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Property values up in city

Jeremy M. Lazarus | 7/8/2016, 5:05 p.m.
For the third year in a row, rising property values in Richmond will put Richmond City Council on the spot ...

For the third year in a row, rising property values in Richmond will put Richmond City Council on the spot when it comes to collecting property taxes from owners of real estate.

Before retiring July 1, City Assessor James Hester issued a preliminary report noting that the current value of real estate in the city — homes, apartments, commercial and industrial space — is up 3 percent compared with last year.

The increase means the city’s nine-member governing body again will have to decide whether to maintain the current tax rate of $1.20 per $100 of assessed value — equal to $1,200 for a home valued at $100,000 — or reduce it.

It doesn’t matter that the city’s current tax rate is the lowest since Richmond first imposed a tax on property in 1870 to pay for its new system of public schools. City records show the original tax was $1.25 per $100 of assessed value.

When property values are increasing, state law requires local governments automatically to roll back the tax rate to ensure taxpayers pay no more than a 1 percent increase over the previous year.

The law requires that the governing body vote if they want a higher tax rate. In each of the past two years, council has voted to keep the $1.20 tax rate, essentially raising the tax bills for those whose property values increased.

This year, the tax rate would roll back to about $1.17 per $100 of assessed value. For a property valued at $100,000, the rate would bring a tax of $1,170 — a $30 savings from the current rate.

Given that Mayor Dwight C. Jones and City Council built the new budget that went into effect July 1 on projections of higher property values, rolling back the tax rate could require spending cuts.

Every penny of the property tax yields about $2 million in revenue for the city — critical for a government that is struggling to balance its budget and is looking for more money to pay for improvements to schools and city property.

The 3 percent increase in overall values is based on the new assessments that were issued last month to the owners of the 70,236 homes , condominiums, apartment buildings and commercial and industrial properties in Richmond. The property assessments will be used to generate real estate tax bills in January 2017.

According to the preliminary report, the total value of taxable property now exceeds $21.5 billion. This is the first year that property values have surpassed the previous peak of $21.1 million in 2010 — a signal that much of the city’s real estate market has almost fully recovered from the Great Recession.

The value of property is largely based on comparative sales prices in the previous 12 months.

However, a closer review of the assessor’s report shows that the rise in property values is very uneven across the city, with property values still flat or declining in a third of the city.

For example, the new property values in the Shockoe area of Downtown collectively jumped $33 million, or nearly 17 percent, compared with last year, the largest single increase in values.