How Much Is Too Much For So Much?

How Much Is Too Much For So Much?

Assessments Escalate in Mount Vernon and Lee districts.

What price glory? That old adage could well apply to real-estate assessments in the Mount Vernon and Lee districts of Fairfax County. Or perhaps, what price convenience?

In the Mount Vernon District, the majority of the latest residential real estate assessments fall within the escalation range of either 11 to 20 percent or in the 21 to 30 percent range. There are some patches that fall as high as 50 percent. The Lee District is following suit.

What is driving the upward spiral? Primarily four factors:

1. The desirability of living within a very short commute of surrounding work places not requiring use of the Beltway and/or Interstate highways;

2. The desirability of the neighborhood - it's ambiance, established housing and services;

3. The loss of taxable income from commercial real estate caused by a downturn in the overall economy exacerbated by the burst of the dot-com bubble;

4. The inability of county government to control its own destiny due to the pervasive stranglehold of the state in many matters of local taxation and services.

"This increase is indicative of what people are willing to pay for the convenience of living in this area," said Gerald W. Hyland (D), Mount Vernon District supervisor and vice chairman, Fairfax County Board of Supervisors. "The assessment on my home rose more than 25 percent."

"We are basically built out. Plus, we are very fortunate to have the infrastructure and amenities people want such as parks, schools, excellent police, fire and other public services, and the proximity of the river," Hyland said.

"We have an incredibly strong residential real-estate market. Living almost anywhere in the Mount Vernon District, a resident is only 20 to 25 minutes from a job in Alexandria and a little more to the District," Hyland emphasized.

IN A SURVEY OF real-estate agents last fall, it was discovered that the primary driving force behind the sales boom in the Mount Vernon and Lee districts, as well as the City of Alexandria, was the desire to reduce commuting time. It is a quality-of-life issue for which buyers are willing to pay.

Coupled with the escalating residential property assessments are the declining commercial property values, Hyland noted. "Our goal has always been a 25-percent commercial, 75-percent residential split," he said. "But commercial properties real-estate taxes are down due to a high vacancy rate as a result of the dot-com bust in the county."

The vacancy rate in commercial real estate is now at 16.5 percent, according to Hyland. In 2001 office vacancies were at 6.4 percent. By mid-2002 that had risen to 10.2 percent.

"Commercial real-estate valuation will not increase until the economy turns around," he insisted. "When that happens, some of the burden can be taken off the residential market."

THAT ASSESSMENT WAS buttressed by Lee District supervisor Dana Kauffman (D). "I look at it as a two-part scenario. First, there was the effort to bring us up to the rest of Fairfax County. Other districts have seen extensive increases in the past.

"And second, the challenge is to induce some reality into the tax rate. In our analysis of this situation, everything is going to be on the table."

Kauffman further noted, "There are two areas where we could make a change. One is in the area of taxes on hotels, meals and cigarettes, and the other in the category of state funds for education. There was a statutory commitment for aid in the education area they [legislators] are not living up to. The first would require a change from the General Assembly."

Kauffman insisted, "We have to find a way to reduce the rate. The market can't sustain this upward spiral."

Most of the recent tax assessments for residential properties in Mount Vernon District fall within the 11 to 20 percent and 21 to 30 percent range of increase, according to recently released property assessment tax maps. The swath from Alexandria City to the Mount Vernon Estate, along the George Washington Memorial Parkway, encompasses a major segment of the high-rent district.

The area from the Parkway to Craig Avenue along Ferry Landing Road is in the super-high category of 31 to 50 percent increase range. Most of the properties from the intersection of Route 235 and Route 1 to the Alexandria City border fall within the 11 to 20 percent increase category, with others in the 21 to 30 percent range.

There is a very small scattering of properties with assessment escalations in the 1 to 10 percent range. All Fort Belvoir is excluded as government-owned.

OTHER SECTIONS OF Mount Vernon District are designated as follows:

* Mason Neck, bounded by Gunston Road, River Road, and the river, increased 21 to 30 percent;

* Upper part of Mason Neck - 11 to 20 percent;

* Other segments of Mason Neck only a 1- to 10-percent escalation.

