Richmond faces drop in revenue
Falling property values could take a $12.2 million to $14.7 million whack out of Richmond government revenue next year, a survey by the city assessor shows.
It looks as if the total value of taxable real estate will drop 5 percent to 6 percent when the city reassesses property as of next Jan. 1, Assessor James D. Hester said.
That will cut $1 billion to $1.2 billion off the city's real estate tax base, which stood at $20.4 billion as of Jan. 1.
"There's a lot of pressure on commercial property," Hester said. "There's a lot of vacant space, and it looks like it isn't filling that fast."
Owners of offices and other commercial buildings are trying to fill that empty space by lowering rents, he said. The combination of empty space and lower rents on leases they are signing affects property values, he said. The reason is that part of what tax assessors look at when putting a value on commercial property is the amount of income they generate.
The Richmond area's office vacancy rate rose to 16.4 percent at the end of June, from 15.5 percent at the end of the first quarter.
Hester said it is harder to be sure about trends in residential real estate because the market is slow, which means there are few sales on which to base property value estimates. But he said he believes residential property values are holding up better than commercial values.
In the first quarter of 2009, the average sales price for homes in the city fell 11 percent from the year before, to $231,095, assessors' office records show. The number of sales, 198, was down 42 percent.
The city was forecasting a 9 percent drop in real estate tax collections for the current fiscal year, ending June 30, 2010, with a slight increase in the following year. The Jan. 1 reassessment will affect tax collections for part of the current fiscal year and part of the next.
In Hanover County, officials meet monthly to review real estate trends, and the assessor will give a preliminary look forward in August, Finance Director Vivian McGettigan said. "Right now, things look stable," she said.
Henrico County Finance Director John Vithoulkas and Chesterfield County Assessor Jonathan Davis said their counties do not do midyear snapshots of real estate values. They said they felt it is too early to comment on next year's real estate tax base.
Contact David Ress at (804) 649-6051 or
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Reader Reactions
Well, as butmunch has commented, you can go and voice your opinion at the public hearings. Unfortunately, very few people understand that the rollback rate would be far lower than the amounts that council and/or the mayor ask for. They use the smoke and mirrors approach by making it look like they are lowering the tax rate when they are actually raising it by not allowing the rollback rate to take effect. BTW, I do, and have, go to the public hearings. I am usually the one asking council to vote NO on ALL papers so the rollback rate can be the tax rate. Some people shouldn’t ASSume so much.
The comments by “dc” is both overly bitter and misdirected. To be correct, assessments should be fair (equitable) and close to the market level (selling price). The budget need dictates the appropriate tax rate. If assessments dip next year causing a need to increase the tax rate, it can’t be done without a public hearing. If you don’t voice your opinion at that public hearing, you can only caustically gripe, like “dc” is doing.
In reference to the post 4 below mine, I would like to say that I am doing more than implying. I am flat-out saying that the assessor’s office is arbitrarily using differing methods because they are LAZY and inefficient. Just because something is covered under a standard of practice does NOT make it fair.
The fact remains; the City of Richmond tax assessor’s office does NOT tax properties the same. Residential properties are taxed on the sales of other homes in the area. Does the standards of practice cover why it is fair to base an entire neighborhood home values on a few that are market-ready? Remember, there may be a few houses in your neighborhood that are market-ready and thus, would be assessed fairly. Not the rest. And what about the 40 or so houses that have been for sale for the last year and have had price decrease after price decrease? Will their failed attempts at selling factor into the magic number? NO. So you can pull all your fancy reference materials you want but you can’t argue with common sense.
It’s public record. Go to the city’s GIS site and look at the assessed values of a few commercial properties around your neighborhood and call the owners of those properties and offer them the assessed value. They will hang up on you.
Meant to type “Shockoe” - sorry, I have a bad habit of adding an “h”.
The dismal picture this article paints is all the more reason not to sink millions into another Richmond real estate debacle, the Shockhoe Center. Supporters of the stadium project argue that citizens won’t be taxed to pay for the project because busineses will spring up all around the stadium and the ensuing commercial tax revenue will cover the cost. But how can anyone look at the current Richmond real estate picture and continue to believe that?
Don’t worry the mayor is going to buy GRTC property with taxpayer money and help remove more commercial property from the Richmond tax base. Tax payers will buy the property and then pay more in their own real estate taxes to help offset the cost.
Some seem to imply that Richmond’s Assessor is arbitrarily using differing methods of valuation for residential and income-producing or commercial properties. The differences in the valuation methods are not of his making or selection but dictated by the standard of practice for professional real estate appraisers. Those interested may wish to read the Society of Real Estate Appraisers Standards at the following web address:
http://ethics.iit.edu/codes/coe/soc.real.estate.appraisers.pro.practice.html
The wealth in Richmond is not in mortar, bricks, and trees. The wealth in Richmond is not seen, nor taxed. It’s the intellectual property, and pass-through sales. Software used and developed in-house for millions of dollars, never appears on the asset lists, nor do sales from local distribution centers to large businesses, where the distribution center’s products are warehoused for companies headquartered out-of-state. If the city of Richmond could tax the value of software used and developed by businesses in the city, and if they could get tax on the value of sales from all local distribution centers to other businesses in the area, then Richmond would be one of the wealthiest cities in the world.
dc,
I think the assessor is right about this. Commercial properties don’t turn over anywhere near fast enough to be the source for Fair Market Value comparisons. Gotta use something else.
Awraith is absolutely correct. Furthermore, while off-topic, the proposed Charter revision as it respects the City Auditor violates the principle of Auditor Independence required in the standards of practice of the Institute of Internal Auditors - one organization that certifies those who practice that profession. Those who are interested in reading the Institute of Internal Auditors’ standards can do so at http://www.theiia.org/guidance/
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