Homeowners faced with soaring tax assessments could opt for temporary relief under a new program the Richmond City Council will consider.
Councilwoman Kimberly Gray, who represents the 2nd District, introduced a measure this week that would allow owners to defer a portion of the property taxes they owe the city if their assessments rise at least 10 percent from the previous year.
For example, if a property was previously assessed at $200,000 and jumped to $230,000, the owner could defer payment on the taxes owed for $10,000 of the property’s value under the program. At the city’s current tax rate of 1.20 per $100 of value, that would amount to $120 in taxes.
“It is intended to help families who are either on a fixed income or have modest means that own a home in areas that are seeing a lot of development and land values are going up at a very rapid rate,” Gray said.
More than 18,000 property owners would be eligible for the program, according to a council staff analysis of data on the current tax year made available by the City Assessor’s Office.
The program would take into account growth only from the previous tax year, rather than locking in an assessment level.
If all homeowners who qualify for the program opted in, the city could defer a projected $2.7 million in property tax revenue annually, though Gray said she does not expect all would take advantage of it.
To qualify for the deferral program, a homeowner would have to live in the property for two years, owe no back taxes, and agree to pay 2 percent interest on the deferred amount when they settle with the city. Owners would be required to pay the full amount deferred plus interest when they sell the property.
The measure comes shortly after some homeowners saw steep increases in assessments the city sent out at end of June. The average home value rose 8.3 percent, from $228,000 to $247,000. The bump means the average tax bill will go up $228 when the city mails them to property owners early next year.
“You can’t plan for those increases,” Gray said.
In some areas, the spike was even more dramatic. More than two dozen neighborhoods saw assessments increase by double digits, according to the assessor’s office. Among them: Woodland Heights, Scott’s Addition, Manchester, Providence Park, Oakwood, Carver and Oregon Hill.
Richmond’s real estate tax rate — $1.20 per $100 of value — is the highest in the region. The rate per $100 is 95 cents in Chesterfield County, 87 cents in Henrico County and 81 cents in Hanover County.
Laura Lafayette, chairwoman of the Maggie Walker Community Land Trust and CEO of the Richmond Association of Realtors, said Gray’s proposal would provide aid for financially strapped homeowners without resulting in lost revenue for the city.
“It seems to strike a balance between the relief that a taxpayer needs in the here and now to enable them to stay in place and making sure that the city doesn’t permanently forgo that income,” Lafayette said.
Greta Harris, president and CEO of the Better Housing Coalition, said she believed the deferral program merited consideration as a piece of a larger effort to address housing affordability in the city and region.
“I think what Councilwoman Gray is proposing could be helpful for people in the moderate-income spectrum,” Harris said.
Commercial properties, many of which also saw steep increases in their taxable value, would not be eligible for the deferrals.
If the council approves the program, it could take effect in July 2019, at the start of the next fiscal year. The Department of Finance would administer the program. John Wack, its director, said he was concerned about the additional workload the program would place on the department, but added the administration had not yet analyzed its full impact.
The council’s Finance and Economic Development Standing Committee is scheduled to weigh Gray’s ordinance at its next meeting, scheduled for Thursday.