April 7, B. Notice of Assessment - Taxpayers receive annual notices of assessment in accordance with , VA Code, Ann.

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1 COUNTY OF PRINCE WILLIAM 4379 Ridgewood Center Drive, Prince William, Suite 203. Virginia Real Estate Assessments Office (703) Metro Ext FAX: (703) FINANCE DEPARTMENT Steven A. Solomon Director of Finance April 7, 2014 TO: FROM: RE: Steven A. Solomon Director of Finance Allison Lindner Real Estate Assessments Division Chief 2014 Real Estate Assessments I. Background: A. Annual Reassessment - The County has been performing an annual reassessment since 1979 in conformance with , VA Code, Ann. B. Notice of Assessment - Taxpayers receive annual notices of assessment in accordance with , VA Code, Ann. II. Current situation: A. Reassessment Complete - The 2014 reassessment is complete. B. Notification - Approximately 137,800 notices of assessment were mailed to property owners beginning March 14, C. Assessment Changes - Total taxable assessed value for all property types increased 8.19% from approximately $46.1 billion in 2013 to $49.9 billion in A net increase of 1.65% is attributable to growth and a net increase of 6.54% is attributable to market appreciation (Table 1). Residential properties, including apartments, increased 9.42% for 2014 compared to an increase of 6.58% for 2013 and 4.56% for Commercial and industrial properties including public service properties increased 2.69% for 2014 compared to an increase of 5.72% for 2013 and 4.40% for 2012 (Table 2). 1. Residential - Residential assessments (including vacant land and excluding rental apartment communities) increased 9.14% overall (Table 1). The average assessment of existing single family, townhouse, and

2 condominium properties (excluding new construction) increased from $289,264 to $310,940 or 7.49% overall from 2013 to 2014 (Table 5) while the average assessed value of all residential (including new construction and excluding partially built homes) increased from $289,264 to $312,094 (Table 6). a) Growth - Growth from construction of new homes and newly created lots added approximately $527.7 million to the residential tax base (Table 1). This includes 1,281 new homes that were completed during calendar year 2013 (Table 3). The average assessed value of a new home as of January 1, 2014 was $415,015 compared to $412,439 in The assessments of 79.9% new homes exceeded $300,000 (Table 3) for 2014 compared to 83.2% for Average new single-family sale prices within each zip code range from $315,000 to $1,739,602 (Figure 1). New townhouse average sale prices by zip code range from $318,350 to $450,000 (Figure 2). The average for new condominium sale prices within each zip code range from $232,000 to $418,754 Figure 3). b) Reassessment - Reassessment of residential properties added 7.66% or approximately $2.7 billion to the residential tax base (Table 1). Single family homes appreciated on average about 6.79% while townhouse and condominium homes appreciated 10.11% and 8.57%, respectively (Table 5). Assessment changes by zip code are shown in Figure Apartments - Apartment values increased 14.11% overall. The increase due to appreciation was 6.11% while new lots and apartment units added approximately $173.1 million, or 8%, to the tax base (Table 1). 3. Commercial/Industrial - Locally assessed commercial and industrial property values increased approximately 3.08% for 2014 (Table 1). These properties do not include utility, pipeline, and railroad properties that are in the non-locally assessed public service classification. Locally assessed commercial and industrial properties make up 13.59% of the 2014 tax base compared to 14.27% in 2013 (Figure 4). a) Growth - Commercial new construction and new lots added approximately $55.8 million or 0.85% to the tax base (Table 1). Approximately 734,000 square feet of taxable commercial space was completed during calendar year Of this amount (Table 4), roughly 54% of the new commercial square footage was built within the industrial sector. Retail new construction accounted for 35%, medical offices less than 1%, while hotels and general commercial categories represented 10% and 1% of the taxable commercial new construction, respectively, in calendar year 2013.

