Colonial Williamsburg tax relief request turned aside in York County

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York County officials have said they will not grant Colonial Williamsburg's proposal for real estate tax relief, but county administrator Neil Morgan said the foundation may have other options for financial relief.

Morgan said he consulted with county attorney James Barnett, real estate assessor Maria Kattman and commissioner of revenue Ann Thomas in coming to that conclusion.

"Their unanimous legal guidance to me was that given the nature of the properties that are in York County, we don't have the legal authority to waive the taxes," Morgan said. "It's not an option."

"We're not going to put any time and energy into getting permission to do that," Morgan said. "In the scheme of things, the (foundation's real estate tax for 2017) in York County isn't very large. It's like $114,000. And in the scheme of what Colonial Williamsburg Foundation's challenges are, quite honestly $114,000 isn't all that significant."

Morgan said he told foundation president Mitchell Reiss that if the foundation considers its land in York County to be surplus, that the county could buy some of it from the foundation, "and that would be a way to render them some assistance."

In the letter to Reiss, Morgan said he had inquired "many months ago" on the foundation's interest in working with York County on developing some of its property in the Camp Peary/Interstate-64 exit area.

"As the property is one of the most significant taxable parcels controlled by the foundation, I would continue to encourage you to consider this opportunity," Morgan wrote to Reiss.

Local legislators, including State Senate majority leader Tommy Norment, R-James City, Del. Mike Mullin, D-Newport News, and state Sen. Monty Mason, D-Williamsburg said they have not yet to come to any conclusions concerning Colonial Williamsburg's request for tax relief from Williamsburg and James City and York counties.

Del. Brenda Pogge, R-James City, said she believes Williamsburg has the ability to provide some relief for Colonial Williamsburg, saying that "they have the ability to determine which non-profit they can give tax relief to." She said she bases this on past experience with non-profits in Newport News seeking tax relief.

Reiss sent a letter June 27 to the three localities asking for a three-year exemption from real estate taxes and business license fees as part of a financial restructuring plan. The foundation paid close to $2.3 million in total taxes to the city of Williamsburg as well as York and James City counties in the 2016 fiscal year. It estimates having to pay the same amount this year.

Reiss said the foundation lost $54 million in operations in 2016, and $277 million over the past five years. He said the endowment has been used to cover the foundation's losses.

Norment, who also serves on the foundation's board of directors, said he is looking into the parameters of James City and York counties' taxing authority to determine whether there's a category under which supervisors for each could grant tax abatement or tax relief to the foundation.

Norment noted the Dillon Rule, which limits the power of localities, allowing them only to pass ordinances in which the General Assembly has granted it clear authority. Thirty-nine states operate under the Dillon Rule, according to the National League of Cities. Other states operate under Home Rule, giving localities within them more leeway to create laws and levy taxes.

The city of Williamsburg notes the rule came in the late 19th century from an Iowa judge, John E. Dillon. The rule is described by the League as "a cornerstone of American municipal law," and is used to interpret state law when there is a question of whether a local government has a certain power.

In Virginia, the Dillon Rule has evolved through a court decisions over the years, according to the University of Virginia's Weldon Cooper Center for Public Service, and is not written into Virginia law. The city of Williamsburg has more flexibility with taxation issues because it has written into its charter the ability to levy certain taxes, which is not allowed to counties in Virginia under the Dillon Rule.

"If that explicit language is not authorized by James City County or York County, then I certainly would be interested in pursuing that in the 2018 session of the General Assembly," Norment said.

Norment said the localities will have to request the legislative ability for tax abatement if they do not have the authority already.

"They would have to request it, and secondly, in order for me to be supportive of it, in addition to requesting it, I would want a commitment from those localities that in fact they were going to extend tax abatement," Norment said. "I would not want to enter into that legislative discussion as an academic exercise.... I don't want to expend the energy unless there's going to be a positive use of it."

Reiss said he and Norment have spoken since his announcement, with the foundation president saying he would present the Senate majority leader with ideas to bring before the legislature in 2018, but noted that tax relief is just one way of helping the foundation.

"There are things that, again, if people started to think creatively, there are tourism dollars that can be devoted to the Historic Triangle," Reiss said. "There are conference and group meetings that could be directed to Williamsburg. Tax relief certainly would be welcome, but there are other ways in which they can help us."

Norment, Pogge, Mullin and Mason all have said they have not yet heard from any locality regarding the foundation's proposal, and Reiss said July 19 he has not spoken with any local officials on his proposal, though he said foundation staff has.

"I'm glad that they're talking about it," Reiss said. "I want them to be aware of our situation, and I'm still optimistic that they're going to help us."

The foundation's request, or discussion about it, has yet to appear on the agendas for Williamsburg City Council, or the York or James City counties' boards of supervisors.

Mason said he asked the state's Division of Legislative Services to look into a couple of specific places where the legislature has addressed both real estate tax and business license fee abatement.

Mason also said he has had some informal conversations with a couple of localities on whether the Dillon Rule precludes them from acting, rather than seeking state legislative intervention.

"I think what we're going to find is some flexibility to the localities dealing with non-profits, which the foundation is most certainly, regarding real estate taxes," Mason said, "but the other business and licensure tax, I don't think the General Assembly has addressed that, and that's part of what we're trying to get to the bottom of and see."

Mullin said "it's not entirely unusual" for localities to seek state relief on taxes for non-profits or businesses in their communities.

"There are certainly industrial areas throughout the state that might need some tax authority help," Mullin said. "And so, there are actually a lot of provisions from the code that allow a (locality) to defer or exempt (real estate taxes) in redevelopment zones, conservation areas or rehabilitation districts. A lot of those have been set up before. There are also special assessments that can be given for land preservation, and there's some smaller exemptions that can be given. That's the kind of thing the General Assembly generally addresses."

Mullin called the foundation "a jewel of Williamsburg" and said he wants to ensure its success going forward.

"I know that everyone in the delegation is intensely focused," Mullin said, "on making sure that the foundation continues to be healthy and successful for a long time to come."

LaRoue can be reached by phone at 757-345-2342.

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