City government's "valentine" to local property owners was mailed Tuesday, Feb. 8. For recipients, it could qualify for the old Chinese dual-meaning greeting, "May you live in interesting times."
That "valentine" is the 2005 Real Estate Property Tax Assessment. And, for the present calendar year it is showing an overall increase of 21.2 percent. But, the residential real property tax base increased by 22.9 percent for 2005.
"The good side of this is that property values are escalating. The bad side is that so are taxes," said Mayor William D. Euille.
"This overall increase reflects the strength and health of the Alexandria economy, and the continued demand for both rental and owner-occupied housing in the city and other urban jurisdictions close to the District of Columbia," Euille said.
"But, City Council also recognizes the increased burden of the higher taxes assessments on residents and will take this into consideration when reviewing next year's budget and arriving at the real estate tax rate. One of the things we will be looking at are ways to aid people so they are not driven from their homes by escalating taxes," he said.
DURING A PRESS briefing on the new assessments in the City Council workroom Tuesday afternoon, Mark Jinks, assistant city manager, fiscal and financial affairs, said, "This is the largest percentage increase in real estate assessed values in 25 years."
Jinks attributed this phenomenon to several factors. "This region has added more jobs than any other region in the country and new home construction didn't keep pace with that growth. Plus interest rates for 30-year mortgages have remained flat and even fell slightly," Jinks said.
Euille pointed out, "The quality of life in Alexandria has been a really big factor in this residential escalation. People move here because of what Alexandria has to offer."
Residential real property represents 59.5 percent of the total real property tax base. Commercial property accounts for 37.7 percent and State Corporation Commission Properties, such as public utilities, make up the remaining 2.8 percent.
Commercial property tax base increased 20.4 percent, or $1.75 billion. Commercial properties increased 14.7 percent on average.
New construction of commercial properties accounted for $489.5 million, or 28 percent of the total increase in this category. Of that, $245 million can be attributed to new PTO construction.
The escalation trend in the residential tax base began in 2000 when that category represented just over 50 percent of the city's total tax base. The lion's share of the 2005 increase, $2.82 billion, is attributable to appreciation of existing properties. New residential construction accounted for only $206 million of the total $3.03 billion increase, according to Cindy Smith-Page, director, Alexandria Real Estate Assessments.
"The residential market has continued to show strength that is unprecedented, with the average assessed value of an existing residential home increasing 131 percent since 2000. This escalation has occurred in all areas of the city. There isn't any bad section of the city from a property value standpoint," Smith-Page said.
BETWEEN THE TWO categories of residential real property, Residential Single Family and Residential Condominium, the latter has shown the greatest percentage increase not only in 2005 but over the last 19 years, according to Smith-Page's analysis.
The percentage of appreciation in Residential Single Family ranges from 17.8 percent for detached residences to 19.51 percent for semi-detached. Single family townhouses, those where owners hold a fee simple deed, escalated the least in this category at 19.32 percent.
Within the Residential Condominium categories, of which there are four, the High-rise units showed the most dramatic escalation at 32.63 percent. Others were: Garden type - 27.17 percent; Townhouses - 21.65 percent; and Residential Cooperative - 14.65 percent. Owners of these townhouses are part of a condominium association, according to the Real Assessments Department.
Considering all categories under each designation, Residential Single Family assessments increased by an average of 18.57 percent while Residential Condominium assessments increased by an average of 28.83 percent.
However, given the fact that there are 20,608 Residential Single Family units in the city compared to 16,222 Residential Condominium units, the former accounts for $1.8 million value appreciation compared to just over $1 million for the latter.
"The average assessed value of an existing residential home, single family and condominium, increased 21.3 percent to $441,823 in 2005," Smith-Page stated in her memorandum to City Council. As of Jan. 1, 2005 the average assessed value in each category is:
Single Family Home - $563,092; and Residential Condominium - $287,765.
SMITH-PAGE'S COMMENT that there are no bad sections of the city from a real property value standpoint was borne out by a map within the council memorandum giving the percent of appreciation in the two residential categories according to geographic areas, coinciding with the city's Small Area Plans. They are as follows:
* Area 1, Alexandria West, SF 20.3; RC 31.3
* Area 2, Braddock Road Station, SF 18.5; RC 31.9
* Area 3, Farlington/Bradlee, SF 18.4; RC 24.3
* Area 4, King Street/Eisenhower Avenue, SF 13.6; RC 32.2
* Area 5, Landmark/Van Doran, SF 20.0; RC 31.6
* Area 6, Northeast, SF 20.4; RC 24.5
* Area 7, Northridge, SF 17.1; RC 28.9
* Area 8, Old Town, SF 13.9; RC 17.7
* Area 9, Old Town North, SF 15.5; RC 26.7
* Area 10, Potomac West, SF 20.7; RC 46.7
* Area 11, Potomac Yard/Potomac Greens, SF 16.6; RC 12.3
* Area 12, Seminary/Strawberry, SF 21.4; RC 35.5
* Area 13, Southwest Quadrant, SF 15.8; RC 19.8
* Area 14, Taylor Run/Duke Street, SF 18.1; RC 31.4
As of Feb. 9, property owners can obtain detailed information pertaining to not only the overall tax assessment valuations but also specific information about their own property, that of their neighbors, sales data for specific neighborhoods, and other details by going to the city Web site at www.alexandriava.gov/realestate.
FOR THOSE that such escalations may cause financial hardship the city has two aid programs. They are the Real Estate Tax Relief Program and the Affordable Homeownership Preservation Grant Program (AHOP).
The first is for seniors who are at least 65 or persons who are permanently and totally disabled. In order to qualify, total household income may not exceed $40,000 for full exemption, $62,000 for partial exemption, and $62,000 for deferral of taxes. The deadline to file under this program is April 15, 2005.
Last year the city created the AHOP to offset some of the impact of increased assessments for "those homeowners not eligible for senior or disabled tax relief." It provides a $250 grant to homeowners whose household incomes were $62,000 or less per year and whose residences were assessed at no higher than $362,000.
There is a possibility this will be amended this year to increase the grant amount, according to Smith-Page. The filing deadline for AHOP is Sept. 1, 2005. More information on both programs is available by calling 703-838-4570 or writing to Tax Services Branch, Department of Finance, City Hall, 301 King St., Room 1700, Alexandria, VA 22314.
The 2005 tax rate will be set by City Council on May 2. Until that time, the dollar amount of taxes to be levied on individual properties cannot be determined. However, by law, the assessed value is required to be 100 percent of the estimated fair market value of the property as of Jan. 1 of the tax year.
The 2004 tax rate was $0.995. This was down from $1.03 in 2003. "If the rate for 2005 were to remain the same as it was in 2004, the average increase would be approximately $772 for both single family residences and condominiums," Jinks said at the briefing.
Alexandria's 2004 rate was the second lowest of major jurisdictions in Northern Virginia, according to the department. It has also had the greatest percentage decline over the past 20 years.
On March 8 the City Manager will propose a 2005 tax rate to Council as part of the City budget. There will be a public hearing on that budget April 4. Both the budget and tax rate along with tax relief proposals are scheduled for approval May 2.