LeCondre Projects No Real Estate Value Growth for Next F.C. Budget

December 5, 2012 7:42 PM2 comments

The Falls Church City Council and School Board were told by the City’s Chief Financial Officer Richard LeCondre in meetings this past week to be prepared for another very tight budget struggle come the New Year because residential real estate assessments will remain unchanged at last year’s levels.

LeCondre and City Manager Wyatt Shields said that a 3.2 percent growth in revenues to the City is expected, but that it will come exclusively from new development projects, including the Northgate mixed-use project under construction and improvements to single residential homes. Otherwise, there will be no net growth in real estate assessments expected from the annual assessment process in January.

The grim projection was first presented by LeCondre at a joint City Council-School Board work session on Nov. 28, with the obvious implication being that the Schools, in particular, are going to have to plan on some severe budgetary restraints.

No one on the City Council or School Board challenged the gloomy assumptions in the projection, even though there is considerable anecdotal evidence, including comments from prominent local realtors, that residential property values are rising considerably here, as they are throughout the region and the nation.

The Metropolitan Region Information System (MRIS) monthly analysis in November, for example, showed median home sale prices up 13.3 percent from a year earlier, with sellers getting 96 percent of their asking price, and that Falls Church had the highest median sales price in the region. The number of home sales was up 16.1 percent in the region, and the average number of days a property spent on the market before selling fell to 54 days, from 78 days a year earlier.

Moreover, according to the National Association of Realtors in a report aired on ABC National News this week, average home prices nationwide have rebounded from a level of $160,800 in 2011 to $178,600 so far this year.

But none of this is reflected in budget projections for Falls Church. LeCondre’s scenario for the next budget was based on the stipulation that no added sources of revenues, such as an increase in the tax rate, is contained in the projection, a scenario that can hold only if growth in the School Board budget is held at 3.2 percent and funds are limited for storm water and other capital projects. That scenario would generate a $681,285 surplus.

However, LeCondre showned that an alternate scenario providing a 9.3 percent increase for the School Board and a 5.4 percent increase in general government costs would result in a $1,855,948 deficit.

At the joint City Council and School Board work session last week, School Board members stated that, given continued explosive enrollment growth, the School Board budget request would necessarily be closer to a 9 percent than a 3 percent growth.

Shields also pointed out that the City’s obligations for pensions will grow by more like 20 percent, and inter-jurisdictional contracts by double digits.

“This is going to be a very austere budget,” Shields told the City Council at its work session this Monday.

The final combination of second quarter (Oct-Dec 2012) performance and actual real estate assessments will not come in before late January.

The School Board will adopt its budget in mid-February, and Shields will present his recommended budget in mid-March, with the Council slated for final adoption of the next fiscal year budget in late April.

 

  • jimbledsoe

    The true metric in my opinion is what the properties sold for relative to what the
    City assessed them at for property tax purposes. Having had two assessments of
    my property in the last 4 years that came in an average of ten percent below my
    assessment, I would be interested in those statistics. I would also be
    interested if any other homeowners have experienced the same thing.

  • http://twitter.com/GregRasnake greg rasnake

    For the record Nick, the School Board Chair and I both questioned Richard on this issue at the recent Joint Session. I am not comfortable with the projection. We were told that the projection is based on “softness” in commercial values smoothing out gains in the residential market; but I’m not buying it. Residential properties make up the lion’s share of our tax base and it sure seems to me that properties are flying off the market and that inventories are low. Zillow showed a 7% increase in year over year market appreciation. I will admit that using Zillow is not a wise approach to pegging market appreciation forecasts, but I for one would sure like to know more about how the City came up with their number. Maybe I’ll be proven wrong. And maybe federal budgeting issues will impact our market going forward; time will certainly tell. But I do not believe that the world is flat and I don’t believe that our market is either…..

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