The Falls Church City Council is considering future changes to the city’s tax relief policies for seniors and people with permanent disabilities.
Council members considered a relatively straightforward staff request on Monday night: updating the city code to include changes that leaders made about two years ago with regards to real estate tax relief.
Those policies increased some of the previous income and asset limits for residents who are ages 65+ or permanently/totally disabled, letting more people receive full or partial tax relief or deferral of their tax burden.
“We’re just updating to what we changed in [fiscal year] 2024,” Mayor Letty Hardi said at the meeting. “We’re just trying to get our code to match what we’re doing.”
Hardi added that when the measure is next up for review in coming years, she would like a broader discussion of its parameters.
“Maybe when we do the next refresh, it’s worth having staff think about,” she said.
Under current city rules, eligible homeowners who have a household income of less than $60,000 and assets (excluding the home) of less than $500,000 qualify for 100% exemption of real-estate taxes.
Those with higher incomes and/or assets can qualify for partial exemptions or for deferral. In some cases, households with incomes of up to $175,000 annually are eligible for deferral.
“That is money that comes back to the city at the time the property changes ownership,” said chief deputy city treasurer Niki Kalavritinos, who briefed Council members.
Despite the seemingly black-and-white nature of the income and asset limits, the program is “administered in a way that is a little more nuanced than the chart reflects,” Council member Erin Flynn noted.
One key example: Anyone living in a home that is assessed at more than 125% of the city’s median value is eligible only for deferral, not exemption.
“The Council in the past has affirmed that as good public policy,” City Manager Wyatt Shields said.
That limitation seemed to mollify Council member Justine Underhill, who expressed concerns that someone living in a pricey home but meeting the income and asset limits could be getting money that could be better used for others.
“The purpose of this [program] is to make sure people in need can stay in the city,” Underhill said.
Council members also wanted to get information on how the participation rate in Falls Church compares to similar programs in other jurisdictions across Northern Virginia. Staff will research the issue and report back.
Flynn said the city’s tax rate, one of the highest in the region, likely was leading more residents to opt into the program than in other jurisdictions.
“The tax burden is higher on them because the tax rate is higher,” she said of Falls Church residents. “They may be more inclined to seek relief.”
Hardi also sought clarification on whether the city could use household size as one factor in determining eligibility.
City Attorney Sally Gillette said she would check.
“It doesn’t seem prohibited to me to do it that way,” Gillette said. “I can dig into it a little more.”
Hardi also sought future discussion of why, in fiscal year 2024, the income limits were changed to dollar figures rather than percentages of area median income, which had been used in the past.
“I don’t want to create more work, but it did feel a little weird,” she said of the change to raw dollar amounts as thresholds.
Council members will formally consider changing the city code to enshrine existing practice on Aug. 11. None of the potential future alterations discussed during the work session will be part of the ordinance change.
A public hearing is slated for Sept. 8, with any changes expected to be approved the same night.
Council members included about $300,000 to cover costs of tax relief in the fiscal year 2026 budget.
The city’s tax-relief program is separate from state-mandated tax relief for U.S. military veterans injured while on active duty, and for surviving spouses of military personnel killed in the line of duty.
