Board Advertises Property Tax Rates — “The Arlington County Board today voted unanimously to advertise no increase in the Calendar Year 2021 base real estate property tax rate, citing the toll the ongoing coronavirus pandemic is taking on residents. The Board also voted to advertise a proposed Stormwater tax rate of 1.7 cents per $100 of assessed real property value to fund the full cost of operations and planned capital improvements to the County’s stormwater infrastructure and flood mitigation… The estimated annual impact for the average household with an assessed home value of $724,400 is $123.” [Arlington County]
Snow Falling in Arlington — Updated at 9:10 a.m. — Snow is falling in Arlington, which is just outside of a newly-expanded expanded Winter Weather Advisory. Be careful out there! [Twitter]
Business Owners Talk About Burglaries — “Metry describes the Bluemont neighborhood where his business was burglarized as safe. He doesn’t understand why his business was targeted. ‘The whole register, the iPad, the square scan, all of this was missing,’ Metry said. Surveillance footage captured at neighboring restaurant La Union shows the burglars wearing dark clothing, hoodies, masks and gloves. Jose Zelaya has owned the Mexican restaurant La Union for 21 years. Aside from a random car break-in, he said he’s never experienced any crime like this.” [WUSA 9]
St. Patrick’s Pie at Clarendon Pizzeria — “Colony Grill, Clarendon’s new family-friendly tavern, known for its gracious hospitality and famous ‘hot oil’ bar-style pizzas, will serve a special corned beef & cabbage “Bar Pie”… [f]rom Friday, March 12 through Wednesday, March 17.” [Press Release]
Reminder: Trash Collection Delayed a Day — Due to ice and snow last week, Friday’s residential waste collection will be completed today, shifting this week’s collection schedule by one day. [ARLnow]
Schwartz calls the upcoming Fiscal Year 2022 budget, which is being presented to the County Board Thursday afternoon, a “transition budget.” While modestly increasing spending, his proposal reflects big pandemic-era declines in some key revenue sources.
“This budget provides us a path forward, ensuring we have a strong, resilient County government when we emerge from this pandemic,” he said after a press briefing earlier today.
For starters, the proposed $1.36 billion budget — representing a 1.4% increase in spending — includes a $17.5 million coronavirus contingency fund. This will fund vaccine distribution and testing, eviction prevention, food assistance, and will go toward supporting local businesses.
Meanwhile, Schwartz has identified $16.4 million in cuts to help close what the county describes as a budget shortfall of $26 million, down from what was initially estimated last fall to be a $50 million shortfall. The rest will be made up through one-time funding sources, he said.
The bulk of the cuts come from eliminating 56 vacant positions, which resulted from a voluntary retirement package offered in January and a continuing hiring freeze from last year.
Schwartz proposes keeping the $1.013 per $100 property tax rate flat, as he did last year. Still, the average homeowner will see a tax bill that is 5-6% higher due to rising property values, Schwartz said. Commercial property assessments, by contrast, declined this year.
Homeowners will see an average increase of $29 in stormwater taxes, reflecting a rate hike of 1.3 to 1.7 cents per $100 in property value. The increase will help generate $15.1 million earmarked for stormwater improvements. Eventually, the county plans to eliminate the stormwater tax completely in favor of a fee based on how much impervious surface covers a given property, Schwartz said.
Schools will receive 47% of the tax revenue, or $529.7 million, an increase of $5.1 million over last year.
(Updated on 2/23/21) The pandemic has saved the county money through remote work and online services, which Schwartz said will help fund other programs and services. His budget includes a one-time, $500 bonus for county employees, who will be foregoing merit-based raises.
“Our employees have gone without raises — or a vacation day — for an entire year,” Schwartz said.
After the County Manager submits his proposed budget, the Arlington County Board will vote on an advertised tax rate this Saturday. The Board will be able to ultimately adopt a property tax rate equal to or less than, but not above, the advertised rate.
The Board will then review the budget proposal and conduct a series of work sessions with each county department beginning in March.
There will be two public hearings: Tuesday, April 6, and Thursday, April 8. The final vote on the FY 2022 operating budget is scheduled for Saturday, April 17.
