JCC Supervisors Consider Tax Break for Chinese Drywall 'Victims'

By Desiree Parker Tuesday, April 20, 2010

James City County supervisors have asked staff to look into the possibility of offering residents with corrosive Chinese drywall in their homes a substantial tax break.

Last year, homes across the nation were found to have a type of drywall that releases hydrogen sulfide, which corrodes metal included in wiring, gas pipes, fire sprinkler systems, smoke alarms and other home components. The majority of the drywall seems to have come from a supplier in China, which has been the object of a class action suit recently decided in U.S. District Court. The federal government has been investigating the issue, and though they have not released a statement on the health effects of the drywall, they did recently release a statement recommending homeowners with the substance completely remove and replace all affected drywall and replace all susceptible components.

Cases of Chinese drywall have been reported in 37 James City County homes to date, in neighborhoods that include Stonehouse, Wellington Estates, Braemar Creek, Kensington Woods, Overlook Point and New Town. To date, the county has been contacting builders to rectify the problem if a home is two years old or less; after that, the matter has passed the statute of limitations in the state.

At their regular meeting last week, Chairman Jim Kennedy said some people in his district have contacted him regarding the defective drywall in their homes. Many cannot afford to tackle the extensive renovations needed to repair their homes, Kennedy said, and probably can’t sell the home, either. Some residents have told Kennedy they can’t live in their homes and are facing bankruptcy and foreclosure. A year’s worth of letters from the county to various government representatives at the state and federal level have gotten no response, he pointed out.

“Most people have no means to fix this [drywall problem],” he told fellow supervisors at the meeting, “and it’s their biggest investment.” Kennedy asked the board to consider a proposal similar to what Virginia Beach is offering afflicted homeowners, in which the county would only tax the property and $100 of home value for people with the drywall (though he suggested a time limit on the offer).

“I realize it’s not orthodox, but these people need some relief,” Kennedy said.

Richard Sebastian, director of the county’s Real Estate Assessment division, told supervisors that his office has reduced tax assessments on affected properties to 50 percent of the property’s value. He said there wasn’t any set methodology to address the drywall issue, but his office had used an assessment strategy like what’s used to assess newly constructed homes that aren’t yet inhabited. That way, the size of the structure is accounted for (versus taxing at a flat amount like $100 for every type of home, regardless the size).

Sebastian and Supervisor Bruce Goodson exchanged some heated words about whether this current tax assessment was appropriate, with Goodson arguing homeowners with the drywall should be considered similar to people displaced from fire, who can’t live in their damaged home.

Supervisor John McGlennon said he agreed with the idea of helping homeowners, saying, “in this case someone’s asset has become a liability,” but he stressed the need to look into the legality of the issue and seemed hesitant to create a policy exactly like what Kennedy suggested.

McGlennon suggested that residents should turn to the Board of Equalization if they think their assessment is still too high; the BOE has authority to take unusual circumstances into consideration and adjust tax assessments.

The board will send letters to the 37 homeowners advising them to look to the BOE while a possible county policy on the issue is examined.

County Administrator Sandy Wanner said staff would have to discuss the plan with the county attorney to analyze the legality of the proposal. He said legislators at the federal and state levels are working on the issue, as are builders and banks.

"You’re treading into territory I have serious reservations about,” Wanner told the board, but he agreed to follow their directive and look into Kennedy’s suggestion.

Read more about the Chinese drywall issue on the county’s website here. Find information about the county’s Board of Equalization here. The board will discuss the new ideas on Chinese drywall at a future meeting.