The Garland County Board of Equalization denied Green Springs Medical's property tax appeal Thursday, upholding the valuation the county's contract appraisal service set for the only licensed medical marijuana dispensary inside the city of Hot Springs.
Arkansas CAMA Technology appraised the Seneca Street location at $400,600, a 27.5% increase from the valuation the equalization board set in 2020. Barbie Weatherford, ACT's chief commercial appraiser, told the board the increase was in line with the 28.6% increase for commercial properties in the Golf Links Road area since the conclusion of the previous reappraisal cycle in 2017.
ACT said the aggregate appraised value for real estate in the county rose more than 40% from the previous five-year cycle, increasing from $8.9 billion to $12.9 billion.
Green Springs will have a $3,158 tax bill for the 2022 tax year, according to the county assessor's office's estimate. According to the 2021 tax bill the county collector's office provided, Green Springs will pay $288 more than it did during the previous tax year. Most of the money will go to the Hot Springs School District.
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The board's ruling can be appealed to county court, which the county judge presides over. His ruling can be appealed to circuit court.
Owner Dragan Vicentic told the board the property was overvalued compared to other commercial properties in the area. He presented five examples, including the warehouse at 181 Golf Links that Oaklawn Racing Casino Resort acquired in 2012, the tire store at 126 Golf Links and the strip mall and flea market behind Kroger.
They were appraised at $26 a square foot on average, about half of Green Springs' valuation.
"It should be lower when you're looking at the price per square foot of the other five buildings," Vicentic told the board.
He said the $350,000 he paid for the building in 2019 was more than market price, a premium owing to the limitations on where dispensaries can be located. The medical marijuana amendment voters approved in 2016 requires dispensaries be at least 1,500 feet from schools, churches, day cares and facilities for people with development disabilities.
"That is the only building in Garland County that is 1,500 feet away from a church, school or day care," Vicentic told the board. "I had to pay a premium price."
Weatherford told the board the higher appraisal proceeded from an increase in commercial building costs measured by the appraisal guide the state uses.
"At this point, I'm unsure what the complication would be," she said. "I made no changes from the valuation that was applied in 2020, other than cost per square foot has increased since that time period. Supplies as we are all aware have increased, and that shows within the marketplace."
Weatherford said an outside appraiser told her the property was undervalued.
"I requested another appraiser from outside the Hot Springs area to review this property due to the fact I knew we were going to be here, and they told me it was too low," she told the board.
Vicentic questioned the admissibility of her statement.
"That sure is a lot of hearsay," he told the board.
Income is used to appraise some commercial properties, such as Uptown Hot Springs, the property formerly known as Hot Springs Mall, but Weatherford said the cost method was given the most weight in Green Springs' appraisal. It's based on the cost to construct an equivalent building, minus depreciation.
She said the income method is based on what a property would lease for on the open market, not gross sales.
"I can't look at income produced by his business," she said. "I can't look at that on any property in the county."
The Tax Procedure Act prohibits the state from releasing revenue figures from individual dispensaries, but the more than 1,900 pounds in sales Green Springs reported to the state revenue agency last year represented 5% of the weight sold statewide. The Department of Finance and Administration said 2021 sales totaled $265 million.