About 30 percent of Fredericksburg's property owners will pay a tax increase this year if City Council approves the advertised real estate tax rate of 74 cents per $100 of assessed value. The rest will pay the same or less, depending on their final reassessment.
City staff presentedPearson Appraisals Fred Pearson's appraisal details to City Council in a work session Tuesday night. The overall tax book value of property in the city was $3.6 billion in 2011 and the new preliminary value is $3.58 billion.
According to Pearson's presentation, multi-family homes saw the largest increase at 24.3 percent. Single-family homes dropped 6.53 percent and commercial and industrial property dropped 2.03 percent, which came as a shock to the local commercial real estate industry. Virginia Business reported in early March that economists predicted the commercial real estate recovery would be sluggish.
Of the 6,087 parcel owners, 4,358 will have a lower tax bill and 1,706 will have a higher tax bill if the advertised rate is approved this month. How much more will depend on what your final assessment is.
There were 1,199 commercial and industrial parcels and 937 parcels had lower reassessment values and 243 had higher values. Pearson's presentation shows that 900 commercial/industrial property owners will see a decrease but 283 will see a significant increase in their bills if the advertised rate is approved this month.
Michael Colangelo, executive vice president of Johnson Realty Advisors, sent out an email on March 29 that said the city's last commercial reassessments in 2009 were "egregiously off base." He believes this year's reassessment is unfair, too.
"They were raised or ignored as the eroding market devastated values," he said. "The ensuing equalization rate in Spotsylvania and Fredericksburg excessively charged commercial properties tax increases as high as 34% due to a disproportionate reduction in Commercial vs. Residential values. Spotsylvania corrected this by lowering commercial values (some 35%) in their most recent assessments."
Colangelo said that a group of commercial real estate agents met with Pearson to discuss the market and it exposed some "stark realities" to him. Colangelo said the business community is willing to pay its fair share in the city's reassessment process, but the residential property owners, who use more city services, should be "more involved" in paying for the city's new capital projects, including the new courthouse.
"Many leases have been renegotiated, rents have been lowered, tenants have been lost or allowed to stay for the purposes of not having a ghost town as a project," he said. "Industrial properties we selling at 1/3 their assessed values and raw land sales and new commercial construction is nonexistent. It makes me start to wonder if there is an understanding between municipal staff and assessors to lean the burden of real estate taxes unjustly on commercial properties. I don’t really believe that, but it does give me pause for thought."
Colangelo also sent an email to Pearson questioning the "limited scope of sales in the year 2011" and for using sales available in 2012, which he doesn't think is suitable data for comparable sales. "Why would you consider ‘asking prices’? These properties may be still on the market based on faulty or nonmarket pricing. The vacancy rates in the city and lease rates have dropped since 2009 by a number much greater than 1.4%. It's not a question of values being lower than 1.4 %, it’s a question of ‘how much lower did they really drop’?"
Pearson responded that he can only reflect the market based on sales for 2011 and sales available for 2012.
"I have also considered the income from people who have mailed their income information," he said. "I have taken into consideration such things as vacancies and rent. I will be happy to explain the sales and what they indicated. I would welcome any additional information that would help me better reflect the market value."
Water-Sewer Rates Likely To Rise
All city residents will likely pay more in bi-monthly water and sewer bills. Council also decided to advertise the new water rates at 9.9 percent higher and the new sewer rate at 10.7 percent higher. This is the first phase of three increases but City Council has not addressed the other two phases of increases that a consultant recommended earlier this year. There will also be increases in availability fees, connection fees and penalties for late payments. See the chart for expected increases.
Funding Outside Agencies
Council is also planning to level fund most outside agencies, except for the following:
- Central Rappahannock Regional Library: $1,238,785 an increase of $58,485
- Juvenile Court Services Unit: $74,605 an increase of $11,655
- Rappahannock EMS Council: $7,040 an increase of $1,840
- Rappahannock Community Services Board: $197,065 an increase of $5,740
- Fredericksburg Area Food Bank: $5,000 an increase of $5,000
- George Washington Regional Commission: funded at FY 2013 request a decrease of $1,530 from FY 2012