EDC COMMERCIAL PRESENTATION 3-07

							    Economic Development
Commission Meeting – March 2007

       COMMERCIAL
       TAX BASE 101
            Todd Kaufman, CAE
          Loudoun County Assessor
  STATUTORY MANDATES
CODE OF VIRGINIA § 58.1-3201

    What real estate is to be
  taxed?

   All real estate annually

   Except exempted real estate

    SHALL BE made at 100%
  fair market value
Loudoun County Business Regulation
    and Taxation Code 860.09(a)

  ASSESSMENT AND EQUALIZATION OF
 REAL ESTATE

   Assessment and equalization of real estate
 for local taxation shall be performed on an
 annual basis.
  STATUTORY MANDATES
CODE OF VIRGINIA § 58.1-3280



    Assessment of values for…..

    All lands, lots, and improvements

    SHALL physically inspect
  STATUTORY MANDATES
CODE OF VIRGINIA § 58.1-3330

 Notice of change in assessment.

  Requires that property owners
be notified any time there is a change
in the assessed value of their real estate.
         MARKET VALUE
• "Market value" is the cash price a
  property would bring in a competitive and
  open market. In such a market, sufficient
  time has been allowed for a sale, the
  buyer and seller are not subject to undue
  pressure, and both are well informed.
  Market Value may not be the same as the
  "sale price".
      PRICES AND VALUES
• “Prices”…historical facts.
• “Values” …opinions…hypothetical prices,
  based on actual prices, when comparable
  properties sold in a competitive, open market.
• Market value can also be viewed as the present
  value of future benefits (income approach).
• The date of value for assessments in Loudoun
  County is January 1st of each tax year.
            SALES DATA
• Residential – sales within 12 months prior
  to DOV.
• Commercial - sales and income data for
  up to 36 months prior to DOV
• Fewer commercial sales.
• Income approach better supported by
  stabilized I and E during a three year
  period to establish a trend.
 WHY FAIR MARKET VALUE?
• Fair…Objective…Easy Understood

• Avoids subjectivity

• Supported by market derived sources such as sales.

• Tax levy changes as market changes

• Relatively – market value – tax rate – budget

• Tax rate is not a constant factor
    INCOME APPROACH
Methods, techniques, and mathematical
procedures that an appraiser uses to
analyze a property’s capacity to
generate benefits and convert these
benefits to an indication of present
value. The key element in establishing
value is the determination of the
capitalization rate.
        COST APPROACH
Three elements:
• Replacement cost of improvements
• Subtract depreciation
• Add land value
Three basic sources:
• Construction contracts
• Historical files
• Cost services (Marshall and Swift)
      SALES COMPARISON
• Informed purchaser
• Pays no more for a property than the cost
  to him of acquiring an existing property
  with the same utility.
• Use recent market transactions in
  comparison to the characteristics of a
  subject property to support value.
2007 Real Estate Tax Base Distribution (Office of the County Assessor)

                                     Exempt   SCC
                       Ag > 100 Ac     7%      2%
                           3%

                 Ag 20-99.99 Ac
                      3%




               Com/Indust
                 15%


                                                    Residential
                                                       68%
                Multi Family
                    2%
                          Real Estate Tax Distribution 2005 to 2007 (Office of the County Assessor)



                 90.00%

                 80.00%
                                                                                            RESIDENTIAL
                 70.00%
Percent Change




                 60.00%

                 50.00%

                 40.00%

                 30.00%

                 20.00%                                                                     COMMERCIAL
                 10.00%
                                                                                            EXEMPT
                 0.00%
                                     2005                      2006                      2007
  2007 OVERALL CHANGES
• All Real Property +4.34% or $2.79B; from
  $64.52B to $67.32B

• -0.38% equalized value (-$241.9M)

• $3.04B construction/growth (4,102 parcels)

• $712.4M supplementals (3,163 parcels)
   2007 OVERALL CHANGES
                           (continued)


• Residential < acre                     -2.03%

• Residential > acre < 20                +8.47%

• Multi-Family > 5 units                 +10.53%

• Commercial/Industrial                  +18.51%

• Residential >20 a < 100 a              +14.63%

• Residential >100 a                     -0.24%

• SCC                                    +2.99%
    2007 Commercial Property
           Overview
• The equalized commercial tax base
  increased 13.43% or $1,137,881,699.

• New construction and growth
  increased $431,024,300.

• The commercial tax base increased
  18.51% or $1,568,905,999.
                              2007 Value Allocation by Class and District (Office of the County
                                                         Assessor)


                $14


                $12
                                                                                   Residential
                $10
                                                                                   Commercial
$ Per Billion




                $8
                                                                                   Exempt
                $6


                $4


                $2


                 $-
                      Blue Ridge   Broad Run   Catoctin   Dulles   Leesburg   Potomac    Sterling   Sugarland Run