Scott York Talks Real Estate, Tax Rate with Local Realtors

Scott York, Chairman Loudoun County Board of Supervisors met with the Dulles Area Association of Realtors Government and Political Affairs Committee yesterday. The purpose of this meeting was to discuss the Loudoun housing market and other Loudoun real estate related issues.

Some of the topics covered were:

• Current state of the housing market and future projections
• Foreclosure and short-sale situation and issues
• Loudoun down-payment assistance program and county employee housing assistance
• Best use of $2M from Neighborhood Stabilization Program (NSP)
• New Loudoun County tax rate of $1.245 per $100
• Proposed increase in proffers
• The first annual Dulles Home Fair
• Moorefield Station and Dulles Rail update

I think that we surprised Scott York with some of the latest information and statistics on the Loudoun County housing market as well as the foreclosure and short-sale situation. But that was a given… The market, bank policies and rules change so quickly and often that it’s hard to keep up – even for full time real estate agents.

Some of us made the suggestion that the county use the $2M from the Neighborhood Stabilization Program more for down-payment assistance than for buying up foreclosure properties to rehab and flip. Rather than buying 10 to 12 foreclosure properties, rehabbing them and flipping them, they could do something like offer $15K in down payment assistance to 150 home buyers who really need it. This could benefit people such as county employees many of who live in West Virginia or Maryland because they couldn’t previously afford to live in Loudoun.

Personally, I think that down payment assistance is a much better use of those funds because it’s helps a far greater number of people than flipping a few bank-owned homes. (Click here to read more about what’s going on with the Neighborhood Stabilization Program and the money)

The first annual Dulles Home Fair was also a topic of discussion, particularly the classes being offered at the event. The classes will help Realtors and consumers better understand the current real estate market and home buying opportunities. (On a side note…Loudoun County is helping sponsor the event)

The latest news on Moorefield Station is that it will be completed sometime in 2016 rather than the 2013-2015 date previously thrown around. Scott York mentioned that the bulk of the construction will occur within the last 2 years of development. Consider the next 4 to 5 years to be the calm before the storm…

And the topic that many of you have been waiting to hear about – the new Loudoun County tax rate.

When sharing our concerns with the new Loudoun tax rate and those of our clients and others we’ve spoken with, he looked as though he had heard the same things from others hundreds of times before. And then he brought up an interesting and great point…

When you do an apples-to-apples comparison of the tax rate of all the counties and areas in Northern Virginia, Loudoun County is NOT the highest in the area as many claim it is (including mass media).

Loudoun County has one real estate tax - $1.245 per $100 – that covers everything while other jurisdictions have multiple taxes that they add on top of the real estate tax. Examples of taxes that other jurisdictions add on to your tax bill are fire and rescue, stormwater service, leaf collection, refuse collection and community centers. These additional taxes make for much higher overall tax rates than advertised.

In addition, Loudoun County’s commercial tax rate is lower than many other jurisdiction’s rates. This may not mean much to many of you, but it means a lot to those of you who are involved in commercial real estate or are a business owner.

So even though Loudoun’s tax rate seemed really high at first glance,  it’s actually not as high as others in Northern Virginia (*cough*…Prince William County… *cough* …Fairfax County… *cough* …and others…)

Definitely a productive meeting with lots of good information and ideas discussed. I got some good things out of it and hope Scott York did as well.

Loudoun County Tax Rate Increasing for 2010

 

Loudoun County's real estate property tax rate will increase in 2010 to meet the current and future needs of the county's school system and other programs. There is a large budget shortfall due to an average drop of 8 percent in residential values and 2 percent in commercial values. In reality, it's due to poor planning on the part of Loudoun County, but that's a discussion for another time…

According to the Loudoun County school system and county officials, the county needs to raise the tax rate to at least $1.26, if not $1.35 per $100 of assessed value. The current rate is $1.14, which is a 19% increase from $0.94 just two years ago.

Should the tax rate be raised to $1.26, that would be a 34 percent increase in just three years. If the tax rate were raised to $1.35, that would be a 44 percent increase.

On a side note…in this area, only the Town of Leesburg and Manassas Park have higher tax rates than Loudoun County ($1.32 and $1.27). Should the increase to $1.35 occur, Loudoun would have the highest tax rate in the area. Remember when Loudoun was attractive to home buyers due to having a lower tax rate than Fairfax? So much for those days…

The Loudoun County school system posted an article on their web site about this issue. Here's an excerpt:

Loudoun County Deputy Chief Financial Officer Ben Mays detailed the budget outlook that was presented by County Administrator Kirby Bowers to the Board of Supervisors and the School Board earlier in the week. Figures contained in this analysis include:

• At the current real estate tax rate of $1.14 per $100 of assessed value, the county government would face a revenue shortfall of $27 million and the school system a shortfall of $70 million in Fiscal Year 2010. That shortfall would come from the funding level of this year's budgets.
• A tax rate of $1.26 is necessary to get the county government and school system back to the same funding level as this year.
• A tax rate of $1.35 would be needed to accommodate the anticipated increase in budget items, including school enrollment growth. (This rate would not fund raises or new programs, but would cover things such as increased insurance and retirement costs on current county employees.)

Will Loudoun County home owners pay the higher tax rate? According to some, they will because they want a higher level of service and are willing to pay for that. But it may affect the decision of future home buyers who may view Loudoun as less attractive than before due to higher taxes and a higher monthly house payment.

Whatever the Loudoun County tax rate increase for 2010 will be, there is sure to be one and it will go into effect July 1, 2009.

Loudoun Assessor Releases Forecast of 2009 Assessed Values

According to the Loudoun Times-Mirror, the Loudoun County Assessor's office released a report that says that assessed values throughout Loudoun will be an average of 11 percent below 2008's assessed values. In addition, here are some of the other stats they released:

Single-family homes on parcels of less than 1 acre in Sterling are being assessed on average 25 percent below the previous assessment, while townhouses are down 36 percent and condominiums are down nearly 57 percent.

Also seeing big drops are homes in Sugarland Run, with single-family homes, townhouses and condos experiencing declines between 15 percent and 20 percent; Potomac (including Cascades and CountrySide), which is seeing declines between 12 percent and 20 percent; and Leesburg, which is seeing declines between 16 percent and 28 percent, depending on the type of home.

Meanwhile, values in the Dulles District, which includes communities in the southeast corner of the county, are seeing the smallest drop in values, with 2009 assessments trending about 2 percent to 8 percent below 2008.

Sounds like they did more homework than last year, which is great. But there are a few things they could clarify some more:

1. Is the Assessor's office factoring in whether a property that sold was a bank-owned or short-sale property when it comes to comps/market value?
2. How exactly did the Assessor's office come up with an 11 percent average drop in values throughout Loudoun County?

On a side note…The drop in assessed values along with other issues is sure to send the Loudoun County budget shortfall and deficit much higher than expected. This will create even greater financial turmoil for the county than projected. I'll be writing more about that shortly…

Related Articles

"Assessor's Concerns Go Public" – LoudounExtra.com

"Loudoun County Home Assessments Drop by 12%" – Channel 8 News