PORTSMOUTH, Va. (WAVY) – Help may be on the way after Portsmouth residents recently opened their mail to sticker shock.
The assessed value of homes jumped again in the latest city reassessment, up as much as 40% for properties in the Brandon Square townhomes, after a nearly 9% overall increase in the previous year’s assessment.
Homes in other areas such as Brighton, Afton Commons, Cypress Cove Villas, Westbury and more saw bumps as high as 25% to 38%, with the overall taxable value for residential property up city-wide by nearly 13%.
Historically, the increase has only been around 1% to 3% on a given year, City Assessor Patrick Dorris says.
For the average home value in Portsmouth, $235,000, the new assessment means a more than $400 increase annually to a homeowner’s tax bill under the current city real estate tax rate of $1.30. Many home owners expressed frustration about the news, with a first-time homebuyer telling WAVY that she already paid an inflated rate for what she believes her home was worth, and that the higher taxes add that extra burden.
This comes as values for real estate overall have surged nationally in recent years due to market conditions. The median home price was up 10.2% nationally compared to 2021. New homebuyers in 2022 also saw a significant increase in interest rates, which led to a loss of around $160,000 in purchasing power on average nationwide, CNBC reports.
Other local cities have also seen big increases in assessed home values. Suffolk lowered tax rates by 2 cents last year after a jump of nearly 15% in home prices, and Newport News projected an assessment increase of 14%, WHRO reported. This past year, Virginia Beach saw an increase of about 9% in residential assessments.
But the big increases around 40% for some in Portsmouth stood out in a recent presentation from the city assessor to city council.
“I want to share the impact of this increase is notable. It should be recognized,” said Dorris, who suggested that council consider lowering its tax rate from $1.30 to a “net neutral” $1.17 to offset the increased assessment.
“We’re at a $1.30 now, just taking it verbatim and looking at our budgetary needs say the same, which they won’t, we’d go to a $1.17,” Dorris said. “That would effectively put one paying the same real estate tax. Not necessarily, but that would achieve a similar result.”
Dorris also explained how the assessment process works. Virginia state code requires assessments to be at 100% of fair market value for a property, and since the previous assessment in 2022, homes in many areas of city have sold for much higher amounts than what they were previously appraised for — hence the hefty increases in the reassessment.
“If you have a house that sells for $100,000 and we’re assessed at $80,000, that’s an 80% [assessment to sale ratio] and that ratio should be 100%, or pretty darn close to 100%,” Dorris said.
Councilman Vernon Tillage Jr. said in that February 28 meeting that he’s concerned about the tax increases, particularly for neighborhoods with lower median household incomes.
Mark Hugel, another new member to council, agreed.
“I hope this opens the door for us to have a serious conversation about reducing our tax rate to a $1.30 to – something lower than that,” Hugel said.
Vice Mayor Lisa Lucas-Burke said “we all want a lower real estate [rate] … our citizens that are in those areas on the residential sheets cannot afford a 40% increase,” but emphasized that changes to the tax rate and the impact on the city’s budget has to be factored in.
“This might need some more massaging before it could be reality,” she said.
Lucas-Burke added the tax assessment for Portsmouth’s new casino will need to be factored in as well. That assessment is still underway through an “expert” outside appraiser from Colorado named Richard Jortberg. Jortberg has done casino appraisals “all over,” Dorris says, including in Kansas.
Dorris said he went to Jortberg because the city wants to make sure its assessment for Rivers Casino Portsmouth is as accurate as possible and can hold up in court.
“All they’d have to do is prove is the valuation process or the number is wrong and then you lose your presumption of correctness,” Dorris said.
Portsmouth city leaders though do expect up to about $16 million in tax revenue per year from the new casino, which opened back in January.
Back to home assessments, if you believe your home’s individual assessment from Portsmouth is incorrect, you can file an appeal through the City Assessor’s Office. The assessment process looks at similar homes that have sold in the neighborhood and figures may be off for some on an individual level, Dorris says.
“For the appeals process, we’re glad to come out an look at your house, measure, double check your characteristics to make it right. That’s ultimately our goal,” Dorris said.
WAVY will continue to follow the latest updates on proposed tax relief and more during budget season for Portsmouth and other local cities. You can send any feedback, tips and story ideas to brian.reese@wavy.com.
The due date for the first quarter of real estate taxes isn’t until September 30.