Taxes
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Does An Increase In The Real Estate Tax Rate Directly and Significantly Affect Housing Affordability? |
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 The City of Harrisonburg recently increased the real estate tax rate from $0.86 per $100 of assessed value to $0.90 per $100 of assessed value. Does this affect housing affordability for home buyers and homeowners? I tried to say "yes and no" for this question -- but it's somewhat difficult to say that the increase in the real estate tax rate (alone) has a meaningful increase on housing affordability. Technically, yes, the increased tax rate does increase the cost of owning a home -- but not by much... For a property assessed at $250,000...
So, for the house assessed for $250,000 -- the monthly payment would increase by $9 per month based on this change in tax rates. So, certainly an increase in monthly housing costs, but not much of one. To put this change in monthly housing cost in context... If a homeowner had financed 90% of their purchase price of $250K at 3.5%, their mortgage payment would likely be right around $1,243 before the change in tax rate -- and right around $1,251 after the increase in real estate taxes. So, this change in tax rates increases their monthly payment by less than 1%. Am I saying that the City of Harrisonburg can just keep on raising the real estate tax rate forever without any impact on housing affordability? No. But it's hard to argue that this increase in the real estate tax rate, on its own, dramatically changes the financial picture for many or most homeowners. Now, I'll pivot a bit to a few other common talking points related to real estate taxes... Increased Tax Rates + Increased Assessed Values If we look at both at the increase in property values AND the increase in the real estate tax rate, then yes, the change in one's real estate tax bill is more significant. That said, the assessed values of real estate do not (at least right now) seem to be increasing as quickly as sales prices are in the current real estate market. While the median sales price has increased by about 10% over the past year, this year's property value assessments increased a net of 2.9%. As such, we shouldn't hastily calculate the increase in a tax bill using the increase in our local median sales price to show a large increase in real estate taxes, because market values are currently escalating much more quickly than tax assessed values. Tax Rate Increases + Income Changes A somewhat common refrain is to say "real estate tax rates increased by __% over such and such timeframe -- but my income didn't increase by that much during that timeframe!" This argument doesn't make a lot of sense to me. Let's make it as extreme of a point to point comparison as possible. The real estate tax rate was $0.59 ten years ago and is now $0.90. That is a 53% increase over a ten year period. So, per the argument above, I'd need a 53% increase in my income during the same time period in order to afford those higher real estate taxes, right? Well, probably not. :-) I'm going to use very rough, inaccurate numbers here, but let's pretend Fred owned a home assessed for $150K ten years ago and today it is assessed at $250K. His annual tax bill would have been $885 a decade ago at that $0.59 tax rate and that would have increased to an annual tax bill of $2,250. That's quite an increase! In fact, it's a $1,400 increase in annual real estate taxes over ten years. So, per the prior argument, he probably needs to have seen a 53% increase in his income because the real estate tax rate increased 53% over a decade, right? Well, maybe not. If Fred was earning $35,000 a decade ago, a 53% increase over the past ten years would mean that he would be earning $53,000 today. If you made it through all of my ramblings, thanks for reading and engaging on this topic. Do I think higher taxes are OK or good or great? No. I would love for everybody to pay the same or lower taxes forever and ever. Do increases in the local real estate tax rate directly and significantly affect housing affordability? In the short term it's very hard to say "yes" to this ($9/year) based on the information above. Over the mid to long term, certainly, this does have a cumulative impact - but I believe we should be precise with our language. Do you agree or disagree or have another counterpoint? Email me at scott@hhtdy.com. | |
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City Approves Increase In Real Estate Tax Rate, No Change In County |
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 If you own real estate in the City of Harrisonburg, you'll be paying slightly more in real estate taxes due to a recently approved increase in the real estate tax rate. Previously, properties were taxed at a rate of $0.86 per $100 of assessed value. Now, the tax rate has increased to $0.90 per $100 of assessed value. For a property assessed at $250,000 this means...
