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STORY #1 — Car Tax Elevator - Going Up
A reader alerted us this week that if you have not yet gotten your personal property tax bill (car tax) from the city, you soon will — and it will be notably higher than last year unless you bought a newer model of drive a jalopy.
The city receives roughly $16.7 million per year from the state to provide for car tax relief originally established by the state in 1998 (which is a whole other topic for another day). During and after the pandemic, car values rose as the demand for used cars skyrocketed and higher tax bills followed accordingly. City Council first approved the Mayor’s “step-stair” approach to tax relief in 2022 — a policy in which owners pick up a bigger share of the tax over the course of a few years. Last year, the tax relief rate was 36.6% in the city.
In the city, you pay $3,70 tax per $100 assessed value. Under the relief program, a car valued at less than $1,000 owed no tax. If your vehicle was assessed between $1,000 and $20,000, you received the partial credit and owed the balance. If your vehicle was assessed at $20,000, you received the credit in relief up to $20,000 but then owed full freight on everything over $20,000.
So a car assessed last year at $12,000 would owe $444 in personal property tax but got the 36.6% relief. That vehicle would have received a credit of $162.50 and the owner paid $281.50 in tax.
Two years ago, car (and truck) owners in the city received a 50% credit, but that credit declined to the 36.6% in 2023. This year, the credit declines again down to just a 22% credit towards the assessed value. The owner of a $11,000 vehicle in 2024 would get a tax bill for $407; after a 22% credit of $89.50, the owner would pay $317.50. So the value of the car went down, but the tax goes up.
In the example sent by our reader, they received a bill for both of their cars with a combined assessed value that was about $3,900 lower than it was in 2023; but their tax bill was about $36 higher.
Value goes down, tax goes up. Call it Stoney-nomics.
The reader pointed out had the rebate percentage remained at 36.6%, their bill would have been about $60 lower; so they saw a total swing of about $96.
Last month, for comparison, Chesterfield’s Board of Supervisors increased their personnel property tax relief value from the 39% it provided in 2023 to 44% for 2024. Not only did they do that, they also lowered the assessed value rate for vehicles from $3.60 to $3.35 per $100 of assessed value, which is the lowest rate ever set by the county and the lowest rate among all Virginia localities with a population over 100,000.
Dale District Supervisor Jim Holland, chair of the Board of Supervisors, called it “a transformational opportunity.”
“We are positively impacting many more people than if we just gave a reduction on the real estate tax rate,” said Clover Hill District Supervisor Jessica Schneider. “There are a lot of people who rent and they would not see any of that rebate whatsoever. This way, anyone who has a car gets a rebate.”
“Doing it this way, we’re actually giving a true tax cut,” said Bermuda District Supervisor Jim Ingle. “We’re not just cutting the rate and people’s taxes still go up. We’re cutting the rate and they’re actually going to see a tax cut from this. I applaud this board for that.”
“I think this is a huge step in the right direction,” added Matoaca District Supervisor Kevin Carroll. “I would like to make sure this is a permanent tax cut. If we come back next year to raise it, I’m going to vote no.”
Similarly, Henrico is providing tax relief at a rate of 46% for 2024 assessments. Last year, the Henrico Citizen reported that the county lowered the tax rate for vehicles by 10 cents from “$3.50 to $3.40 per $100 of assessed value, which amounted to a total savings of roughly $3.6 million for car owners (about $102 each).
One other telling bit of data was a table from Fairfax County that showed that locality’s efforts to slowly reduce their tax credit over time and provide as much relief as possible for as long as possible.
Richmond, meanwhile, has gone from 50% relief in 2022 to 36.6% relief in 2023 to 22% this year. Who knows what the relief will be in 2025 — or if there will be any left at all.
STORY #2 — City Center Shoe Drop
For the last eight years under Mayor Stoney, economic development projects have followed a similar pattern with similar results. Announce a city-involved project with a bang and lots of pretty pictures, talk about how great it will be for the city and cost us nary a dime, then say nothing while months (or years) pass, reassure that negotiations “are continuing,” which is then inevitably followed by the announcement that the city will indeed bear some cost and responsibility (but that was in reality the better way all along) and whatever the cost, it will be worth it — just you wait and see.
The vote to fund the new baseball stadium in the Diamond District is coming up on Wednesday, and it will commit $170 million of city money to backstop the bonds in case the development falls short of paying the debt, after years of the Mayor and CAO telling us the city would not be on the hook for any of the debt. But believe it or not, that is another topic for later this week.
This piece is about why the Mayor’s City Center economic development plan had come down with a bad case of inertia until suddenly, we are told the city has to commit a big chunk of money to get it going.