Throughout Lee District, most residential property assessments have increased between 11 and 30 percent according to the maps. The highest-increase areas, 21 to 30 percent, are along the Beltway from the Mixing Bowl toward the Woodrow Wilson Bridge and southeast to the abutment with Fort Belvoir.

Most other property designations show an increase of 11 to 20 percent. There are two minute patches indicating a 1- to 10-percent increase.

In both Mount Vernon and Lee districts, nonresidential properties show an increase of only 1 to 10 percent or no increase. In Sully, Hunters Mill, Dranesville and Providence districts, nonresidential properties show a significant decrease in assessed valuation. Nonresidential values decreased 2.94 percent, the first loss in value since 1996.

This same residential escalation has occurred in the City of Alexandria. There, the average residential tax assessment increased 24.5 percent.

Hyland pointed out that the county's 2004 budget is predicated on a 2-cent reduction in the property tax rate. "But this is a drop in the bucket," he said. "We must find a way to stop this escalation, by other taxes and giving more controls back to the local government. That's who the people look to for relief. But, in many cases our hands are tied by the state."

WITH THE VARIOUS endeavors to revitalize the Route 1 corridor, the takeover of the former Lorton Correctional facility and preservation of open space, both the Mount Vernon and Lee districts are victims of their own successes. It has increased their livability, with developers building larger and more expensive homes.

The proposed county budget estimates the average residential real-estate tax increase will be $424 on an average payment of $3,775. Over the past three years, the tax rate per $100 assessed value has decreased from $1.23 in 2001 to $1.19 in 2003, if the proposed budget is adopted as presented. But skyrocketing values have more than offset this in the Mount Vernon and Lee districts.

According to county statistics, the mean assessed residential value is $317,240. This breaks down as follows: single-family detached, $380,039; townhouse/duplex, $225,983; condominiums, $144,110.

Both Hyland and Kauffman expressed the frustration that the tax burden on homeowners could be lightened if the General Assembly would relinquish more taxing powers and other governmental initiatives to the counties. Hyland has long maintained that relying on homeowner taxes "is not an equitable way to finance governmental services."

As stated in the budget presentation to the Board of Supervisors, "Real estate taxes account for nearly all FY ‘04 revenue growth." Real estate as a percentage of total General Fund revenues has escalated from 50.7 percent in FY ‘01 to 59.1 percent in FY ‘04.”

It went on to note, "Excluding real-estate taxes, all other revenue categories increase $5 million or 0.2 percent of total General Fund revenues." There is an "over-reliance on real-estate tax to support county services."

COUNTY EXECUTIVE Tony Griffin's budget presentation supported both Hyland's and Kauffman's long-standing argument that the counties need more control over their fiscal affairs and the quality of life of their residents.

Griffin emphasized that the state limits Fairfax County's ability to access other sources of revenue and that numerous studies and efforts to diversify revenue base have been unsuccessful.

Griffin noted absent the real-estate tax, 90 percent of county revenues are capped, limited or controlled by the state. "Counties do not even have the same authority as cities to diversify revenues," he said.

On Feb. 24, Griffin issued a memorandum to the Board of Supervisors titled "Real Estate Assessments for Certain County Officials." It gave the assessed value of officials' residences for 2001, 2002 and 2003 with the percent of increase for 2003.

In the case of the supervisors, the increases ranged from a low of 1 percent for Elaine McConnell, Springfield District, applied to a property at 8519 Tuttle Road, to a high of 25 percent for Hyland on his property at 7911 Bayberry Drive.

Kauffman's property at 4520 Lantern Place was slapped with an 18-percent hike. It was the second highest on the list along with Penelope A. Gross, Mason District.

The only official on the entire list who had no increase in an owned property was Griffin for his address at 12795 Netherleigh Place. Although it had made a substantial jump from 2001 to 2002 of $122,360, it remained static from 2002 to 2003.

A NEWS RELEASE that same day, Feb. 24, stated, "The notices, which are sent to property owners whose assessment has been changed, represent approximately 96 percent of the 331,819 taxable parcels in the county.

"The relatively large percentage of properties that have an assessment change for 2003 reflects the strong price appreciation and solid sales volume in the 2002 residential real-estate market."

On March 15, the first of two public Community Budget Workshops will be held at the Fairfax County Government Center, 12000 Government Center Parkway, Fairfax. As Kauffman summarized it, "Everything is going to be on the table."