3 b) Reassessment - Existing locally assessed commercial properties increased in value by approximately $146.8 million or 2.23% in 2013 (Table 1). 4. Public Service - Non-locally assessed commercial and industrial properties include utility, pipeline, and railroad parcels. Public service assessed values are expected to increase 1% for 2014 (Table 1). The Virginia Department of Taxation and the State Corporation Commission assess these properties and will provide the County with actual 2014 assessments in September Agricultural/Resource Land - The assessed value of agricultural and resource land decreased 5.6% overall (Table 1). Appreciation accounted for 0.94% increase while there was a 6.56% contraction in agricultural assessments due to rezonings and subdivisions. D. Residential Tax - The estimated average residential real estate tax for existing homes in 2014 is $3,501 based on a tax rate of $1.126 (Table 5). The average estimated 2014 real estate tax on a new home is $4,673 (Table 3). III. Issues in order of importance: A. Fiscal Impact - Total real estate revenue is expected to increase from $544.6 million in fiscal year 2014 (at a tax rate of $1.181) to approximately $561.8 million in fiscal year 2015 (at a tax rate of $1.126). B. Timing - Real estate assessment notices were be mailed to Prince William County property owners beginning March 14, C. Service Level/Policy Impact - A sample assessment notice is attached. Taxpayers have until June 2, 2014 to appeal their assessment to the Real Estate Assessments Office and July 1, 2014 to appeal their assessment to the Board of Equalization. Assessments are available at D. Legal - Prince William County is in compliance with the requirements of , VA Code, Ann. IV. Alternatives: For information only. V. Recommendation: No action required. Attachments: Table 1. Growth and Appreciation Table 2. Annual Assessment Changes Table 3. Residential New Construction Table 4. Commercial New Construction Table 5. Average Residential Assessed Value

4 Table 6. Residential Assessment History Figure Single Family New Home Sales Figure Townhouse New Home Sales Figure Condominium New Home Sales Figure Average Residential Appreciation Figure 5. History of Tax Base Components Attachment 1: Sample Assessment Notice Front Attachment 2: Sample Assessment Notice Back

5 Table 1. GROWTH AND APPRECIATION 2014 Landbook Estimate Category 2013 Assessed Value 2013 Appreciation Change 2013 Growth Change 2014 Assessed Value Total Change Residential 1 $35,700,235,000 $2,733,566, % $527,748, % $38,961,550, % Apartments $2,164,872,400 $132,439, % $173,102, % $2,470,413, % Total Residential $37,865,107,400 $2,866,005, % $700,851, % $41,431,964, % Commercial/Industrial $6,579,421,600 $146,834, % $55,794, % $6,782,049, % Public Service 2 $1,501,930,954 $0 0.00% $15,019, % $1,516,950, % Total Commercial/Industrial $8,081,352,554 $146,834, % $70,813, % $8,299,000, % Agricultural/Resource Land $171,039,400 $1,616, % -$11,222, % $161,432, % Total Real Estate $46,117,499,354 $3,014,456, % $760,441, % $49,892,397, % Total Assessment - Local $44,615,568,400 $3,014,456, % $745,422, % $48,375,447, % Total Assessment - Non-Local $1,501,930,954 $0 0.00% $15,019, % $1,516,950, % Total Real Estate $46,117,499,354 $3,014,456, % $760,441, % $49,892,397, % Notes: 1) Residential totals include improved, vacant, and other (e.g. parcels w ith multiple houses) categories. For the average change to existing improved residential assessment, see Table 5. 2) All properties are locally assessed except Public Service properties, which are assessed by the Virginia Department of Taxation and the State Corporation Commission. Public Service assessed values for 2014 are estimates; actual assessed values will be published in September 2014.

