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July 23, 2018

County board continues inequitable tax relief program at the expense of needy seniors, families and adult renters

Affordable Housing — @ 12:50 pm

The Arlington County Board refused to modify real estate tax relief in order to target its benefits mostly to lower income seniors at its July 14 meeting. The board continues to reward many homeowners who are rich in wealth and higher income than the vast majority of lower income renters in Arlington. The board loosened restrictions on eligible homeowners costing another $154,000 in lost annual taxes; in April the board cut funding for rental housing grants by $400,000. So the rich get richer and the poor get less.

Arlington Greens had urged the board to limit real estate tax relief for homeowners to tax deferral which would increase county tax revenues by about $3 million annually that could then fund assistance for more needy Arlington residents with other forms of housing assistance, particularly rental grants. Greens urged the board to equalize maximum income levels for both renters and owners to a maximum 80% area median income. Arlington renters who are seniors getting a housing rental voucher have maximum income of 40% AMI, and most actually earn far less than this.

But the county board did the expected, and continues to give out over $4 million a year to homeowners many of whom live in a half million residence and have additional financial assets over $300,000.
This property tax relief program is highly inequitable, and treats Arlington property owners with higher incomes and much higher wealth better than Arlington residents who are renters.

With tax deferral, there would be about $3 million in additional tax revenue that could then be used to expand rental housing grants for elderly, disabled and families by the same amount. The housing rental grants program serves the elderly, disabled and families with a child all of whom earn well under 40 percent area median income (AMI), and who have personal assets under $35,000. The average senior getting a housing grant earns $14,000 a year. In April 2018, the county board cut housing grants by $0.4 million.

The real estate tax relief program in FY 2018 spent $4.4 million for tax exemption or tax deferral of property taxes to benefit 932 households (each receiving an average $4,700 benefit) of seniors and disabled persons who can earn up to $100,000 a year (130 percent AMI for a single person), and can have personal assets up to $540,000, in addition to their residence, potentially well over a million dollars in wealth. About $3 million of the program cost occurs owing to tax exemption.

With tax deferral, property owners would pay no real estate tax until the property is sold; there is no financial burden on them as our rising property values insure that even these deferred taxes will be paid without a net cost to these property owners in the future. In general, our real estate tax is about 1 percent of the value of the property, and property values have been rising at 2-3 percent or more annually. It is a significant form of housing assistance to be able to avoid paying taxes for years, and to repay them without interest years later from the proceeds of a capital gain.

The Affordable Housing Master Plan (AHMP) goal is to help an additional 630 more households with housing assistance annually over the next 25 years. The county has never met this goal in any year, and it appears that the goal is mostly just words on a piece of paper without the funds to make it reality.

Housing rental grants are the county’s single most effective housing assistance program. A HUD study found that housing grants in the United States were 72 percent less expensive than building new subsidized apartments—so called committed affordable units or “CAFs.”

The county should give more housing (rental) grants to seniors, disabled and parents with children, and other adults by lowering the current minimum age for seniors from age 65 to 50, and eliminating the other purely arbitrary restrictions that block tens of thousands of Arlington renters from applying for rental grants.

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