January 15, 2009

The Honorable City Council
City of Newport News
Newport News, Virginia

Dear Council Member:

It is with pleasure that I submit to you the twenty-second Annual Report of the Office of the Real Estate Assessor.  The purpose of this report is to better acquaint City Council with information relative to the assessment of real estate in the City of Newport News.

The general functions of the Real Estate Assessor’s Office are as follows:

1. Assess all real estate, including tax exempt property, at its fair market value.
2. Interpret and administer all laws pertaining to real estate assessments and exemptions.
3. Publish a land book annually, which is the official real estate tax roll.
4. Maintain records and provide information for each parcel of real estate in the City of Newport News.
5. Conduct hearings and review assessments with the public.
6. Represent the City before the Board of Review of Real Estate Assessments and Circuit Court as necessary.

As mandated by State and Local codes, this office must strive for assessments that are 100% of fair market value while maintaining equalization and uniformity.  This office reviews assessments annually for each class of property to determine the changes necessary in the reassessment.

The following list represents the average change in assessments from 2007/08 to 2008/09 broken down by property class:

Every effort is made to promote and maintain good public relations while informing the public of the policies, procedures and work performed by this office in carrying out these duties.

This year 43,372 reassessment notices were mailed in April 2008 to property owners informing them of the assessment for their property that would be effective July 1, 2008.  Each notice extended an invitation to contact the Assessor’s Office to discuss their assessment should they so desire.

For the three weeks of hearings ending April 25, 2008, this office received 375 inquiries concerning reassessments which represents 0.86% of the notices mailed.  Of these inquiries, 89% were conducted by telephone and the balance by office visit or e-mail. From this contact with our office and subsequent field inspections and data verification, 60 assessments were changed.

If the property owner is not satisfied with their assessment after their contact with our office, they have the right to appeal the assessment to the Board of Review of Real Estate Assessments.  For FY2009, there were 26 property assessment appeals heard by the Board of Review. Of these, 15 assessments were affirmed by the Board and 11 appeals (all commercial properties) were reduced.  For historical reference, since 1994, there have been 74 hearings in total inclusive of FY2009, of which 11 of 13 residential cases were affirmed (84.6%), and 47 of 61 commercial cases were affirmed (77.1%).

The Virginia State Department of Taxation conducts annual studies to determine the accuracy of assessments and their quality for preceding years.  These studies utilize the overall sales ratio and coefficient of dispersion as a measure to determine the above. These statistical measures are one way of addressing how well the Assessor’s Office performs its job.  Since the coefficient of dispersion measures the quality of an assessment ratio, the lower the figure the more equitable the assessments.  A coefficient of dispersion of fifteen percent (15%) or less is considered satisfactory, with ten percent (10%) or less being the desired goal.

The most recent sales ratio calculated for the City of Newport News for FY2007 is a median ratio overall of 76.93% with a coefficient of dispersion of 7.56%.  Segregated by property type the ratios are 76.93% for residential, 77.75% for apartments and 77.56% for commercial which shows excellent conformity across property types.  For FY2006, the reported ratios were 70.05% overall, 70.00% for residential and 82.81% for commercial.

25 YEAR ASSESSMENT HISTORY

Taxable Property

NON-TAXABLE TOTALS / 10 YEAR ASSESSMENT COMPARISON
July 1, 2008

The total value of all tax-exempt property within the City of Newport News increased $365,441,657 or 11.79% from the previous year.  City-owned tax-exempt property decreased by 10 parcels and the total value increased by $63,874,357 from 2007/08 to 2008/09.  Tax-exempt  City property is inclusive of the City of Newport News, the City of Newport News School Board, the Newport News Redevelopment and Housing Authority, the Industrial Development Authority and Economic Development Authority.

            The General Assembly of Virginia enacted legislation changing the tax exemption by designation program in 2003.  Effective January 1, 2003, no new tax exemption by designation will be granted by the General Assembly. Each locality had to adopt local ordinances to establish a tax exemption program.  Newport News adopted a tax exemption by designation ordinance and a policy whereby any organization owning property in Newport News seeking relief from real estate taxes may apply for a Real Estate Tax Reimbursement Grant or apply for tax exempt designation from City Council.  The grant program is administered by the Department of Budget & Evaluation in coordination with the City Attorney’s Office and the Assessor’s Office.  Organizations previously granted tax exempt designations by the State will remain tax exempt providing there is no change in ownership or use.

