City sees slight rise in grants for tax relief

By Rachana Dixit

Published: October 5, 2008

Charlottesville’s 2008 Housing Affordability Program is giving $428,475 in grants to city homeowners for real estate tax relief, a slight increase from last year.

Grant amounts were upped $25 this year — to $525 for household incomes of less than $25,000 and $375 for incomes between $25,000 and $50,000 — in addition to an increase in eligible property values. To have been eligible for the grant, homeowners had to fulfill a range of criteria, including a maximum assessed property value of $365,000, own no other property nor owe delinquent real estate taxes.

Though there were 149 more applications submitted to the commissioner of revenue’s office this year, for a total of 1,420, fewer were accepted. In 2007, 1,015 grant applications were approved, as opposed to 995 this year. The program started in 2006, with Alexandria being the only other Virginia city to implement it.

“It’s been an extremely popular program,” said Lee Richards, Charlottesville’s commissioner of revenue.

Many of those who were rejected for the grant had a household income of more than $50,000, and a smaller number owned more than one city property.

However, Richards said the city encourages those who may not fit the income requirements to nonetheless apply for the grant. Future amounts and grant logistics, he said, are determined from examining applications from previous years.

“What we try to do is come up with a form that, say if you made $60,000, if you would still apply so that we could begin to look at how many people might have qualified,” Richards said.

Every year, Richards said, the city manager’s office sets the parameters of the program based on application estimates. But he cited a number of reasons as to why application numbers increased this year — from the program’s advertising to the economy.

“With the way the economy is now, people are having a hard time of it,” he said.

Charlottesville Mayor Dave Norris said the grant and property value caps were increased this year by the City Council because of rising property assessments, and because the city wanted to encourage more residents to apply. But he does not suspect that will be the case for the upcoming year.

“We’re seeing assessments decline or flat-line at best in most neighborhoods,” Norris said. Charlottesville officials are projecting a $1.8 million budget deficit by June 30, with the biggest piece coming from an estimated $573,000 reduction in real estate tax revenue. During the 2008 fiscal year, the city collected $47.35 million in real estate taxes.

When councilors considered the increase for the grant, Norris said, it was expected that most neighborhoods would experience moderate climbs in their assessments.

“That’s clearly changing,” Norris said.

Ivo Romenesko, a real estate consultant and appraiser, said assessments are a backward-looking type of analysis for property values because they are formulated on mass models at the end of one year and applied for the next.

“Assessments were increased based on historical sales,” he said. While sales in Charlottesville were strong in the past, Romenesko says the current demand for houses is down.

A report given to the City Council in August by Leslie Beauregard, the city’s budget director, said residential real estate assessments — which were expected to grow 4 percent this year — are only showing a growth of 1 percent. City figures show that combined residential and commercial real estate assessment growth began to slow in fiscal 2008, when it was about 6.7 percent. In 2007 it was 15.03 percent; in 2006, 17.78 percent.