookstore building is currently undergoing a major renovation as Campion prepares it for the opening of two new upscale apparel stores and a combination bar/cafe/bookstore, signaling new life in the Hanover retail scene.

But others expressed bewilderment over their reassessments.

“I don’t know what they were thinking,” Perry Papadoliopoulos, the owner of C & A Pizza, where the assessment on the Lebanon Street building jumped $942,200 to $1.65 million, said late one night last week as he slid a couple of small pepperoni pizzas into the oven near the end of eatery’s 11-hour day. “How much can you raise the price of pizza?”

Several commercial property owners declined to discuss their reassessments, saying they did not want to jeopardize their discussions with the town in their appeal. A few, however, were not reluctant to acknowledge the impact.

Frank Pizzuti, owner of Michael’s Audio-Video on Allen Street, said the assessment on the building his family has owned in the alley across from the former Dartmouth Bookstore since 1963 rose almost $402,000 to $1.35 million. Pizzuti has two tenants in the building — Stinson’s Village Store on one side of him and on the other AroMed Essentials, a new aromatherapy and CBD products shop that will be opening soon in the space formerly occupied by the crafts store Folk.

Pizzuti said he was previously paying about “$18,000 and change” annually in town property tax, which he now estimates will balloon to more than $26,000 annually.

“I have to pass it on to some degree to tenants,” he said. “It makes it difficult for us and puts tenants in a precarious position. Look around. There are a lot of vacant spaces ... (South) Main Street doesn’t have the eclectic stores it used to have. Now it’s banks and corporate America.”

Hanover’s hotreal estate market

Caught in the squeeze by the property reassessments are the handful of dwindling small downtown storefronts still geared to a 1990s pre-internet economy while the face of Hanover has changed dramatically.

The large increase property owners saw in their assessments reflects the changing demographics and economy of Hanover, according to Hanover Town Manager Julia Griffin.

She said the town increasingly fits the profile of an affluent Boston and New York suburb with an influx of a professional workforce that wants to live near Dartmouth College, Dartmouth-Hitchcock Medical Center and the satellite institutions where they work.

“We’re tending to see people moving in from more urban areas who are accustomed to the expensive real estate markets where they are willing to pay prices for property over the assessed valuation,” she said. Griffin said there has been a “real shift” in the preference among these homebuyers to be “in town.”

For the five-year property reassessment completed at the end of last year, the town adopted a “market-driven cost model” that collected data on home sales between Jan. 1, 2016, and March 31, 2018, according to the Hanover assessors office (only the decennial reassessment involves on-site home inspections). That analysis found a “distinctive shift of value over to land values and in-town properties,” the assessors office explains on the Hanover town website.

Following the 2018 assessment, Hanover’s grand list — the total of assessed real estate value in town — increased about $150 million to $3.34 billion from $3.19 billion in 2017 and from $3.09 billion in 2013, the time of the last townwide assessment, according to grand list totals reported to the state.

More strikingly, however, is the difference between the change in value between taxable property and non-taxable property, which in the case of the latter is mostly property owned by Dartmouth College. The grand list for taxable property increased about $378 million to $2.33 billion between the quinquennial assessments, while non-taxable property actually fell about $127 million over the same five-year period.

The 27-month period of sales data included 245 property transfers in Hanover, according to a list of property sales compiled for the statistical analysis.

“Land values have been steadily on the rise as Hanover continues to be a sought-after community to settle in,” the assessors office explained in a guide to the revaluation.

Town officials also pointed to the “phenomena of improved parcel sales” where new owners have razed an existing home to build a new one, saying, “This all adds further credence to the desirability of in-town properties or to those within a short walk or bike to downtown.”

An analysis of recent-year home sales in Hanover by the Upper Valley real estate brokerage firm Snyder Donegan supports the town’s analysis. Eighty homes were sold in Hanover in 2018, up 8% from 2017, while the average sales price of a home in Hanover in 2018 was $736,000, up nearly 50% from $500,000 in 2009 — including one on Rope Ferry Road that Snyder Donegan sold for $3.6 million.

The median price of a home in Hanover was $675,000 in 2018. The robust Hanover market continued in 2019, but the median price of 46 homes sales during the first six months of the year ticked down to $648,000 — although 17 of those sales either met or exceeded the seller’s asking price, according to Snyder Donegan.

Rubens noted that one property, a commercial condominium property owned by a Hanover attorney and located above Main Street Kitchens on South Main Street, saw its reassessment mushroom from $236,000 to $909,800. On a square-foot basis, he estimates, that would yield a return on investment of only 3.5% — similar to the high cost/low return of New York City commercial real estate — which puts the downtown Hanover property on par with “the GM building in Manhattan on a good day when the Chinese are buying.”

“I don’t know where they got that number from. It bears no relation to reality,” Rubens said.

Residential property owners have been equally confused over the reassessment, especially given the sometimes wide differences in neighboring properties.

Peter Murdza was perplexed when he saw the new assessment on his 0.66-acre home with a basement rental unit had actually declined “roughly” $120,000 to $580,200.

He even went before the board of assessors to seek an increase — he had the house appraised a couple of years ago that suggests the property could sell for at least $900,000 to more than $1 million, he said — but the board informed him it only had authority to lower assessments.

Murdza, a retired property casualty actuary, said residential assessments appear inconsistent in the land portion of properties with neighboring lot sizes sometimes varying greatly. He thinks part of the problem may lie in the small sample size of property sales upon which the townwide assessment was based.

“There is randomness in the data,” he said. “Maybe the data isn’t good enough to get all that precise with land values.”

Hanover Town Assessor Dave McMullen said via email that there have been a total of about 390 abatement requests, which had to be filed by the March 1 deadline. He said he did not have a breakout between how many abatement requests were filed by residential property owners and how many were filed by commercial property owners nor does the assessors office track how many requests have been approved and how many denied.

But, according to the minutes of the monthly meetings of Hanover Advisory Board of Assessors — one of two avenues of appeal available to property owners along with the applying to the state Superior Court in North Haverhill — a total of 236 abatements had been heard between January and April, of which 187 were approved, 23 denied and 26 tabled or postponed for further information.

One casualty of the jump in assessments is the loss of 16 parking spaces off Allen Street that have been available to the public in a lot owned for decades by the Buskey family.

After the assessment on the parking lot, which was leased to the town, jumped from $426,400 five years ago to $1.2 million in the recent reassessment, the owners sought to renegotiate their share of parking revenue and ultimately took back the lease, Griffin said.

A line is now stretched across the entrance to the parking with a sign hanging from it that announces, “Sorry, We’re Closed.”

John Lippman can be reached at jlippman@vnews.com.




Valley News

24 Interchange Drive
West Lebanon, NH 03784
603-298-8711

 

© 2019 Valley News
Terms & Conditions - Privacy Policy