Certain parts of the budget may be revisited, Schwartz said, should additional federal funding become available.
Other highlights from the budget proposal include:
- More racial equity training, money for a Restorative Justice initiative, and more funding for probation, parole and the Public Defender’s Office.
- About $1.5 million to implement several recommendations from the Police Practices Group, especially in transitioning mental health-related work from police officers to clinicians.
- Allowing firefighters to work a shorter week, adding transportation safety officers to the police department, and multiple positions to support the new body-worn camera program.
- The county elections office is proposed to receive additional staff to support mail-in ballots and absentee voting.
- Funding for the opening of the Long Bridge Park Aquatics and Fitness Center and the Lubber Run Community Center
- Increasing the lowest base pay for county employees from $15 to $17 per hour
- Adding Juneteenth as a County holiday
- Delayed re-opening of Cherrydale and Glencarlyn libraries, saving $881,000
- An additional $2.6 million in housing grants, plus $21 million in housing choice vouchers and $8.9 million for the Affordable Housing Investment Fund.
Schwartz’s budget proposal focuses affordable housing efforts on “eviction prevention and direct housing support,” but decreases county funding for Arlington’s affordable housing development fund, as the Washington Business Journal’s Alex Koma noted on Twitter (below).
“4.6% of the County’s operating budget is dedicated to housing and more than 15% is dedicated to safety net services and housing,” a slide from the budget presentation noted.
#ArlingtonVA officials are previewing the 2022 budget now, ahead of a full reveal Saturday.
Of note: the county contribution to its main affordable housing loan fund is getting halved, to $8 mil. Amazon, of course, is chipping in $20 mil on its own, but this is a notable change pic.twitter.com/xDrGoUbuDC
— Alex Koma (@AlexKomaWBJ) February 18, 2021
No APS Return Dates Yet — “Alexandria City Public Schools this week joined a flood of Northern Virginia school systems in setting firm timelines for reopening classrooms, vowing to welcome all students back for in-person learning by mid-March. But in Arlington, school officials aren’t committing to return dates just yet.” [Washington Post]
Summer School Appears Likely — “Gov. Ralph Northam on Friday will announce a plan to extend the school year into summer to allow students to catch up. The announcement will come during an 11 a.m. news conference, Northam said during a Thursday morning interview with Washington Post Live. No details have yet been released. ‘We’re working with our teachers, our school boards, our superintendents. It has to be a top priority,’ he said.” [InsideNova]
Karantonis Running for Reelection — “Although his announcement was temporarily derailed by a snafu too common in the Zoom era, Arlington County Board member Takis Karantonis on Feb. 3 formally kicked off his bid for re-election with comments before the Arlington County Democratic Committee.” [InsideNova]
Napoli Salumeria’s D.C. Location Closing — “The restaurant has decided not to renew their lease at their current location, so they are temporarily closing their Columbia Heights doors as they search for a new DC location. In the meantime, guests can still get the full Napoli Pasta Bar menu at Napoli Salumeria in Arlington starting next week (including dine-in). Napoli Pasta Bar will also offer free delivery for DC residents within a certain radius from Napoli Salumeria.” [PoPville]
Marymount Announces Commencement Speakers — “In mid-May, approximately 975 students will receive their degrees over the course of three days during Marymount University’s 70th annual commencement ceremonies. The newest graduates of the mission-based Catholic university will hear from three distinguished commencement speakers – influential Virginian James Dyke, Jr., entrepreneur and philanthropist Sheila Johnson and business leader Donald Graham.” [Marymount University]
Editorial: No Counterbalance Against Tax Increases — “The government’s Fiscal Affairs Advisory Commission effectively has been gelded; the Arlington County Civic Federation is trying to keep up but is not the budget-watching powerhouse it once was; the Arlington County Taxpayers Association effectively died with its leader, Tim Wise; and serious budget discussions almost never even come up within the intra-Democratic nomination contests that determine who will hold elected office.” [InsideNova]
Virginia May Abolish Death Penalty — “Virginia is poised to become the first state in the South to abolish the death penalty, a sign of ascendant liberal political power in a state that has executed more people since the 1970s than any other except Texas.” [New York Times]
The value of homes in Arlington County has soared during the pandemic.
