By Olivia Anderson | firstname.lastname@example.org
City Council discussed real property assessments for this year at its Tuesday night legislative meeting, which included a 3.82% increase – or $1.75 billion – from 2022 of locally assessed taxable real property assessments.
Of that number, the residential tax base added the most value at $1.4 billion, or a 5.02% increase, followed by the commercial tax base at $355.5 million, or a 1.97% increase, and non-locally assessed tax base at $21 million, or a 3.2% increase.
According to city staff, roughly one-fourth of the rise was due to new growth or construction, while three-fourths of the rise was due to appreciation, which is the change in the market. Most of that growth came from multi-family residential units, followed by residential and then commercial developments.
Specifically, $302.66 million came from multi-family rentals, $256.03 million came from single-family residential units and $19.19 million came from commercial buildings.
At one point during the meeting, Councilor Sarah Bagley asked if staff looked at whether certain types of development impacted home values during analysis. Staff admitted to not having examined that specifically, but Director of Finance Kendel Taylor said that the data demonstrated that “across the city, we’re seeing appreciation without getting into the specifics.”
“The point we like to make is no matter where you live or what kind of home you have, this is an attractive place to live and properties are valuable,” Taylor said.
“I guess where I’m going with it is as we get into zoning for housing and we’re talking about potential changes and we’re building types, [we should be] understanding the potential relationships that that would have on home values in either direction,” Bagley said. “I appreciate the goal here tonight, but [I’m] just tying these things together philosophically when we’re able.”
When it comes to the city’s commercial tax base, staff characterized the 1.97% increase as fairly steady. Apartments, hotels, shopping centers, general commercial buildings and warehouses all saw tax increases from last year, ranging from 1.19% to 9.81%.
Hotels enjoyed the highest increase, which Annwyn Milnes, a representative from the finance department’s Office of Real Estate Assessments, partially attributed to recovery from the COVID-19 as travel has picked up. She also noted that a big portion of the increase is because of new hotel growth.
“Much of the change is really due to new hotels coming into the system and being built in 2022. The hotels actually appreciated about 2%,” Milnes said, adding that apartments also appreciated about 2% due to “modestly increasing rents.”
However, office buildings’ value decreased by 10.01%, which Milnes attributed to a shift in the way many people work post-pandemic. Hybrid or fully remote work has resulted in continued increases in vacancy, the anticipation that this change will likely be long-term, and more conversions to other uses – the latter indicating only a slight market decline in office buildings.
“Teleworking has suppressed demand for older Class B and Class C inventory offices in particular, and that happens to be the office building stock we have here in the city,” Milnes said. “… So, really, even though you see that big decrease in the office buildings, most of the decrease is due to conversions and changes, and really they only depreciated about 2%.”
Councilor Kirk McPike questioned how the decline in office building value compares with neighboring localities, to which Milnes and Taylor said they don’t currently have but will work toward obtaining.
“I’d be interested in seeing that because we talk a lot about the viability of Alexandria’s office space compared to some of Arlington, D.C.,” McPike said. “If we’re seeing a wave of conversions which is driving this down, I do wonder how that’s impacting.”
According to Taylor, the City of Alexandria was one of the top five cities in the country for conversion as of last year, with the primary conversion types being office to residential.
There has been $321 million in new growth among all commercial property classes, with the largest portion belonging to apartments. Recently completed construction projects include the Alexan at 286 units, the Venue Condominiums at 123 flats and 41 townhouses, 801 North Condominium at 54 units, the Muse Condominium at 73 condo units, the View on Washington Condominium at 13 condo units, and Abingdon Place Condominium at 19 townhouse units.
Additionally, several projects are currently under construction, such as the AKA Hotel, the Grayson, the Holiday Inn Express, the Aspire, the Heron Hotel, 805 North Columbus, the Braystone Condominiums and the Aidan.
Some proposed projects include converting 901 North Pitt from office to mixed-use redevelopment, Tidelock from office to 234 units and a restaurant, and the Montgomery Center to a multifamily space with retail and art space.
During deliberation, Wilson noted that the “non-residential commercial development pipeline has never been lower.”
“You look at those numbers, and to have a quarter of a billion of residential single family and condo growth, and another 300 million of commercial multi-family and then 19 million in non is pretty stark,” Wilson said. “So that will inform more conversations to come, I’m sure.”
Every property owner in the city has two opportunities to contest their assessment; the first is to request a review with the Office of Real Estate Assessments by March 15, and the second is to file an appeal with the Board of Equalization by June 1. To review their assessments, residents can visit realestate.alexandriava.gov.
City Manager Jim Parajon will present the FY 2024 proposed budget to City Council on Feb. 28.
Bagley made a motion to receive the 2023 real property assessments report, which Councilor John Chapman seconded.
“We recognize that this is a long period of work, but it starts another very significant period of work,” Wilson said.