Tax Exemption Ordinance




Authorizing public hearing to consider ordinance amending Chapter 15, Taxation, Article X, Real Estate, to grant certain property tax exemptions.



Tucker, White, Davis, Herrick, Wiggans, Woodzell






August 11, 2004


ACTION:                               INFORMATION:   



  ACTION:     X                      INFORMATION:   











In a November 2002 referendum, Virginia voters approved an amendment to the Virginia Constitution that shifted the responsibility for granting most property tax exemptions from the General Assembly to the localities.  Since then, the General Assembly has enacted Virginia Code § 58.1-3651 to outline the circumstances and procedures under which localities may grant property tax exemptions.  Though Virginia Code § 58.1-3651 effectively grandfathers property tax exemptions existing as of January 1, 2003 (when the Constitutional amendment took effect), it does not address properties seeking exemption after that date.  Unless a property is Constitutionally exempt (such as government, religious, cemetery, or educational property), any and all post - January 1, 2003 exemptions must be granted at the local level, either by designation (specifically naming the organization and property) or by classification (exempting the general class or use of property).




4.2: Fund County Services in a fair, efficient manner and provide needed public facilities and infrastructure.




In responding to this shift in tax-exempting authority, the Board has at least three options.  The first option within the Board’s discretion is to do nothing.  Localities are not required to adopt new tax exemption ordinances.  The state Constitution would continue to exempt some, but not all, of the same types of properties currently enjoying exemption.  For example, the state Constitution would continue to exempt church or religious property used “for religious worship or for the residences of their ministers.”  However, without a local ordinance, other types of new church-owned property (such as new church vans), and other new property not named in the state Constitution would be taxed.


A second option is to adopt a local ordinance to address how properties desiring tax-exempt status may become exempt.  The attached draft ordinance would adopt the classification standards of the Virginia Code that applied prior to January 1, 2003, and extend those same exemptions to new post-2003 properties.  Without such a local ordinance, unless Constitutionally exempt, all properties that were not exempt as of December 31, 2002 would automatically be taxed.  For example, fraternal lodges exempt as of December 31, 2002 would remain exempt; but without a classification ordinance, any new lodges would be taxed, simply because they were not exempt at the time that the General Assembly’s exemptions were grandfathered, and the County has not yet established that all fraternal lodges, by classification, will be exempt.


A third option would be to adopt some but not all of the pre-existing classifications.  This would eliminate tax-exempt status for properties in the eliminated classes lacking exemption on January 1, 2003 unless the Board granted tax exempt status by designation.


Staff recommends the second option: the adoption of an ordinance to exempt all classifications of property that previously existed on the state level.  This approach maintains a continuity of how properties are treated for tax-exempt purposes, and allows new property obtained by owners who would have qualified for tax-exempt status in 2002 by classification to qualify for tax-exempt status for the newly-acquired property.


Following the General Assembly’s own enabling legislation, the suggested local ordinance has an effective date of January 1, 2003.  This effective date is designed to address the tax-exempt status of properties during tax years 2003 and 2004, from the time the state Constitutional amendment became effective.  Without a 2003 effective date, taxes for the years 2003 and 2004 would technically be due on those properties that the Board chose to exempt by classification after January 1, 2003.  The 2003 effective date would close any gap for properties that were not exempt prior to January 1, 2003, but would be tax-exempt if the attached ordinance were adopted.


The proposed ordinance would not affect the Board’s current policy of declining special requests for exemption by designation for property that does not otherwise qualify by classification.  While properties meeting the ordinance’s objective criteria to qualify by classification would qualify for exemption, the ordinance does not designate any new entity (not otherwise meeting the classification criteria) as exempt.  The ordinance, however, does outline the procedures required by state law for considering any future special designation requests.  Such requests could be approved or denied by the Board at its discretion.




Staff recommends that the Board set the attached ordinance for public hearing on September 1, 2004.



































ORDINANCE NO. 04-15(1)




BE IT ORDAINED By the Board of Supervisors of the County of Albemarle, Virginia, that Chapter 15, Taxation, Article X, Real Estate - In General, is hereby amended and reordained as follows:


By Adding:

Sec. 15-1004     Property exempt from taxation by classification.