Residential property values in Arlington are up 5.6%, while commercial property values slumped 1.4% from last year, according to newly-released stats. Arlington County is starting the process of mailing the new assessments out to homeowners and commercial property owners.
“Arlington’s overall property tax base grew modestly from last year due to continued residential growth despite a slowdown in some commercial sectors due to the impacts of the COVID-19 pandemic,” the county is saying in a letter to property owners. “Property values increased 2.2% overall in Calendar Year (CY) 2021 compared to 4.6% growth in CY 2020. New construction contributed to 1% of the 2.2 % overall property assessment growth.”
The sharp rise in residential property assessments shows “the continued attractiveness of our Arlington community, even as our businesses and residents face the burdens and challenges brought by the COVID-19 pandemic,” said County Manager Mark Schwartz. The average value of existing residential properties is now $724,400, up from $658,600 two years ago.
The average value of hotels, meanwhile, plummeted amid the pandemic, while apartment and office buildings increased in value — with the latter propped up by the arrival of Amazon.
“Overall commercial property assessments decreased by 1.4% over the previous year, mainly driven by a double-digit decrease in the hotel sector where operations have been significantly impacted by the COVID-19 pandemic,” the county said. “Apartment and general commercial (malls, retail stores, gas stations, commercial condos, etc.) property values saw small decreases offset by new construction. After strong growth in CY 2020, apartment property assessments increased by 0.8% overall in CY 2021. General commercial property assessments increased by 0.1% overall.”
“While many office property assessments decreased due to increases in vacancy rates and changing demand for office space, total office property values increased by 0.8% over last year,” the county added. “The overall office market tax base increased, in part, due to the increased presence of Amazon and the related development activity.”
Last year, assessments rose 4.6% on average — 4.9% for commercial properties and 4.3% for residential properties. The big rise in 2021 residential assessments will likely result in another effective tax hike for homeowners.
Last year, Arlington’s property tax rate — $1.026 per $100 in assessed value — was held steady despite the higher property values. This year, budget pressures brought on by the pandemic have prompted the county to warn of the likelihood of both budget cuts and tax rate hikes.
The height of Arlington’s budget season is set to kick off on Feb. 20, with the release of the County Manager’s proposed Fiscal Year 2022 budget. The final budget is expected to be adopted on April 17. The county’s new fiscal year begins July 1.
“The County continues to feel the economic impacts on local revenues, including the slowdown in sales, meals and hotel taxes, as well as cost increases and additional costs related to the pandemic,” the county said in a press release today. “The projected budget shortfall remains at more than $40 million, excluding the needs of the Arlington Public Schools (APS).”
Earlier this year, in the depths of the economic shock caused by the start of the pandemic, the federal government handed out a half-trillion dollars worth of expedited business loans.
The Paycheck Protection Program helped businesses — mostly small businesses — keep workers employed, with loans issued by banks but funded by the feds in the amount of 2.5 times a business’ average monthly payroll costs.
The portion of the loan spent on payroll, rent or mortgage payments and utilities can then be forgiven, after the business submits an application and proper documentation.
Though there has been criticism of the rushed roll-out of PPP, and of the larger businesses that received a sizable portion of the overall funds, a search of the recipients turns up plenty of small Arlington businesses — from restaurants to gyms to others — that received PPP loans that likely saved jobs or even the businesses themselves.
There is, however, a potential downside to the loans.
If a business received a loan and kept employees on, even if they continued to lose money, they’re now facing the reality that — absent a proposed fix from Congress — they may face extra tax liability and have to dig into emptied pockets at tax time next year. That’s because the expenses paid for by the forgiven portion of the loan are, under current guidance, not able to be deducted, effectively making the forgiven loan federally taxable for many businesses.
Fixes have been proposed by Congress as part of new coronavirus relief packages, but so far nothing has passed.
On the plus side, there is a bit of good news for businesses in Arlington. Officials from both the county and the Commonwealth expect that forgiven loans will not be taxed on a state or local level.