As a point of comparison, for the same value of property in the County...
At least part of the reason for the increase in the real estate tax rate in the City is to fund the new high school. | |
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City of Harrisonburg Considers 5% Increase In Real Estate Tax Rate |
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 Here's the current lay of the land as it relates to real estate taxes in the City of Harrisonburg...
Harrisonburg City Council is considering an increase in the real estate tax rate...
Stay tuned for further news of decisions from City Council as to changes in the real estate tax rate! | |
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Rockingham County Considers Purchase of 27 Acres Between Barrington, Lakewood for Stormwater Management Purposes |
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 Rockingham County will likely purchase the 27-ish acre parcel on Taylor Spring Lane between Barrington and Lakewood to use for managing stormwater in the Lake Shenandoah Watershed. The purchase has not been finalized, but the County is in discussions with the land owner regarding the purchase. The County does not have a design for how the property will be used, but according to Lisa Perry, (Environmental and Land Use Manager for Rockingham County) it is safe to say that the low lying areas of the parcel will be used for stormwater storage capacity. My understanding is that only half of the property will be needed for stormwater management and that the County intends to use the other half of the land for a future County park once funding is available to build the park. Here's a reminder of some of the details of the Lake Shenandoah Stormwater Authority...  If you live in (or own property in) the area shown above, you'll have a new tax to pay come December 2020 - a fee that will go towards funding upgrades in the stormwater infrastructure in the Lake Shenandoah Watershed.
These fees should bring in approximately $2.8 million over the next ten years - though the total estimated costs for the needed infrastructure improvements are between $3.15 million and $4.75 million. Also in their June meeting, the Lake Shenandoah Storm water Control Authority Board (made up of the same members as the Rockingham County Board of Supervisors)
If you live in this area, hopefully the news of this new tax isn't a surprise to you -- as it has been discussed for about a year now. The County held the first public hearing on this matter back in July 2019. | |
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Rockingham County Approves Stormwater Fee for Properties In Lake Shenandoah Watershed |
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If you live in (or own property in) the area shown above, you'll have a new tax to pay come December 2020 - a fee that will go towards funding upgrades in the stormwater infrastructure in the Lake Shenandoah Watershed.
These fees should bring in approximately $2.8 million over the next ten years - though the total estimated costs for the needed infrastructure improvements are between $3.15 million and $4.75 million. Also in their June meeting, the Lake Shenandoah Storm water Control Authority Board (made up of the same members as the Rockingham County Board of Supervisors)
If you live in this area, hopefully the news of this new tax isn't a surprise to you -- as it has been discussed for about a year now. The County held the first public hearing on this matter back in July 2019. Learn more about the Lake Shenandoah Stormwater Control Authority here. | |
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Comparing Monthly Property Tax Bills Between Harrisonburg and Rockingham County |
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 It seems that the real estate tax rate will stay the same in Harrisonburg and Rockingham County for 2020-21...
Despite no change in the real estate tax rates, many homeowners will see an increase in their real estate tax bill due to rising property values. The graph above tracks the City vs. County real estate tax bill for a median priced home -- and here is the underlying data...  As shown above, it has become more expensive (16%) to pay property taxes on a home in the City of Harrisonburg as compared to a similarly priced (assessed) home in Rockingham County. | |
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Fee Structure Proposed for Property Owners in Lake Shenandoah Watershed |
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 The Lake Shenandoah Stormwater Control Authority (currently made up of the members of the Rockingham County Board of Supervisors) have set a proposed fee schedule for collecting revenue from property owners within the Lake Shenandoah Watershed to allow for funding of the stormwater management improvements needed within the watershed. A public hearing will be held on March 25, 2020 regarding the fees, but here are some details of the proposed fee structure...
