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Food for thought
The Virginian Pilot reports today that Norfolk city officials are beefing up their assessor’s office to try to get a more accurate handle on how commercial properties are valued for tax purposes.
According to reporter Harry Minium, a consultant told the city that commercial properties appear to be underassessed by as much as 30 percent, meaning the city has been losing out on millions of dollars in tax revenue.
Norfolk has more than five times the land area of Fredericksburg, so it has a dedicated assessor’s office to keep up with real estate values. Fredericksburg, on the other hand, contracts out its assessments at a cost of around $150,000 per reassessment.
Last time around, Blue Ridge Mass Appraisals, the Staunton firm that does many of the outsourced reassessments around here, was the only firm to bid on the reassessment contract. Councilman Matt Kelly questioned Blue Ridge’s handling of commercial properties when Blue Ridge was hired for the 2007 reassessment, and ended up abstaining from the vote.
The Pilot story touches on the fact that commercial assessments can be difficult:
Almy said computing assessments for commercial properties is more difficult than for residential, which is based on sales. Many commercial assessments are based on business income, and for that, the city must rely on businesses to honestly report income data.
One example of how confusing they can be to look at has surfaced with the recent request from the U.S. National Slavery Museum for a real estate tax exemption on its 38 acres in Celebrate Virginia.
Looking at records from the city treasurer, it becomes clear what prompted this request now: The museum’s tax bill went from around $8,000 a year before the most recent reassessment to around $42,000 a year after it.
That means that the land was assessed as 20 times more valuable than its previous assessment in the 2007 revaluing. The value went from $381,700 to $7.6 million.
And to add to the confusion, the museum valued the land at $17.4 million in its most recent tax return.
When I asked Commissioner of the Revenue Lois Jacob about whether the extreme jump in this assessment raised any red flags, she said it appeared consistent with other Celebrate Virginia properties. We talked about how, as Matt Kelly mentions in comments on his blog, the potential use of this land has changed dramatically in recent years, and how development in Celebrate Virginia around this piece of land affects its value.
But the land for Celebrate Virginia was rezoned in 1998. It would have been reassessed in 1999, after the 1998 rezoning of the property for the tourism complex had already happened. The 2003 reassessment would have been the second time it was revalued since the change in its potential use. So is the city maybe in the same boat as Norfolk?