Minutes 03/22/2022 - Laserfiche WebLink

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March 22, 2022 Next Steps Following Council Action:  Application of the tax relief credit to personal property tax bills will be performed upon adoption of this ordinance. Motion by Mr. Moody, and seconded by Ms. Lucas-Burke, to adopt the following ordinance, and was adopted by the following vote: “ORDINANCE ESTABLISHING A PERSONAL PROPERTY TAX RELIEF PERCENTAGE OF 45% FOR CALENDAR YEAR 2022 PERSONAL PROPERTY TAX BILLS.” Ayes: Barnes, Battle, Lucas-Burke, Moody, Whitaker, Woodard, Glover Nays: None 22 - 88 - Adoption of a resolution to apply an assessment ratio to the value of certain automobiles and small trucks as authorized by Code of Virginia §58.1-3503(B) for the calendar tax year beginning January 1, 2022. Background:  Under Sections 58.1-3503(A)(3) and 58.1-3503(A)(4) of the Virginia Code, most automobiles and small trucks (i.e. under two tons) are assessed based on the values listed in the National Automobile Dealers Association (NADA) pricing guide.  Because of a shortage of new vehicles caused by the economic impacts of COVID- 19 and supply chain difficulties, vehicles have appreciated in value substantially in the current NADA pricing guide.  It is anticipated that this appreciation in value will be only temporary. However, if 2022 personal property tax bills are issued based on the appreciated values, Portsmouth citizens will face a significant spike in their personal property tax bills. Discussion:  Recognizing Council’s priorities, the Commissioner of the Revenue has investigated options to alleviate the burden on citizens resulting from this unprecedented appreciation in automobile values.  Section 58.1-3503(B) of the Virginia Code permits City Council to authorize the application of a ratio to automobile and small truck assessments. The ratio would be applied to reduce the assessed value, and thereby reduce the tax paid. For example, if an automobile were assessed at $100 based on the NADA pricing guide value and a 75% ratio were applied, the automobile owner’s tax liability would be calculated based on a $75 value.  th At the March 8 work session, Council by consensus requested that the Commissioner of the Revenue meet with City management to attempt to determine what assessment ratio would be most likely to maintain revenues at approximately the same levels as were received from calendar year 2021 assessments.  The Commissioner of the Revenue and his staff have met with City management and determined that a 75% assessment ratio is most likely to achieve this goal.  Other localities have also recently adopted resolutions to apply a 75% ratio to 2022 automobile values, including Lynchburg and Hampton. Many other localities are expected to adopt similar resolutions this month.  Because it is intended to address a temporary and likely ephemeral spike in fair market values for automobiles and small trucks, the 75% ratio will be applied only to calendar year 2022 assessments. Financial impact:  It is anticipated that by applying a 75% ratio to the current abnormally high fair market values of automobiles and small trucks, the City’s revenues will be substantially similar to the revenues from the prior year assessments (subject to year over year changes in the number and types of vehicles that are domiciled in the city). Recommended Action:  Adoption of the resolution.