City Council: The Glass is More Than Half Full

Following the “Queen Darlene” tax story in our last issue and prior to city council’s vote to retire Roanoke City Manager Darlene Burcham, Roanoker Publisher Richard Wells submitted a set of questions to each of the seven members of Roanoke City Council, seeking their views on issues raised in the article. Here is the letter and questions submitted, followed by council’s collective response.

Note: Of the eight questions submitted by Wells, seven are addressed. The last one – “Some of you during your election campaigns expressed dissatisfaction with the way things were being run at city hall. What changed once you were elected?” – was in effect answered on Monday, June 1, when council ended the city manager’s tenure with the city, effective in March.

Richard Wells’ Letter

It’s been 3½ weeks since The Roanoker published an in-depth look at Roanoke city real estate taxes and the skyrocketing cost of city government.

Never in the 35 years since I founded this magazine has any article created more response or interest than has QUEEN DARLENE. We’ve had dozens of calls, numerous letters to the editor and more than 100 comments to our website. Based on these responses, the overwhelming majority of readers disapprove of the current administration, the existing real estate tax rates and other issues raised in our story.

Most respondents express surprise that a city that ranks at the absolute bottom of the state’s largest 11 cities in household income has one of the highest real estate tax rates.

In our next edition, we’ll show that the city’s real estate taxes make Roanoke the “least affordable” city in Virginia. The affordability of housing may help explain why the city’s population continues to decline.

One of the most interesting points, made by several readers, is that the only way to express dissatisfaction with city management and city policies is through city council elections. They point to the significant turnover on council (14 have come and gone) in the last eight years, as evidence of that dissatisfaction. One writer said it this way: “Voters keep shooting at the city manager but they keep hitting council members.”

The resulting “revolving door council” has created the general opinion that council can’t seem to make a decision and that council votes one way today and then flip flops.

There were a number of questions and issues raised by our story. The purpose of this communication is to provide you with an opportunity, as one elected to oversee the administration of our city, to respond to some of the questions raised and to allow our readers to know where you stand.

As a long time city resident, as one who mortgaged my business in the late ‘80s to invest in a deteriorating Farmer’s Market that looked like Beirut, and as the publisher of our community’s city magazine since 1974, I respectfully request your response.

1. Were you aware of the $83 million growth in Roanoke city government budget in the last eight years?
2. Are you comfortable with a city government that is growing at twice the rate of infl ation while serving fewer and fewer citizens?
3. Based on numbers from the Weldon Cooper Center for Public Service at the University of Virginia, real estate taxes for a $200,000 home in the city of Roanoke take a greater proportion of average household income than any city in the state. What, if anything, are you doing to making home ownership in the city of Roanoke more affordable to residents?
4. The city’s record of maintaining its property is dismal. From Victory Stadium to the rat-infested City Market Building to the latest revelation about a terminally neglected school bus fleet, the city has a poor record of maintaining its assets. What does this say about city management?
5. By our estimates, the city has invested $3 million directly (and millions more indirectly) in the ill-fated stadium/amphitheater site behind Berglund Auto on Williamson Road. Now there’s another $4 million invested at Countryside Golf Club. What, if anything, do you advocate for these burdens on city taxpayers?
6. The City Market Building has been studied three times, the amphitheater how many times? Seems like council and the city can’t make a move without hiring an out-of-town consultant. Is there no company or professional in Roanoke qualified to advise council what it should do?
7. Declining populations. Are you comfortable with the fact that your city continues to lose residents? (Yes, there is an uptick of 700 over the past five years, but we are still down by almost 2,000 since the year 2000, and down almost 13,000 since 1959.) What does this say about our city’s future? Our leadership?
8. Some of you during your election campaigns expressed dissatisfactions with the way things were being run at city hall. What changed once you were elected?

Thank you for your response and for your service to the city of Roanoke. We will share your answers as fully as possible in our next edition.

J. Richard Wells
Publisher

City Council Response
(Sidebar pieces are Roanoker magazine content, not part of council response.)

Roanoke is one of the best places to live in the United States. The progress made in The City in recent years includes the revival of downtown, the creation of the new medical campus on South Jefferson Street, two new high schools, and neighborhood improvements such as the Grandin Theater, branch library additions, and the greenways. This progress came about because of the combined efforts of a progressive city government, enlightened private business leaders, and effective nonprofit organizations working together.

The undersigned, all of the Members of the current Roanoke City Council, disagree with your characterization of the City of Roanoke in the May/June issue of The Roanoker magazine. We believe your article is excessively negative and certainly misleading. You seem to see the glass as half empty. We see it as more than half full. This letter responds to the letter you sent to all of us by e-mail on May 28. All of us have contributed to this letter, and we are in agreement on its contents.

