New Pr. William Arrivals Bitter
Falling Home Values, Immigration Debate Shake Confidence

By Kristen Mack
Washington Post Staff Writer
Monday, June 23, 2008; B01

Mike Klepac was supposed to move into his three-story townhouse the day before Thanksgiving 2006. But construction did not start until two months later. Before he could unpack a box three months after that, houses were going for nearly $100,000 less than what he paid.

Even though the value of his home has dropped, his tax bill will go up an estimated 21 percent this year.

Klepac and other newcomers to Prince William County were drawn there during the housing boom because they thought it would be a cheaper version of Fairfax County, with its upscale subdivisions, good schools and plentiful shopping. Yet a year after Klepac moved in, the Potomac Club subdivision is still not completely built, and promised amenities have yet to materialize.

As their home values plummet and their taxes go up, some of the new arrivals, many of whom are 30-somethings with families, are beginning to sour on Prince William, which has the highest number of foreclosures in Virginia.

"We're stuck," Klepac said. "I don't think I would have moved to Prince William County. I felt I was getting into a brand-new community with all these luxuries. They haven't delivered."

He and other residents complain about living in a construction zone with bulldozers and mounds of dirt, and they are angry about unstaffed gatehouses and non-functioning streetlights. The county has limited ability to force developers to deliver projects on time, with the exception of public roads and infrastructure.

Nick Josties, project developer for Kettler's, the developer of the subdivision, said that there is no set-in-stone completion date and that it depends on how houses sell.

Potomac Club was the best-selling planned community in the Washington area last year, according to Hanley-Wood Market Intelligence, which tracks sales data for the building industry. Located in Woodbridge, near Potomac Mills mall, it is one of several new developments that have sprouted in the older, denser eastern end of the county, along the Route 1 corridor.

County officials say they can't be faulted for the national housing crisis, and they are confident Prince William will recover.

The Board of County Supervisors is scrambling to cope with the costs of Prince William being one of Virginia's fastest-growing counties in a time of slumping home values. The problems are magnified by the foreclosures, which are partly to blame for the average value of homes decreasing by $61,328.

To make up the lost revenue, supervisors raised the county's real estate tax rate by 19 cents to 97 cents per $100 of assessed valuation. That will push the average homeowner's tax bill up by 5 percent in the coming budget year.

"It's another slap in the face. I don't know what more I'm getting this year than I did last year," Klepac, 33, said of county services. He is worried that his federal government job will require him to move before the housing market rebounds.

Supervisor Frank J. Principi (D), whose Woodbridge district includes Potomac Club, said he doesn't think the issues are unique to the subdivision or to Prince William.

"Clearly, this is a national problem," said Principi, who urged patience among disenchanted newcomers. "I empathize and appreciate what they are going through. To the extent we can solve local problems, we should do that. On the rest, we need to cross our fingers."

Among the things he said the county could do better are "streamlining the permitting process and making inspections consistent" on new development. Principi also noted a proposed program to make loans available to county employees so they can afford to live in Prince William.

New residents' views of the county are dictated by when they arrived, said Stephen Fuller, director of George Mason University Center for Regional Analysis.

Those who have been in the county long enough to see their home values appreciate are less disillusioned. People who moved in right before the slump, however, aren't likely to see relief for a while. "It's going to be a long haul," he said. "They probably paid too much. They speculated, and they got caught."

The next wave of new residents are likely to find bargains, because overpriced houses are becoming more affordable. In May, the median price of a home in the county was $256,124, compared with $375,000 in May 2007, according to Metropolitan Regional Information Systems. Three hundred more homes were sold this May than a year ago.

Even so, Fuller said it's going to be a "slow cure," in part because the county's actions to curb illegal immigration have "damaged its image as a good place to do business."

Katherine M. Gotthardt said she thinks it's a waste of time and money for police to check the legal status of arrested criminal suspects. She would rather see the county invest in fire department staffing, affordable housing and schools.

"They don't seem like they are committed to education and social services," she said. "It's going to take them a long time to climb out of this. The perception is that we are backward."

When Gotthardt moved to Bristow nearly six years ago, it was mostly fields, trees and farmland. Bristow is tucked into the western end of the county, sliced by Route 28, with 10-acre lots on one side and newer residential homes on the other.

"It was like the land got eaten up by these subdivisions," she said. "They've added to that climate of everyone being divided. There's no town center."

Despite the rapid growth, Prince William is still a bedroom community. Roughly two-thirds of its residents work outside the county. When it's time to shop or go out for an upscale meal, they get in their cars and drive to shopping centers in the region. What new residents want is an urban experience, with shopping and dining within the comforts of their suburban community, developers say.

That kind of commercial development also would bring diversity to the county's tax base. Because more than 70 percent of the county's revenue comes from property taxes, Prince William has little choice but to increase residential tax rates when home values plummet.

Board Chairman Corey A. Stewart (R-At Large) said residents should not panic. "We are moving swiftly toward the Prince William that people expected," he said, noting that the opening of a Wegmans grocery earlier this month shows that commercial development is continuing.

County Executive Craig S. Gerhart said it's unrealistic to expect Prince William to be immune to national economic trends. He argues that the county is poised to recover quickly during an economic rebound.

"Government's job is to maintain consistent focus on the things that will benefit the long term. The underlying factors that made Prince William County a good place to move to are still there," he said, referring to its location, top-rated schools, county-funded road projects, commercial growth and triple-A bond rating. "There are a whole lot of things going for the county in general."

But Klepac and other Potomac Club residents' confidence in the county has slipped. Klepac paid $412,000 for his 2,100-square-foot townhouse. By the time he and his wife, Renee, moved in, the asking price for a similar unit was $319,000. His home was valued at $337,000 in March.

Brandi Walker hid her property assessment from her husband, Justin, for a month because she knew he would flip when he found out they lost $78,000 on their place. "I feel like I got took," she said.

Walker, 30, who has a 5-month-old daughter, now wishes she had moved farther south to Fauquier County. "We figured we would be here for a little while. I'm not feeling that now," she said.