A major driver of municipal spending power — the total value of taxable real estate — leaped in Roanoke last year to a degree not seen in 15 years.
An effective tax increase due to that appears in the offing for many, resulting in more money for city services, especially schools. Council members gave no indication they plan to lower the tax rate to offset the increase.
The value of city residential and commercial real estate likely grew 7.65% during the past year to nearly $8.8 billion, according to new projections that reflect a red-hot real estate market.
For affected property owners, which is 90% of those in the city, the newly proposed assessments will take effect July 1 and show up on tax bills due in October, unless an individual owner successfully appeals.
Roanoke’s real estate website — or GIS — is expected to display the proposed revisions Tuesday. Notices will go out to individual owners soon, officials said.
People can initiate appeals with the city’s Office of Real Estate Value by Feb. 1. Veterans, the elderly and people with disabilities can get tax relief.
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The report Monday by Director of Real Estate Valuation Susan Lower forecast about $5 million more money for government services during the fiscal year to start July 1.
The resetting of property values based on current trends — which city staff examined neighborhood by neighborhood — added 7.28% to the total value of all property, Lower told council members. New construction added an additional amount, for an overall increase of 7.65%.
Revenue from real estate taxes next fiscal year is projected to be between $99.8 million and $101.9 million, up from $94.7 million currently.
“When revenues increase, they certainly benefit the services that we can provide. They also benefit what the schools can do in the community as well,” City Manager Bob Cowell said.
Budgeting will take place in the coming months. The city by formula budgets 40% of local tax revenue to its school system.
Assessed values last grew at this magnitude in one year 15 years ago, in 2006, on the eve of the Great Recession. Values did not fully recover for years. Now they are rising again, with the current rise projected to be more than twice last year’s.
The residential real estate market is a seller’s market characterized by a lack of homes for sale relative to demand and low mortgage rates, Lower said. The median residential sales price in Roanoke reached $175,000 in 2021, up from $165,300 in 2020 and $150,000 in 2019, Lower’s report said. The figure for 2021 was based on 10 months of data.
The extra money pales in comparison to the pandemic relief funds awarded under the American Rescue Plan Act, which injected $65 million into city accounts. The city, which employs about 1,700 people serving about 100,000 residents, operates on an annual budget currently at $307 million.