While the city’s residential tax base shows modest growth, acting City Manager Mark Jinks says the commercial sector has remained stagnant.
At the Feb. 10 City Council meeting, Jinks presented the 2015 Real Property Assessment.
“While the assessments were up, it was very modest on the residential side and flat on the commercial side,” said Jinks, who noted that this is consistent with regional commercial growth problems. According to Jinks, the March 3 budget will reflect that impact.
This year, the city’s real property tax base increased 3.5 percent, or $1.25 billion. While the residential tax base rose by 4.33 percent, the commercial sector only increased by 2.37 percent. This rate of growth is consistent with the previous year. In 2014, the real property tax base increased by 3.3 percent and by 2.8 percent.
Particularly hard hit in commercial real estate were hotels, in which Alexandria saw a 13.27 percent decline. The closure of Hawthorne Suites, Washington Suites, and the Holiday Inn has been a grim indicator of the hotel business in Alexandria. City Staff expressed hopes that the new hotel at the corner of Dangerfield and Prince street, as well hotel construction anticipated with the arrival of the National Science Foundation, can help turn that trend around.
According to a report by Stephen Fuller from the George Mason University Center for Regional Analysis, jobs decreased in Northern Virginia by 21,800 (5.6 percent) between 2010 and 2013. Average payroll for the remaining jobs decreased by $2.4 billion.
“The regional economy has gone from one of the fastest growing to the second slowest,” said Acting Deputy City Manager Nelsie Birch. “The jobs added back on are less weighty than the earnings lost.”
One of the other effects of economic slowdown has been a decrease in spending. While the City Manager’s office was reviewing taxable sales from businesses, they found that while the number of sales has grown, profits from those sales have declined by 1 percent. Overall, with the loss of higher wage jobs, the region has lost $1 billion in spending power.
The news on job growth in Alexandria was mixed. Private sectors jobs in the highest paying class, professional and technical, were still the highest growth area. However, the fastest growing area in terms of job growth was the food service industry. The most job losses were in construction, which has lost 1,300 jobs in Alexandria since 2008.
In response, the City Council said that the focus should be on diversifying Alexandria’s economic base. Vice Mayor Allison Silberberg, presiding over the meeting while Mayor William Euille was in Richmond, said that success stories like Alexandria’s Port City brewery should be the model for future growth.
“Cities can build an atmosphere that encourages business,” said Silberberg. She specifically cited Dallas, Texas, which survives energy market downturns because of its more diversified economy where other cities, like Houston, are more heavily impacted. For Alexandria, Silberberg said the city needs to capitalize on the arrival of the National Science Foundation to launch the city’s scientific industry.
Also on Feb. 10, assessment notices were mailed to property owners to reflect updated market values as of Jan. 1, 2015. The tax rate, applied based on the Jan. 1 assessment value, is scheduled to be set by the City Council on May 7.