City Council Regular Meeting
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Old Business   Item #: A.
Real Estate Tax Rate
The Real Estate reassessment is currently underway. Current projections anticipate an overall increase of not more than 5% in assessed values as compared to the current assessment. The majority of the anticipated increase relates to the reassessment of existing property, while approximately 1% is attributed to new construction.
The Commonwealth of Virginia Code requires that reassessments resulting in an increase in assessment of 1% or greater be advertised as a tax increase. The advertisement for the real estate tax must be published 30 days in advance of the public hearing. At that time, the City advertised a real estate tax rate of $0.84 per $100 as an effective tax rate increase of no more than 5%. Current data anticipates that maintaining the current rate of $0.84 would represent a 3.8 cent increase from a revenue neutral rate. However, the assessment is not complete and that amount may change.
Should the maximum average increase in values of 5% be realized, property assessed at $100,000 in the current year would be reassessed at $105,000 and the tax bill would increase from $840.00 to $882.00 annually, an increase of $42.00 annually or $21.00 per installment. If the average increase stays at the current 3.8%, a property assessed at $100,000 in the current year would be reassessed at $103,800 and the tax bill would increase from $840.00 to $871.92 annually, an increase of $31.92 annually or $15.96 per installment. In previous years, the closer staff got to concluding reassessment, the projected percentage increase in values declined.
The estimated increase is an overall average and individual properties may increase at a greater or lesser percentage. The increase in the general reassessment together with new construction is anticipated to generate a $953,000 increase in real estate revenue for the FY 2023 Budget. The Proposed Budget includes an increase of $500,000 representing an estimated 1.96% increase in assessed values, after accounting for uncollectible amounts.
It is recommended that Danville City Council adopt the attached Ordinance maintaining the current real estate tax rate.
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