In other news, the Stormwater Authority is considering moving forward with The Timmons Group to provide engineering services to determine appropriate flood mitigation projects. As shown on the map above, the Stormwater Control Authority will include all or part of the following areas:
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All The Areas That Will Pay A Bit Extra In Taxes To Help Manage Stormwater in The Lake Shenandoah Watershed |
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download a high resolution PDF here In late August, the Rockingham County Board of Supervisors approved the creation of the Lake Shenandoah Stormwater Authority. The authority will work to manage stormwater and mitigate damage from that stormwater throughout the Lake Shenandoah Watershed. Read more via the DNR on 8/29/2019) here. The Authority will potentially spend around $3.2 million to improve the stormwater system by creating new detention facilities and increasing the capacity of ditches and pipes. Property owners in the area shown above will pay some additional taxes that will fund the work of this Stormwater Authority, though the Authority will also pursue grant funding for the needed infrastructure improvements. As shown on the map above, the Stormwater Control Authority will include all or part of the following areas:
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There Might Not Be Anyone To Blame For Urban Flooding in the Lake Shenandoah Watershed Area |
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 If your house, or street, or neighborhood floods during heavy rainfall events in the Lake Shenandoah watershed area, it likely seems that someone must be at fault - someone must have messed up - someone must be blamed for the drainage problems. But who is to blame? Many neighborhoods were developed just southeast of Harrisonburg over the past 20 years - and in each case, the developer would be told by the County how to develop the land from a stormwater perspective based on requirements from the State. So - if the State (Commonwealth of Virginia) creates guidelines, the County enforces them, and the developer implements them, who is to blame if your house, street or neighborhood is flooding? It is tempting to say that the developer must be at fault - but they were just doing what the County was telling them to do to manage stormwater. We could then blame County officials - but they were just doing what the state was telling them to do to manage stormwater. So, hmmm.... Here's a bit of further commentary from Mr. Miller (the County's attorney) at the public hearing held by the Board of Supervisors...
So, if everything was being done based on what the experts at the state were mandating - then it seems that local builders, developers and County officials aren't really the ones to be blaming for urban flooding. Yes, if all of these neighborhoods were developed today, the developer would be told by the County to do more to mitigate stormwater based on requirements from the state - but those guidelines and requirements were not in place when these neighborhoods were developed. A few other related notes...
If this topic interests you, consider attending the Work Session on the topic to be held this Wednesday (August 21, 2019) at 6:00 PM at the Rockingham County Administration Center. No action will be taken at the meeting, but it is an opportunity for further discussion and input. Also, as a refresher, these recent conversations are a result of the County's proposal to create a Stormwater Authority specifically for the Lake Shenandoah Watershed. The Authority could potentially spend around $3.2 million to improve the stormwater system by creating new detention facilities and increasing the capacity of ditches and pipes. If the cost of these potential improvements was divided evenly between the affected parcels, it would cost approximately $200 per year per parcel. Though... "Mr. Miller stated these are only estimates, because there are too many unknowns until engineering studies are conducted. Assistant County Administrator Armstrong noted that the $3.2 million cost is with no contribution from state or federal grants that the County may be able to obtain to offset costs." | |
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Comparing Monthly Property Tax Bills Between Harrisonburg and Rockingham County |
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 Getting a bit further into this topic -- yesterday I was looking only at the changes in the property tax rates in the City and County -- as shown here. Today (thanks for the idea, Mike) I looked at how a monthly property tax bill has changed over the past decade for a median priced home in the City and County. To be clear, this analysis uses:
As shown above, it has become more expensive (16%) to pay property taxes on a home in the City of Harrisonburg as compared to a similarly priced (assessed) home in Rockingham County. Now -- does this cause anyone to move from the City to the County? Or does it cause anyone new to the area to buy in the County instead of the City? Not necessarily - or at least that has not been my experience in working with buyers and sellers in the past ten (+) years. | |
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Real Estate Tax Rates Finalized in Harrisonburg, Rockingham County |
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 The real estate tax rates have been finalized for the 2019-20 fiscal year...