6 Table 2. ANNUAL ASSESSMENT CHANGES 2010 to Residential (Improved, Vacant and Other) 1.73% 6.90% 4.01% 6.11% 9.14% Apartments % 11.87% 15.32% 14.98% 14.11% Total Residential 0.51% 7.14% 4.56% 6.58% 9.42% Commercial/Industrial % 3.23% 5.25% 6.88% 3.08% Public Service % 1.00% 1.00% 1.00% 1.00% Total Commercial/Industrial % 2.77% 4.40% 5.72% 2.69% Agricultural/Resource Land % % 0.24% 6.51% -5.62% Total Real Estate -2.47% 6.25% 4.51% 6.42% 8.19% Table 3. RESIDENTIAL NEW CONSTRUCTION 2014 Assessed Values Number of New Units Over $300,000 Average Assessed Value Over $300,000 Number of New Units Under $300,000 Average Assessed Value Under $300,000 Total Number of New Units Overall Average Assessed Value Single Family 779 $494,505 5 $239, $492,881 Townhouses 213 $339, $339,957 Condominiums 31 $331, $247, $256,357 Total Residential 1,023 $457, $246,992 1,281 $415,015 Average Residential Real Estate Tax for New Homes Note: Includes residential properties completed during 2013 at the proposed tax rate of $ Properties partially built as of January 1, 2014 have been excluded. $4,673 Property Type Table 4. COMMERCIAL NEW CONSTRUCTION 2013 Completed Square Feet Square Feet Completed Percent of Total Square Feet Hotel 73, % Office 3, % Retail 255, % Industrial 393, % Miscellaneous (includes golf course improvements, taxable schools, etc.) 7, % Total Taxable Commercial 733, % Note: All categories include properties completed during 2013 and exclude properties partially built as of January 1, 2014.

7 Table 5. AVERAGE RESIDENTIAL ASSESSED VALUE 2013 Compared to 2014 Existing Residential 2013 All Residential 2014 Existing Residential Percent Change Single Family Detached $335,742 $358, % Townhouse $212,040 $233, % Condominium $170,133 $184, % All Residential $289,264 $310, % Average Residential Tax Bill $3,416 $3, % Note: Average real estate tax is based on tax rate of $1.181 in 2013 and the proposed rate of $1.126 in Average assessments do not include tax exempt properties, partially built properties, vacant land or homes built on commercially zoned land. Table 6. RESIDENTIAL ASSESSMENT HISTORY Average Assessed Value Year Single Family Detached Townhouse Condominium Total Residential 2014 $359,868 $234,161 $186,800 $312, $335,742 $212,040 $170,133 $289, $320,799 $195,932 $160,938 $274, $311,030 $188,992 $157,101 $265, $295,835 $172,225 $152,590 $251, $290,447 $173,170 $162,247 $248, $402,440 $270,936 $232,760 $354, $468,449 $318,980 $260,084 $413, $487,320 $330,362 $257,411 $429, $381,548 $251,764 $182,287 $333,510 Note: Includes completed new construction, but does not include tax exempt properties, partially built properties, vacant land, or homes built on commercially zoned land.

8 Figure SINGLE FAMILY NEW HOME SALES Average Sale Price by Zip Code

9 Figure TOWNHOUSE NEW HOME SALES Average Sale Price by Zip Code

10 Figure CONDOMINIUM NEW HOME SALES Average Sale Price by Zip Code

11 Figure Average Residential Appreciation 2013 Landbook to 2014 Landbook (estimate)

12 Figure 5. HISTORY OF TAX BASE COMPONENTS 2010 Landbook to 2014 Landbook (estimate) 3.04% 0.33% 3.26% 0.37% 13.59% 3.76% 0.46% 3.55% 0.38% 14.15% 3.51% 0.36% 14.26% 14.27% 4.69% 4.95% Percent of Real Estate Tax Base 14.61% 3.69% 77.48% 3.95% 77.97% 4.34% 77.53% 77.41% 78.09% Tax Year Total Real Estate Tax Base $39.06B $41.49B $43.4B $46.12B $49.89B Residential Apartments Commercial/Ind. Agricultural Public Service