There is good news to spread about Roanoke. The cost of living here is very low, mitigating the fact that our personal income level is below the state average. Our strength is our regional draw. So, while it is true our population as a city has declined (but is growing again now), the beauty of Roanoke is its role as the capital of southwest Virginia. The Hotel Roanoke, our bustling downtown, and the Farmers’ Market are some of the shining stars in that category.

HIGH TAXES & LOW INCOME MAKE ROANOKE LEAST AFFORDABLE IN VIRGINIA.

With a real estate tax rate of $1.19 per $100 of valuation, an average per-household income of $35,530 and an average home-sale price in the range of $200,000, the percent of household income required for real estate taxes is the highest of Virginia’s 11 major cities. Real estate tax receipts by the city during this decade increased from about $45 million in fi scal year 2000-01 to about $75.5 million in FY 2008-09, with the increase achieved through aggressive reassessments every year of the decade until 2008 when, according to Multiple Listing Services, the average home-sale price dropped from 2007’s $213,459 to $197,889 for 2008. According to Roanoke City, some assessments were increased this year, but for the vast majority of homes, assessments did not change despite the decrease in real estate values, and reassessment notices were not sent to owners: What goes up doesn’t, it turns out, always come down, even when it does.

You told your readers, “Real Estate Valuation decided not to conduct an assessment. In a year when an assessment might actually lower residents’ tax bills, the City decided not to reassess property.” That statement is incorrect. The City of Roanoke is required by State law to appraise property at 100 percent of its market value, and the City Code mandates the Real Estate Valuation Office to appraise the real property on an annual basis. Each staff appraiser is responsible for about 5,000 parcels in the City each year. Even when the trend of property sales is lower than the year before, or sales prices of real property are indicating trends of stabilization, city employees appraise each parcel in the City on an annual basis. They look at neighborhood statistical data and complete a thorough review of each property each year.

As a result of those inspections, some owners receive an increase in their assessment because improvements made to their property are found during those field reviews. In 2009 the annual increase was lower than years past, reflecting the downward trend in the real estate market and the fact that our State Sales Ratio is at 91 percent. (The Department of Taxation computes a State Sales Ratio each year that compares the sale price to the assessed value for all the real estate transfers recorded in Roanoke City Courthouse).

You told your readers, “The real estate tax while growing at a slower rate than in past years, is steady with a 4.5 percent growth, 1.5 percent contributable to new construction and three percent to reassessments.” This is a misleading statement, making it appear we sent out a 4.5 percent increase for FY10 when we actually kept most residential assessments at the same level as the prior year. The actual projected increase estimated for FY09-10 is 1.76 percent, with .68 percent contributing to reassessment and another 1.08 percent for new construction.

You asked us, “Were you aware of the $83 million growth in Roanoke City government budget in the last eight years?” Of course we know that Roanoke’s budget has expanded and that our capital program has expanded considerably. We feel we needed to get some important things done. Yes, expenditures have increased $83 million from FY00 to FY08. This averages 5.8 percent per year. It reflects the aggressive campaign we have undertaken with our capital plan in the past decade. It was a tremendous undertaking to replace the two high schools in the same decade, but a succession of City Councils felt this was the right thing to do and undertook the added capital burden to achieve this goal. These two projects combined amount to $111 million. They were almost entirely financed by the issuance of debt, which means that the operating budgets of the City and Schools had to expand in order to repay this debt.

You asked, “Are you comfortable with a city government that is growing at twice the rate of inflation while serving fewer and fewer citizens?” Our response is that, when comparing Roanoke’s expenditure growth to inflation, one must consider Roanoke’s disproportionate share of citizens with high levels of social services and welfare needs. Roanoke’s expenditures for health and welfare grew 8.2 percent during the period under examination, well above the average total growth during that time.

You asked: “Based on numbers from the Weldon Cooper Center for Public Service at the University of Virginia, real estate taxes for a $200,000 home in the City of Roanoke take a greater proportion of average household income than any city in the state. What, if anything, are you doing to making home ownership in the City of Roanoke more affordable to residents?”
This statement ignores the fact that Roanoke’s cost of living is considerably lower than that of most other areas of the state. If these data were adjusted for the cost of living, Roanoke would look much better. Roanoke’s real property tax rate is only slightly above the average of the older cities in Virginia to which we compare ourselves. While our rate is above that of neighboring Roanoke County, the City provides far more services such as much higher per capita police and fire/EMS staffing.

