The new owners of the Ormsby House will be making a case Tuesday for an $18,000 property tax break for the hotel/casino.
The Ormsby House's taxable value was set at $5.8 million for 1999-2000, but Cubix Corp. of Carson City paid $3.75 million for the real property portion in September.
Cubix owners Don Lehr and Al Fiegehen have not disclosed the total purchase prices for all Ormsby House assets, but Lehr indicated in a letter to the editor in the Nevada Appeal that it was higher than the cost of the real estate.
When the Carson City Board of Equalization meets Tuesday, the members will consider whether to reduce the taxable value to reflect the September sale transaction.
The board has faced similar decisions regarding the Ormsby House several times in the past decade, said Carson City Assessor Kit Weaver.
"The situation with the Ormsby House is unique because it's been through a bankruptcy, a closing down, then a sale and reopening, the foreclosure on that owner, now, another sale," Weaver said. "During all this, there's been a wide fluctuation of values associated with the transactions, all at substantially less than full taxable value.
"The assessor's office has taken the Ormsby House's value to the board of equalization for a number of those years and suggested that maybe a discount is in line."
Weaver said the full taxable value of the Ormsby House real property, which includes six parcels, the hotel/casino and its four-story parking garage, is about $15 million.
"State law requires that we set the assessed value at full taxable value. Then, if an owner notifies us or we become aware ourselves, we must make a reduction if the assessed value is greater than market value," Weaver said.
The Ormsby House had a taxable value of $16.9 million before it went bankrupt in 1993. The next year, new owner Bank of America paid $25,000 to a private commercial appraiser to establish the closed property was worth just $3.425 million, Weaver said.
After it was reopened, a taxable value of $15 million was set for 1996-97, but owner Barry Silverton appealed and got it reduced to $6 million that year. The next year the Ormsby Houses property taxes were based on a $15.1 million value.
Silverton had filed bankruptcy in January 1997 and was foreclosed upon by mortgage holder Cerberus, which bought the Ormsby House at its own foreclosure sale a year later. The taxable value was then dropped by the board of equalization to $5.7 million for 1998-99.
The hotel/casino would pay about $51,000 in property taxes this year if the taxable value remains at the present $5.8 million, Weaver said. Reducing the taxable value to the Cubix purchase price would reduce the tax bill about $18,000, he said.
Since the Ormsby House is in the redevelopment district, the impact of the lost revenue would fall there, Weaver said. But new construction in the area would reduce the sting of that loss.
"The timing of the Tenth Street project is excellent for the redevelopment district," Weaver said.
He was referring to new office buildings built for local developer and attorney Richard Staub and a restaurant being built by Metcalf Builders expected to open by May, all surrounding the former A&W Restaurant site on South Carson Street.
The Ormsby House itself could provide additional tax revenues to the redevelopment district over the next few years.
Carson City treasurer Al Kramer told the redevelopment district board at its Dec. 15 meeting that he had met with the Ormsby House's owners, who said they have committed to $10 million in improvements to the property during the next three years.
Ormsby House general manager Bob Cashell said Thursday that plans for the improvements are being developed, but that discussion of any details would have to wait until those plans are firmer.
Every real property owner has the same opportunity to challenge the taxable valuation, Weaver said. He said owners should examine the notices they receive each year and discuss any problems with his staff.
"Often, we discover we have set a value based on incomplete information and can make an adjustment," Weaver said.
If that is not satisfactory, owners can appeal to the local equalization board, then the state board and then to court, he said. But the first appeal must be filed by Jan. 15 each year.
Ormsby House taxable values by fiscal year ( in millions of dollars)
93-94:16.9
94-95: 3.4
95-96: 4.1
96-97: 6.0
97-98:15.1
98-99: 5.7
99-20: 5.8
