THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Friday, March 22, 1996 TAG: 9603210155
SECTION: VIRGINIA BEACH BEACON PAGE: 12 EDITION: FINAL
TYPE: Cover Story
SOURCE: BY PAM STARR AND BILL REED, STAFF WRITERS
LENGTH: Long : 156 lines
IN WHAT HOMEOWNERS might call the ``good old days'' - the 1970s - the city of Virginia Beach assessed real estate at 60 percent of the market value.
If you owned a $100,000 house in Bayside, for example, you would only pay taxes on $60,000. The tax rate then was $1.45 for every $100 of assessed value. But that left many homeowners perplexed. What exactly was their property appraised for and how much did they owe?
The state of Virginia simplified matters in the late 1970s when it decided to assess real estate at 100 percent of the market value. Whatever you pay for a house, expect to be assessed at the same price.
That's not confusing but try explaining the law to some irate homeowner who insists that his assessment was lowballed by $10,000. City assessor Jerry Banagan said that his office fields hundreds of calls every year from people who are livid about their assessments. Out of the 135,000 parcels of property, the owners of about 500 will call about their assessments.
``We can have people pretty upset,'' Banagan said. ``I'll pull the sales study for the neighborhood to see if we're describing the property appropriately.
``We'll give them sale dates and transfers. . . . most people leave thinking we treated them fairly.''
The average house in Virginia Beach this year is assessed at a median of $90,000 or $112,000 mean. The median price is taken by picking the precise middle price from the list of highest to the lowest. The mean is achieved by adding all of the assessments and dividing. Banagan likes to go by the median because a $750,000 house can skew the average.
When all's said and done, the city collects about $215 million from real estate taxes, which represents one-fourth of all the money it receives from local, state and federal sources.
Banagan and his crew of appraisers use a methodical approach to assess every parcel in the 860 neighborhoods. Their function is to ``systematically equalize things'' so that every similar house in a neighborhood is rated the same. This year, 58 percent of neighborhoods received an increase in assessments, 9 percent received a decrease and 33 percent stayed the same.
The only reason for a property to decrease in value is due to lower sales prices of surrounding homes. The neighborhoods with the largest decreases were primarily townhouses and condominiums. One in particular, Broadmeadows Condo, a small, 16-unit development on Newtown Road, near Wesleyan Drive, had a whopping 20.27 decrease in value.
``That's because the neighborhood was plagued by foreclosures,'' Banagan explained.
The only difference in assessments in the same neighborhood will be for amenities. House values are determined by square footage, size of the lot, age of the home, sales prices of comparable homes, room additions, water views, deep-water access, kitchen remodeling and trends in the neighborhood.
``Each year we record all sales that have occurred in the neighborhood, then compare existing assessments against newest sales and adjust them,'' Banagan said. ``Sometimes we're wrong, like if there's a structural problem with a house that we're unaware of.''
But say you spent a fortune remodeling your house. You replaced those ugly olive green cabinets in the kitchen with custom-made oak and tore up the old vinyl to lay ceramic tile. You expanded the family room and added a much-needed second bathroom. The house looks great, everyone agrees. But your assessment still came back depressingly low. What recourse do you have?
Other than calling and yelling at the first available voice, you can file an appeal like 27 did last year. After the initial phone call, you'll be sent a form to state the reason why you think the assessment was wrong. The assessor's office will send you a ``rejection letter'' back, Banagan said. That letter will provide addresses and sales prices of sales in the neighborhood and show you how they came up with your assessment.
``If we are unable to appease, they can appeal to the Board of Equalization,'' Banagan said. ``That's a three-member panel appointed by the Circuit Court. They'll make the final decision.''
The highest assessment increase for a single-family residential area was in Owls Creek Estates, a secluded Seatack neighborhood of 19 houses located off Birdneck Road. Assessed values there rose by 19.27 percent. The average value of a home in the area is $98,888, a jump of $19,055 from last year.
The reason for the increase, explained Winfield Mullen, who lives in the 1000 block of Owls Creek Lane, is the construction of about a dozen new homes on the street. Adding impetus to the increased values on Owls Creek Court was the installation of sewer and water lines - plus a sewage pumping station - within the last four years.
Mullen, who is in the real estate business, said he was not sure exactly how much his property assessment had risen, but added, ``It feels like it went up 22 percent.''
The City Council raised the real estate tax rate on July 1, 1995, to $1.188 from $1.14 per $100 of assessed value, said city finance director Patty Phillips. So, property owners in most cases will feel a double jolt in the pocketbook, once an assessment hike and tax increase are included. The higher real estate taxes will kick in this year when payments are due. In Virginia Beach, half the property levy is due June 5 and the second half is due Dec. 5.
Assessments on Birdneck Point homes, an upscale neighborhood bordering the Cavalier Country Club golf course, increased by an average of 9.24 percent this year. Figures from Banagan's office indicate the increase was one of the highest in the city for single-family residential neighborhoods.
The annual real estate tax on an average Birdneck Point home, valued last year at $317,660 and now at $350,000, would jump from $3,621 to $4,130.
John Mamoudis, a contractor who lives in the 800 block of Cardinal Drive, views the annual property valuation process as a boon, although he concedes that the process is ``a double-edged sword.''
``I look at it as a savings account,'' he said. ``When the appraisals go up, the value goes up and the taxes go up, but you'll get it back some day when you sell.''
Mamoudis has lived in his Birdneck Point home for 15 years and remembers only one year when his property valuations did not increase. ``That was back in the recession,'' he said.
Ronald C. Ripley, president of the Tidewater Association of Realtors, said prospective buyers seeking their first homes will be affected most by substantial increases in property valuations.
``Because of the way payments are calculated, an increase in taxes has a special impact on the first-time buyer,'' he explained. ``Second- and third-time buyers don't have the impact that a first-time buyer would.''
The folks who particularly feel the pinch of real estate tax hikes are the ones who own the bulk of the city's homes, Ripley said, and they are largely in the $80,000 to $100,000 range. ``That's the bulk of the market in the city.'' ILLUSTRATION: [Cover, Color photo]
IS THE PRICE RIGHT?
GRAPHICS
Increasing assessments
The following list includes only those neighborhoods where
assessments went up by 5 percent or more.
[For a copy of the list, see microfilm for this date.]
Decreasing assessments
The following list includes only those neighborhoods where
assessments went down by 5 percent or more.
[For a copy of the list, see microfilm for this date.]
The highest assessment increase for a single-family residential area
was in Owls Creek Estates, a Seatack neighborhood of 19 houses
located off Birdneck Road. Assessed values there rose by 19.27
percent.
Staff photos by DAVID B. HOLLINGSWORTH
Assessments on Birdneck Point homes, an upscale neighborhood
bordering the Cavalier Country Club golf course, increased by an
average of 9.24 percent this year - one of the highest increases in
the city for single-family residential neighborhoods.
City assessor Jerry Banagan said that his office fields hundreds of
calls every year from people who are livid about their assessments.
The neighborhood with the largest assessment decrease was
Broadmeadows Condo, a small, 16-unit development on Newtown Road,
near Wesleyan Drive. It had a 20.27 percent decrease in value.
by CNB