Saturday, December 04, 2010

Value investing and a postscript

I've been meaning to ask what is up with the property assessment appeal filed by Rivers Casino.  No need since there is an update: Rivers Casino trying to reduce tax burden

Remember, this is the case where a business invested reportedly $800 million in a business operation all at a single location.  Probably $400-500 million of that was in property related investment.  A generous calculation of its construction replacement cost was set at $300 million....yet despite all of that, the county's official assessment value (set by the now former chief assessment officer), which came in at all of $200 million, was deemed to be unfair by casino management.  

Wonder what the parking garages would be worth if put on the tax rolls?  oh, nevermind....

The news seems to say the first round of appeals which were scheduled for yesterday passed without contest by the casino, setting up potential further appeals later on.  We were awaiting to see what arguments they would put forth to justify a lower assessment valuation. Could be interesting if they were to try to justify a lower assessment by saying they are losing money.

Everything said in the public record seems awfully irrelevant to me, even if, or especially if, true.  The casino argues it is the highest assessed valuation for any casino in the state.  Likely true, but 1) has anyone looked at the base years most counties in Pennsylvaia use for property assessment.  Some like Butler and Crawford Counties use base years of 1969.  Other counties have assessments set at base years that are all at almost random dates over the last 4 decades.  The result of which is that quoting other counties' assessment valuations is near meaningless.  and 2) are any other casinos built in the densest, most expensive parts of their regions on potentially prime river frontage?  We can quibble over some things, but I don't think any other operating casino in the state is a comparison for the value of the casino here.

The other argument they cite, which is something I thought I mentioned here long ago, is that the Rivers Casino is indeed the highest valuation for any single non tax-exempt parcel in the city if not the entire county.  Not sure why that is relevant, but as a factoid in itself it is true.  Quite true actually.   Some may have already seen the vanilla version of the graphic below which is a representation of effective property valuation across neighborhoods in the city of Pittsburgh.  Effective here being defined as aggregate tax assessment net of long term tax delinquencies that are presumed to not be generating revenues.  I've modified it to treat the Rivers Casino in itself as a neighborhood.

The sad truth is that the current (potentially underassessed) valuation of the Rivers Casino is more than the aggregate real estate valuations across 20 lowest-valued city neighborhoods combined.   That's an awful fact in itself.  Does not support the casino is undervalued at all.  Given that the casino represents a bigger investment than has been made in those 20 neighborhoods is the sad corollary.  So something would be wrong in a pathological sense if the casino was not valued at least as high as it was.  Otherwise you have to start by asking why would anyone invest so much to build something worth cents on the dollar the moment it is completed?  A metaphysical question.

Anyway, here is the graphic.  The interactive version of this is here on Manyeyes.


and as a postscript on yesterday's post.   First off, apologies for those who were misled and thought my little pseudo-story on the Balcony nightclub reopening was real.  There was no intention of fooling anyone.  I put in there as many billboard-like clues that I could to show it was, for sake of a description, parody.  Nonetheless, this got a little out of hand and apparently quite a number of folks thought the story was real.  So no, the Balcony is not reopening... or let me be clearer, I have no idea whatsoever on the plans or potential of any future manifestation of the Balcony.  I suppose it is possible, but it is nothing I know of, heard of, nor expect. One comment is that I have dashed the hopes of all those who really want the Balcony to reopen, so I feel awful.  I dunno though, I am wondering if maybe one lesson of all of this is that we really don't read/watch the news critically enough.  My good friends in the media do yeoman's work, but the news is not sacrosanct.  Think past the headline and lots of stories may not be what they seem.  Not that Google-wisdom is much better all by itself, but still go back to what I wrote and do a very quick look up some of the references in the 'story'. That scion of Shadyside: Lillian Mountweazel?  or how about that new PG illustrator Alan Smithee?   I am debating taking that content all offline, lest it make its way to posterity like some of the great google hacks.  The greatest of which may still be found by plugging in "French Military Victories" and hitting Google's "I'm feeling Lucky" button.  (et j'aime la France! Vraiment.)
and for a completely random non-sequitur..   The Balcony story may not rise to Orson Wells' War of the World broadcast, but has anyone caught the newsoids that one of the preanticipated wikileaks stories is about UFO's?  Makes you wonder there the DoS attacks are coming from eh?


Anonymous MH said...

This is a very interesting chart. I was surprised to see that, even after all of the non-taxable property, Central Oakland doesn't come higher than South Oakland. Also very surprised that Brookline is in the top dozen or so. Even more surprised, on looking it up to see what was there with money, that Brookline has the same population as Squirrel Hill South.

Monday, December 06, 2010 9:31:00 AM  
Anonymous Anonymous said...

I hadn't noticed before, but it seems that Google has done away with its "I'm feeling lucky" button. But the first hit says, "Did you mean French military defeats?". So, ha!

Wednesday, December 08, 2010 9:14:00 AM  

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