Hillwood Avenue Tax Assessments: What Happened?

Everyone received their 2012 tax assessment (TA) back in late February for the tax year that begins July 1st. We recently learned of the increase that affected home owners on Hillwood Ave so we decided to take a closer look.
[box type=”info”](Note: Hillwood Ave has 61 residential properties (detached, townhouses) in the sub-divisions of Buffalo Park, Hillwood, and James Wren Estates. There are several commercial properties but are not included here).[/box]

Every home on that street had its “improvement’ assessment (i.e. house) go up for 2012. The average increase (detached and townhouse) was 10% for total assessment and a whopping 17% for the improvement. The land assessment stayed the same for every property from 2009-2012 (and possibly further though we did not look that far back).

With our curiosity piqued, Dave spoke with the City Assessor’s Office. They said that this part of the City had been under assessed for a number of years and that this was a corrective action. State guidelines require the assessment-to-sales ratio not fall below 90% and that had apparently happened here. Tax assessments are based on sales data for the previous year. In 2011, there were four sold properties for these three sub-divisions. One was a foreclosure (901 Hillwood Ave), and state law does not allow a distressed sale (foreclosure, short sale) to be used for assessment purposes. That’s convenient given the foreclosure sold well below its 2011 TA. So that left three sales (718 Broad Street, 112 S. Cherry Street, 711 Berry Street) which did sell above their 2011 assessments, on average 8.7% (Total) and 19% (Improvement). It’s most likely the City used these sales to justify raising TAs for everyone. The only consolation is that at least owners had several years of low assessments.

With even more curiosity, we dug a bit more. While not searching all sub-divisions, we looked at 2011 sales for Broadmont, Cherrywood, and Winter Hill and here’s what we found……

*Broadmont/124 Detached Homes: There were 9 sales last year–7 sold above and 2 below their TAs–for an average increase of 12%. Each of these properties has their 2012 assessments go up, even the 2 that sold below 2011 TAs. The rest of Broadmont had their assessments go up slightly. In fact increases varied by street. It appears the City did not feel the rest of Broadmont needed to be adjusted upwards as much as the ones that sold. And how can an assessment go up when a sales in the previous year was below its assessment?

*Cherrywood/23 Townhouses: 3 of which sold last year. Interestingly, all TAs went up (sold & unsold) exactly 8%.

*Winter Hill: A very large sub-division of condos and townhouses, there were only 3 townhouse sales. Their assessments were the same for previous years and increased exactly 5% in 2012.

So a few questions come to mind……

*Why did Hillwood Ave increase so much in one year? If it was to make up for past underassessment’s, why did that happen in the first place? And can 3 sales out of 61 properties (5%) really make a market?
*Why do assessment increases go up differently within sub-divisions?
*Why do land assessments not change, sometimes 4-5 years at a time?
*Why does the improvement piece (with no actual improvements) go up when the land valuation stays the same. Land is not a depreciating asset, a house is.
*Why do some neighborhoods have no increase when other comparable areas do?

As you can tell, this is a complicated topic and there are no easy answers. Anyone that has an issue with their assessment is caught arguing over ambiguous details. In addition, state law allows jurisdictions a plus/minus 5% leeway. So while one property may in fact be over-assessed, it’s unlikely the assessment will be more than 5% above fair market value. And that wiggle room makes it hard for a property owner to prevail when challenging an assessment. We know the City does a good job with a very difficult task. Dave served on the Board of Equalization (2007-2010) and found the Assessor’s Office to be very professional and totally above-board. But the above facts seem hard to explain.

For more information on the assessment process, check out the City’s FAQ.

http://www.fallschurchva.gov/content/government/departments/finance/realestateassess/faq.aspx

What Do You Think? …….Comments/Questions are always welcome!