Blog posts are the personal views of Letty Hardi and not official statements or records on behalf of the Falls Church City Council
We had our final FY20 budget work session, ahead of next week’s mark up where we make adjustments before adoption on April 22. We reviewed departmental highlights in housing and human services, library, public works, schools, human resources/city employee compensation, and senior tax relief. While each of those areas merit an entire post, up for consideration is an expansion of the senior tax relief program – so I’m going to devote this week’s update to the program and my long-standing belief in affordability as a policy goal for the city. (Blast from the past: I wrote a post, as a City Council candidate in October 2015, about affordability if you’d like to check it out.) I’d love to hear from you if you support or oppose the current program and proposed changes, or general thoughts about affordability.
Next Monday night’s meeting will be a biggie – besides budget mark up, we’ll have a work session on the West Falls Church project and discuss an early draft of the comprehensive agreement and land lease.
PS – Walkability and pedestrian safety plug: there will be a community information meeting for 3 proposed HAWK signals (ped-activated lit crossings) on Broad St at the Oak, Berry, and Fairfax intersections. If you live nearby or walk a lot around town, pencil it in your calendars!
What Happened This Week:
(1) FY20 Budget Review – for die hard budget watchers, here are highlights from the department budgets we discussed this week.
(2) Senior Tax Relief Program
In October 2015 as a then candidate for City Council, I wrote a post titled “Affordability – It’s Expensive to Live Here!” and five policy actions to tackle affordability across the board, not just for seniors. When I doorknocked across the city, I heard over and over again from aging seniors about their affordability concerns. Since 2015, we’re making progress in all five areas and have managed to keep the tax rate relatively steady in light of taking on a *huge* capital program with a new high school, City Hall, and Library projects, right on the tail of finishing up Mt. Daniel. I do acknowledge that it continues to be more expensive to live in the DC area. In Falls Church specifically, our property values climb every year which means even though tax rates are not going up every year, your tax bills (and rents) are still growing. Tax relief strategies, for our most vulnerable populations, are a part of that five prong approach.
Background on current tax relief:
- What: We offer a tax relief program for low income seniors and disabled veterans. You can check out the link to see the eligibility requirements and the difference between relief (ie, abatement of taxes), deferral with interest, or both.
- Who and how much: According to the current budget book in FY18, we granted tax relief and/or deferral to 76 individuals, at a cost to the city of $185K for the senior program and $97K for the veteran’s relief program. An additional 9 seniors qualified for deferral only, with $37K in real estate taxes deferred. The total program costs $282K. (Separately, there is a car tax relief program that provides relief to 25 citizens, with only $1K in taxes in relief.) There are varying caps on the amount of taxes that can be relieved based on income levels, with a maximum amount of $4K per household for the lowest income bracket.
- Whoa: if your reaction is like mine, I was surprised by the low participation. Out of approximately 4600 taxable parcels in the city, only 54 parcels are in the program. This is not a widely used program currently.
- Last year, we appointed a Tax Relief Working Group to assess our program. We charged them to benchmark our program with neighboring jurisdictions, consider expansion of the program to help more seniors, and encourage greater use of deferral as a more equitable tool.
- From our initial work session you can see the research from the working group. Our participation rate is indeed the lowest in the area, with 0.41% in relief (with neighbors ranging from 0.54% to 1.51%) and 0.09% in deferral; our eligible household incomes range from $0-52K and neighbors range from $0 to $72K or $99K.
Recommendation from Working Group:
- Lower asset limit from $540K to $400K. This means you wouldn’t qualify for tax relief if you had more than $540K in assets, now proposed to be $400K, in assets.
- Remove interest from deferral option to encourage greater use. The treasurer shares that deferral is not widely embraced by seniors because of interest and that they’re concerned with leaving their house with debt to their heirs. Making it an interest-free deferral would remove one of those barriers.
- Bring income brackets and relief amounts closer to neighbors – see working group recommendation option #3. The recommendation includes giving out greater relief amounts, allowing deferral only for the highest of the lower income bracket, and allowing deferral only for homeowners whose house value is 125%+ of the median home value, should their income and asset levels qualify.
- Other changes including making the application process simpler and aligning the program to fiscal vs calendar year to align with the real estate billing cycle.
- The total cost of such changes would be additional $63K in the FY20 budget, bringing the program total cost to $390K. (As context, the total FY20 operating budget will be $99M.)
When we worked on the City 2040 Vision in 2017 – we asked ourselves “what kind of community do we want to live in?” and “what kind of city do we want to be in 2040?” Recall the vision we adopted after much community discussion:
In the year 2040, the City of Falls Church is a welcoming and inclusive community – a special place in the heart of Northern Virginia. Involved citizens are key to the City’s long-term success as a leader in education, environmental sustainability, multi-modal transportation, and vibrant economic development. By investing in neighborhoods, community services and facilities, schools, and parks the City preserves small-town character and history while honoring a deep commitment to progress and a growing community. The continual rejuvenation of robust commercial areas supports the City’s high quality of life for all citizens.
We espouse our value of inclusiveness, which to me includes racial, socioeconomic, and generational diversity. With the highest income per capita and some of the highest home values in the country, could we do more for our most vulnerable? We all have neighbors who are long-time residents on fixed incomes, facing higher tax bills and living expenses. Enabling the lowest income seniors to stay in their homes, and more of them, with this expansion, seems like an example of the American social contract that binds us together – it’s the right thing to do.
The Treasurer (and FCNP reported) that there is also a “simple math” equation that makes the investment in senior tax relief actually a win-win. While generational turnover is a phenomenon everywhere, I’ve observed it in my own neighborhood as I’m sure you, too, have seen your local bus stops explode and small ramblers and cape cods transform into larger houses with full families. Speaking about fiscal impact only, families* with school-age children can be a net fiscal loss for the city because the cost of educating one child per year is nearly $20K while the average annual property tax bill is $10K, maybe $20K for a large house. (And remember our “3 is the new 2” trend?) So if annual school costs aren’t covered by a household’s taxes, then the other city services, like fire and rescue, streets, parks, trash, snow removal, debt service, etc also funded by property taxes aren’t covered either.
I believe there are many factors involved in a family or senior’s decision to leave the city, and taxes may only be a part of the picture. (For the factors we can control, this is one of the reasons why I continue to advocate for the other quality of life investments across the city like walkability, parks, downtown vibrancy. Once a family has children graduate high school, let’s make sure they have reasons to stay in this community beyond the schools.) If high taxes are one of the many reasons a senior turns over the house, a tax relief and deferral strategy lowers the chances / decreases the speed of turnover and keeps an important population in our community.
There are many permutations on how to modify the tax relief program and we’ll have time to consider them, but I believe earmarking an additional $60K, per the Treasurer’s request, to expand the program in this budget cycle is an important commitment to the value of socioeconomic and generational diversity.
*Families with children, 30% of the city’s total households, are of course an important and welcome part of the city. However, I believe a financially sustainable community also needs a diverse demographic and growing tax base – hence the focus on building smaller housing geared towards younger residents and age restricted housing options for the 55+ as we’ve been doing in recent projects.
What’s Coming Up:
*Note that the April Sunday Series Town Hall meeting is actually on a Monday night to avoid conflicts with the FCEDF Home and Garden tour
- Monday, April 8 – City Council Meeting (730 pm, Community Center)
- Monday April 22 – City Council Meeting (730 pm, Community Center)
- Friday, April 26 – Campus Coordinating Committee Meeting (730 am, School Board Office)
- Monday, April 29 – “Sunday Series” (730 pm, Community Center)