Last month, Chief Administrative Officer (CAO) Lincoln Sanders told City Council that the city now needed to pay $3 million to demolish the Coliseum to help spur the City Center development process that kicked off with such promise in 2022.
The city issued a request for proposals in the fall of 2022. The Greater Richmond Convention Center Authority and Richmond Economic Development Authority reviewed the proposals and chose four finalists in May 2023 to choose from. The Times-Dispatch ran an article on June 1, 2023 with highlights and diagrams “that lay out the groups’ visions for the mixed-use development project, with conceptual renderings that bring their plans to life. The winning development group will be tasked with demolishing the Coliseum structure within 12 months, repurposing the historic Blues Armory on North Sixth Street and building a 500-room hotel that will support the Greater Richmond Convention Center.”
It also noted that “The [city’s] Economic Development and Convention Center authorities hope to announce a preferred development group this summer [2023].”
By early September 2023, Richmond Bizsense reported that the city was taking an even more detailed look at the plans of the four development groups and hoped to make a final selection by fall 2023.
Then, in February of 2024, Virginia Business reported that no one knew where the process was, when a final selection would be made, or when the final selection process was taking so long.
Which brings us to a few weeks ago in mid-April when the CAO suddenly announced the city needs to pony up and pay $3 million for the demolition of the Coliseum — which the city had originally included in the request for proposals to which all four developers responded understanding demolition was clearly their responsibility.
But now, that $3 million will be coming from the city’s Capital Improvement Budget to pay for something the city told developers they should be expected to pay, and will prevent the city from directing that funding to schools or roads or community centers, for example.
BizSense reported that CAO Saunders reported to City Council that, contrary to the solicitation the city issued in 2022, all of a sudden, demolishing the Coliseum would help reenergize City Center while also removing a public safety liability and costs of about $500,000 annually to keep the shuttered structure secure.
“If we do not move forward with advancing the demolition of the Coliseum, we will likely have to offset that with additional security costs to maintain the integrity of the fencing, etcetera, that is intended to keep folks from getting inside and causing challenges. Doing this would also, I think, help with advancing and/or enabling the City Center project to move forward at a faster pace, without adding that cost and challenge to the (project),” Saunders said.
Of course, the city could have also done this a year or two ago for the same reasons Saunders is using as excuses now; the city could have demolished the Coliseum as part of the enticement of the City Center project before even issuing the solicitation from developers (and probably used federal pandemic aid to do it).
But it was also clear then that there was significant interest from developers in the project with an invitation to develop a ten-acre swath of highly developable tracts downtown (including a 500-room hotel next to a very successful convention center), and the city could (and did) use that as leverage to have the developers pay for it. But rather than negotiate from a position of strength, the city seems to have since decided the best path is to pull out the checkbook.
The Diamond District development took months longer than anticipated to reach an agreement, and then in spring 2023, the first shoe to hit the floor was that the city would pay millions for infrastructure and the stadium opening would be delayed a year to 2026. After that, that project saw no action or news for almost a year until the Mayor and CAO suddenly said a few weeks ago the city would be responsible for all of the debt as the second shoe hit the floor.
There has been no news about progress on City Center since last summer. It is unclear what Saunders means by spending $3 million of city money to demolish the Coliseum will achieve a “faster pace” to select the City Center developer or make the project doable. But the city waving the white flag to pay for demolition is the first shoe to hit the floor.
One possibility for the sudden city surrender could be that the prospective developer(s) might be fearful about unforeseen costs like asbestos abatement or other hidden costs of demolition that could cost more than $3 million. Of course, that would have been clear during the solicitation process (and is apparently a major issue in the demolition of the Public Safety Building site being paid for by VCU which is well behind schedule).
Another possibility is that those interested in developing City Center saw that the city is willing to do anything to get a deal done, especially since Stoney & Company have failed at every large economic development deal they have tried to get the city involved in over the last seven years. Desperation to get a deal done makes leverage a two-way street.
It’s not beyond the realm of possibility that a developer that watched the city fumble the Diamond District project for the last 18 months and then abandoned the original financing plan (yes, interest rates played a major role), but when the city turned and took full backing of the bond debt, someone might also have concluded that they could get the city to pay for the demolition of the Coliseum (and maybe even more) as part of the City Center deal.
It’s also possible that neither of those scenarios will play out, or we might see something else entirely. But we know that since the first shoe dropped and the city is paying the $3 million to demolish the Coliseum, another shoe is likely to follow. It won’t happen until after the Diamond District deal is secured, and just how much more it may cost the city is TBD. But we know since the Mayor is on his way out, he is so anxious to close these deals so the city will offer whatever it takes to get them done, whether it makes good financial sense or not. And once again, we will be the ones left to pick up his tab.
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