The Assessment Process
The City of Suffolk Real Estate Assessor's Office receives its authority from the Virginia Constitution, various statutes in the Code of Virginia, the Suffolk Charter and City Code.
- Assesses all real estate at fair market value
- Interprets and administers all laws pertaining to real estate assessments and exemptions
- Publishes an annual land book
- Maintains records and provides information on all parcels in Suffolk
- Reviews assessments with the property owners
Each parcel of real estate in the City is assessed annually, effective as of the following July 1. The City Council determines the real estate tax rate. The assessed value multiplied by the real estate tax rate equals the real estate tax. Typically, the tax rate is expressed in a rate per $100 assessed value. The City Treasurer's Office handles the distribution of tax bills and collection of taxes.
The current tax rate is established through June 30, 2023 and is determined for three specific geographic areas:
- The city wide tax rate is $1.09 for every $100 of assessed value
- The Route 17 Taxing District is $1.33 for every $100 of assessed value
- The Downtown Business District is $1.195 for every $100 of assessed value
Fair Market Value
The Code of Virginia requires that properties be assessed at fair market value. The Courts of the Commonwealth of Virginia have defined the fair market value of property as the price which it will bring when it is offered for sale by one who desires but is not obligated to sell it, and is bought by one who is under no necessity of having it.
In order to determine the fair market value of properties in the City of Suffolk, a full-time staff of experienced professional appraisers is employed by the Real Estate Assessor's Office. The appraisers must continue their education by completing courses in the use of the most current appraisal practices and techniques sponsored by the Appraisal Institute, International Association of Assessing Officers, Virginia Association of Assessing Officers, and the Virginia Department of Taxation. Many have or are working toward professional designations by the Appraisal Institute and International Association of Assessing Officers. Although not a requirement for employment, some of the appraisers are licensed or certified appraisers by the Commonwealth of Virginia.
Developing Market Value
Developing and reporting the market value of a property involves opining the price most people would pay for it in its present condition. Suffolk is a large city with thousands of parcels. The large volume of properties and the requirement to reassess each parcel annually, means that to comply with law, the assessor must utilize mass appraisal techniques.
Mass Appraisal, as defined by the International Association of Assessing Officers (IAAO), the systematic appraisal of groups of properties as of a given date using standardized procedures and statistical testing (Mass Appraisal of Real Property 1999, IAAO). Mass appraisal differs in the market analysis of real estate from single-property appraisals, but share similar steps in developing the valuation process.
Once a determination is made by the Assessor regarding the development and analysis, it is applied to the properties that are to be appraised. The Assessor does not create the value, but rather discovers it through the systematic process. Value is created by transactions within the market. These transactions are reviewed by the assessor and staff, and used to develop the opinion of fair market value. To develop the opinion of fair market value the property's value may be determined by considering the three, generally accepted approaches to value; the sales comparison approach, the cost approach and the income approach. While all three approaches are considered, only those approaches that produce meaningful results are used to determine a specific property's, or group of properties value.
The Sales Comparison Approach
The first way, the sales comparison approach, compares the subject property to others that have sold recently. This approach uses the economic principle of substitution. This means that a buyer will not likely pay more for an alternative, similar property. It is imperative that the appraiser understands the market make up so that proper consideration can be given to this approach. This is the approach most often used as the basis for residential property valuation.
The sales price of any comparable property must be analyzed very carefully to determine if the transaction was an arms-length-transaction, this is referred to as qualifying the sales. Sometimes a property may sell too low because the buyer and seller are related. It is also common for sellers to sell when faced with some type of hardship such as an impending foreclosure, or bankruptcy. These reasons and many more, can disqualify a sale from being used in the analysis.
The Cost Approach
The second method, the cost approach, is based on how much money it would require, at current material and labor costs, to replace the property with something similar less any depreciation. If the property is not new, a determination must be made as to how much it has depreciated.
This method is also based on the economic principle of substitution. Simply, it is unlikely that a buyer would pay more for a property than it costs to build a suitable replacement. Often times, this approach is given secondary consideration behind the other two approaches. The exception is most often when dealing with special use properties, such as a school or a church.
The Income Approach
The third way, the income approach, is used to evaluate the amount of income the property would produce if it were rented, such as an apartment complex, a retail building, or an industrial property. The appraiser must also consider operating expenses, insurance, maintenance costs and the return most people would expect for that kind of property.
This approach is based on the economic principle of anticipation. Meaning that a buyer will likely consider how much income (rent) less expenses that a property will generate as return on the investment.
Reconciliation of the Approaches to Value
In arriving at an indication of the market value of a property, the appraiser may use one, two or all three of the above approaches to value. It is the appraiser's primary responsibility to find the fair market value of the subject property. This requires the knowledge and experience to understand and properly develop the analysis in such a manner as to be equitable and fair to the property owner.
The Rest of the Process
Once fair market value has been developed, a notice is mailed out to all of the property owners in the city. This notice will show the current assessed value and the proposed value. The proposed value takes effect on July 1 of that year. It is important to note that City Council establishes the tax rate and not the Assessor. If there are any questions regarding the value of a property, the Assessor's Office can assist you. Any questions regarding the tax bill should be forwarded to the Treasurer's Office.
In the event that a taxpayer has concerns regarding the value or the accuracy of the property data, the taxpayer should contact the Assessor's office. An appointment can be made to meet with the individual appraiser that handles the property. The Assessor's Office will schedule and review all such requests as part of an informal hearing process. This process ends once the date for formal appeal hearings passes. There is no requirement to participate in the informal appeal, but it is recommended, as these matters are often resolved in the informal appeal process.
The Board of Equalization
If the taxpayer is unsatisfied with the informal review, a formal appeal may be filed. The formal appeal will place the review in front of the Board of Equalization (Board). The Board is comprised of citizens that are appointed by the Circuit Court. In the matter of a commercial, industrial or multifamily appeal, the board must be made up by at least one citizen that possesses some form of professional experience with real estate, construction, financial or legal matters. In the event that a taxpayer is dissatisfied with the Board's decision, the matter may be appealed to the Circuit Court.
In some cases such as commercial properties, a taxpayer may opt to be represented by an agent in the appeal process. The taxpayer must grant the agent permission (PDF), in writing, to represent the property value dispute. The Assessor and staff welcome any inquiries regarding the processes explained above. It is the goal of the office to provide excellent customer service.