Councilman pushes for tax reform as Richmond property values rise: 'We're putting a burden on our families'

Richmond, Virginia
Posted at 7:13 PM, Sep 08, 2022
and last updated 2022-09-08 19:23:08-04

RICHMOND, Va. -- When Richmond resident and realtor Scott Garnett received his real estate tax assessments in the mail, his initial reaction was quite tamed.

“It wasn’t a surprise. I’ll be very honest," Garnett said.

But Garnett said he became perplexed as he compared the 2023 reassessments among all his properties and other neighbors around the city.

“Seeing the variations and the different numbers and talking to other people, there's no rhyme or reason as to where the pricing came in at," he said.

His rental properties in the Fan District both went up by more than 20%, but his property in the Arts District didn't change at all from the previous year.

CBS 6 also heard from residents with varying assessments in different parts of the city. Some of the numbers Richmonders provided were:

  • 20% in the East End
  • 19% in Scott's Addition
  • 18% in Westover Hills
  • 41% in the Fan

“If it was like a flat 10% across the board, I don't think anybody would care," Garnett said. "There's just no set control. I don’t know why we don’t have a centralized valuation system.”

Richmond City Assessor Richie McKeithen said the varying assessments are dependent on the specific property and sales in the area.

“You can have properties that will differ from street to street, and we try to capture that in the increase in the assessments. Every property doesn't go up the same. I know that's a typical misconception," McKeithen explained.

He pointed to an overall 13.04% increase in taxable real property citywide, comparable to last year's 13.35% increase.

According to a map breaking down assessments by neighborhood, Manchester, Stratford Hills, and parts of the West End, Northside, and Church Hill saw the most significant growths of at least 20%.

"The city is thriving. This is no secret. Real estate is increasing. From all the variables you see going on nationally, we have the same situation here in the City of Richmond," McKeithen said. "We have very low inventory compared with a high degree of actual individuals who are in the market to purchase properties, with inflation kicking in as well."

Garnett said the additional taxes in an inflationary environment may cause tenants, who already face skyrocketing rent prices, to feel the impact of rising assessments on the back end.

"When you start hitting somebody with a 20% or 25% increase, especially somebody who's on a fixed income, who's renting a property struggling with already high prices of food and gas and inflation, this is just the double whammy that we just don't need right now," Garnett said.

McKeithen said it's a market-driven national trend, not unique to Richmond, and that relief programs are available to some citizens including seniors.

He added efforts are underway to look into potential additional programs for people who don't qualify for existing relief.

"City council and the mayor are looking at getting programs, or trying to get the General Assembly to have some sort of a homestead program, that will be sort of a circuit breaker, something we can put in our toolbox to help individuals who are outside the box of the qualifications," McKeithen said.

Meantime, 1st District Councilman Andreas Addison said longtime single-family residents, who have stayed put in their neighborhoods, are being taxed more due to a growing number of people buying and selling in a booming market.

"They didn't create the value. A neighbor who sold their house did, and who's now left paying that bill? It's not that neighbor that used to live there, it's now the people who stayed in the neighborhood," Addison said.

He believes the city's budget is too dependent on residents. As costs to improve city infrastructure increase, he said the city has taken in more revenue. While he said assessments of properties are helping to cover those costs, Addison doesn't want the city to continuously rely on that.

"I think you're seeing a lot of our revenues and our budgets being expected to be paid for by residents here-- personal property taxes, real estate taxes, and other things that go in that capacity. When you add those up, it makes it tough," he said. “We're creating an inflated value, we're putting a burden on the wallets of our households and our families, and we could potentially discourage residents staying in their homes."

The councilor said between 55-60% of the city's real estate taxes come from single-family homes, and private-sector developments, including apartment complexes and offices, make up the rest. He said the ratio is inverted among many other similar-sized cities across the country.

Addison said the council has considered temporarily rolling back the real estate tax rate, which currently sits at $1.20 per $100, but said it's not a sustainable long-term solution.

That's why Addison said he pushes for a tax reform that would tax land value separately from the building and potentially lower taxable value of the property itself.

"If we looked at decoupling our property, the home versus the land, we could look at how zoning dictates value changes of the land itself. Then we tax what the land is worth rather than being dependent on what the building is," Addison said.

He said this approach would create an incentive to build on vacant parking lots and encourage development.

Addison added, as a land-locked city, it would give Richmond more economic control.

“The land’s value is dictated by very controllable assets: zoning type, density, height, usage, proximity to other assets, parks, schools, facilities, etc. It becomes a very different formula than just depending on, 'hey, look, the interest rates went down, people are buying and selling homes, my assessment value goes up, the city makes more money,'" he said.

While land value taxation is not widely known or practiced, Addison said City Council approved a study and community engagement process that would analyze the possible impacts of implementing such a reform. Results will take about six to nine months.

Meanwhile, Garnett said he doesn't mind paying extra in property taxes as long as he knows the money is being put to good use.

"It's a good thing. It's a sign the city is growing. My question is, where's the money going? You're talking about a lot of money. When you're adding 15-20% assessments across the board, where's the money going? I'm fine paying more, but show me how it's being spent, and show me how some efficiencies can be done downtown," Garnett said.

Click here to appeal an assessment.

McKeithen suggests meeting with a real estate expert first as many folks may not realize how much their property is actually worth.

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