Get ready for real estate tax sticker shock

Real estate tax reassessments are coming this year in Floyd County and homeowners expecting to see a drop in real estate values are in for sticker shock.

Real estate values, at least in the eyes of the tax assessor, will most likely go up in Floyd County just as they are everywhere else in the area.

County administrator Dan Campbell tells me he expects the new assessments, when they come in, to be higher than the last round four years ago.

Which, of course, begs the question: If real estate and home prices are dropping around the country, how can the values go up here?

Good question. In some areas of Southwestern Virginia, tax reassessments have raised home values as much as 600 percent. Although land and home values are dropping in Carroll County, the assessor there has raised values on the tax roles by more than 300 percent over the last three years.

Roanoke County's tax rate went up a more modest 2.75 percent last year but even that flies in the face of economic reality where the prices of homes have plummeted in recent months.

We hired a private appraisal firm to assess our home a little over a year ago. The appraisal showed the value of the house and property had dropped since 2004 even though we have made numerous improvements to the property.

Real estate taxes are the primary source of revenue for most county governments. Tax assessors are under pressure to provide assessments that produce more, not less, revenue for cash-strapped government coffers.

Are the new assessments real or a case of smoke and mirrors? That's a question we all need to ask when these re-evaluations of our properties come in.

Real estate tax reassessments are coming this year in Floyd County and homeowners expecting to see a drop in real estate values are in for sticker shock.

Real estate values, at least in the eyes of the tax assessor, will most likely go up in Floyd County just as they are everywhere else in the area.

County administrator Dan Campbell tells me he expects the new assessments, when they come in, to be higher than the last round four years ago.

Which, of course, begs the question: If real estate and home prices are dropping around the country, how can the values go up here?

Good question. In some areas of Southwestern Virginia, tax reassessments have raised home values as much as 600 percent. Although land and home values are dropping in Carroll County, the assessor there has raised values on the tax roles by more than 300 percent over the last three years.

Roanoke County’s tax rate went up a more modest 2.75 percent last year but even that flies in the face of economic reality where the prices of homes have plummeted in recent months.

We hired a private appraisal firm to assess our home a little over a year ago. The appraisal showed the value of the house and property had dropped since 2004 even though we have made numerous improvements to the property.

Real estate taxes are the primary source of revenue for most county governments. Tax assessors are under pressure to provide assessments that produce more, not less, revenue for cash-strapped government coffers.

Are the new assessments real or a case of smoke and mirrors? That’s a question we all need to ask when these re-evaluations of our properties come in.

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10 Responses

  1. Thanks for raising this issue before it’s too late. I saw a report on the tax increases in Carroll county. One family’s taxes had increased from $400 to $4000. The people interviewed seemed frightened and helpless. I suspect some feared losing their homes because they could not pay these outrageous charges.

    On the other hand, the Tax Assessors, when interviewed, seemed chipper and smug. Obviously they had delivered the goods to their revenue-hungry employers. I commented to my wife at the time ” I sure hope this doesn’t happen in Floyd Co.”

    Knowing one can’t sue the government, any government successfully, contributes to the citizen’s sense of helplessness and fear that those in power will readily decide to take one’s money or home.

    But my question is this, Doug. Couldn’t a Coalition of Concerned Homeowners sue the Assessor for dishonest and backbreaking assessments ? After all, many of us could do as you did, and get private assessments to prove the fraud. I know assessors are required to carry insurance for such contingencies, so lawsuits MUST be possible. Perhaps they cannot hide behind the skirts of local governments.

    Just knowing such a coalition were ready to chip in and hire lawyers to sue in the civil courts might go a long way towards keeping the process honest.

    I propose that we the citizenry of Floyd County consider defending ourselves against such taxation without representation.

  2. At risk of sounding like the impressions writer Jim W., above, took from the Patrick County hearing, I do think that other points should be considered before we all get our knickers in a knot.

    Doug asked the question how values could go up here when they are plummeting elsewhere. It could be related to the fact that we are on a four year appraisal cycle. If values went up modestly for three of those four years and then dropped back to levels of three years ago, we still would all see an increase from prior valuations. The four year reassessment cycle saves the County and its taxpayers money but makes the new valuations, encompassing four years worth of appreciation, seem so much more dreadful.

    I think that it may also be possible that the common sense of Floyd Countians limited exposure to the so called sub-prime mortgages and the artificially inflated appraisals that accompanied such schemes. A great deal of the collapse of real estate prices nationwide might be attributed to those inflated real estate values returning to fair levels. Floyd County might not mirror that national pattern.

    Doug, it would be beneficial to know if the independent appraisal you obtained is compared to the county assessment of 2004 or the same independent appraiser’s valuation from 2004. It could be an apples to oranges comparison if not. Is it not possible that a 2004 independent valuation might have been lower than the county valuation back then too? If so, the one you just got could have been higher than that one while being lower than the earlier county assessment.

