Tax Appraisal Mysteries: Unraveling Why Some Buildings Are Valued at $0

In Asheville, a notable case has emerged concerning the tax appraisal of a vacant 126,000-square-foot building, previously a Kmart at 1001 Patton Ave., which is now appraised at $0. This situation has raised questions about tax appraisals and the criteria used to evaluate commercial properties. The building, purchased by the Black Mountain-based supermarket chain Ingles in 2019 for $8.5 million, has been earmarked for redevelopment into a new Ingles store, addressing the need for a grocery store in the Emma-community. Despite its significant purchase price and the land value appreciating nearly $3 million to $8.5 million, the building itself is valued at practically nothing due to its dilapidated state and the cost of potential renovations.
The decrease in appraisal from its previous $953,200 to $200 in 2021, before dropping to $0, reflects a broader approach by county tax appraisers to assess commercial properties based on factors like economic life, building condition, and potential income. This practice, as explained by County Tax Appraiser Keith Miller, is common for buildings considered at the “end of their useful life.” It’s worth noting that while the building itself may not contribute to the tax bill, the overall land value does, ensuring that property owners still contribute to municipal finances.
This issue isn’t isolated to the former Kmart. Other Ingles properties, including the former Sears building at 1 South Tunnel Road and the Merrimon Avenue Stein Mart, also hold a $0 appraisal value. These assessments have sparked debate over property valuation practices and their implications for local tax revenue and urban development. Critics, like Joe Minicozzi who presented on property assessments to a 2022 Ad Hoc Reappraisal committee, suggest that such appraisals should be higher to reflect the properties’ location, commercial potential, and replacement costs in accordance with North Carolina state law.
The situation underscores the challenges and considerations in appraising commercial real estate, balancing between current property conditions and future redevelopment prospects. It also highlights the broader conversation about property taxes and their role in supporting municipal services and infrastructure.