Charlottesville’s strong housing sales market buoyed the city’s tax base as property values rose 3.3% on average despite the pandemic’s adverse impacts on hotels, restaurants and businesses, according to the city assessor’s 2021 property reassessment.
“The pandemic did depress the values somewhat, but we did see an increase overall,” said Jeffrey Davis, city assessor. “Residential properties increased an average of 4.2% but commercial properties saw a decrease of about two-tenths of a percent.”
The city’s 15,148 taxable properties combined for a 2021 citywide assessed value of about $8.5 billion, the reassessment states. Assessed values last year totaled about $8.2 billion.
The City Council will use the assessment in the coming weeks and months to determine a tax rate as it sets about to fund city projects, programs and services in the fiscal year 2022 budget.
That tax rate, currently 95 cents per $100 of value, combined with a particular property’s assessed value, will determine owners’ tax bills. The bills are usually sent out about 30 to 45 days before they are due. The bills are split into two equal installments each year, one due on June 5 and the other on Dec. 5.
Properties are looked at each year by the assessor’s office to determine a fair market price, to which the tax rate is applied. Although still up, the 2021 assessed value is the lowest increase in nearly a decade.
“We’ve been averaging over the last 10 years about a 4.7% annual increase,” Davis said. “We’ve had pretty steady increases all along. This year, the residential market remained strong and it will likely continue to be strong so long as the inventory of homes for sale remains low and interest rates remain low.”
Charlottesville saw a limited number of homeowners put their properties up for sale last year, but buyers were very interested in those properties that were on the market, according to reports released throughout 2020 by the Charlottesville Area Association of Realtors.
More buyers chasing fewer properties causes an increase in home prices and an increase in fair market values, Davis said.
The assessed value of Charlottesville residential properties is based on sales prices of similar properties, sales prices of properties in the same neighborhood and the specific characteristics of the property.
“It’s all neighborhood based. If homes are similar to other houses that sold and those sale prices go up, the values of those that aren’t on the market will likely go up,” Davis said. “We compare with a number of sales, so it’s not just based on one home that sold, and we investigate the sales to make sure they are not sales between family members and are actually at-arms-length sales.”
Residential properties in Albemarle County’s urban areas saw an average 3.1% increase, according to the county assessor’s office.
Davis said commercial properties suffered in value because of the COVID-19 pandemic.
In Charlottesville, as across the state, commercial and business property values are based on an income approach, which uses the property’s income to estimate its value.
According to the city assessor’s office, the method considers the ability of the commercial property to generate income. The net income, combined with market sales of nearby properties and similar properties, is used to determine a property’s assessed value.
“We had to recognize that the hospitality industry has really taken a beating during the pandemic, as has the restaurant industry,” Davis said. “If you have a hotel or a restaurant and you are limited to the number of guests and the income you can make, that has an impact on the value of the property. That’s had an impact everywhere.”
In Albemarle County, commercial property assessments decreased by an average of 5.5% with shopping centers, restaurants and hotels seeing the biggest decreases in value, according to the county’s reassessment.
According to the city’s reassessment, more than 82% of Charlottesville homes saw an increase in value while about 13% were unchanged and nearly 5% declined in assessed value.
Slightly more than 64% of commercial properties saw increases in assessed value while more than 21% remained stable and about 14% declined in value. Those that declined included hotels, shopping outlets and restaurants, offsetting the properties that saw assessments increase, according to the city.
Reassessment notices have been mailed to property owners. Anyone who questions whether their values are accurate should contact the assessor’s office, Davis said. Staff will review the assessment to determine if it is accurate.
Those who remain dissatisfied with their property assessment may appeal it to the city’s Board of Equalization.
“We do the reassessment every year,” Davis said. “It’s an estimate of what your property value is as of Jan. 1.”