PUBLIC SERVICE CORP. PROPERTY / 25 YEAR ASSESSMENT HISTORY

BUILDING PERMITS

Building permits for additions, alterations, and new construction are reviewed and worked quarterly throughout the year commencing July 1.  Approximately 5,000 building permits were worked by this office during the 2007/08 fiscal year.  As building permits are completed, they are valued quarterly and the value and taxes are prorated for the remaining portion of the year.  The quarterly breakdown for tax year 2007/08 building permits is as follows:

July 1, 2007 - New improvements, additions and alterations completed during the quarter totaled $62,438,556 or $686,824 in taxes.

October 1, 2007 - New improvements, additions and alterations completed during the quarter totaled $17,482,100, when prorated for nine months equated to $13,111,575 or $144,227 in taxes.

January 1, 2008 - New improvements, additions and alterations completed during the quarter totaled $35,511,000, when prorated for six months equates to $17,755,500 or $195,310 in taxes.

April 1, 2008 - New improvements, additions and alterations completed during the quarter totaled $72,818,800, when prorated for three months equates to $18,204,700 or $200,252 in taxes. 

The quarterly building permit activity for the past five years is displayed graphically below:

 PROPERTY TRANSFERS

During fiscal year 2007/08, 5,035 transfers of property were recorded in the City of Newport News Clerk of Courts Office by deeds and affidavits.  The transfers were obtained from reading 29,776 recorded instruments.  Additionally, there were 591 wills recorded of which 443 transferred real property ownership.

PLATS

During fiscal year 2007/08, 185 new parcels were added as a result of recorded plats and surveys.  These parcels increased the tax base by $10,479,000.  At the current tax rate of $1.10 per hundred, this equates to an additional $115,269 in taxes.  The following table shows the plat activity for the past five years.

TOP TWENTY REAL ESTATE TAXPAYERS
July1,2008

*1  Previously Crown American Financing Partnership L P  

*2  Previously Mountain Ventures Newport News LLC & Jefferson Value LP    

LAND USE 

The Agricultural Land Use Assessment Program was discontinued effective July 1, 2001 pursuant to City Ordinance 5591-01.  Parcels previously qualified for Land Use Assessment have been monitored by the Assessor’s Office and where the use has changed from agriculture, all applicable roll-back taxes have been certified and transmitted to the Treasurer for collection.  The period for applicable roll-back tax liability for previously qualified parcels has concluded and no further monitoring is necessary.

REHABILITATION

            The City has an exemption program for eligible structures that have been substantially rehabilitated.  The commercial exemption is effective for five years and the residential exemption for fifteen years.  The following shows the abatement activity for the past five years:

TAX RELIEF

            The City has opted to provide tax exemption or deferral for elderly and/or disabled homeowners who meet eligibility requirements.  This program is administered by the Commissioner of the Revenue taking applications, determining eligibility, and certifying qualified applicants; and the Real Estate Assessor’s Office processing the certified applicants to affect changes to the tax levy and monitoring changes in ownership throughout the year.  Program requirements to meet the eligibility requirements are as follows:

• Filing period is April 1^st through August 31^st of each year.
• Income limit for total relief is $31,931.
• Income limit to qualify for partial relief is $50,000.
• Portion of taxes paid by qualified partial relief homeowners is 2.5% of their gross income.
• Limit on amount of taxes relieved for those eligible for partial relief is $1,100.

Maximum amount of assets, excluding the value of the house and up to one acre of land is $200,000.

The following shows the tax relief amounts for the past five years:

After reviewing the previous information, it is evident the taxable Real Estate Land Levy has experienced much slower growth over the past year.  The taxable levy increased from $14,149,159,334 in 2007/08 to $15,274,403,420 for 2008/09, an increase of 7.95%, of  which  6.39% came from general reassessment and 1.56% was the result of construction and new plats. In contrast, the taxable levy increased by 16.02%, 19.32% and14.23% over the previous three years respectively.

Vacant developable land within the City is at 9.1 percent of the total acreage, as shown in the most recent Development Monitoring Report published by the Department of Planning.  With the amount of vacant acreage available for development only at 9.1 percent, along with a general slowdown of the real estate market, the growth in the taxable Real Estate Land Levy due to new construction and plats may decline as a growth rate component of the Real Estate Land Levy.

Our goal is to administer the laws of the Commonwealth and the City, as they pertain to assessments, in a fair and uniform manner with equality throughout the City.  Additionally, we strive to project an image of high professionalism in our work and personal relationships with the citizens of the City. I am confident that we have met that challenge and will continue to do so in the future.

I trust you will find this report to be useful, as well as informative.

                                                   Respectfully submitted,

                                                   Charles G. Young, SRA

                                                   City Assessor