    Increases in valuations do not necessarily mean increases in taxes. I believe that under Virginia law, an increase in assessments cannot result in a revenue increase of more than one percent (1%) without action by the governing authority. A common action is for the authority to reduce the tax rates applied to the increased valuations in order to be “revenue neutral.” For example if the values go up by 100% the rates must be decreased by 50% to achieve neutrality. If the authority seeks more than a 1% increase in revenues, then it must conduct a public hearing to establish any new tax rate that generates more than that. Doug, help me out here, but I believe that the the last time around Floyd County did cut the rate to preserve revenue neutrality or close to such.

    I think that another factor affects valuations here in Floyd County, and that has been population growth. That growth was touted to have been the highest percentage increase in all of SW Virginia over the last decade or so. That means lots of people have been buying lots of land. And if my own experience is any indication, folks from larger metropolitan areas pay a lot more money for land here than assessed values. Within weeks after I had an independent appraisal done, some comparable land adjacent to mine sold for three times the price per acre in my appraisal and there was no home, nor improvements, nor timber on that land. That chap paid three times the price here, because that was but one fourth the price he would have paid back where he came from. A sale like that goes a long way to establish higher valuations by the County assessors and it has happened a lot since 2004.

    And finally, we all need to look at ourselves in the mirror just a bit. Who amongst us, IF we were selling, wouldn’t want the absolute top dollar for our land and homes? Valuations, and our impressions of them, are moving targets; we don’t want valuations so high that we can’t afford to pay taxes, but we probably all want really high values when we sell. Should my neighboring land owner have told his buyer “Please pay a lot less because the land is not assessed that high?” Of course not.

    Please, don’t anyone misunderstand me on all this. I don’t want to pay any more taxes than the next guy. But nor do I think we should approach this inevitable event in a “ready-FIRE-aim” kind of way. Each and every one of us has the right of appeal for valuations that we think are too high. Each and every one of us has the opportunity to approach our respective supervisor to discuss concerns in a civil manner. IF there were to be a public hearing on a proposed tax increase, each and every one of us has the right to attend and be heard.

  3. Jack Russell,

    Excellent post, you are absolutely dead on with the facts and I basically agree with your opinions.

    Sorry for not laying out an exhaustive listing of the rules and regulations that we face, both local govt AND citizens, in regard to these reassessments and their potential impact. I guess I took for granted that these guidelines are common knowledge, thanks for taking time to transcribe them.

    From what I gather, the real bone of contention, (aside of the timing of this “increase”) is that it is setting up a situation in which people will be taxed off their land, plain and simple. Here are some of the numbers we’re talking about.

    Given that Patrick Co. has, lowered it’s tax rate from .55 per $100 to .33 per $100 lets look at the “average” increase (according to the BOS) of 76%.

    I like round numbers so lets start with a property originally valued at $100,000.
    Under the old tax rate, Patrick Countians would have paid a yearly tax bill of $550.
    Same property, applying the reassessed value and new rate would result in a yearly tax bill of $580. That represents a 6% increase in tax burden (6 times higher than the maximum 1% increase you imply a taxpayer can expect from this sort of thing, I digress.)
    That’s using an “average” given by both the board and the reassessor. Unfortunately I’ve seen no evidence to support any increase that low, but that’s the number they keep clinging to.

    Here are some real world examples that I have seen with my own eyes. I’ve seen my real estate value increased by 120% and as a result my bill went from $1,237 to $1,633 allowing me to experience a 32% increase in tax liability.

    I’ve not talked with anyone whose increase was lower than mine, but I have seen several who’s value went up 300% to 400% and that is not an exageration. I’ve seen one case of an increase of 660% and another of 1,000% (yes 10 times higher!).

    The majority of these outlandish increases were seen on small farms and larger open tracts and here’s where things get a little ugly. A friend of mine who’s lived in Patrick Co all his life (he’s in his 70’s) and has a tiny house on 60 acres that he paid off long ago. He told me he paid $12,000 for his land and built the house himself at a cost of around $15,000. He was crying when he showed me his reassessment. His value had gone from $160,000 to $1,056,000. His tax bill will go from $880 to $3,485. He told me he guess’d he’s just “plain F@^ked” and I can’t disagree with him there, can you??

    Enough math for now, I presume you get the picture.

    I don’t know how it will all shake out given that the overall revenue increase is limited to 1%, evidently some people are going to be paying less and they aren’t complaining?

  4. Doug,

    I am not a member of the Planning Commission. I am an appointed member of the Economic Development Authority and have served in that role for ten or more years. I participate in this blog as a private citizen and I serve on the Authority for no other reason than an interest and willingness to give back to my community. In this very blog you previously defended my courage to use my full name while participating. If I were “speaking as a member of the Commission” – which I feel neither inclined toward nor appropriate to do in this forum – I would say so.