13 Attachment 1: Sample Assessment Notice Front Commonwealth of Virginia Prince William County 4379Ridgewood Center Drive, Suite 203 Prince William, Virginia (703) Fax (703) Hours: 8:00 AM to 5:00 PM Monday through Friday Finance Department Real Estate Assessments Office Notice of Reassessment THIS IS NOT A TAX BILL Notice: Information concerning your assessment, appeal procedures, and tax relief programs is printed on the back of this form. Tax Year RPC/Account No. Property Address Parcel ID Acres Legal Description Assessed Value January 1, 2014 January 1, 2013 Market Value Land Building Total Land Building Total Use Value Land Building Total Land Building Total REAL PROPERTY ASSESSMENT INFORMATION Assessment information for all properties is available on the Internet at PUBLIC HEARING A public hearing to accept public comments on the proposed Fiscal Plan for Fiscal Year 2015, 2014 Tax Rates, and the Fiscal Year Capital Improvement Program, will be held by the Prince William Board of County Supervisors on April 8, 2014 at 7:30 p.m. in the Board Chamber at the McCoart Building located at 1 County Complex Court, Prince William, VA All interested parties are encouraged to attend and submit testimony. Pre-registration to speak at the public hearing starts at 6:30 p.m. Additional information regarding this public hearing is available from the Clerk to the Board of County Supervisors at

14 Attachment 2: Sample Assessment Notice Back GENERAL INFORMATION The Constitution of Virginia requires that the Assessments Office determine the fair market value for all properties as of January 1. Assessments are made according to accepted methods, techniques, and standards of the real estate appraisal and assessment professions. For most residential properties, fair market value is best determined using comparable sales data. Properties that have recently sold are analyzed and adjustments are made for differences such as size, condition, age, location, and interior and exterior amenities. Fair market value of commercial and industrial properties is determined by sales comparison or the income approach whereby the property's income stream is capitalized into an estimate of value. Other approaches such as replacement cost less depreciation are also used in the assessment process of residential, commercial and industrial properties. The real estate tax is the County's largest single revenue source and for many property owners it is the largest tax paid to the County. Consequently, it is important to both the County and the taxpayer that real estate assessments are administered fairly and equitably. Your 2014 assessed value should reflect fair market value as of January 1, If you have questions about your assessment you may call, write, or visit the Assessments Office to discuss the assessment with a real estate appraiser. ASSESSMENT APPEALS If you are not satisfied with your 2014 assessment, you should contact the Real Estate Assessments Office at to speak to an appraiser. If the appraiser is not able to satisfy your concerns, you may request a Real Estate Assessments departmental appeal of your assessment. The deadline for filing a departmental appeal is June 2, You may also appeal the assessment to the Board of Equalization (BOE), an eight-member citizen group appointed by the Board of County Supervisors. The deadline for filing an appeal to the Board of Equalization is July 1, Please call for a BOE application. You may also appeal to the Circuit Court within three years of the assessment. For more information, contact the Clerk of Circuit Court at TAX RELIEF PROGRAM FOR ELDERLY AND DISABLED If you are 65 years of age or older by December 31, 2014, or totally and permanently disabled, and meet certain criteria, you may be eligible for relief from all or part of your 2014 real estate taxes, the solid waste fee, and the personal property tax and decal fee on one vehicle. TAX RELIEF PROGRAM FOR DISABLED VETERANS If you are a disabled veteran and meet certain criteria, you may be eligible for relief from your 2014 real estate taxes on a home and up to one acre of land it occupies and the solid waste fee. TAX SAVINGS FOR REHABILITATING YOUR HOME OR BUSINESS To encourage renovation and revitalization of aging structures, the County has enacted a tax exemption program that provides a reduction of the tax due on real estate that is substantially repaired, rehabilitated or replaced. To participate, you must apply for the exemption BEFORE you begin construction. For more information or to request an application for any of the above programs, please contact the assessments office at