Council has reduced the real estate tax rate several times in recent years. The tax rate in the early 1990s was $1.25 per $100 assessed value, and the rate is currently $1.19. Roanoke offers several programs that promote home ownership. The City Rehabilitation Program allows abatement from five to 15 years, depending on the location and the property class of the real property. The Energy Efficient Building Program allows a 10 percent reduction in the tax rate for buildings showing a 30 percent reduction in energy from the Virginia Standard Building Code model. And the City offers an Incentive for building on an in-fill vacant residential lot.

You asked: “The City’s record of maintaining its property is dismal. From Victory Stadium to the rat-infested City Market Building to the latest revelation about a terminally neglected school bus fleet, the City has a poor record of maintaining its assets. What does this say about city management?” We respond that all governments struggle to maintain their infrastructure, for example the Commonwealth’s struggle to maintain its roads. We have added funding to capital maintenance as part of our annual budgeting process but agree more can be done. Using a private contractor has addressed this problem at the Civic Center and this model may be used at a refurbished Market Building.

You asked: “By our estimates, the City has invested $3 million directly (and millions more indirectly) in the ill-fated stadium/amphitheater site behind Berglund Auto on Williamson Road. Now there’s another $4 million invested at Countryside Golf Club. What, if anything, do you advocate for these burdens on city taxpayers?” While it is true that the Orange Avenue/Williamson Road site has more invested in it than a reasonable fair market value, the final result of Council debate regarding where high school stadiums should be built – on the high school campuses – is the right one, but the debate left this site temporarily vacant. You need only see the team spirit at Patrick Henry High School and the high voltage excitement during soccer season there to comprehend the wisdom of separate stadiums at the new high schools. Council is currently awaiting proposals submitted for the long-term management of Countryside as a golf course though future, alternative uses must still be discussed.

LEAKS IN THE RAINY DAY FUND

As part of the response to our May/June issue’s cover story, a few of our readers pointed out that city of Roanoke does have a rainy day fund that currently amounts to $19.7 million.

What we feel is important to add to this information is that, based on city budget numbers, this amount reflects an annual savings of less than three tenths of one percent during the Darlene Burcham-era administration. That means over the last nine years the city has spent 99.7 percent of every dollar taken in.

Here’s how we arrived at these numbers:
When Mrs. Burcham arrived in 2000 the rainy day fund stood at $13.1 million. Over the past nine years that sum has grown by $5.6 million. On average that’s an increase of about $622,222 per year, or a rate of just .28 percent, based on an average budget size of $217.1 million. That leaves 99.72 percent of all funds leaving city coffers each year under the Burcham administration.

Perhaps if city government had been putting a little more away during these years of relative plenty they would not now face the need to close two public schools, suspend trash pickup and outsource school bus services to balance their budgets.

You asked: “The City Market Building has been studied three times, the amphitheater how many times? Seems like Council and the City can’t make a move without hiring an out of town consultant. Is there no company or professional in Roanoke qualified to advise Council what it should do?” You would criticize us if we kept expensive consultant-like talent on staff with the capacity to perform feasibility studies at the drop of a hat. You would question the objectivity of such in-house staff. Therefore, we must hire consulting firms to assist with such projects. One reason there have been so many studies, we acknowledge, is City Council turnover. As Council’s priorities change, projects change in ranking. Each Council has the prerogative to request changes in direction.

You ask: “Declining populations. Are you comfortable with the fact that your city continues to lose residents? (Yes, there is an uptick of 700 over the past five years, but we are still down by almost 2,000 since the year 2000, and down almost 13000 since 1959.) What does this say about our city’s future? Our leadership?” We note that many other older Virginia cities have also incurred population declines. Hampton, Newport News and Norfolk all declined in recent years. As a landlocked, completely built-out city, it is difficult for Roanoke to grow significantly. What is more important about Roanoke is its significance as a regional drawing area. Consider these positive points: The Roanoke Metropolitan Statistical Area was third in retail sales per capita in 2006 in The Commonwealth of Virginia lagging only Northern Virginia and Winchester. And the City of Roanoke’s sales per household ranked tenth in the nation in 2004, coming in at $72,652.

We, the Members of the Council of the City of Roanoke are optimistic about the future of our great city and we believe that optimism is shared by a majority of the citizens of Roanoke. We pledge to do our best to keep the City on a sound financial footing while addressing its needs and opportunities.

Sincerely,
David A. Bowers, Mayor
Sherman P. Lea, Vice-Mayor
M. Rupert Cutler, Council Member
Gwendolyn W. Mason, Council Member
Anita J. Price, Council Member
Court G. Rosen, Council Member
David B. Trinkle, Council Member

Enclosures*
pcc: Darlene L. Burcham, City Manager
William M. Hackworth, City Attorney
Ann H. Shawver, Director of Finance
Stephanie M. Moon, City Clerk