For some context...
For an even broader context...
And to translate it into monthly costs...
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Real Estate Tax Rate Likely To Increase Slightly In Harrisonburg |
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 The City of Harrisonburg and Rockingham County are going through their annual budget process and while Rockingham County has proposed a budget that does not include any changes to the real estate tax rate, the City of Harrisonburg's proposed budget for next fiscal year requires a $0.01 increase in the real estate tax rate. Read more about the City's forthcoming budget via... | |
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Owners, Operators of Short Term Residential Rentals in Rockingham County to Pay Transient Occupancy Tax |
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 If you are renting part or all of your Rockingham County home out on AirBNB you will need to start collecting and paying a transient occupancy tax of 5% of the gross rent starting January 1, 2019. Read on from yesterday's update from Rockingham County... ### NOTICE TO ALL OWNERS AND OPERATORS OF SHORT TERM RESIDENTIAL RENTALS LOCATED IN ROCKINGHAM COUNTY Beginning January 1, 2019, all owners of residential properties located in Rockingham County, Virginia, who rent all or any portion of a residential property for not more than 30 consecutive days must collect from the tenant the transient occupancy tax of 5% of the gross rent and remit the tax collected to the Commissioner of the Revenue for Rockingham County. The tax must be collected at the time of rental, and the remittance is made quarterly with the filing of a return. Owners and operators of short term rental properties should contact the Office of the Commissioner of the Revenue of Rockingham County for more details and information. 540-564- 3073. ### A short term rental is defined here as being a rental period of less than 30 days. | |
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How To Appeal The Assessed Value of Your Home in Rockingham County |
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 Do you live in Rockingham County, and is your home's assessed value too high -- causing you to pay more real estate taxes than you think you should be paying? If so, now is the time to appeal that assessment. The Board of Equalization of Real Estate Assessments is meeting over the next month and you can make your case for having the assessed value of your home adjusted. Here are the dates of the hearings, each being from 9AM - 12PM:
Call 540-564-5079 to schedule a time and date for a hearing with the Board of Equalization. Of note -- in my experience, most assessed values in Rockingham County are not higher than market value. | |
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How Are Your City of Harrisonburg Tax Dollars Spent? |
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 I found the infographic above to be helpful. The largest portions of our local tax dollars are being spent on Education, Public Safety and Public Works! If you found the above interesting, you'll likely enjoy reading the entire (8 page) "Budget in Brief" developed by the City of Harrisonburg this year, with a high level analysis of the Fiscal Year 2018-19 budget for the City of Harrisonburg. Click below to download the report.  | |
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Land for New High School Was To Be Student Housing, then Convocation Center |
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 Have you heard Harrisonburg needs a second high school? The current (only) high school in the City is beyond capacity. As such, the City has been evaluated various pieces of land to find a suitable new site for the new high school -- and now they have made a decision. Background... Owners of median priced City homes might have to pay $26 more per month to fund new City high school So, back to the location... The parcel of land shown above is 60 acres located between South Main Street (Route 11) and Interstate 81. The City intends to purchase this land for five million dollars from JMU. But JMU has actually owned it for a few years. You see, this land was actually originally slated to be used for college student housing! More background... So... the land was originally going to house 466 apartments for college students...  And then it was to be the site of JMU's new convocation center...  And now, the site of Harrisonburg's second high school. Read today's Daily News Record article for further context... | |
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2018-19 Rockingham County Budget Reflects No Change in Real Estate Tax Rate |
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 The budget shown above is the proposed budget for 2018-19 in Rockingham County, VA. This reflects no change in the real estate tax rate -- it would remain at $0.74 per $100 of assessed value -- though the tax revenue will increase due to increases in assessed values.  Interestingly (above) the real estate tax rate in the County has been above $0.70 before -- between 2000 and 2005 -- and at that time it was well above the City's real estate tax rate! Stay tuned for news of changes in the City real estate tax rate.... | |
