In a money-saving move to improve its cash flow, the city of Richmond may have created a post-holiday pinch for some of its homeowners.
The city is mailing the first bills as part of its switch to twice-per-year collection of real estate taxes. Bills covering a half year of taxes were sent out this week and are due Jan. 14. A second round of bills will be due June 14.
Bill Pittman, a retiree who lives in Ginter Park, objects to a payment due in January — just after Christmas — and said he is concerned that many property owners are unaware that tax bills are imminent.
"People are not going to have the money to pay this upfront," he said.
Marcus D. Jones, chief administrative officer for finance and administration, said the city has been collecting about $200 million in real estate taxes in one payment each June. He said that system created a cash windfall for the city during the 1960s but also a significant downside in more recent years.
The city has had to borrow about $70 million on short-term basis to meet cash flow — which now costs taxpayers $1.7 million annually in interest payments. Such borrowing has hurt the city's efforts to upgrade its bond ratings. Mayor Dwight C. Jones wants to upgrade from largely double-A to triple-A status.
Marcus Jones said, in switching to two collections, the city needed to eliminate the need for borrowing and keep the payments in the same fiscal year, which runs July 1 through June 30. He said collections of a half-year's taxes in June and the following December would not have worked because the city would have forgone about $100 million.
Like other localities, Henrico and Chesterfield counties collect real estate taxes twice per year, with payments due in June and December. Hanover County collects its payments in June and October.
"This is bringing us more in line with the vast majority of localities across the state," Marcus Jones said.
He acknowledged that a January tax bill may not be ideal for homeowners whose real estate taxes aren't paid through a mortgage. He said the city has tried to soften the blow by accepting payments early into an escrow account and by expanding tax-relief for the elderly and disabled.
wjones@timesdispatch.com
(804) 649-6911
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