City of Alexandria, Virginia
________________
MEMORANDUM
DATE: FEBRUARY 1, 2022
TO: THE HONORABLE MAYOR AND MEMBERS OF CITY COUNCIL
FROM: JAMES F. PARAJON, CITY MANAGER /s/
DOCKET TITLE:
TITLE
Consideration of the Calendar Year 2022 Real Property Assessments.
BODY
_________________________________________________________________
ISSUE: Calendar Year (CY) 2022 Notices of Assessment will be mailed to property owners on February 9.
RECOMMENDATION: That City Council receives this report on calendar year 2022 Real Property Assessments.
BACKGROUND: Discussed in the following report are the changes in real property assessments from CY 2021 to CY 2022 and historical statistics related to assessment appreciation/depreciation, new construction, and residential sales activities.
The 2022 real property tax rate applicable to the January 1 assessments is scheduled to be set by the City Council on May 4, 2022.
DISCUSSION:
OVERALL CHANGE IN CY 2022 REAL PROPERTY TAX BASE
The City’s overall assessed real property tax base increased 6.24%, or $2.73 billion on a year-over-year basis, from $43.8 billion in CY 2021 to $46.6 billion in CY 2022 (Attachment 1, Page 2, Line 73). The overall increase marks the continued improvement in the residential market and substantial growth in the multi-family sectors that began in CY2020 and delivered in CY 2021. The following table shows the year-over-year Land Book changes in grand total taxable real property assessments from CY 2016 to CY 2022. Of the $857.4 million in new growth reported as of January 1, 2022, $398.6 million (46.5%) was attributable to multifamily rental projects. Another $201.5 million (23.5%) was attributable to residential condominiums. This positive development accounted for 70% of the City’s new growth in CY 2022. More details are included in Attachment 12.
Calendar Year Grand Total Taxable Real Change from Prior Year
2016 $38.20 2.82%
2017 $38.99 2.07%
2018 $39.90 2.34%
2019 $40.98 2.71%
2020 $42.68 4.15%
2021 $43.83 2.69%
2022 $46.56 6.24%
Attachment 2 reflects the tax base from the starting point of the 2021 equalized assessments. The equalized assessment represents the year-ending 2021 assessments (as of December 31, 2021) and reflects changes that occurred throughout the calendar year including administrative reviews, appeals, Board of Equalization changes, supplemental assessments, subdivisions, consolidations, changes in tax status and demolitions. On this basis, locally and non-locally assessed real property assessments increased 6.71% (Attachment 2, Page 3, Line 66).
Points of Interest Relating to CY 2022 Land Book and Equalized Assessment Changes:
- Locally assessed real property assessments increased 6.29% (which consists of both new construction and appreciation), or $2.7 billion, from $43.2 billion in 2021 to $45.9 billion in 2022 (Attachment 1, Page 1, Line 49).
-
- The residential property tax base increased 6.91%, or $1.8 billion, from $26.0 billion in 2021 to $27.8 billion in 2022 (Attachment 1, Page 1, Line 21). This is the largest percentage increase to the residential Land Book property tax base since 2006.
On an equalized basis, the average assessed value for all residential property (including single-family and condominium) as of January 1, 2022, increased 5.36%, from $622,506 in CY 2021 to $655,901 in CY 2022. For 2022, approximately 82% increased, 3% decreased and 15% remained unchanged.
The average assessed value for a residential single-family home as of January 1, 2022, increased 6.44%, from $841,964 in CY 2021 to $896,176 in CY 2022. For 2022, approximately 97% increased in value, 1% decreased, and 2% remained unchanged.
The average assessed value for a residential condominium as of January 1, 2022, increased 2.81%, from $387,597 in CY 2020 to $398,470 in CY 2022. For 2022, approximately 65% increased in value, 6% decreased, and 29% remained unchanged.
Ø The commercial property tax base increased by 5.34%, or $915.86 million, from $17.16 billion in 2021 to $18.07 billion in 2022 (Attachment 1, Page 1, Line 47). This compares to a 1.96% decrease the previous year. For the second year in a row, industrial and self-storage properties led the commercial market increasing 15.4%. This was followed by multi-family rental properties that increased 10.3%. The pandemic continues to adversely impact the hospitality and office sectors decreasing 12.2% and 6.5%, respectively.
