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F.C. Treasurer: Expanded Senior Tax Relief Will Benefit All City Taxpayers

Measures to better enable older Falls Church residents to “age in place” rather than move out of their homes that were approved by the F.C. City Council last month will benefit all City taxpayers, F.C. Treasurer Jody Acosta explained at the first forum held in the wake of the new policies this Tuesday at the Community Center.

All Falls Church residents who qualify under the new rules on the basis of age, infirmity, veteran status and income will have to apply for the program by Sept. 15, even if they’ve already been in the previous version of it.

Following an extensive effort by neighboring Arlington County to update its tax relief and deferral programs that included the retention of nationally-known consultants on the subject, the Falls Church City Council moved a year ago to review and revise its own program. Last month, the Council voted unanimously to adopt the recommendations of a task force that was established last September to evaluate the matter. The task force’s Council liaison was Vice Mayor Marybeth Connelly.

While there were some heated debates at City Council work sessions this spring over whether or not it is fair to other taxpayers in the City to provide relief to qualified seniors and others, Acosta reiterated the point Tuesday that measures designed to help residents stay in their existing homes is not only humane from the residents’ point of view, but good for the fiscal health of the City, as well.

Any time an elderly citizen feels compelled to move out of their existing home and put it on the market to sell, City taxpayers run the risk of higher taxes as a result. That’s because the trend has been for existing homes, when they are sold, to be purchased by families interested in tearing down the existing home and replacing it with something much larger.

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This phenomenon is going on all around town right now, she noted. The larger homes are subsequently occupied by younger families with multiple children. Once such family recently moved into Falls Church brought with it six children, she noted.

As the City is responsible for educating the children in its public school system at what is now a cost averaging $19,000 per child, the cost to taxpayers of the conversion of an existing home into a “McMansion”-style new home will be far greater than providing a few extra coins for some expanded tax relief to a home’s existing resident, she noted.

As the task force’s report first indicated to the Council in the spring, the differential between providing relief to an existing home is actually staggering, she said. With the value of an average senior-owned home in the City at $525,000, an average tax bill is $7,100 annually, of $71,000 over 10 years.

By contrast, a new home on the site with two children in the City’s public schools will cost taxpayers some $38,000 to educate those two children, at a cost over 10 years of $380,000.

Therefore, the effort to provide tax relief to an elderly citizen could save the City the difference between $71,000 and $380,000, or a whopping $309,000 per year, equivalent to almost a penny on the real estate tax rate.

Such aging in place measures could be augmented by the City Council if it moves forward to adopt new “accessory dwelling unit” measures along the lines approved by Montgomery (Maryland) County last week (“Accessory Dwelling Units OK’d by Montgomery County Council”), and also recently promoted with zoning modifications in neighboring Arlington County.

Citizens who would go the route of building a second accessory dwelling unit on their residential property would enhance their ability to afford to remain in their homes, and if the value of the second dwelling unit is valued at below $400,000, it could be done also without sacrificing tax relief or deferral options for the property owner.

Moreover, the secondary units would effectively put an affordable housing option into the City now so lacking here and in most other jurisdictions in the region.

It remains to be seen if someone on the Council introduces a proposed ordinance to change City zoning statutes to encourage accessory dwelling units. The Falls Church Housing Corporation and the Housing Commission, while working to update language in support of new affordable housing in the City’s Comprehensive Plan, have not moved to draft and urge the Council to adopt specific changes to its code, at least so far.

At Tuesday’s forum, Acosta and Deputy Treasurer Niki Wisemiller reported that mailings were sent this week to all the citizens in the City currently in either the tax relief or tax deferral programs. The mailing spelled out the changes, which will expand the programs to include more citizens.

That is, tax returns as of Dec. 31, 2018 and bank and asset statements will have to be provided with completed application forms, something the City requires only once every three years once an applicant has been approved.

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The changes approved unanimously by the Council at its July 8 meeting include the following:

• No interest will be charged on deferred taxes as of July 1, 2019. Interest on the deferred taxes has been a big stumbling block for citizens who do not want to pass on the interest costs to their heirs. Existing deferral balances as of July 1 will remain, however.

• Calculations will now be based on total gross income, with no deductions (i.e. for non-taxable portions of Social Security income).

• The qualifying asset limit (over the value of the home) will be lowered from $540,000 to $400,000 (those between $400,000 and $540,000 would be allowed to defer only).

• The program offers 100 percent relief to citizens with incomes between 0 and 40 percent of the average median income (AMI) of the region, and not limited to up to $4,000 per year under the previous program. Those with incomes at 41 to 60 percent of the AMI can get a relief of 75 percent of their tax bill, and with an income of 61 to 80 percent of AMI can get a 50 percent tax relief.

Other more minor changes have also gone into effect.

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