REAL ESTATE TAX RELIEF WORKING GROUP
2100 Washington Blvd., Lower Level Auditorium
Meeting Minutes
January 9, 2017
REAL ESTATE TAX RELIEF WORKING GROUP MEMBERS PRESENT: Paul Holland, Bill Staderman, Patty Sullivan, Pat Findikoglu, Pam Juhl, Evelyn Gee, Carolyn Day, Jill Herndon, Edith Gravely, Kathryn Scruggs,
REAL ESTATE TAX RELIEF WORKING GROUP MEMBERS EXCUSED: Peggy Jones, Prentiss de Jesus
STAFF: Michelle Cowan (Deputy County Manager), Anita Friedman (Director, Department of Human Services), Jeanne Booth (Chief, Economic Independence Division), Caitlin Hutchison (Assistant Director, Department of Human Services), Kasey Liedtke (Management and Budget Specialist, Department of Community Planning, Housing, and Development), David Remick (Alexandria/Arlington Regional Workforce Council Executive Director), Aaron McCready (Management Analyst, Community Assistance Bureau)
- Call to Orderat 6:10 p.m. – Paul Holland
The meeting of the Real Estate Tax Relief (RETR) Working Group was called to order by Mr. Holland, Working Group Chair.
- Introductions
Attendees introduced themselves, with Ms. Juhl, Ms. Day, and Ms. Herndon identifying themselves as participants in the Real Estate Tax Relief Program.
- Approval of December 12, 2016 Meeting Minutes
- Ms. Gravely moved to approve the December 12, 2016 meeting minutes, and Ms.Dayseconded the motion.
- The December 12, 2016 meeting minutes were unanimously approved by the Working Group.
- Overview of Reverse Mortgage and Deferral Discussion
- Ms. Herndon and Ms. Hutchison provided a brief overview to the Working Group of the reverse mortgage and deferral discussion that occurred on January 3, 2017.
- Interested members of the Working Group heard from two reverse mortgage specialists on January 3 – Laurie MacNaughton and Jay Elder – as well as an elder law attorney, Elizabeth Wildhack.
- Topics covered included:
- What reverse mortgages are;
- How reverse mortgages function; and
- The relationship between reverse mortgages and real estate tax deferrals.
- RecommendationsDiscussion, Prioritization, and Voting – Paul Holland
- The draft recommendations from each Subgroupwere incorporated into a RETR Recommendations Crosswalk, which organized recommendations according to implementation timeframe and topic area (see Attachment 1). Mr. Holland presented the content of this document to the Working Group.
- All of the recommendations were discussed and voted on, with the exception of those related to income limits, income exclusions, asset limits, liabilities/asset exclusions, program structure, and program management (i.e., Priority Recommendations 4, 11, 12, 13 and 14, and Mid-Term Recommendation 3). More specifically, the outcome of the discussion and votes was as follows:
- Priority Recommendations
- Application Materials – these recommendations were accepted by the Working Group. Ms. Hutchison will investigate whether there are any other programs (in addition to utility programs) that should be considered for implementation by the Board (e.g., personal property tax relief, solid waste fee relief, etc).
- Application Timeline – this recommendation was discussed by the Working Group, and accepted with modifications. It was suggested that all application deadlines (and not just the initial application deadline) be extended to November 15.
- Outreach – these recommendations were discussed by the Working Group, and accepted with modifications. It was suggested that PTAs be added to the list of organizations, groups, and events to target. It was also suggested that the group of volunteers helping with outreach be trained on confidentiality and related topics.
- Liabilities/Asset Exclusions – these recommendations were discussed by the Working Group, and the final vote was postponed until the January 30 meeting.
- Program Oversight – these recommendations were discussed by the Working Group, and it was decided that the recommendation put forth by the Application and Outreach Subgroup (i.e., create a Citizens Advisory Group appointed by the County Manager) would be accepted.
- Program Management and Administration – these recommendations were accepted by the Working Group.
- Extension Process – this recommendation was accepted by the Working Group. It was requested that this recommendation be grouped with the Application Timeline recommendation.
- Technical Assistance – this recommendation was accepted by the Working Group. It was requested that this recommendation be grouped with the Outreach recommendations.
- Deferrals – these recommendations were discussed by the Working Group, and accepted with modifications. It was suggested that the recommendation be revised to read something like this: “County staff will investigate how to address mortgage lenders’ opposition to the deferral portion of the RETR program by working with various stakeholders, such as elected officials, other local governments, the American Bankers’ Association, the Consumer Finance Protection Bureau, the Metropolitan Washington Council of Governments, and the National Association of Counties.”
- Appeals Process – these recommendations were accepted by the Working Group. It was requested that the first bullet (e.g., include the appeals process in the application materials) be grouped with the Application Materials recommendations, and it was also requested that the second bullet (i.e., provide assistance in filing appeals) be grouped with the Outreach recommendations.
- Income Exclusions – these recommendations were discussed by the Working Group, and the final vote was postponed until the January 30 meeting.
