PE Considers Service Charge

Published 6:10 pm Thursday, March 29, 2012

PRINCE EDWARD – The County has $335,322,400 in real estate assessments that are tax-exempt, but County Administrator Wade Bartlett presented a concept to the board of supervisors Tuesday afternoon to look at a fee in connection with some tax-exempt properties that could translate into more County revenue.

Specifically, Bartlett recommended as part of his budget presentation that the board authorize staff to research the development of a service charge in lieu of real property taxation as allowed in state Code.

“Such a service charge can be placed on all real estate which is exempted from property taxation,” he told the board. “Certain criteria must be met to allow the service charge to be placed on property owned by the Commonwealth. Such criteria does not apply to the placement of such a service charge on exempted property not owned by the Commonwealth.”

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He noted that nine counties and 11 cities impose the service charge.

An estimated 22 percent of all real estate assessments in Prince Edward are tax-exempt.

“This revenue stream has the potential to be a significant source of funding but, due to state regulations, cannot be imposed prior to the next fiscal year,” Bartlett cited. “So this will take some research, some work by both the commissioner of revenue and our County attorney and the board of supervisors to determine if we meet the criteria for the Commonwealth. It's almost automatic for non-Commonwealth institutions.”

He further elaborated, “All the tax-exempt property can be subject to this under various criteria. And the amount that you charge is also based on what an entity is and that formulation is set out in the Code of Virginia-what you can and cannot include as a cost.”

Although there are some differences, localities have some authority to recover costs associated with state-owned and privately-owned properties in furnishing police and fire protection and collection and disposal of refuse. Additionally, the cost of public education is to be factored in the service charge imposed on faculty and staff housing of an educational institution.

Exempt properties include churches or religious bodies exclusively used for religious worship or for the residence of the minister of the church, religious body or for other specific uses other than faculty or staff housing of any such educational institution. (The service charge does not apply to federal properties.)

Also, the service charge is not applicable to public roadways or properties held for future construction of roadways. Supervisors would have the authority to exempt any class or organization from the service charge.

The service charge, however, is not to exceed 20 percent of the real estate tax rate of the locality imposing the charge or 50 percent in the case of faculty and staff housing of an educational institution.

“We've started looking at this,” Bartlett detailed. “It's going to be close if we meet all the criteria on the state. (If) we don't meet it this year, we will meet it in the near future, I am sure.”

Should the County approve an ordinance outlining the service charge, they are to notify the Governor in writing and each state agency affected by the change at least 12 months prior to the effective date; In addition, a locality levying a service charge on faculty and staff housing of a private college or university is to notify the chief executive officer of the institution at least 12 months prior to the ordinance's effective date.

If approved by the Board, Prince Edward would not be unique.

“The closest county to us that does this is Buckingham,” Bartlett highlighted. “They apply it to the Department of Corrections.”

He speculated that they can place various organizations in different classes and charge or not charge based on the class. He likened it to different classes of personal property where, for example, there is no charge for farm equipment.