Town Property Values Drop 35% — Tax Rates Will Increase

By DORIE SOUTHERN
Cape Charles Wave

April 11, 2013

It was a long time coming, but properties in Cape Charles and Northampton County have finally been reassessed to reflect current values.

Northampton County, which handles assessments for the Town of Cape Charles, had not done a reassessment for five years — before the real estate bubble burst.

According to Town Manager Heather Arcos, the reassessed values in the Town of Cape Charles are 35 percent lower than last year.

For Northampton County overall, values dropped 20 percent, according to County Administrator Katie Nunez.

During the real estate bubble, values swelled more in Cape Charles than elsewhere in the County, and now those Town values have dropped the most.

Rising property values tempt governing bodies to increase their budgets for “free” – that is, without increasing the general tax rate.

But when property values fall, counties and towns are faced with the necessity of increasing the tax rate just to obtain the same amount of money as before.

Northampton County Board of Supervisors would have to increase property taxes from 54 cents to 70 cents per hundred dollars of property value just to maintain the same income as last year.

But since budgets include cost of living increases and other inflationary items, the tax rate could be even higher.

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Cape Charles Town residents pay two tax bills – the full Northampton County bill, plus Town taxes.

Last year’s Town property tax rate was 18 cents per hundred dollars of value. This year, just to maintain the same income would require a rate of 27 cents.

Add the County and Town tax rates and you get 97 cents needed just to equal last year’s income.

Town Council heard even more sobering news last Thursday from Treasurer Kim Coates: If the Town budget funds all the current requests from departments, the tax rate would need to be 37 cents.

That would include a 3 percent cost of living increase for Town employees.

In an effort to keep from doubling the tax rate, the Town is considering proposals for debt refinancing. With interest rates at historic lows, the Town has the opportunity to reduce its debt service on current bonds by refinancing.

But rather than reducing payments, the Town is considering increasing its Water and Sewer fund debt while maintaining current levels of payment.

By borrowing more money, the Town would not need as high a tax increase.

Neither Northampton County nor the Town of Cape Charles has yet advertised prospective tax rates, which is the first requirement before enacting them.

But a back-of-the-envelope estimate might be that Town property owners will be charged a County and Town combined total of $1 for every $100 value.

That means that for a $250,000 home, the tax might be $2,500.

Of course, that $250,000 property might be last year’s $400,000 home.

Town Council will continue its budget work sessions 6 p.m. tonight (April 11) at Town Hall. The public may attend but not speak.

The entire Northampton County Reassessment Book, listing all properties by owner’s name, may be accessed here: http://www.co.northampton.va.us/gov/pdf/2013_Reassessment_Book.pdf

Other Town Council news:

— Town Planner Tom Bonadeo has moved his retirement date up to June 1.

— The moving date to the new library is now set for the first weekend in May.