[Update 12:15 3/22/11: According to an InsiderLouisville source, there is a second petition to de-list the Drumanard Estate from the historic registry being brought by Denis Frankenberger. More as it happens.]
With all the political wrangling over the Drumanard Estate and its role in Louisville’s East End bridge project, it’s important to note the different numbers being tossed around regarding its market value.
And, does being an historic property add to, or possibly subtract from, its value?
In January, we published a piece about Louisville’s handful of historic landmarks. It is select company; only eight, in fact.
Properties on the historic registry, however, are far more common. (According to Wikipedia, we Kentuckians enjoy the fourth most of any U.S. state ,with 3,276.)
To be historic or not to be, that is the question
To reset the table, there was an attempt to de-list the property from the National Registry on December 10, 2011. That didn’t happen.
Like the NCAA, an institution that holds complete power over member subjects, the State Historic Preservation Office did exactly what they wanted. They let the Drumanard property retain its designation.
So what exactly makes a property historic?
The National Registry, administered by the National Park Service, publishes these criteria.
II. NATIONAL REGISTER CRITERIA FOR EVALUATION
Criteria for Evaluation
The quality of significance in American history, architecture, archeology, engineering, and culture is present in districts, sites, buildings, structures, and objects that possess integrity of location, design, setting, materials, workmanship, feeling, and association, and:
A. That are associated with events that have made a significant contribution to the broad patterns of our history; or
B. That are associated with the lives of significant persons in or past; or
C. That embody the distinctive characteristics of a type, period, or method of construction, or that represent the work of a master, or that possess high artistic values, or that represent a significant and distinguishable entity whose components may lack individual distinction; or
D. That have yielded or may be likely to yield, information important in history or prehistory.
Wow. That leaves things as wide open as the Pacific Ocean. The definition of “significant” leaves a great deal to subjective humans to determine.
Based on that criteria, I suppose the Drumanard Estate could be correctly labeled a historic property. After all, we have a whopping 466 official historic properties in Jefferson County. Anchorage has 36 all by itself!
Does being an official historic property inherently increase the properties value? Most experts agree it does, but the amount of increase is far from a consensus.
There are also restrictions that come along with the placard that could in some cases reduce the value of a property. Changes to the structures, especially the exterior are to be in line with a long list of mandatory rules, many of which are costly.
Determining market value by appraisal
According to this Courier-Journal report, the owner’s appraisal came in at $11.4 million. (Their report fails to mention when the appraisals were completed.) The most current appraisal ordered by the State topped out at a mere $6.8 million.
All this while the PVA tax assessment stands at $3,000,530. Assessments are wildly inaccurate but it was set in 2008, which was the very top of the housing market.
Determining market value by appreciation method
6401 Wolf Pen Branch Rd was listed for sale on 5/7/1998 for $3,790,000. Here is the listing description at that time.
SALE IS SUBJECT TO CONSERVATION EASEMENT DELINEATION BETWEEN BUYER AND SELLER AND/OR SUBJECT TO DEED OF RESTRICTION REGARDING FUTURE USE. COTTAGE, GREENHOUSE, APARTMENT ABOVE GARAGE; EXTENSIVE GARDENS. ONE OF LOUISVILLE’S MOST PRESTIGIOUS ESTATE PROPERTIES. TRULY FABULOUS! SELLING AGENT TO SEE LISTING AGENT FOR COMMISSION SPECIFICS. DB4568, PG435 ALSO INCLUDED.
The PVA holds that it was sold on 2/23/2000 for $2,175,000 and then again, one day later for both values, $2,756,300 and $2,900,000. It’s unclear as to why two different values are recorded.
(The sale was never registered with the MLS and there is no data record of whether Semonin agent Mimi Middleton-Osborn received a commission on the sale.)
It’s unknown to what extent the new owners improved the property since purchasing it in 2000. It is also possible that home has not been kept up and has actually lost value.
Assuming $2.9 million was fair market value in 2000, using the data from the Federal Housing Finance Association’s Home Price Index for Jefferson County, this property would have appreciated 26.85% during this time frame. That value is $3,678,650.
The question now becomes not whether the State of Kentucky overpaid for this property but just how much.
You can judge for yourself from the official 18-page registration form submitted to the National Registry the worth of this property. The accompanying photos are also available to you.
Whether this property is properly labeled historic likely isn’t the crux of the issue. Now that a bridge will be built, these 49.53 acres are no longer a prime development location, at least for residential real estate. No one wants to live in a gorgeous, up-scale home right next to the expressway. The property’s value should be going down, not up.
Sure, it’s an impressive property, in a highly desirable part of Louisville. But in a down real estate market, buyers are supposed to get bargains.
That is, unless politics are involved.
Related: Sound arguments have been made that the State simply can’t afford both a downtown bridge and an East End bridge, most recently by Shawn Reilly.