Sec. 15-1005     Property exempt from taxation by designation.






Sec. 15-1004  Property exempt from taxation by classification.


A.         Pursuant to the authority granted in Article X, Section 6 (a) (6) of the Constitution of Virginia to exempt property from taxation by classification, the following classes of real and personal property shall be exempt from taxation:


1.         Property owned directly or indirectly by the Commonwealth, or any political subdivision thereof.


2.         Buildings with land they actually occupy, and the furniture and furnishings therein owned by churches or religious bodies and exclusively occupied or used for religious worship or for the residence of the minister of any church or religious body, and such additional adjacent land reasonably necessary for the convenient use of any such building.


3.         Nonprofit private or public burying grounds or cemeteries.


4.         Property owned by public libraries, law libraries of local bar associations when the same are used or available for use by a state court or courts or the judge or judges thereof, medical libraries of local medical associations when the same are used or available for use by state health officials, incorporated colleges or other institutions of learning not conducted for profit. This paragraph shall apply only to property primarily used for literary, scientific or educational purposes or purposes incidental thereto and shall not apply to industrial schools which sell their products to other than their own employees or students.


5.         Property belonging to and actually and exclusively occupied and used by the Young Men's Christian Associations and similar religious associations, including religious mission boards and associations, orphan or other asylums, reformatories, hospitals and nunneries, conducted not for profit but exclusively as charities (which shall include hospitals operated by nonstock corporations not organized or conducted for profit but which may charge persons able to pay in whole or in part for their care and treatment).


6.         Parks or playgrounds held by trustees for the perpetual use of the general public.


7.         Buildings with the land they actually occupy, and the furniture and furnishings therein belonging to any benevolent or charitable organization and used by it exclusively for

lodge purposes or meeting rooms, together with such additional adjacent land as may be necessary for the convenient use of the buildings for such purposes.


8.         Property of any nonprofit corporation organized to establish and maintain a museum.


B.         The real and personal property of an organization classified in Virginia Code §§ 58.1-3610 through 58.1-3622 and used by such organization for a religious, charitable, patriotic, historical, benevolent, cultural, or public park and playground purpose as set forth in Article X, Section 6 (a) (6) of the Constitution of Virginia, the particular purpose for which such organization is classified being specifically set forth within each section, shall be exempt from taxation, so long as such organization is operated not for profit and the property so exempt is used in accordance with the purpose for which the organization is classified.


C.         Property which was exempt from taxation on December 31, 2002, shall continue to be exempt from taxation under the rules of statutory construction applicable to exempt property at the time such property became entitled to exemption.


D.         Exemptions of property from taxation granted under this section on or after January 1, 2003 shall be strictly construed in accordance with Article X, Section 6 (f) of the Constitution of Virginia.


Sec. 15-1005  Property exempt from taxation by designation.


Property not granted tax-exempt status prior to January 1, 2003 can be granted tax-exempt status by designation only by the adoption of an ordinance by the board of supervisors granting the exemption.  The adoption of such an ordinance shall be pursuant to the provisions of Article 4.1, Chapter 36 of Title 58.1 of the Code of Virginia applicable to the exemption of property from taxation by designation.


            State law reference--Property exempt from taxation by classification or designation by ordinance adopted by local governing body on or after January 1, 2003, Va. Code § 58.1-3651; Va. Code § 58.1-3606.


Pursuant to Enactment Clause 2 of Chapter 557 of the 2004 Acts of Assembly, this ordinance shall be effective as of January 1, 2003.


I, Ella W. Carey, do hereby certify that the foregoing writing is a true, correct copy of an Ordinance duly adopted by the Board of Supervisors of Albemarle County, Virginia, by a vote of _____ to _____, as recorded below, at a regular meeting held on _________________________.  



                                                                                    __________________________________                                                                                Clerk, Board of County Supervisors


                                    Aye      Nay

Mr. Bowerman               ____     ____

Mr. Rooker                    ____     ____

Mr. Dorrier                   ____     ____    

Mr. Wyant                     ____     ____

Mr. Boyd                      ____     ____

Ms. Thomas                   ____     ____