In the case of the county, there’s a question of whether the forgiven portion of the loan would be included in the “Gross Receipts” that are subject to the Business, Professional, and Occupational License (BPOL) tax, which is generally $0.36 to $0.18 per $100 of revenue — not profit, as is the case for federal corporate taxes.
William Burgess, an attorney with the Arlington Commissioner of Revenue’s office, tells ARLnow that the county does not currently think that forgiven loans are taxable.
“Per Virginia Code § 58.1-3732(A)(4), the loan proceeds received by a borrower are excluded from gross receipts,” Burgess said. “Therefore there is no provision addressing what happens if the loan is forgiven and no [state tax documents] interpreting this section.”
“Given that the statute expressly exempts loan proceeds and does not explicitly address forgiveness, our office believes that the loan proceeds do not become taxable upon forgiveness,” he continued.
Virginia officials, likewise, said the current expectation is that forgiven loans will not be taxed by the Commonwealth. An annual tax “conformity” bill that is expected to be passed by the state legislature should ensure that.
“The Virginia General Assembly would need to enact legislation advancing Virginia’s date of conformity in order for the state to adopt the Paycheck Protection Program loan forgiveness provision set forth in the CARES Act,” said Virginia Tax spokeswoman Stephanie Benson. “If the General Assembly conforms to this provision, the forgiven loans would not be subject to Virginia income taxation.”
“It is common practice for the Virginia General Assembly (GA) to adopt a conformity bill each session, and the GA generally conforms to the majority of federal tax provisions,” Benson noted.
Photo by Pepi Stojanovski on Unsplash
In March, Arlington County was on-track to set a new record low for tax delinquency rates.
Then, the coronavirus hit.
Delinquency rates had decreased by almost half since 2014, but COVID-19 erased two years of record-setting lows. The County is currently out nearly $10 million in uncollected tax revenue, de la Pava said.
For every 10,000 tax-paying residents and business, de la Pava had aimed to have only 17 fall behind, but when the collection year ended on Aug. 14, that proportion increased to 22. She told the County Board that next year, she predicts it will be “difficult, but achievable” to keep the rate under 30 delinquent residents and businesses per 10,000.
“We have our work cut out for us,” she said. “We started this collection year with the highest rate of delinquencies since I became treasurer,” or about $14 million.
The “elephant in the room” that contributed the most to the spike is delinquent real-estate taxes, which have never been higher in the County’s history, de la Pava said. Overall, the County is missing more than $5 million in property taxes for homes, apartments, hotels and businesses.
The highest percentage of households that have not paid their property taxes are clustered in the 22207 zip code: the northernmost part of North Arlington that includes the Cherrydale, Country Club Hills and Yorktown neighborhoods.
The highest percentage of businesses that have not paid their property taxes are centered in the 22202 zip code (the Crystal City, Pentagon City and Arlington Ridge neighborhoods) and 22206 (the Shirlington, Fairlington and Long Branch Creek neighborhoods).
Taxes on property used for business are also up dramatically, with number of delinquencies concentrated in the 22202 zip code. The amount owed along the Rosslyn-Ballston corridor, however, exceeds all other zip codes combined, de la Pava said.
This June, the treasurer’s office put a number of hotels and big businesses on Taxpayer Assistance Program loans so they could pay their taxes over 10 months, from August 2020 to May 2021. This came after her office offered a two-month deferral this spring that mostly benefited hard-hit restaurants and hotels.
John Marshall Bank, which partners with the county on the short-term loans, lowered its rates to make these repayment plans more affordable, she said.
“We prevented almost $1 million in going delinquent through TAP loans from John Marshall Bank,” de la Pava said.
To encourage safe and timely payments this year, de la Pava said her office added a temporary location this September and encouraged people to pay online, resulting in an 11% increase in online profiles.
The County Treasurer said she found another bright spot in vehicle taxes, which reached the second-lowest delinquency rate in Arlington’s history this year. Outreach, payment plans and automatic billing contributed to the lower delinquency, she said.
The Columbia Pike corridor, or the 22204 zip code, has the highest concentration of vehicle delinquencies, amounting to $1.1 million.
