For decades, the assisted living complex in Uptown New Orleans known as Malta Park operated as a church-owned non-profit.
Then last fall, at the same time the troubled complex was hit with a whistle-blower lawsuit by a former employee claiming poor conditions for residents, a new owner emerged.
Now the 116-unit complex is called Homelife in the Gardens, a for-profit operation run by an Ohio businessman named Donald Rankey.
In the course of the ownership change, the property occupying an entire block of prime real estate on Magazine received one of the steepest reductions in tax assessment in recent history, according to New Orleans Assessor Erroll Williams.
The assessed value was slashed 85 percent, records show, from $19 million to $2.75 million. (See Orleans Parish assessment) Williams said the new assessment is now below land value for the neighborhood.
'My argument then and my argument today is that, knowing the neighborhood, I think the land's worth that, for that whole square, without a doubt,' Williams said. 'Especially the way the sales have been Uptown.'
The reduction came in two stages. The first came after Rankey asked for a re-assessment and Williams obliged.
Williams said his experts compared Homelife to other assisted living apartments in the city and proposed a new assessment right smack in the median of the comparable properties, valuing Homelife at $6.6 million.
'My experts suggested $6 million, but when I looked at everything, I said no, $6.6 million. That's the number I set on the property,' Williams said.
But Homelife wasn't satisfied with the 65 percent reduction. The new owner appealed to the City Council, which acts as the assessor's board of review. Much to Williams' surprise, the board knocked the value down to $2.75 million, a full 85 percent lower than its original assessment.
The new number has made Homelife's value per square the lowest of any assisted living home in the city, according to the assessor's records.
For example, Woldenberg Village in Algiers is valued at $510 a square foot. Nearby St. Luke's is valued at $87. At the low end, The Landing, also in Algiers is pegged at $40 a square foot.
Homelife, at its new assessed value, has dropped to $32 dollars a square foot.
'Too low,' Williams said. 'We believe that, location-wise, I can get $2.75 million dollars for that land alone.'
A sweetheart deal?
Even with the reduced assessment, when Rankey came to the table to finalize the sale, he didn't even have to pay anywhere near the new value.
His sale price? Zero.
Essentially, Rankey bought an entire block of Uptown New Orleans by merely assuming the mortgage on the property. Not only that, but even though Homelife is for-profit company, it was allowed it to retain its non-profit tax exemption for the rest of the year because the sale closed after the assessor closed his books for the year.
The attorney for Homelife, Evans Schmidt, said the circumstances may come across as a sweetheart deal, but only on the surface. He said Malta Park actually was a struggling property badly in need of upgrades. He portrayed Rankey as a white knight who took over a distressed property that nobody else wanted.
'No one else, after reviewing it, had an interest in the property,' Schmidt said. 'So I don't think the deal was quite as sweet as you characterize it...He owes a lot of money to the lender. He assumed the entire indebtedness.'
A map of comparable properties to Malta Park / Homelife in the Garden
Schmidt said that if it wasn't for Rankey, Malta Park might have been forced to shut down, putting employees out of work and elderly residents in search of new housing.
'Now it's engendering a substantial economic impact in the city,' he said. 'Which is a lot more than if a struggling property had closed its doors.'
Erroll Williams said time and the marketplace will tell if Rankey is a savior who kept an assisted living apartment afloat or an opportunist who bought a prime slice of New Orleans for a song.
In fact, he said the verdict may come with the next assessment period in the spring.
'Reasonable people may differ, but we think our value is correct,' Williams said. 'At some point in time, though, I get a chance to revisit it. It's on the radar. And when we revisit it, we'll fight it again.