The surprising news reported in last week’s News-Press of a significant disparity between the value of single detached family home real estate in Falls Church as assigned by the City’s assessor, and sale prices of all 35 such homes sold between July and December 2010 was met with a loud silence at City Hall.
Only late yesterday, in response to a News-Press inquiry, did the City Manager’s office provide a statement that included the note that with 4,126 residential properties in the City, including single family townhouses and condos, the sale of 35 homes “was a small sample.”
City Manager Wyatt Shields said that, “It is important to note that assessing real estate is a mass appraisal process. The City does not appraise each property individually. However, based on the state’s most recent report, Falls Church’s 97.7 percent ratio of assessed value to sales indicates that, overall, the City is very close.”
Prior to that statement, the only comment from City Hall came in the form of a nod of agreement from Shields when Vice Mayor David Snyder commented at a Council work session this Monday that no governmental entity can comment on the City assessor’s work, since it is essential for him to operate independent of any political pressure.
Shields noted that Ryan Davis, Falls Church’s real estate assessor, “has performed at a very high level.”
But the assigned value of real estate in Falls Church, a predominantly residential independent jurisdiction with a population of 12,332 (according to the new U.S. Census numbers), is critical for determining the amount of revenue available to the City’s government and schools.
Right now, as the F.C. City Council and School Board are wrestling with determining how to deal with significant anticipated revenue shortfalls based on the City assessor’s numbers.
But a review of actual sales the last six months of 2010 conducted by the News-Press has shown that, while the assessor, Ryan Davis, issued his assessments showing an average four percent increase in the value of single family detached homes, the actual sale prices for all such units sold in that time frame were more than 15 percent above their 2010 assessed values.
According to Virginia law, assessments are supposed to reflect 100 percent of market value. While unofficially some have noted that individual cases could involve someone willing to sell or buy for either inordinately greater or less than market value, the review in this case involved all 35 sales that closed over the six-month time frame.
Moreover, the News-Press learned this week that the disparity between the assessed value and sale price of one major commercial property is also wildly out of whack. City Hall records show that a building in the 1100 block of W. Broad St. that sold for $2 million as recently as July 2008 has been assessed at only $871,100.
In fact, the assessed value assigned to the structure in January 2009 was less than half (at $956,400) the price of its sale just six months earlier, and has dropped from that to its current assigned value of only $871,100.
A realtor active in the Falls Church market told the News-Press this week that often wide disparities between assessed and market values of properties in Falls Church is due to the fact that City Hall has not paid attention to improvements made on homes around the City.
She noted that there has been a redoubled focus on improving existing homes instead of buying new ones especially since the Great Recession hit in 2008, but that City Hall appears oblivious to the phenomenon. “They just not paying attention to what is going on out here,” she said.
A local developer commented that it is common in the assessment business to err on the side of undervaluing property in hopes of avoiding complaints and appeals. Citizens who feel their properties have been improperly assessed have the option of appealing to the Board of Equalization, which can be an expensive process for the City.
They are much less likely to appeal if their assessments are too low, rather than too high, the developer noted, because lower assessments are generally felt to translate into lower taxes.
However, that is not the case if the governing body decides to raise the real estate rate to offset shortfalls in revenues due to low assessments.
The City Manager’s office forwarded a “2008 Virginia Assessment/Sales Ratio Study” prepared by the Virginia Department of Taxation last summer. It showed that, among all taxing jurisdictions in Virginia, Falls Church’s assessments were within 2.6 percent of market values, with the lowest “coefficient of dispersion” in the state at 5.17 percent.