FY 2007 Proposed Budget - Arlingtonva
Subject: DHS – RETR Follow-up FY 2017 Proposed Budget Budget Work Session Follow-up April 10, 2016 The following information is provided in response to a requests made by Board Members at the work session on March 17, 2016, regarding Real Estate Tax Relief.
Real Estate Tax Relief Do we know the unmet need for the Real Estate Tax Relief Program (RETR)? (Garvey) Response: To qualify for the RETR program, participants must meet both an income and asset requirement. The only way for the County to know a household’s income and asset level is for the household to file for tax relief. The County does not have access, nor does it have any way of knowing, what the income and financial portfolio is of households in Arlington to know the “unmet need” for the program. There are approximately 8,700 senior (65+) owner-occupied homes in Arlington. Of these, about 3,045 (35%) are ineligible due to their annual income exceeding $99,000. Of the remaining 5,655 (65%) of homeowners that may be within the income level, staff do not know their asset level as noted above to determine their eligibility. What happens to a homeowner’s deferred tax amount when the home changes ownership? (Garvey) Response: The homeowner, or their estate, will pay the taxes. If the homeowner dies, the estate has one year from the date of death to pay the taxes. If the property sells, the taxes must be paid within 30 days of the transfer of ownership.
Who benefits from deferral vs. exemption? (Garvey) Response: If a homeowner has an exemption, they receive the benefit. By having relief from the real estate tax burden, qualifying homeowners have additional resources available to pay for other living expenses. A homeowner’s heirs will also benefit because they will potentially have a larger inheritance. If a homeowner chooses the deferral option, the tax burden is paid from the home’s sales proceeds. Approximately 70% of homeowners qualifying for a partial exemption prefer to pay their non-exempt real estate taxes in lieu of deferring the tax debt.
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Subject: DHS – RETR Follow-up
How many homes are owned outright by participants? (Garvey) Response: This information is unknown at this time, but could be collected in the future through the application process.
Why is the number of applications declining? (Vihstadt) Response: As recipients leave the program, they are replaced by homeowners who do not meet the eligibility criteria for the program. As Arlington becomes more affluent, it may be that fewer households are in need of real estate tax relief.
Are we seeing declines in the senior or disabled populations leading to reduced applications? (Dorsey) Response: There have been no declines in the senior and disabled populations in Arlington. However, those populations have become more affluent in recent years. In 2000, 19% of senior households had income above $99,000. In 2014, 32% of senior households had income exceeding $99,000.
Does shifting from exemption to deferral result in developers building “McMansions” in our communities? (Cristol) Response: There is no evidence to support this assumption.
Do we have customer service satisfaction data on RETR? (Cristol) Response: Not at this time, however, this program is slated for a Performance Measurement Plan in the future, and will include a customer satisfaction metric.
What other information can be given to the Board to help decide on program changes? (Fisette) Response: DHS would need to gather additional information on the correlation between increases in real estate taxes and the ability of seniors and individuals with disabilities to remain in their homes in order to respond to this question. The RETR program is intended to assist these individuals in order to prevent them from bearing an “extraordinary real estate tax burden in relation to their income and financial worth.” The Board would also need to provide direction on what constitutes an “extraordinary tax burden.”
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Subject: DHS – RETR Follow-up
If RETR is moved to the COR, does the Board still have authority over the program? (Fisette) Response: This question was referred to the County Attorney for response.
Could another county department do more outreach? Can we contact commissions to increase outreach? (Fisette) Response: DHS provides a substantial amount of outreach as a part of the over 145 programs impacting the community which DHS oversees. In addition, the department works with many other County departments, commissions, and nonprofit agencies. Examples of outreach include the RETR information that is sent out to all homeowners as part of the County’s annual real estate assessment notice. DHS also worked this year with the Treasurer’s Office to send out information about the program that went to approximately 17,000 Arlingtonians. County Board commissions such as the Agency on Aging, located in DHS, does a tremendous amount of outreach to senior groups informing them of the availability of the Real Estate Tax Relief Program. DHS will continue to investigate ways to expand outreach.
Did changes in income limits tie to changes in the social security index? (Fisette) Response: No. Program income levels increased when home values increased as a result of strong economic conditions. During less favorable economic conditions, the program was made more restrictive to account for lower home values and tax assessments. For most Real Estate Tax Relief clients, Social Security is not their main source of income. If, however, Social Security is a client’s primary source of income and their assets are below the $340,000 threshold, they will qualify for a full exemption under the current program.
