What’s the R.E Lee Hotel worth? About $3.4 million, judge says

By Caroline Boras

Owner Ugo Benincasa will save $25,000 in property taxes a year on the Robert E. Lee Hotel as the result of a lawsuit against the City of Lexington that was settled Monday.

Judge John E. Wetsel ruled that the city’s contractor who estimates property values assessed the R.E. Lee Hotel at a price that was too high. Wetsel ordered that the City of Lexington adjust the property taxes for the hotel to reflect the new, lower property assessment that is about half its original level.

The lawsuit came as a result of an appeal R.E. Lee Hotel Owner Ugo Benincasa made in 2014. At the time, he felt the city’s Board of Equalization, which is in charge of tax administration and fee collection for the city, assessed the value of the hotel at a value that was higher than expected.

The 2014 assessment claimed that the R.E. Lee Hotel building – excluding the apartments and retail space – was worth $6.7 million.

After the appeal, the property was reassessed to be worth over $5.7 million in June 2015.

Lee Taylor, Benincasa’s attorney, said Benincasa hoped for more.

When Benincasa bought the hotel in 2014, he planned to renovate the top floor to include three high-end condos. Two out of the three condos were also reassessed in June 2015.

One condo, referred to as “Suite A” in the lawsuit, was valued at over $390,000 in 2014. The June 2015 assessment found the condo was worth $220,000. The other condo, “Suite C,” originally assessed at over $326,000, was reassessed to $188,000.

In early 2015, Benincasa was trying to sell these condos at over $700,000 per condo.

In the lawsuit, Benincasa acknowledged that the value reduction for the condos was not permanent, since the Board of Equalization said it would reassess the condos when they were completed. But, he claimed that these assessments, like the reduced value of the building, were not consistent with other comparable properties in the area.

Judge Wetsel ordered that the hotel alone be reassessed at $3.4 million.
City Manager Noah Simon explained that properties like the R.E. Lee Hotel are taxed through separate tax parcels, which means each piece of land or property is taxed on an separately. Suite A and Suite C are both separate tax parcels.

With this lower assessment for the property, Benincasa estimates that he’ll save $25,000 next year.

Not all of the complaints in the lawsuit were addressed. Judge Wetsel ruled that the new assessments for Suite A and Suite C are correct.

“We came to a conclusion that was fair for me and for the city,” Benincasa said.