A Utah County Board of Equalization decision to lower the 1987 and 1988 assessed valuation of the Excelsior Hotel by almost $5 million "is unacceptable," says a spokesman representing the hotel's prospective owner, who wants the assessment lowered by another $1 million.
"We'll probably appeal it," said Stephen Yeoman, representing Alpine businessman Victor Borcherds. Unless he hits further legal snags, Borcherds is expected to wrap up the hotel's purchase by Nov. 21.Borcherds, joined by Bob Schwartz, one of four general partners who are selling the hotel, asked commissioners earlier this month to lower the hotel's valuation so taxes in turn can be reduced.
Recent appraisals of the hotel, which is being sold for $5.5 million, set its value at $5.1 million. Schwartz has said it would be an injustice not to lower the hotel's valuation from the $11 million figure originally set by the county.
County commissioners, who double as the county's board of equalization, reduced the Excelsior's valuation on Wednesday to $6.5 million. But Yeoman said the board should have lowered the valuation by at least another $1 million.
Claude Richards, chief deputy county assessor, recommended the value be set at $7 million.
"We think we're high, but we also think they're low," Commission Chairman Malcolm Beck said of the differing valuations.
"We would have accepted $5.5 million," Yeoman said. "To put the value at $6.5 million is not equitable at all. You can build anything you want, but if it doesn't generate income, it's not worth that amount."
If the hotel's value were reduced another $1 million, the owners would save an additional $12,140 in taxes annually.
In setting the new valuation, commissioners said they accepted the sale price of $5.5 million as representative of the hotel's value. But they tacked on another $823,000 for the value of 1.9 acres of Provo City land on which the hotel sits and rounded the total up to $6.5 million.
Because the hotel owners lease the land, they're responsible for the taxes on it, they said.
Because the hotel has not generated the income originally anticipated, the valuation of $6.5 million is fair, said Ron Madsen, director of Provo's Redevelopment Agency.
"It's obvious it (the hotel) is not worth what it was built for," he said.
Yeoman said money is in an escrow account to cover back taxes and will be paid by Nov. 21.
Beck said no taxes have been paid on the Excelsior since it opened, and that taxes owed total around $700,000. He said the hotel's valuation before 1987 will stand and that taxes won't be reduced because Excelsior owners failed to file any previous appeals.
"We haven't had any appeals before 1987," he said. "You assume when you send out a (tax) notice and they don't appeal it, that they accept it."