Estimated 2010 budget gap now $35 million
ARLINGTON, Va. – December 30, 2008 – (RealEstateRama) – Arlington real estate property values for 2009 performed at a higher-than-expected level, showing a net gain of 0.4%, County officials announced today. Existing properties declined in value 0.06%, but new property added 1.0% to the County’s real estate, resulting in a slight gain.
Previous projections were for a decline of up to 5.0%. Normal growth for a sustainable budget is plus 4.0%
The commercial property tax base increased by 2.3%, while residential properties saw a net decrease of 1.2%.
The encouraging news on property values was partially offset by downward revisions for other revenues that are sensitive to economic conditions, including personal property taxes on motor vehicles. Additionally, the budget proposed by Virginia Governor Tim Kaine would further reduce state aid to Arlington by $2 million.
County Manager Ron Carlee reported that the County’s projected gap for Fiscal Year 2010 (July 2009 – June 2010) has decreased from approximately $40 million, announced in November 2008, to slightly less than $35 million.
Budget remains challenging
“It is great having some good news for a change” Carlee said. “Nonetheless, the FY 2010 budget remains a great challenge. To balance the budget, we will still have to use a combination of service reductions, downsizing, and tax rate increases.”
Carlee announced earlier in December that he would recommend no pay increases for County employees in FY 2010 in order to preserve as many services and as many jobs as possible. He previously instituted a freeze on vacancies for non-essential services and is preparing a plan for voluntary severance and early retirement.
“As difficult as this budget is, I would not trade the challenges in Arlington with those in any other community,” Carlee said. “We will have to make decisions that we will not like, but we can manage this situation.”
Carlee will present his proposed budget for FY 2010 in February 2009.
Net 1.2% decrease in residential property
As noted, Carlee had previously estimated that real estate values would range from zero to a decline of up to 5%. For budget planning purposes, his working estimate had been negative 2.0%. Existing residential properties did indeed decline 2.0%; however, new construction and condo conversions softened this decline, resulting in a net decrease of 1.2% in residential property.
The average single-family assessment for 2009 is $520,100, a decline from $530,800 in the previous year.
Commercial properties remain solid
Values were better than expected in commercial property.
“Having a property tax base that is split between residential and commercial property makes our economy extremely resilient,” Carlee said. “We also benefit from the fact that within each category, we have a wide diversity of sub-types: detached houses, townhouses, condos, garden and high-rise rental apartments, office, retail, and hotel properties. All help smooth out dramatic shifts in any one particular sector.”
The County Manager will present a detailed analysis of the County’s 2009 real estate assessments in January. Among the key points:
- The change in the tax base is due to a combination of growth from new construction, which added about 1% to the base, and declining property assessments, which accounted for a negative 0.6% change in the base.
- The total residential tax base, which consists of single-family neighborhoods of detached dwellings, townhouses, condominiums and cooperative units, declined in value from $31.5 billion to $31.1 billion, or negative 1.2%. New construction and conversion of property to condominiums added 0.9% to residential property values, while declining assessments accounted for a negative 2.1% change.
- The commercial property tax base, which includes multifamily residential property, offices, hotels, shopping centers and retail properties, increased by 2.3%, of which 1.2% was due to new construction and condominium conversions and 1.1% was due to appreciation in value.
- Multifamily residential assessments increased to $9.3 billion. The change of positive 5.4% is attributable to three sources: new construction, which added 4.2% in value; conversion of apartments to condominiums, which reduced the base by negative 0.6%; and appreciation in value, which added 1.8% to the multifamily base.
- Other commercial property increased in assessed value to $17.3 billion, an increase in the base of 0.7%. Conversion of property to residential use produced a negative 0.4% that was balanced by a gain from new construction of positive 0.4%. Appreciation in value added 0.7% to the base.
- The total value of all property is up 0.4% to $57.7 billion.
About real estate assessments
Real estate assessments are appraisals — the County’s opinions of value for each parcel of real property in Arlington. Assessments are made according to accepted methods, techniques, and standards of the real estate appraisal and assessment profession. The 2009 assessment is an estimate of the fair market value as of January 1, 2009.
Residential assessments were based primarily on neighborhood sales occurring from July 1, 2007 through June 30, 2008. The real estate tax rate determines the amount of the tax which is levied on the property. A uniform tax rate for all real property is set by the Arlington County Board. More information>>>
###
Arlington, Va., is a world-class residential, business and tourist location that was originally part of the “10 miles square” parcel of land surveyed in 1791 to be the Nation’s Capital. It is the geographically smallest self-governing county in the United States, occupying slightly less than 26 square miles. Arlington maintains a rich variety of stable neighborhoods, quality schools and enlightened land use, and received the Environmental Protection Agency’s highest award for “Smart Growth” in 2002. Home to some of the most influential organizations in the world – including the Pentagon – Arlington stands out as one of America’s preeminent places to live, visit and do business.