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Real Estate Tax Relief Do we know the unmet need for the Real Estate Tax Relief Program (RETR)? (Garvey) Response: To qualify for the RETR program, participants must meet both an income and asset requirement. The only way for the County to know a household’s income and asset level is for the household to file for tax relief. The County does not have access, nor does it have any way of knowing, what the income and financial portfolio is of households in Arlington to know the “unmet need” for the program. There are approximately 8,700 senior (65+) owner-occupied homes in Arlington. Of these, about 3,045 (35%) are ineligible due to their annual income exceeding $99,000. Of the remaining 5,655 (65%) of homeowners that may be within the income level, staff do not know their asset level as noted above to determine their eligibility. What happens to a homeowner’s deferred tax amount when the home changes ownership? (Garvey) Response: The homeowner, or their estate, will pay the taxes. If the homeowner dies, the estate has one year from the date of death to pay the taxes. If the property sells, the taxes must be paid within 30 days of the transfer of ownership.
Who benefits from deferral vs. exemption? (Garvey) Response: If a homeowner has an exemption, they receive the benefit. By having relief from the real estate tax burden, qualifying homeowners have additional resources available to pay for other living expenses. A homeowner’s heirs will also benefit because they will potentially have a larger inheritance. If a homeowner chooses the deferral option, the tax burden is paid from the home’s sales proceeds. Approximately 70% of homeowners qualifying for a partial exemption prefer to pay their non-exempt real estate taxes in lieu of deferring the tax debt.
L:\DMFBUD\Bud17\Work Sessions\Follow-up which has gone to the Board\F-7 DHS -RETR Follow up.docx
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Subject: DHS – RETR Follow-up
How many homes are owned outright by participants? (Garvey) Response: This information is unknown at this time, but could be collected in the future through the application process.
Why is the number of applications declining? (Vihstadt) Response: As recipients leave the program, they are replaced by homeowners who do not meet the eligibility criteria for the program. As Arlington becomes more affluent, it may be that fewer households are in need of real estate tax relief.
Are we seeing declines in the senior or disabled populations leading to reduced applications? (Dorsey) Response: There have been no declines in the senior and disabled populations in Arlington. However, those populations have become more affluent in recent years. In 2000, 19% of senior households had income above $99,000. In 2014, 32% of senior households had income exceeding $99,000.
Does shifting from exemption to deferral result in developers building “McMansions” in our communities? (Cristol) Response: There is no evidence to support this assumption.
Do we have customer service satisfaction data on RETR? (Cristol) Response: Not at this time, however, this program is slated for a Performance Measurement Plan in the future, and will include a customer satisfaction metric.
What other information can be given to the Board to help decide on program changes? (Fisette) Response: DHS would need to gather additional information on the correlation between increases in real estate taxes and the ability of seniors and individuals with disabilities to remain in their homes in order to respond to this question. The RETR program is intended to assist these individuals in order to prevent them from bearing an “extraordinary real estate tax burden in relation to their income and financial worth.” The Board would also need to provide direction on what constitutes an “extraordinary tax burden.”
L:\DMFBUD\Bud17\Work Sessions\Follow-up which has gone to the Board\F-7 DHS -RETR Follow up.docx
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Subject: DHS – RETR Follow-up
If RETR is moved to the COR, does the Board still have authority over the program? (Fisette) Response: This question was referred to the County Attorney for response.
Could another county department do more outreach? Can we contact commissions to increase outreach? (Fisette) Response: DHS provides a substantial amount of outreach as a part of the over 145 programs impacting the community which DHS oversees. In addition, the department works with many other County departments, commissions, and nonprofit agencies. Examples of outreach include the RETR information that is sent out to all homeowners as part of the County’s annual real estate assessment notice. DHS also worked this year with the Treasurer’s Office to send out information about the program that went to approximately 17,000 Arlingtonians. County Board commissions such as the Agency on Aging, located in DHS, does a tremendous amount of outreach to senior groups informing them of the availability of the Real Estate Tax Relief Program. DHS will continue to investigate ways to expand outreach.
Did changes in income limits tie to changes in the social security index? (Fisette) Response: No. Program income levels increased when home values increased as a result of strong economic conditions. During less favorable economic conditions, the program was made more restrictive to account for lower home values and tax assessments. For most Real Estate Tax Relief clients, Social Security is not their main source of income. If, however, Social Security is a client’s primary source of income and their assets are below the $340,000 threshold, they will qualify for a full exemption under the current program.
L:\DMFBUD\Bud17\Work Sessions\Follow-up which has gone to the Board\F-7 DHS -RETR Follow up.docx
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