The treasurer’s office drafted 400 payment plans for vehicle taxes, saving $600,000 from going delinquent, de la Pava said.
Images via Arlington County
(Updated at 4:45 p.m.) Facing a potential $41-56 million budget gap, the Arlington County Board is signalling that service cuts and tax rate hikes may be included in next year’s budget.
At its Tuesday meeting, the Board provided guidance to County Manager Mark Schwartz on the upcoming Fiscal Year 2022 budget, covering July 2021 through June 2022. Underlying it all is a big drop in tax and fee revenue caused by the pandemic.
“Our challenge in Fiscal Year 2022 will be to support our community as it continues to deal with an unprecedented medical, economic and educational emergency, even as the County faces continued fiscal uncertainty,” Board Chair Libby Garvey said in a statement.
“Our guidance to the Manager today starts what I expect to be a difficult conversation with our community about priorities, cuts to programs and services, and potential tax increases over the coming months, as we focus our limited resources on defeating this deadly virus, preserving our social safety net, protecting public health, and supporting our students and those in our community who face food and housing insecurity,” she said. “While the budget situation is serious, Arlington’s financial fundamentals remain strong.”
In a press release, the Board detailed what they want Schwartz to include in his proposed budget next year, including:
- “Reducing programs and services where necessary”
- “Consider a real tax rate increase, increased cigarette taxes, and a plastic bag tax”
- “Fund affordable housing, with a primary focus on preventing evictions and providing housing grants”
- “Food assistance, COVID-19 testing, contact tracing, personal protective equipment, and an anticipated vaccine program for the virus”
- “Funding… to implement Rank Choice Voting in Arlington… and the Police Practices Group’s recommendations”
- Funds to open the new Long Bridge Aquatics and Fitness Facility, and a recommendation on when to open the new Lubber Run Community Center
- An evaluation of “the advantages and disadvantages of moving to a utility model for funding stormwater management”
The Board’s guidance also calls for funds to be set aside “to support collective bargaining implementation,” following the May 1, 2021 implementation of a new Virginia law that allows localities to recognize and negotiate with public employee labor unions.
While reserve funds and federal coronavirus funds may help close up to half of the anticipated budget gap, Schwartz and his staff told Board members that difficult decisions may still be necessary. County revenue from commercial real estate taxes, as well as sales and meals taxes, is down significantly.
“The bottom line” is that “there is a significant gap to close,” Arlington County Budget Director Richard Stephenson said. “It will require some tough choices in the development and adoption of the FY 2022 budget.”
Board member Matt de Ferranti asked the public to be aware that the Board is “seeking options.”
“As much as we might wish we were fully immune from economic challenges, we are not,” he said. “There won’t be good options — there will only be least bad options.”
Board member Christian Dorsey said the Board does not take the possibility of tax increases lightly, and cautioned against a budget that prioritizes other aims above the marginalized in Arlington, who have been disproportionately hit by the pandemic.
“It’s certainly not lost on me or any of you that we have a really blunt tool in adjusting real-estate taxes to raise revenue,” he said. “It’s a blunt tool that can cause harm to the people you’re seeking to try and help with other government expenditures and services.”
Greens Want Tax Hike for New Initiative — “The Arlington Green Party is seeking a five-fold increase in one local tax in order to fund an environmental initiative. The party in late October promoted the idea of the county government giving owners of single-family properties in Arlington $1,000 credits to have energy audits conducted and then take cost-effective steps to improve efficiency…. The party wants to increase the existing utility tax from $3 per household per month to eventually hit $15 per household per month.” [InsideNova]
Improvements Proposed in Seven Corners — “The Virginia Department of Transportation has provided another in a series of updates on potential improvements being studied along Route 50 (Arlington Boulevard) between Jaguar Trail and Wilson Boulevard in the Falls Church/Seven Corners area.” [InsideNova, VDOT]
Members of the Arlington County Board say that before they enact a local tax on plastic bags, they need time to identify and avoid the unintended consequences of one.
“The most vulnerable suffer the most from pollution and will suffer the most when we try to clean it up,” Board Chair Libby Garvey said during the County Board recessed meeting on Tuesday afternoon. “We’re going to try and do it right and be aware of the pitfalls, and there are a lot.”
