City Council looks to help homeowners, keeps property tax stable
Richmond City Council voted Monday to keep real estate taxes stable and signaled other avenues it would pursue to give relief to property owners seeing higher tax bills.
Richmond’s appreciating real estate values raised property assessments by an average of 13% citywide last year. State law requires assessments to occur each year, and the state constitution requires the city to assess properties to reflect “fair market value.”
Councilmembers have said they’ve been flooded with calls and texts regarding the higher tax bills.
The city will lobby the General Assembly to put a constitutional amendment before voters that would provide localities with options for fighting displacement through different property value assessment systems.
“Growth is good,” Stoney said last week. “But there's a flip side to that. And that's what we're experiencing in some of our neighborhoods in the East End and parts of Northside. We see folks being displaced ... . [W]e don't want to see that.”
A draft memo of the city’s legislative priorities outlined two different programs: “payment in lieu of taxes,” referred to as PILOT, for affordable housing, and a long-term owner occupancy program, known as LOOP.
“Allowing local governments to develop and implement means-tested, long-term owner-occupied real estate tax relief programs will help prevent the displacement of long-term owner occupants due to dramatically rising property tax assessments, thereby leading to neighborhood gentrification,” the memo said.
Jonathan Sgro, a Philadelphia attorney with Community Legal Services, said LOOP programs, “if well-designed and well-implemented,” can help keep people in their homes. In Philadelphia, he said, it “has worked to a certain extent.”
“Not only are we trying to keep people in their homes, but we're also trying to preserve their family wealth and address the racial wealth gap,” he said. “There's much more at stake here than just, you know, ‘Oh, pay your taxes or else the city's gonna face some kind of financial crisis.’ It's a much more nuanced issue than that.”
Habitat for Humanity Virginia said 48% of Black households in Virginia own their homes versus 73% for white households.
Localities can opt for a “rolled-back” tax rate of $1.072 per $100 of assessed value, which Virginia law allows localities to use, if real tax collections surge. Each year a public hearing must be held regarding the city’s choice to not use the “rolled-back” rate.
Petula Burks, a city spokesperson, said that rate would not be fiscally prudent and would have prevented basic services like trash pickup and the payment of city employees’ salaries.
Richmond property tax rate
Council reaffirmed a tax rate of $1.20 per $100 of assessed value along a 7-2 vote on Monday. Councilmembers Kristen Nye and Reva Trammell sponsored legislation to reduce the tax rate to $1.16, and Trammel sponsored a separate bill to reduce it further — to $1.10.
Chief Administrative Officer Lincoln Saunders and Mayor Levar Stoney have cautioned against any sort of permanent tax reduction, saying it’s important to protect city finances.
“We know that when we reduce the tax rate, it’s not anticipated that that’s a one-time thing that becomes the new rate that we base the new budget off of,” Saunders told councilmembers on Monday.
Also introduced Monday was Stoney’s solution to rising property tax bills: a one-time real estate tax rebate. The proposal likely will be approved by City Council: All members — except Nye and Trammell — are listed as co-sponsors.
Neighborhoods with less expensive housing — predominantly where Black and brown Richmonders live — saw values appreciate much more quickly than elsewhere in the city. Between having lower incomes and more rapidly rising tax bills, the effect has raised concerns about residents’ ability to remain in their homes and continue to build wealth.
There are 2,003 Richmonders delinquent in paying their real estate taxes as of Oct. 19, according to a report by the city auditor. The report showed that most properties that were delinquent for more than two years were in the city’s predominantly Black neighborhoods.
Properties can be auctioned by the city after taxes are delinquent for two years. That policy dates back to this fall; previously, the city referred properties that were delinquent for at least five years to its Tax Sale Program. The vast majority of properties sold in the program were in predominantly Black neighborhoods.
Councilman Mike Jones raised the issue at the Monday meeting: “The homeowners that seemingly — it’s kind of like the ‘Hunger Games' — whose houses are tax-distressed, seems as if certain neighborhoods get called up for auction quicker than other neighborhoods.”
Stoney announced the “Five Back Initiative” last week, which would send one-time rebate checks equivalent to a reduction in the current tax rate from $1.20 to $1.15 per $100 of assessed value.
Stoney said the plan “strikes the right balance of providing relief to taxpayers while being fiscally responsible and meeting our obligations, maintaining the delivery of services and protecting our city's strong financial standing going forward into an unpredictable future.”
Trammel, who represents the 8th District, said the rebates would come too late.
“What is that? That’s after Christmas? We need to reduce the real estate tax,” she said.
Correction: An earlier version of this story incorrectly listed the district that Councilmember Reva Trammell represents. VPM News regrets the error.