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Economic slowdown hits Rappahannock
Rappahannock County has been largely an oasis in a nation and a state that have been shaken for two years by a severe housing crisis, an explosion of energy costs, rising food prices, a shaken financial system and a massive drop in state and local tax revenues.As close as the home foreclosures in Culpeper or empty office buildings in Tysons Corner, Northern Virginia has seen the home expansion gallop of 2003 and 2004 evaporate into a sharp drop in many home values, job layoffs and wrenching changes in the real estate and banking businesses.
In a sense, Rappahannock was shielded by the very nature of the county. It has a small population- 7,200 citizens, no strip malls, no housing developments and a small government apparatus, housed largely in buildings that were built mostly in the 19th century. Its biggest business is agriculture, says Robert Anderson, chairman of the Board of Supervisors. And food prices have been on the rise. Many of the county's residents are retired on comfortable incomes or earn their living in Washington and Northern Virginia.
Until this summer, if there were troubles, the soft green forests and rolling fields of Rappahannock have hidden them from view. Now as the financial slowdown heads toward its third year, Rappahannock County is beginning to show signs that other jurisdictions have faced for months.
Government
Last Monday, Virginia Gov. Tim Kaine warned the state that early revenue returns showed even more drastic loss of revenues than his administration had predicted and he anticipated calling for additional sharp reductions in the $77 billion 2008-2010 state budget that already had been trimmed by $2 billion. Though the governor would make no estimates on how deep new cuts would be, members of the legislature estimated that they could be as high as $1.5 billion.
Kaine would not disclose what programs his administration might cut. "The need to engage in a third round of budget cuts," the governor said, "will mean by necessity, that all programs, including those previously held harmless" could face cuts.
County Administrator John McCarthy said that would mean education, social services and health services could all face cuts. "I certainly sensed gloom when I was in Richmond (recently), " he said. Beyond the immediate cuts, he said, it could lead to removing state participation in later years. If the state cuts of public services were too severe, he said, the Board of Supervisors could choose to make up the difference with county funds, perhaps by dipping into money set aside for a new county office building,
Superintendent of Schools Robert Chappell has said that his greatest concern would be cuts in the general fund which pays for the core of the schools' operation. Because of a formula the state uses - Rappahannock has been listed as a "rich" school district - the state has cut its support from $3.2 million to some $2.7 million this year.
Beverly Dunford, director of Social Services in Rappahannock, said she has no inkling what cuts might be asked for. Between food stamps, Medicare recipients and public assistance, her department helps some 500 persons in Rappahannock. The food stamp program has some 93 recipients and Medicare some 400. The program that is growing is the general assistance. The case load is rising, she said, and applications are up. “It's an indication more people are struggling,” Dunford said.
Real estate
The most obvious pinch of the national slowdown has been in the sale of real estate in the county. Though the county does not count house sales, it does keep track of real estate transfers- houses, acreage and commercial buildings.
The transfer of land has dropped over the last three years, according to courthouse records. From July 2005 to June 2006 there were 313 land transfers; from July 2006 to June 2007, there were 187 land transfers and from July 2007 to June 30, 2008, there were 138 transfers. A good many of these involve houses and many of them are valued from $400,000 and above.
Alan Zuschlag, a county real estate agent, said that the freeze on sales seems to have hit the middle part of the market. "Houses over a million are selling, " he said.
"Even though sales have slowed," he said, "prices are holding. There is plenty of demand. I ride people around the county every weekend looking for property."
Zuschlag thinks people in Rappahannock "don't have to sell" and will wait before letting a house or a lot go significantly below its market price.
Zuschlag said that Rappahannock is "markedly better off than its neighbors where the impact of financial crisis is much more acute."
He said he sold “an $800,000 house in Culpeper that had been foreclosed on for $400,000 with the end result that neighbors all saw their housing values drop to the $400,000 level."
Monica Worth, president of the Rappahannock League for Environmental Protection, put a house on the market in February 2007 on Fodderstack Road at the appraised price of $530,000 which had a new roof, modern kitchen and a building for use as an office with a computer hookup. It has been on the market ever since and the price has been reduced to $430,000.
Though there has not been a glut of foreclosures in Rappahannock (records show there have been three a year over the past three years), Worth said she knows homeowners who have put their house up for rent at low market prices, to keep their payments up and avoid foreclosure.
Phil Irwin, who is the proprietor of an historic bed and breakfast, Caledonia Farm near Flint Hill, said he too put a house on the market just as the housing crisis began and has been unable to sell it.
Hospitality Industry
Rappahannock has a dozen or so inns and bed and breakfasts including the world famous Inn at Little Washington. Individual firms are loathe to talk about their business in fear of further harming it. John McCarthy said he has been told of several of the bed and breakfasts that have suffered business reversals. Some people believe that there has been a marked reduction in visitors to the county.
Phil Irwin, who also works at a visitors' center in Front Royal, says the people who used to drive down from Washington, D.C., or its suburbs for a day trip seem fewer over the past several years. Though bed and breakfasts are more expensive than motels, he said, there are no motels in Rappahannock County and the hospitality industry in the county has had a lively business in the past.
Restaurants, too, are hurting, according to knowledgeable sources, but no owners will publicly say that for fear of dampening their business.
Many people believe that the Shenandoah National Park, a main attraction since the Thornton Gap entrance to the park is in Rappahannock and miles of hiking trails end there, has less visitors than it once did.
Karen Beck-Herzog, spokeswoman for the park, said visitor counts to national parks across the nation are down and this is attributed to busier people with more recreation outlets available to them. She said through July of this year, the park has had 506,200 visitors but will still end up with over a million visitors annually.
The park has numbered over a million visitors a year for the past three years. She said park attendance is often more affected by weather which in several recent years was quite bad, but there has been a steady decrease.
For Rappahannock, particularly in Sperryville, this can reduce incidental stops at restaurants. Some shops and restaurants in the last few miles a driver approaches the park are closed or appear to be out of business.
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