In March, the Virginia General Assembly passed SB11, a bill that allows municipalities to collect a tax of five cents on disposable bags. Gov. Ralph Northam signed the bill into law on April 10. The proceeds of the tax would be used for environmental purposes.
“Based upon revenue generated from similar taxes in the District of Columbia and Montgomery, Maryland, the tax proposed in this bill could potentially generate aggregate local revenues between $20.8 million and $24.9 million annually” statewide, the bill’s impact statement said.
The 5-cent tax has the support of EcoAction Arlington, an environmental advocacy group, which launched a petition this fall. The group aims to have 1,500 signatures by the November Arlington County Board meeting.
“Presently, 471 local ordinances have been adopted in cities and counties across 28 states,” the petition said. “We believe Arlington should be the next county to take this important step forward.”
Staff have been and are working through policy issues and how to engage Arlingtonians, with a specific focus on how this would work during the pandemic, said Deputy County Manager Michelle Cowan.
A proposed timeline would start with a “robust” engagement of stakeholders in January, she said. An ordinance could be drafted in February. The law requires it be adopted by April 1 to be effective on July 1, Cowan said.
County Board Member Christian Dorsey said April may be too early, and wants to hold off until the community is optimistic that the pandemic is over. He said he worries that the tax would hurt the vulnerable and low-income residents of Arlington, “during a time when we are all hoping to prioritize getting them safely and healthily through the pandemic.”
Board Member Takis Karantonis encouraged county staff to include the most vulnerable in the county’s outreach efforts.
“It’s a very good point to think about how to introduce multi-use bags and create a culture that helps those who are the most vulnerable,” he said.
Members Matt de Ferranti and Katie Cristol also wanted to pump the brakes and review the potential tax in February or March when they have more information.
“I know there is a strong desire to see this plastic bag tax in effect on Jan. 1, and I associate myself with that impatience to make these big strides on environmental protection,” Cristol said, before adding that additional time is needed for a more thoughtful and equitable approach.
In the same meeting, Dorsey told members about new goals to reduce regional greenhouse gas emissions by 2030, set by the Metropolitan Washington Council of Governments. The association adopted a plan in 2008 to reduce greenhouse emissions by 80% from the baseline in 2005 by 2050, Dorsey said.
“There was a significant decrease at the start, but that has resulted in a plateau over the last several years,” he said.
Pushing through the plateau will require retrofitting homes, ensuring new home construction is energy efficient and moving buses and passenger vehicles toward zero-emissions, he said.
Ballston Movie Theater to Close Again — “Cineworld Group, the owner of Regal Cinemas, will suspend operations at all of its theaters in the United States and the United Kingdom beginning on Thursday. The closures will affect 45,000 employees.” [CNN, Axios]
N. Va. Trending in Right Direction — “The health department’s new pandemic metrics, updated Monday based on data through Saturday, show that the disease is currently at a ‘low burden’ level in Northern Virginia, is trending downward, and has low levels of community transmission. All other region’s of the state either have moderate or high levels of burden of the virus and community transmission.” [InsideNova]
County Joins Eviction Task Force — “Arlington has joined the Northern Virginia Eviction Prevention and Community Stability Task Force, a diverse coalition of stakeholders from the housing sector in Northern Virginia, to identify best practices to prevent evictions and stabilize households.” [Arlington County]
Greens Want Local Bag Tax — “The Arlington Green Party is pushing the Arlington County Board to enact a tax on single-use grocery bags, now that the General Assembly has given localities the permission to do so. Party members on Sept. 2 endorsed the proposal to enact a 5-cent tax on bags, and plan to present a petition to the County Board in November.” [InsideNova]
New Police Dog’s Official Photo — “FRK9 Brooks recently sat for his official department photo and gave the camera his best puppy dog eyes.” [@ArlingtonVaPD/Twitter]
More I-66 Ramp Closures — “Alternating overnight ramp closures are scheduled to occur this week on I-66 East in Arlington for final asphalt paving and striping as part of the I-66 Eastbound Widening Project.” [VDOT]
Flickr pool photo by Tom Mockler