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Increasing Home Values Can Lead To Increased Real Estate Taxes |
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 It's exciting if your home value is increasing, right? Well -- mostly, it seems. Certainly, if you bought your home for $250K and it is now worth $260K or $270K or even $300K -- that can be a good thing. At some point in the future, you'll recoup that equity when you sell your home -- plus or minus any shifts in value between now and then. But in the near-term, increasing home values can actually hurt a bit. The amount of real estate taxes that a homeowner pays to their locality (city, county) are based on two factors -- the assessed value of the home, and the local real estate tax rate. In Rockingham County, the current real estate tax rate is $0.74 per $100 of assessed value....  Tomorrow, the Rockingham County Board of Supervisors will hold a public hearing to receive input before adopting a real estate tax rate for fiscal year 2019 -- which runs from July 1, 2018 through June 30, 2019. But here's the thing -- even if the tax rate remains the same (at $0.74) there are many homeowners who will see an increase in their real estate taxes -- because of increases in home values, and thus increases in assessed values. Rockingham County revises their property assessments once every four years -- and the most recent increase resulted in a 2% increase in the assessed value of an average home. This is good news for the County, as the increase in property values, even with no change in the real estate tax rate, will likely generate over $2 million in additional tax revenue. It is sort of good news for County property owners -- because it means your property value is (likely) increasing -- but it is also potentially bad news, as your tax bill will likely be increasing. To put some numbers to it:
And -- you can both celebrate and mourn the news that property values are increasing, and that your real estate tax bill likely will be as well. | |
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Owners of median priced City homes might have to pay $26 more per month to fund new City high school |
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 Numbers are funny. All of these statements are true based on current projections:
I'm guessing that if you ask most parents of school aged kids in the City if they'd be willing to pay $26 per month such that their child would not be in an overcrowded, not-so-ideal, learning environment for high school, they'd likely be quick to say yes. That said, this $26 per month increase would need to be paid for 25 years -- but for a parent of a child in the school system, I'm guessing that would still seem to be a reasonable cost. I'm also guessing that City property owners who do not have children in the local school system would LOVE for their property taxes to NOT increase. And I'll even go a step further -- I am guessing that they don't really want school aged children to have an overcrowded, not-so-ideal, learning environment -- it's probably just more about the increased tax burden. Anyhow. Numbers are funny. Read today's Daily News Record article, and feel free to form your own opinions. There seem to be plenty of them circulating through our community about this topic. :) | |
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Make your voice heard in the updated Comprehensive Plan for the City of Harrisonburg |
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 The City of Harrisonburg is in the midst of updating the Comprehensive Plan for the City. As per the City.... The Comprehensive Plan presents a vision of Harrisonburg's future. It identifies steps to move toward that vision by providing information about current conditions, long-term goals and objectives, and recommended implementation strategies. As described in the Code of Virginia, the Comprehensive Plan is general in nature. Harrisonburg's Plan addresses a wide range of issues including but not limited to: land use, housing, education, transportation, recreation, the preservation of historic and natural resources, and economic development. The plan serves as a long-term guide for the community, and it helps City leaders with setting policies and decision-making. So, basically, what do you want the City of Harrisonburg to be in 10 or 20 years? Discussions taking place and decisions being made right now will affect that future, and you have the opportunity to be a part of the conversation! Better yet -- there are several Public Workshops coming up that will allow you to chime in on topics near and dear to your heart.... Education; Arts, Culture, and Historic Resources; and Community Engagement & CollaborationSo, mark your calendars, and get involved in the discussions and decisions to help shape the future our our great City! Also of note.... Lots of Q&A's about the Comprehensive Plan update can be found here. General information about the Comprehensive Plan update can be found here. | |
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Scott Rogers
Funkhouser Real
Estate Group
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scott@funkhousergroup.com
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