Former Starks building owner fought assessments before selling f - WDRB 41 Louisville News

Former Starks building owner fought assessments before selling for $14 million

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The Starks building (Chris Otts WDRB) The Starks building (Chris Otts WDRB)
LOUISVILLE, Ky. (WDRB) -- The Hertz Investment Group, a California company that owns office buildings around the country, pocketed $14.25 million this month when it sold the Starks building in downtown Louisville, according to a deed filed Friday with the Jefferson County Clerk's office.

Yet for the last two years, Hertz has been able to lower its annual property tax bill by insisting that the 14-story building is worth much less than $14 million, public records show.

Hertz has twice objected to Jefferson County's assessment of the building's value; in 2013, the company was able to lower the assessment from $10.16 million to $9.3 million. Then, last August, Hertz appealed again, saying the building's value in the market was only $8.5 million.

The appeals, which are permitted under state law, have allowed the real estate company to save on taxes – most of which go to support Jefferson County Public Schools, as well as Metro and state government. 

But the April 2 sale for more than $14 million “kind of undermines (Hertz's) argument” that the building was worth only $8.5 million as of Jan. 1, 2014, said Jefferson County Property Valuation Administrator Tony Lindauer, whose office sets real estate assessments.

Hertz's appeal of the Starks building's 2014 assessment is still pending before the Kentucky Board of Tax Appeals, and Lindauer said the recent sale of the building for more than $14 million “certainly lends credence to our side” that $9.3 million is a fair value.

The tax appeal board resolves differences between local PVAs like Lindauer and property owners who appeal assessments.

Mendel Hertz, a Hertz Investment Group partner who worked closely with the Starks building, did not return a call and email sent last Monday. Judah Hertz, CEO at Hertz's headquarters in Santa Monica, California, did not return a call placed Friday.

It's possible that market changes, or physical improvements, could have raised the building's market value between Jan. 1, 2014 – when Hertz claims it was worth $8.5 million – and April 2, when it was sold for $14.25 million.

But no building permits have been issued at the Starks address, 455 S. 4th Street, since Aug. 28, 2013, when Hertz got approval for an estimated $100 worth of “fit up” work for a new tenant, according to a search of Louisville Metro permits. 

Hertz's property tax bill for 2014 was $118,881, based on its opinion that the building is worth $8.5 million. With a $9.3 million assessment, the bill would be just over $130,000, according to a WDRB analysis.

The new owner of the Starks building, which appears to be an affiliate of Florida-based Hudson Holdings, will have a tax bill of almost $200,000 based on the $14.25 million sales price, assuming tax rates do not change.

Calls to Hudson Holdings, which is reportedly planning a mix of office space, apartments and hotel rooms at the Starks building, have not been returned.

Lindauer said it's not unusual for property owners like Hertz to want the lowest possible tax value for their homes or buildings – right until they're ready to put the property on the market.

“Everybody wants their assessment kept low until they sell, and then it's gone from a shack to a palace,” he said.

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