Fredericksburg keeps nonprofit groups on tax rolls
The Fredericksburg City Council has placed a moratorium on additional real-estate tax exemptions for nonprofit organizations.
Rather than considering new exemption requests, the council now will consider requests for financial support from organizations when preparing the city’s annual budget.
The council had been contemplating the moratorium for months and at its May 27 meeting denied requests from Empowerhouse and Employment Resources Inc.
Empowerhouse provides extended emergency shelter for victims of domestic violence. ERI owns the land where the Gladys Oberle School operates and plans to expand. The school serves children with disabilities.
The decisions to make those denials came in identical 4–3 votes with Mayor Mary Katherine Greenlaw and council members Brad Ellis, Fred Howe and Matt Kelly in the majority.
On Tuesday night, the council voted 5–2 to establish the moratorium, with council members Kerry Devine and Bea Paolucci opposing the action. Councilman George Solley had joined Devine and Paolucci in favoring exemptions for ERI and Empowerhouse but went with the majority on the moratorium.
The idea to indefinitely suspend consideration of new requests for real estate tax exemptions was budget driven and proposed by the city staff.
Assistant City Manager Mark Whitley said the change recognizes the 10-square-mile city’s limited land and provides flexibility in tight fiscal times.
Tuesday’s action does not impact properties already granted an exemption or exempt by law.
Government-owned land and land used by religious bodies for worship is classified as exempt by law.
Greenlaw noted that other cities in Virginia are taking the same step and said she supported it because it makes financial sense for Fredericksburg.
She repeated her concern that other jurisdictions in the region need to contribute their fair share toward nonprofits serving the region.
“We support them handsomely. We will continue to support them handsomely,” she said.
Devine said she understands the importance of having other jurisdictions contribute appropriately but was concerned about the timing of the action and that properties already exempt are not impacted.
Once a property is granted tax-exempt status, its status continues forever unless the use and ownership of the land changes, City Attorney Kathleen Dooley said.
Every three years, land owners granted an exemption must document that nothing changed.
The resolution passed on Tuesday notes that the city’s population is growing and so is the demand for government services.
Looking at each organization’s request annually during the budget cycle will enable council members to consider how much the city relies on each organization for meeting residents’ needs, an approach Kelly said he already takes in evaluating requests.
“It’s not an issue of taking anything away,” he said of the change. “It’s just looking at things differently.”
WHO IS EXEMPT?
The assessed value of all land within the city totals nearly $4.4 billion, according to a report Whitley prepared for the council.
Of that total, nearly $3.6 billion, or 82 percent, is taxed.
That leaves land valued at nearly $800 million untaxed.
However, the majority of the untaxed land is government owned and exempt by law. That land is valued at nearly $518 million.
The value of land that was designated as exempt by the council rather than classified that way by law is worth a little more than $64 million.
The tax on that land would generate $474,746 annually under the city’s current real estate tax rate of 74 cents per $100 of assessed value.
The tax rate rises to 79 cents per $100 of assessed value on July 1.
Only nine properties have been granted an exemption by the council.
The most valuable is the land owned by Eagle Housing, which is used for housing University of Mary Washington students at Eagle Village.
The Eagle Housing land is valued at $54.6 million and accounts for a tax revenue loss of $404,263.
The UMW Foundation’s property is also exempt, accounting for a loss of $16,912 in annual tax revenue.
In addition, the city gave exemptions to two groups supporting the homeless, a group serving the HIV/AIDS community, and the Rappahannock River.
The Fredericksburg Area Museum and Cultural Center was also granted an exemption, along with Maranatha Music Ministries and the Mayfield Civic Association.
The city of Fredericksburg granted tax-exempt status for the following properties. These are in addition to properties classified as exempt by law such as government-owned property and land used by religious groups for worship.
OWNER LAND VALUE TAX VALUE*
Eagle Housing $54,630,100 $404,263
Fredericksburg Area Museum and Cultural Center $3,513,400 $25,999
UMW Foundation $2,285,400 $16,912
Thurman Brisben Center $1,329,000 $9,835
Friends of the Rappahannock $790,600 $5,850
Maranatha Music Ministries $445,600 $3,297
Mayfield Civic Association $432,600 $3,201
Micah Ecumenical Ministries $421,000 $3,115
Fredericksburg Area HIV/AIDS $307,200 $2,273
Total: $64,154,900 $474,745
* The tax value is based on the current tax rate. The real estate tax rate will increase to 79 cents per $100 of valuation on July 1.
Pamela Gould: 540/735-1972 | firstname.lastname@example.org