- Income Limit – these recommendations were discussed by the Working Group, and the final vote was postponed until the January 30 meeting.
- Asset Limit – these recommendations were discussed by the Working Group, and the final vote was postponed until the January 30 meeting.
- Program Structure – these recommendations were discussed by the Working Group, and the final vote was postponed until the January 30 meeting.
- Other Programs – this recommendation was discussed by the Working Group, and accepted with modifications. It was suggested that the recommendation be revised to read: “Designate revenue received through the RETR program (deferral repayments) to support affordable housing opportunities with accessibility and supportive services for older residents and residents with disabilities.”
- Mid-Term Recommendations
- Application Materials – this recommendation was accepted by the Working Group.
- Other Programs – these recommendations were discussed by the Working Group, and accepted with modifications. It was suggested that the third bullet (i.e., reverse mortgages) be revised to read something like this: “County staff will review options related to the U.S. Department of Housing and Urban Development’s reverse mortgage product, known as a Home Equity Conversion Mortgage (HECM), and provide homeowners with complete, accurate, and unbiased information so that it is a safe and viable option for all who are interested and may qualify.”
- Program Management and Administration – this recommendation was discussed by the Working Group, and the final vote was postponed until the January 30 meeting.
- Long-Term Recommendations
- Deferrals – this recommendation was accepted by the Working Group.
- Other Programs – these recommendations were discussed by the Working Group, and accepted with modifications. It was suggested that the second bullet (i.e., aging in the community) be revised to read: “Explore ways to enable seniors to age in the community in affordable multi-age multi-unit developments with accessibility and supportive services.”
- Program Structure – this recommendation was accepted by the Working Group.
- Next Steps and Timeline – Paul Holland
- Working Group members will email thoughts related to program management to Ms. Sullivan no later than Friday, January 13, 2017. Ms. Sullivan will create a document weighing the pros and cons of managing the program in the Department of Human Services versus the Commissioner of the Revenue.
- The Working Group will meet again on Monday, January 30, 2017 to discuss and vote on the remaining recommendations related to income, assets, program structure, and program management (i.e., Priority Recommendations 4, 11, 12, 13 and 14, and Mid-Term Recommendation 3).
- Additionally, Working Group members will consider the possibility of providing retroactive RETR, to be discussed at the January 30 meeting.
- The Working Group will also meet on Monday, February 13, 2017 to discuss the fiscal and administrative impacts of the final draft recommendations, and to plan for the Community Meeting.
- The Community Meeting will likely be scheduled for Monday, March 6, 2017 (place and time TBD).
- Adjournment
The meeting concluded at 9:05 p.m.
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Attachment 1 – RETR Recommendations Crosswalk – January 8, 2017
PRIORITY RECOMMENDATIONSThe following recommendations are recommended for near-term consideration by the County Board.
Topic / Application and Outreach / Eligibility Criteria / Program Alternatives / Analysis
- Application Materials
- Edit application to be more user-friendly, including:
- Increase font size (AO #1)
- Simplify number of columns (AO #1)
- Offer item-by-item instructions (Similar to federal and state tax forms) (AO #1)
- Provide a list of all items needed before beginning to fill out the form (AO #1)
- Create a fillable PDF or Word Template application (AO #1)
- Edit renewal application/RETR Review form to resolve confusion around deadlines (AO #2)
- Revise application to make it easier to read (EC #10)
- Clarify documentation requirements, where possible (EC #10)
- Develop program guidelines to be included with the application (EC #10)
- Promote utility programs through the RETR application that provide financial assistance to home and condo owners (EC #12)
- Application Timeline
- Extend initial application deadline to November 15 (AO #3)
- Outreach
- Target specific organizations, groups, and events (see attached list) (AO #4)
- Establish a group of volunteers to conduct outreach (AO #4)
- Perform deliberate outreach to non-native English speaking residents (AO #4)
- Liabilities/Asset Exclusions
- Add liabilities section to application to include medical fees, fire or other severe home damage, large unforeseen special assessments for condos (this could be limited by amount or as a percentage of a resident’s regular condo fee. Any number should be tied to AMI to adjust automatically) (AO#6)
- Deduct all liabilities for anything that is counted as an asset (EC #8)
- Condo fees should not be considered when determining eligibility, as what the fees cover vary among properties (EC #11)
- Utilize “adjusted assets” (instead of “combined assets”) = only includes assets of owners and owners’ spouses, minus any approved deductions of liabilities/debts (e.g., notes payable, accounts payable (to include outstanding medical bills that must be paid out-of-pocket, and emergency home repairs exceeding $1,000), credit cards, personal loans, state or federal taxes due, real estate mortgages (other than the house for which the applicant is seeking relief), and other non-luxury debts) (PA #5)
- Program Oversight
- Appoint a Citizens Advisory Group to regularly review RETR program, investigate any issues, and make recommendations. The Advisory Group should be appointed by the County Manager (AO #7)
