Policy for Tax-Exempt Property Requests




Resolution to Establish Policy for Consideration of Requests for Tax-Exempt Status by Designation




Tucker, White, Davis, Wiggans






September 7, 2005


ACTION:                                 INFORMATION: 



  ACTION:     X                       INFORMATION:   











On August 3, 2005, the Board of Supervisors considered a request by Martha Jefferson Hospital to designate its property as tax-exempt.  In the discussion the Board reaffirmed its policy previously adopted by Resolution on December 6, 1995 that provided that property of qualifying entities should be granted tax-exempt status only if there are compelling circumstances to do so. The Board requested that a Resolution be prepared to update and reaffirm the policy in light of the changes in the law regarding how tax-exempt status can be granted.




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




On December 6, 1995, the Albemarle County Board of Supervisors adopted a resolution (attached) establishing a policy against recommending to the General Assembly future tax exemptions by designation.  The rationale was that instead of permanently reducing the tax base by creating tax-exempt property, qualifying nonprofits could participate in the annual budget process and be considered for annual appropriations instead of paying no property taxes.  That process provided greater accountability to the County and the public by those nonprofits seeking public support instead of providing them perpetual tax relief.


A state Constitutional amendment, effective January 1, 2003, shifted the authority for granting property tax exemptions from the General Assembly to local governing bodies.  On September 1, 2004, pursuant to state law enacted to implement the Constitutional amendment, the Albemarle County Board of Supervisors adopted Albemarle County Code § 15-1601 and  §15-1602.


Section 15-1601 readopted locally the property tax exemptions by classification that previously existed under state law. 


Section 15-1602 established the procedure for the Board to grant tax exemptions by special designation pursuant to the requirements of Virginia Code § 58.1-3651, if it chooses to do so.  Under current state law and County ordinance, the Board has the discretion as to whether or not to consider a request by a nonprofit to grant its property tax-exempt status by special designation.  If the Board chooses to process the request, it can be approved only by adoption of an ordinance.  Before adopting the ordinance the Board must hold a public hearing.  The notice of the public hearing must include the assessed value of the property subject to the request and the amount of taxes that would be exempted by the request.  In addition, the Board is required by state law to consider eight factors set forth in the Virginia Code relating to the nonprofit applicant. 


The proposed Resolution would reaffirm the Board’s policy that property will be granted tax-exempt status by designation only if there are compelling circumstances to do so.  An ordinance will not be considered unless the Board found that compelling circumstances exist.  The Resolution encourages qualifying entities seeking relief from property taxation to instead request County funding during the County’s annual budget process in which the County will consider all factors

relating to the request so that a fair and appropriate allocation of County funding, if available, can be determined on an annual basis.




This policy discourages permanently lowering the tax base by granting property perpetual tax-exempt status and encourages qualifying entities to participate in the annual budget process so that County funding can be appropriately allocated.




Staff recommends that the Board adopt the attached Resolution to Establish Policy for Consideration of Requests for Tax-Exempt Status by Designation.




A - Board of Supervisors Minutes and Resolution of December 6, 1995, reflecting Board policy on tax exemptions

B - County Code §§15-1601 and 15-1602

C - Virginia Code §58.1-3651

D - Resolution to Establish Policy for Consideration of Requests for Tax-Exempt Status by Designation


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