    From the tenor of your reply, you seem to have taken offense to my question about the comparisons of independent vs. county valuations on your property. None was intended but I think the question was a valid one for any of us readers to better understand the statistics.

    You may very well find real property valuations at fair market value to be out of the realm of your personal experience over 40 years. I believe however that Commonwealth law REQUIRES that authorities value properties at “fair market prices.” Such was enacted a long time ago to bring some measure of uniformity to a process that differed widely from city to city and county to county. Please let me and your readers know if you think my belief on this matter is incorrect.

    I do not believe that I put forth any questions or comments in my original post that were not germane to the issue. I continue to assert that an increase in property assessments does NOT necessarily mean a corresponding increase in taxes paid. Counties can NOT reap windfall gains in revenue simply from increasing assessments. Counties (or towns or cities) are required to reduce tax rates to a level that generates no more than one percent (1%) or they must treat any amount in excess of that as a proposed tax increase, advertise the proposal, and conduct a public hearing on the matter. Of course taxes may go up, but your post only referred to the valuation side of the question and made no reference to the tax rates applied. Please let me and your readers know if you think my belief on this matter is incorrect.

    My other points were indeed more subjective, to be sure. Please let me and your readers know, however, if you think those subjective points are not plausible.

    In your reply, you did not address any of my points on merit, choosing instead only to suggest that my comments might not have been my own or somehow tainted by my service on the EDA. It is fair enough to disclose my volunteer public service and maybe I would have been wiser to have done so. But for you to leave open for inference any connection between your first paragraph and your last sentence is RUBBISH and you know it, Doug.

  5. Jack: I appreciate your willingness to use your name. I’ve had to eliminate comments from some who choose to hide their identity.

    It is important however, for readers to know whem comments come from someone who might have a vested interest in the outcome of assessments and tax revenues. When I write about issues affecting drunk driving, I always remind readers that I serve as the county’s representative on the advisory board of the Virginia Alcohol Safety Action Program.

    You may very well find real property valuations at fair market value to be out of the realm of your personal experience over 40 years. I believe however that Commonwealth law REQUIRES that authorities value properties at "fair market prices." Such was enacted a long time ago to bring some measure of uniformity to a process that differed widely from city to city and county to county. Please let me and your readers know if you think my belief on this matter is incorrect.

    "Out of the realm of my personal experience?"  I’ll let that slam pass. I lived in, and owned, property in Arlington County for 23 years (until 2004) and the tax assessment there was never close to the "fair market value" of our property, which sold at three times the tax assessment in 2004.

    I’ve owned, and own, property in several states and have a pretty good "realm of personal experience" upon which to judge tax assessments. I’ve also been writing about the actions of local governments (along with state and federal governments) for more than four decades so I may know a thing or two about how they function.

    Is it "rubbish" to suggest a government might cook the books? You’re either naive or you think my mama didn’t drown the dumb ones. The one constant I’ve found over the past 40 years is that elected officials will either cut corners or lack the expertise to know when the corners have been cut. Is it plausible to believe a government might pad an assessment to aid revenue enhancement? Damn right it is. I’ve seen it happen too many times. It happens in Carroll County on a regular basis. Will it happen in Floyd County? I don’t know yet. I hope it doesn’t and I haven’t said it did. I just said it could happen, given economic realities for cash-strapped governments and citizens have a right to know if it does.

    Sorry about getting the name of your commission wrong. I was writing the response to you while writing stories for another publication and one of them concerned a planning commission. I have corrected the post.

    I admit my mistakes. Do you?

  6. Doug,

    I don’t quite know what your beef is with my phraseology, “realm of experience.” You wrote:

    “Floyd County is one of the few places I’ve lived over the past 40 years that produces property appraisals that can equal or exceed the market valuation of property.”

    That sounded to me like you were writing from your personal experience. Does realm of experience not reflect that? It was not a slam in any way. My point was that VA law requires assessment at fair market value and I asked you disabuse me and your readers of that notion if incorrect.

    You also wrote:

    “….you think my mama didn’t drown the dumb ones.”

    Doug you might very well say that, but I could not possibly comment.

    You go on to ask if I admit my mistakes. The short answer is yes. And further, I have always found, over my realm of experience, that if one has to eat crow, start at the hind end. That way, by the time you get to the head, it doesn’t taste half bad. Specifically, if you consider my failure to disclose my volunteer service on the EDA, which I continue to think unrelated to my participation in these blog discussions, to be a mistake, then yes I believe I did admit such in my sentence:

    “It is fair enough to disclose my volunteer public service and maybe I would have been wiser to have done so.”

    There is no apology necessary on your part for mixing up the authority on which I serve. I simply corrected the factual error contained in your first reply.

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