CUMBERLAND – A reassessment is currently being conducted by Pearson's Appraisal Service, Inc., which will go into affect January of 2014, and it appears that overall assessed values in Cumberland County may drop.

Fred Pearson, manager and part owner of Pearson's Appraisal Service, Inc., told The Herald, that although the assessment will be based on 2013 sales, currently, “based on the 2012 sales, it appears that values, over all, will be coming down in Cumberland County.”

Reassessment could affect the County's real estate tax revenue for the second half of the 2013-2014 fiscal year, County Administrator and Attorney Vivian Giles told the board of supervisors last month during a work session. Total real estate tax revenue is projected to be $8,420,800 in the proposed budget, comprising 71 percent of the County's total local revenue for the upcoming fiscal year.

Supervisors have expressed concern about the assessment dropping, with Chairman David Meinhard, District Four, fearing it could fall as much as 30 percent. If the assessment drops, the tax rate will have to be raised in order for the County to maintain its current level of real estate tax revenue.

However, the drop in assessments may not be as steep as some supervisors fear.

Looking at last year's numbers, assessment will come down around 10 to 15 percent over all, Pearson said, adding that although he cannot predict the future, “I think the economy and the market is probably picking up just a small amount…it could be less than that.”

Referencing the previous increase in values after the reassessment that went into effect in 2010, Pearson explained that the market rose steadily until 2007, after the previous assessment, and started going down in 2008 and 2009. The data for the 2010 assessment was based on 2009 sales.

“It pretty much bottomed out in, probably, 2010,” Pearson says. Since then, he says it has started picking up “just a little bit” each year after that.

But, even though Pearson sees the market currently rising, he predicts it may not be enough to keep overall assessment values in the county from dropping from their 2010 amount. Only time (and this year's real estate market) will tell.

The Herald asked three members of the board following a budget work session what their plan was for dealing with the possibility of a drop in reassessment.

“The only way we are going to be able to stand that…is have an increase in the tax rate to maintain the tax revenue where they are now,” Meinhard responded.

Supervisor Kevin Ingle, District Three, suggested the possible need for additional funding, such as a loan for large capital projects in the future, as an alternative if the tax rate is not raised.

Supervisor Bill Osl, District One, stated he believed, “By state code, we're required to have no tax effect as a result of reassessment.” However, he did not doubt that there would be much discussion about how the board would deal with taxes next year.

Virginia code states that a rise in general reassessment cannot result in more than a one percent increase in the real property tax levied, which would require the tax rate to be lowered.

For example, Pearson's completed the last assessment that went into affect four years ago in 2010. Assessment values rose. Then Assistant Administrator of Finance Jill Matthews told The Herald that due to the 2009 completed reassessment, the revenue neutral tax rate was 52-cents, almost a 12 percent decrease from the previous tax rate of 59-cents.

(The board can raise the rate above the adjusted amount, however they must advertise to do so, just as with any rate increase. That year, in conjunction with the increased assessment values, the real estate tax rate in Cumberland County rose from 59-cents to 70-cents for every $100 of assessed value.)

In 2011, the real estate tax rate dropped two pennies to 68-cents. The current advertised rate is unchanged from last year at 68-cents.

Although there is a mandate regarding when assessments rise, The Herald asked James D. Campbell, executive director of the Virginia Association of Counties, if there is a code mandate requiring that the board equalize the rate if assessments drop? “No,” Campbell replied.

However, he continues, “It would make sense that the board of supervisors would have to advertise a tax increase, tax rate increase, to generate enough revenue.”

The board will vote on the tax rate for the 2014 calendar year, next year around this time. If assessment values drop as Pearson expects, the board will have to decide whether to maintain their revenue by raising the tax rate at that time.

Until then, the County is looking for as many ways as possible to increase its revenue, from tax alternatives to requesting the county administrator create a list of County assets for possible liquidation. (See article in today's paper.)

For now? Giles told The Herald last month that the County is actually a little ahead in revenue.

Pearson's continues collecting sales data and completing the reassessment process.

The assessment values take into account fair market value sales during 2013. For this reason, Pearson said he would carefully evaluate houses that are purchased by Henrico County for the Cobbs Creek Reservoir project.

Property sale values will be considered if they have been advertised on the multiple listing service and sold with a knowledgeable buyer and a knowledgeable seller with a reasonable length of time for the sale, says Pearson.

As of March 26, only one house was recorded as sold to Henrico County in the Circuit Clerk's office. According to the deed filed in the Clerk's office, the 42.9 acres of property and house were assessed at $562,110 and sold for $629,300.

Citizens can expect to receive a notice of what their new, reassessed value is from Pearson's later this year. While assessment values for the county over all may fall or drop, each individual's property will be different, some rising more or less than the average property.

If property owners do not agree with Pearson's assessment, they will have two opportunities to appeal the reassessed values. After receiving a notice of the new value from Pearson's, they can appeal the decision with the company.

After Pearson's processes the appeals, they will pass the data along to the Commissioner of the Revenue some time in December, French says.

The board of supervisors will then appoint an individual from each district, whom a judge will have to approve, to sit on the board of equalization. The board of equalization will be trained and then also hear individual's appeals regarding assessment values.

French points out that both opportunities to appeal assessment findings are at no cost to property owners.

Next year, around this time, the board will have the finalized assessment data in front of them when they have to make a decision about the 2014 tax rate.