Real estate values dropped 3.9 percent in 2009

To keep real estate tax revenues at last year’s level, Chesterfield County’s Board of Supervisors will have to increase the tax rate by at least 5 cents this year, according to information from the county.

The assessed value of all real estate in Chesterfield County dropped 3.9 percent during 2009, according to the county’s Department of Real Estate Assessments. The declined value of all property in the county represents the net effect of: a 4.8 percent, or $1.3 billion, reduction in the overall value of existing residential properties; a 6.4 percent, or $418 million, drop in the overall value of existing commercial properties; and a 1.2 percent, or $400 million, increase from new construction added throughout the year.

Despite significant fluctuations in assessed values among residential neighborhoods, approximately 93 percent of county homes experienced reductions in value. Only 3 percent of homes increased in value, and 4 percent remained unchanged.

According to the county’s  fiscal 2009-fiscal 2010 Biennial Financial Plan with fiscal 2010 amendments, total real estate tax revenues were budgeted at $312.4 million in fiscal 2010, which ends June 30. “Residential assessments for the 2009 Land Book, which … sets property values for calendar year 2009 tax billings, declined 1.5 percent,” it says.

“The real estate revenue projections assume a 4.75 percent decrease in residential assessments in calendar year 2010,” it says.

Jonathan P. Davis, director of real estate assessments, said property values are determined by examining the last 12 months of market activity, or sales. Assessors adjust for depreciation and a host of other factors, he said.

Another element of the annual revaluation process is determining the revenue neutral real estate tax rate, which, using the methodology specified in the Code of Virginia, represents what the county’s tax rate should be in order to produce the same amount of real estate revenue as the year before after adjusting for fluctuations in existing property values, according to information from the county.

Chesterfield County’s revenue-neutral rate for tax year 2010 was determined to be $1.01, 6 cents above the county’s current level. This method of calculating the revenue-neutral rate does not consider the value of new construction. When the value of new construction is considered, the rate for tax year 2010 that would generate the same revenue as the 2009 rate, which was 95 cents, would be $1.

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