Our assets become liabilities II, 1/18/2019

In a prior post, I used the example of Paul VI high school to show that large, privately-held open areas have moved from being assets to their communities to being potential liabilities.  And if you live next to such an area — e.g., a church, private school, or large parking lot — you are at risk for a radical increase in the density of your neighborhood, if the owner of that space sells it in the current market.  In particular, I used that page to explain why I want the Seventh-Day Adventists to be happy right where they are, on their lovely 8+-acre property at the end of my street.

In this post, I look at a few more large tracts of land in Vienna.  And stumble across a few oddities in land taxation in Fairfax.

At the end of the day, this reminds me of what I learned while living in Evanston, IL.  In that mature urban landscape, the only open land was tax-exempt land.  Churches, parks, schools, and cemeteries.  Nothing else.  No private entity could afford to pay the taxes on empty land.

And that’s what I appear to be finding in Vienna.  Basically, all of the large tracts of open land in this round of analysis are either tax-exempt, or have tax valuations that are ludicrously low compared to my neighborhood.

The three topic here are:


 

Westwood County Club. 

By eye, this is the single largest block of open land in Vienna, consisting of 158 acres more-or-less.   By itself, it account for more than 6% of the land area of Vienna.

When I looked at the tax valuation, I thought I was misreading it.  Fairfax County values all that land — 158 acres in the nicest part of Vienna — at just under $8M.  So that land is valued at, and taxed at, just about $50,000 per acre.  And the last time they changed the valuation of that was 2008.

And I have to say, looking at that, this is the first time I’ve ever been tempted to try join a country club.  But in this case, purely as an investment.

Currently, land in the adjacent MAC-zoned area is going for about $6M per acre.  At a MAC-level valuation per acre, that golf course land would be worth just shy of $1 billion.  Even if you can only get a paltry $1M/acre (which appears to be roughly the tax valuation of buildable land in my neighborhood — see end of page),  you’d still end up with a 20-fold increase above the current tax valuation.

I want to be clear here that I’m not (yet) criticizing Fairfax County’s valuation of the land.  In general, as I understand it, Fairfax values land based on its current use, until such time as a sale takes place to show that such a valuation is not warranted.  In effect, Fairfax is valuing that land based on the land being and remaining a golf course/country club.  I have no idea how they come up with the value, but plausibly they use some sort of industry standard.  So the number seems quite low, but may, for all I know, adhere to well-established standards.

My only point is that Westwood County Club is a large capital gain waiting to happen.  So my thoughts are more along the lines of  “thank goodness country clubs cater to the wealthy”.  Because if they ever decide to liquidate, they’re going to have, I would guess, about a third of a billion dollars to distribute among the member/owner at that time.

I’m not even going to guess how many people our current Town Government would allow to live in that space.  MAC is averaging about 100/acre.  Developing the Westwood golf course land at that density would more-or-less double Vienna’s population.  I think that, possibly, even our current Town government might balk at that.


Our Lady of Good Counsel (OLGC).

This church sits on a 22-acre parcel of land just the other side of the Town of Vienna boundary.  It’s on Wolftrap road — more or less directly across 123 from Westwood Country Club.

While this is tax-exempt land, the County values those 22 acres at just under $3M, or just under $140,000 per acre.  If the land would fetch $1M/acre, they are sitting on $22M property.


The odd tax valuation of lots in my neighborhood.

To come up with that $1M/acre figure for buildable residential land in Vienna, I turned to the tax valuations in my neighborhood.  I compared lot size to Fairfax County tax valuation.

What I learned is that I understand a whole lot less about Fairfax County tax values than I thought I did.  Because, as far as I can tell, Fairfax values every lot in my neighborhood at $338,000, regardless of size.  From smallest I looked at to largest I looked at, a more than 100% increase in the size of the lot resulted in a roughly 1% increase in the Fairfax County tax value for the land.

So I looked at the land for the house I used to live in, here in Vienna.  For that, the lot is about half the size of my current lot, in a much less nice neighborhood.  And Fairfax values that lot at … just slightly less than $338,000.

So, that’s certainly odd.  Perhaps a buildable lot is a buildable lot, in a given neighborhood, and the size of the lot doesn’t matter.  Perhaps all Fairfax cares about is the total for land and building, and so the land number is more-or-less arbitrary.  I have no clue.  But the Fairfax County residential land valuations appear to be far odder than I ever could have guessed.