- Explore utilizing the Board of Equalization, the County’s Resident Ombudsman, or a newly-established Advisory Group to perform several key functions for RETR applicants or program participants (PA #1)
- Program Management and Administration
- Establish a comprehensive report and reporting schedule for the RETR program on all aspects of program management (ex. Uncollected revenue, number of denials, initial applicants that never filed, etc.) (AO #8)
- If the program remains at the Department of Human Services, make clear on all program materials that residents do not have to be traditional clients of DHS programs in order to participate in RETR (AO #5)
- Include questions related to the RETR program in the regular Resident Satisfaction Survey, and/or some other countywide feedback mechanism (PA #6)
- Extension Process
- Codify the County Manager’s authority to review hardship cases up until January 31 (AO #9)
- Technical Assistance
- Provide office hours and workshops at senior centers, libraries, AARP tax preparation clinics, and other outreach locations to help applicants with applications (AO #10)
- Deferrals
- Work with banks and lenders to help RETR recipients who have a mortgage and are receiving a deferral to alleviate lenders’ concerns that recipients are not paying their taxes (AO #13)
- Create a Task Force to investigate and address mortgage lenders’ opposition to the deferral portion of the RETR program (PA #7)
- Appeals Process
- Include the RETR appeals process in the application materials (AO #11)
- Provide assistance to applicants filling out forms or filing appeals (AO #12)
- Income Exclusions
- Allow for 100% deduction of non-reimbursable medical expenses (use Schedule A of Tax Form as documentation) (EC #1)
- Allow for 100% exclusion of disability income (EC #2)
- Allow for exclusion of up to $10,000 in income for each non-owner/non-spouse relative living in the home (EC #3)
- Utilize “combined adjusted income” (rather than “combined gross income”) = includes the total income of all owners and owners’ spouses + the income of non-owner/non-spouse relatives living in the home minus the first $10,000 + a deduction for owners (and sometimes spouses) with disabilities (PA #5)
- Income Limit
- Tie RETR income limits to Area Median Income (AMI) so the income limit will adjust automatically (EC #4)
- Adjust the current income limit as follows (use the AMI for a family of 2 as the level for all applicants, regardless of household size)
- Up to 65% AMI = 100% exemption (currently $56,485)
- More than 65% AMI but less than 80% AMI = 50% exemption (currently $69,520)
- More than 80% AMI but less than 115% AMI = 25% exemption (currently $99,935) (EC #5)
- $0-$48,000 = 100% exemption (PA #4)
- $48,001 - $56,000 = 75% exemption (PA #4)
- $56,001 - $64,000 = 50% exemption (PA #4)
- $64,001 - $72,000 = 25% exemption (PA #4)
- Use one income limit for each exemption level, as is done in all neighboring jurisdictions, rather than establishing different income limits for different household sizes (PA #4)
- Ensure that income levels are reviewed and adjusted annually, in accordance with applicable state and local codes (PA #4)
- Asset Limit
- Increase asset limit for exemptions for owners and owners’ spouses to $440,000 (EC #6)
- Link asset limit to CPI so that the asset limit increases automatically on an annual basis (EC #7)
- Limit assets to $340,000 (PA #5)
- Program Structure
- Limit the amount of home value that is eligible for exemption to the median assessed home value or a multiplier of the median assessed home value within Arlington County (PA #2)
- Establish an additional exemption level for program participants (PA #4)
- Other Programs
- Designate revenue received through the RETR program (deferral repayments) to support housing opportunities for older residents and residents with disabilities (PA #3)
MID-TERM RECOMMENDATIONS
The following recommendations are recommended for mid-term consideration by the County Board.
Topic / Application and Outreach / Eligibility Criteria / Program Alternatives / Analysis
- Application Materials
- Build application into website so applicants can apply online (AO #1)
- Other Programs
- Explore options for expanding the dedicated funding stream for development and services associated with housing for seniors and persons with disabilities (PA #8)
- Explore options to provide real estate tax credits to owners of rental dwellings that provide reduced rent to older renters and renters with disabilities (PA #9)
- Recommend that the County staff review options related to the U.S. Department of Housing and Urban Development’s reverse mortgage option, which is known as a Home Equity Conversion Mortgage (HECM) and is only available through a Federal Housing Administration (FHA) lender (PA #11)
- Program Management and Administration
- Evaluate whether the Department of Human Services or the Commissioner of Revenue should oversee the RETR program (PA #10)
LONG-TERM RECOMMENDATIONS
The following recommendations are recommended for long-term consideration by the County Board.
Topic / Application and Outreach / Eligibility Criteria / Program Alternatives / Analysis
- Deferrals
- Add language to state code to recognize deferral programs (AO #14)
- Other Programs
- Conduct an extensive review and reevaluation of the RETR program (PA #12)
- Explore ways to enable seniors to age in the community in multi-age multi-unit developments with accessibility (PA #13)
- Program Structure
- Explore the feasibility, cost, and benefits of establishing separate real estate tax classes specifically for older homeowners and homeowners with disabilities in lieu of the RETR program,similar to the system of tax classes for business taxes (PA #14)
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