Service Charge Eyed

Published 4:06 pm Tuesday, June 19, 2012

PRINCE EDWARD – Whether the County will have the option to impose service charges for state property otherwise tax-exempt will depend on how much property meets outlined criteria.

The General Assembly has restricted the service charge on real estate owned by the Commonwealth to only localities where the property (which excludes state owned hospitals, educational institutions, roadway property or land held for future roadway construction) exceeds three percent of the value of all real estate within the locality.

“That's a high hurdle for us,” County Administrator Wade Bartlett cited in the June 12 Board of Supervisors meeting.

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Real estate valued at nearly $58 million.

“In conjunction with the commissioner of revenue, our IT consultant, we've been pulling some records to see if we meet that requirement,” Bartlett said. “There's approximately 660 tax parcels that we need to look at to determine which parcels can be used and which parcels can't be used because many of the parcels…it's just not in Longwood's name. There have been various real estate foundations and other names on the real estate so we have to kind of go through many of 'em item-by-item to see if we can meet this three percent.”

In addition, he noted, they have “some questions concerning the Code of Virginia and the interpretations therein…along this service charge so the County attorney…needs to look at that and provide some answers for us so we can continue.”

Prince Edward would not be unique in seeking reimbursement from the state. Bartlett told the board he has talked to two other localities to verify that the state is still providing the payment to the counties and he told the board they are.

It was noted in a memo to the board that Longwood University/Real Estate Foundation and Hampden-Sydney College are paying real estate taxes on some of the land they own. It was also cited that the commissioner of revenue is researching and the County attorney is searching the Code “to determine the appropriate legal interpretations of the specific Code sections that apply to Prince Edward County, and if previous Attorney General opinions and/or court decisions on the correct interpretation have been made either by the Attorney General or actual court cases.”

Earlier this year, as the board was kicking off its budget process, it was noted that the County has $335,322,400 in real estate assessments that are tax-exempt. 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. 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.

The amount of the service charge is based on what an entity is and that formulation is set 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 that are exempt.

County officials are looking at both. 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 also does not apply to federal properties.

The service charge for applicable Commonwealth properties is based on the assessed value of state-owned tax-exempt real estate and the amount the locality expended the preceding year in which such charge is assessed, for the purpose of furnishing police and fire protection and the collection and disposal of refuse. Additionally, public school education costs are to be included in determining the service charge on faculty and staff housing of an educational institution.

The service charge rate for properties owned by the Commonwealth is to be determined by dividing the expenditures determined by the assessed fair market value of all real estate in the locality (including nontaxable property). The rate is then applied to the assessed value of tax-exempt property owned by the state.

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.

“My job is to provide the information to the board for them to make the final decision and I will give them all the information that I can garner concerning private property and public property-what would be eligible to have a service charge placed-and also how to calculate it,” Bartlett would later tell The Herald. “If you look in the Code, you can only charge for certain particular expenses, so we have to look at that, too.”