‘Sticker shock’: Greek house values skyrocket. Tax bills come next.
By Kloee Sander / Nebraska News Service
June 2, 2023, noon ·
Greek chapters at the University of Nebraska–Lincoln saw their building values jump nearly $1.2 million on average in one year, according to data from the Lancaster County Assessor’s Office.
“It was sticker shock,” said Assistant Director of Fraternity and Sorority Life Jon Gayer. “Some of these groups are probably looking at a $100,000 increase in taxes.”
The Lancaster County Assessor’s Office reassessed Greek house values after they had not changed during the pandemic. This time, the office looked at how houses were valued near other Big Ten campuses.
The Farmhouse Fraternity saw the largest increase out of all the Greek chapters. Their valuation in 2022 was $250,300 but that didn’t account for a complete remodeling of the house.
Now their new valuation is $7.24 million.
Alpha Xi Delta’s old valuation was $246,400. Their new one: $1.56 million, a staggering 534% increase. Their building value rose the most out of any UNL sorority according to assessor data.
Alpha Gamma Rho’s valuation nearly quadrupled to more than $4.8 million. Kappa Delta’s value also nearly quadrupled to nearly $1.6 million.
Lancaster County Assessor Dan Nolte was not in office until this year, but he said COVID and the housing market during the pandemic may have led to the lack of change in previous building valuations.
“We are tasked by statute with valuing property as close to market value as we can,” Nolte said.
There are 17 fraternities and 12 sororities with chapter houses on or near UNL campuses.
Most men and women who are part of a designated house live there during their college years. Some houses have designated sleeping rooms while others have individual rooms shared with roommates. Chapters eat meals and host meetings and events at their house.
Greek chapters were caught off guard by the increase in part because they had not seen a major change in property value in recent years, Gayer said.
Chapter buildings at UNL had not been reassessed since 2015. The Assessor’s Office began looking at reevaluating the houses after receiving calls about Greek chapter building values not being accurate and other “equalization concerns.” There were also a few building sales and new construction that indicated a valuation issue, said Phil Hughes from the Lancaster County Assessor’s Office.
How the Lancaster County Assessor’s Office evaluated the houses
Property values increase for a variety of reasons. The Greek chapters saw a 293.21% average increase because of renovations and the current housing market, Hughes said.
“We need to value property, real estate as close to market value as we can,” Nolte said.
The statute requires property to be valued at 100% market value. There are three approaches: sales, income and cost. The sales approach compares a property with similar properties recently sold. This method could not be used because Greek chapter houses are rarely sold and are hard to compare to similar-sized properties. The income approach, used with most commercial properties, determines value based on the amount of money brought in. But Greek chapters are generally nonprofits.
“Most of them operate in the red or very, very near in the red,” Hughes said.
So the Lancaster County Assessor’s Office used a cost approach, which looks at cost tables produced by a national company to determine the worth of the property. These cost tables determine values based on replacement costs for things like square footage, materials used and quality of materials, Hughes said.
The Assessor’s Office said staff did on-site inspections of the outside of all the chapters and inside of most of them. They noted updates and areas with deferred maintenance. From these notes, they looked at the cost tables to reach the new values.
“Every time we re-value, we start completely over with new sales data. We don’t base any of our new values off prior data,” said Lancaster County Appraisal Operations Manager Alice Lauer. “It is all new market data, all new income data, all new cost and depreciation data.”
To ensure the numbers “logically aligned,” the office said they looked at Greek properties at universities in Iowa and Wisconsin to compare. They chose these campuses because they were similar to Lincoln, were assessed at full market value and had information available online.
“If they value something at $10 million that we value at $100,000 that just would not be logical,” Hughes said.
Hughes said the office sympathizes with the Greek houses facing large increases, but they are required to follow state statute.
"There is less of a concern that our value is wrong and more of a concern of the increase of the value and what it does with their budgets," he said.
Theta Xi Fraternity Alumni Association Treasurer Brent Ganey said he doesn’t think the valuations are entirely wrong. However, he said Greek houses being taxed as real property at 100% market value isn’t fair because of their unique purpose.
The impact of Sigma Chi, Theta Xi and beyond
As valuations increase, so do property taxes. This will impact budgets and cost of living in a Greek house, leaders said. Chapters will have to pay the expense through an increase in rent or changing budgets.
Blake Welker, a UNL junior, has served as president of Sigma Chi. That chapter’s value increased by more than $500,000. He said Sigma Chi has around 100 members, so they will be able to manage the increase better than smaller chapters. But the increase may still lead to increased dues.
“It does take away from things we can do,” Welker said. “It is not to the point that we can't run the house.”
Gayer said he doesn’t think it will necessarily affect recruitment numbers, but it may affect which chapter students choose because incoming students are looking more closely at cost and value.
Theta Xi Fraternity, which has about 80 members, also received a significant hike in value. Their alumni board is working with the Lancaster County Assessor’s Office, said Theta Xi President Benjamin Morse. If the fraternity pays more in taxes, the cost of living will increase, he said.
“We are just a bunch of college kids,” he said. “It’s already hard for college kids to afford these dues and afford to live in a fraternity or sorority. With these increases, it will deter people from wanting to.”
When the valuations were released, a number of chapters called the Office for Sorority and Fraternity Life. The office organized a meeting with the Lancaster County Assessor's Office where chapter presidents, advisers and friends were able to ask questions.
Chapters can file an appeal before June 30. A formal protest through the County Clerk’s Office can lead to a hearing with a third-party private appraiser.
Chapter advisers and alumni boards are working on appeals, they say. Welker said their advisers are encouraging them to speak to the new chancellor about the issue as soon as possible.
Gayer said he asked if the chapters could file a joint appeal and was told “No.” Nolte said this is because each property is separate.
The Lancaster County Board of Equalization will make a decision on all appeals by Aug. 10. After that decision, chapters could appeal to the Nebraska Tax Equalization Review Commission, said Nolte. If the chapters continue to appeal, they would eventually be heard by the Nebraska Supreme Court, Gayer said.
“I think we lose sight that these are for the most part student housing,” Gayer said. “You can't flip this overnight to be an apartment complex. You can’t.”
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