Ø State-assessed public service corporation property assessments increased 2.87%, or $18.3 million, from $638.4 million in 2021 to $656.8 million in 2022 (Attachment 1, Page 2, Line 71). The 2022 state-assessed Public Service Corporation assessments are effective January 1, 2021. These values are certified by the State Corporation Commission (SCC) and the Virginia Department of Taxation (VDoT) in late September of the effective year of the valuation. The City bills all non-locally assessed properties on a fiscal year basis in order to accurately reflect these assessment changes.
- Tax exempt real property assessments increased 1.76%, or $91.8 million, from $5.2 billion in 2021 to $5.3 billion in 2022 (Attachment 1, Page 2, Line 107).
-
- Taxable new construction activity added $857.64 million for CY 2022. This compares to CY 2021 when $227.0 million of growth was added to the City’s tax base. Residential construction accounted for $238.4 million of the new growth, while the commercial sector, which includes multifamily rental, accounted for $619.2 million. The expansion of the multi-family residential sector accounted for $398.6 million. Overall, $2.16 billion in new growth has been added to the tax base from 2018-2022. Historical new growth figures are detailed in Attachment 3.
-
- The table below compares the City of Alexandria’s median assessment to sales ratio for tax year CY 2020 to the Northern Virginia jurisdictions listed below, as determined by the Virginia Department of Taxation (VDoT). It is noted that this data is considered preliminary and has not been published statewide. Alexandria’s 90.93% ratio was in line with the surrounding Northern Virginia localities, showing the City’s assessments were close to market value. Median ratio data for CY 2022 will be released in early 2023:
-
- Jurisdiction Median Ratio
- Falls Church 92.61%
- Alexandria 90.93%
- City of Fairfax 90.46%
- Fairfax County 89.09%
- Arlington County 88.77%
-
- Impact of Tax Relief. Over the last ten years, the Commonwealth of Virginia expanded the eligibility for real estate tax relief for the elderly and disabled to include military veterans who are considered completely and permanently disabled and spouses of those determined to be killed in action. For FY 2022, the City has budgeted approximately $5.5 million for these programs.
-
- Distribution of Real Property Assessments
-
- Real property classified as residential for assessment purposes for CY 2022 represents 59.8% of the total real property taxable base, while properties classified as commercial and public service corporations represents 40.2% of the base. If multifamily housing is excluded, commercial comprises 20.2% of the base. This compares to CY 2021 when 59.4% of the tax base was residential, and property classified as commercial and public service corporations represented 40.6% of the base. If multifamily apartments were excluded, commercial real property would have comprised 21.3% of the CY 2021 tax base. A historical distribution of the City’s real property tax base allocated between classifications of real property for assessment purposes is detailed in Attachment 5.
-
- Attachment 6 details the distribution of the CY 2022 assessments in terms of actual dollars and percentages by land use. The land uses represented are residential single-family and condominium; residential vacant land; commercial multifamily rental; commercial office, retail and service; commercial and industrial vacant land; and public service corporations.
ATTACHMENTS:
Attachment 1: CY 2022 Real Property Assessment Land Book
Attachment 2: CY 2022 Real Property Assessment Including Appreciation and Growth
Attachment 3: Historical New Growth (CY 2015 to CY 2022)
Attachment 4: Potomac Yard
Attachment 5: Real Estate Tax Base Distribution (CY 2006 to CY 2022)
Attachment 6: Distribution of 2022 Assessments by Land Use
Attachment 7: Points of Interest - CY 2022 Residential Assessment Changes
Attachment 8: Average 2022 Real Property Assessment Percentage Change Map
Attachment 9: Analysis of the Commercial Market
Attachment 10: Overview of the Assessment Process
Attachment 11: New Construction Projects
Attachment 12: Noteworthy Trends in Alexandria Real Estate
Attachment 13: PowerPoint Presentation
STAFF: Office of Real Estate Assessments
Laura Triggs, Deputy City Manager
Kendel Taylor, Director of Finance
William Bryan Page SRA, RM, Assistant Director of Finance-Real Estate
Annwyn Milnes, Appraiser Supervisor
Stephanie Branizor, Appraiser Supervisor
Clare Knauss, Senior Appraiser
Leona Bradford, Senior Appraiser
Madison Blume, Senior Appraiser
Jessica Wills-Lipscomb, Appraiser
Eric Braun, Appraiser
Aracelie Hernandez, Appraiser
Jasenka Reeves, Real Estate Land Records Manager
Daria Johnson, Management Analyst II
Alexis Poteat, Administrative Analyst