An $18,000 property tax break for the Ormsby House was approved Tuesday by the Carson City Board of Equalization after the hotel/casino's operators promised to plow the savings, and more, into upgrading the business.
Owners Don Lehr and Al Fiegehen said they will invest about $5 million in the property during the coming year. That's a million more than they paid for it, they told the board members.
The Ormsby House's taxable value had been set at $5.8 million by Carson City Assessor Kit Weaver in consultation with state Department of Revenue officials. Lehr and Fiegehen, co-owners of Carson City-based computer maker Cubix Corp., had paid about $3.7 million for the buildings and land and petitioned the equalization board for a value reduction.
The application for the reduction asked for the taxable value to be set at $2.5 million. The board members indicated Tuesday they would not go any lower than the actual purchase price.
The two partners paid $4 million in September for everything, with their application indicating the non-real estate or personal property included in the sale, from kitchen equipment to beds and linens to slot machines, was worth $233,000. That put the land and buildings at $3,767,000, which the board set as the taxable value.
"We're satisfied with what the board did. You always hope for more, but they were following state law," Lehr said later. "They did a very professional job up there and we appreciate that, too."
There are three ways to set a property's value - replacement cost, market value and revenue-producing potential. Weaver said it is common to use a sale price as a market value.
"That's the most accurate," he said.
The motion to grant the reduction included a requirement the hotel/casino's value be brought back to the equalization board in a year. Before then, Weaver's office will take a look at how much the planned improvements have boosted its value.
Lehr said plans for projects at the Ormsby House will be filed soon with the city, because some construction is targeted to begin in February.
Weaver said incremental increases of the Ormsby House's taxable value could continue for a few years until it reaches full taxable value.
The last time that happened was in the 1997-98 fiscal year, when it was assessed at $15.1 million.
Weaver also told the board members that he and his staff had determined that the loss of tax revenue from the discount will be made up next year by property taxes on three new buildings in the 1000 block of South Carson Street.
The Ormsby House application was the only matter on Tuesday's agenda. The Board of Equalization meets again next Tuesday and may have 2-4 applications, tentatively two on vacant commercial property and two on apartment houses.