Localities unsure about Colonial Williamsburg tax request

Jimmy LaRoue
Contact Reporterjlarouejr@vagazette.com

While Gov. Terry McAuliffe has said the viability of Colonial Williamsburg is important to Virginia's tourism economy, finding a way to help it is likely to be a challenge for local officials.

As part of last week's announcement from Colonial Williamsburg Foundation president Mitchell Reiss on its restructuring and layoffs, he requested that the foundation be exempt from local real estate taxes, as well as a moratorium on any other taxes for the next three years. He said the money-saving measure would be critical to the foundation's success.

City and county officials, though, are unsure how they could help.

The city's response is likely to be complicated by other moves the foundation is making as part of its restructuring, including its outsourcing of landscaping, facilities management, product and retail management and golf operations, Williamsburg communications specialist Lee Ann Hartman said.

"We have to look at: is (outsourcing) then going to change the dynamic — something that was possibly non-profit is now (for-)profit," Hartman said.

Hartman said the city's finance department, commissioner of revenue Judy Nightengale Fuqua and city manager Marvin Collins have started the discussions about what Reiss and the foundation requested.

Williamsburg councilman Benny Zhang said the city should weigh the needs of the foundation versus the city residents. He said city staff is evaluating the legalities of a tax break for the foundation and its impact on the city's budget.

He said flat revenues and rising costs, along with other city needs, are among the things the city will have to consider when weighing the foundation's request.

"If I had to put a phrase with it, it's definitely a balancing act," Zhang said. "I say that because we're coming to head with this ongoing tourism development fund conversation. ... But there's a balancing act just that we have to be sure to be fiscally responsible to our residents. I think the task is significant. I think there's no question about it. What I am curious to see is more detail."

The city is considering whether to raise meal taxes from 5 to 7 percent, room taxes from 5 to 7 percent and putting into place a 7 percent admissions tax, which would go toward the tourism development fund. Reiss said he is strongly opposed to the admissions tax and increases in the room and meal taxes.

The proposed resolution for the tourism development fund lists 13 potential projects, including tourism venues, although it does not list any specific organizations as being eligible.

City councilwoman Barbara Ramsey said it is "a little premature to guestimate" how the foundation's request will play out.

"One has to take into account all of the needs of the city as opposed to trying to devote complete time to one request regardless of how important that request is," Ramsey said.

In James City County, administrator Bryan Hill said he will soon present several options to the county's supervisors, including the foundation's proposal, which at the moment is a non-starter for him. Hill did not disclose the other options, saying he will need to brief supervisors on them first.

"What I'm looking at, point blank, is as a part of the Historic Triangle and the collaborative that we have here as a regional entity, I'm looking at ways to help Colonial Williamsburg because it impacts James City County," said Hill. "What has been provided to me, I can't react to unless some (state) legislative action is taken. So that being said, I'm looking at other avenues to help Colonial Williamsburg with the interests of our partnership."

With the foundation paying close to $2.3 million in total taxes to the city and counties of York and James City in the 2016 fiscal year — it is estimated to pay the same amount this year — local officials also have to determine how that will affect their budgets.

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

"It's early for me to know exactly what we would be likely to do," said James City County supervisor and William & Mary government and public policy professor John McGlennon.

York County administrator Neil Morgan said that he will review the foundation's request for the 2018-2019 budget year, since the new fiscal year started July 1.

"There's a category of entities that the state allows localities to either tax or not tax at their discretion," Morgan said. "And I'm assuming since they asked that, they're in one of those categories. But I don't really know that for a fact. That's part of what I've got to figure out."

Morgan said the review of the foundation's request will happen over the summer, and then, along with continuing dialogue with the foundation, he will report to the board of supervisors "maybe toward the end of summer ... and then sometime between now and the next budget season, we'll figure out whether it's anything we're inclined to consider."

McGlennon said Colonial Williamsburg is "a vitally important institution for the area" that has faced financial challenges for a long time.

"I can't really comment on the internal dynamics of their financial situation, but (I) certainly understand that they must see this as a critical point to recommend the very significant changes that they're proposing," McGlennon said.

McAuliffe said Colonial Williamsburg is a big reason why tourists come to Virginia, and is hopeful for a solution that keeps the foundation on solid financial footing.

"Last year we did $26 billion worth of tourism income," McAuliffe said Wednesday. "Colonial Williamsburg is a big part of that, so I think we all need to sit down and figure out a way to make it economically viable and continue to be the great tourist attraction it is."

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

Colonial Williamsburg properties

Williamsburg: 302 properties worth more than $200 million.

York County: 25 properties worth about $4.5 million.

James City County: 11 properties worth $8.3 million

Source: City and county property records

Colonial Williamsburg real estate taxes paid

2016: $2,324,142.91 total

•Williamsburg: $2,140,152.82

•York County: $107,968.83

•James City County: $76,021.26

2017: $2,336.427.71* ($950,938.05)

•Williamsburg: $2,146,973.67* ($856,211.03)

•York County: $114,218.60* ($57,109.30)

•James City County: $75,235.44* ($37,617.72)

Source: Colonial Williamsburg Foundation

* estimated total taxes for year. Amount in parentheses is what has been paid through June. Amount paid to city of Williamsburg also includes payouts for personal property taxes and business licenses.

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