Get Off Our Tax

Many neighboring governing agencies, like the City of Charlottesville and Albemarle County, exist in an entangled web of political deals and agreements. These deals are, of course, progressive by-products of peaceful democracy. They are also inherently ridden with conflict.

Albemarle County residents are disgruntled over the mounting burden of a revenue sharing agreement with the City of Charlottesville enacted in 1982. This year alone, the County Chief of Financial Management, Edward Koonce, signed over a check to the City in excess of $18 million, which was the City’s second-highest source of income. The established premise of the agreement was to suppress the then rapid annexation of the county by the City, a legally enabled process which is a by-product of Virginia’s unique system of local government. In exchange for annual payment, the City agreed that it would forgo the acquisition of any of the surrounding Albemarle region, particularly the property tax pot of the US-29 corridor, despite its continued support of regional services such as the U.Va Hospital System. For four decades, the agreement has proven generally beneficial for both parties, but in this economic downturn many citizens of the County are looking for a means of cutting back at the currently projected deficit of $6.7 million.

The now almost-four-decade-old agreement does not actually require that the County pay the City, but instead performs a mathematical balancing act comparing tax revenue potential and population of the two areas to determine how much gets exchanged and in which direction. However, due to discrepancies in population and actual tax rates, the City is all but guaranteed to be the financial beneficiary. When the agreement was signed, there was also a degree of concern that the City could unincorporate into a town within the County, which, while removing a large degree of independent governance, would guarantee a financial migration from the region into the City. Also, the County levees an almost drastically lower property tax than the City, which originally provided a huge support base for the movement to prevent further annexation by the City into the densely populated surrounding County area. From the City’s perspective, the agreement also helps to offset a substantial income loss caused by the presence of the University of Virginia.

Geographically speaking, the University is a natural member of the City of Charlottesville. But when the University expands, the property actually legally becomes part of Albemarle County. On top of this, due to its status as a non-profit organization the University is protected from property taxes by Virginia law. So, in 1975 when the University moved the Darden School and the Law School to North Grounds, the highly assessed property was taken off of the tax books. This rule is not without exception. The property has to have a demonstrated academic purpose, so real estate owned by the Foundation still pays local property taxes. That said, whenever you’re in a building with a 22904 zip code, you are standing on gross, lost financial potential for the surrounding community. As the University continues to expand with ventures such as the South Lawn Project, and the ever growing Hospital (which the community is undoubtedly thankful for), it’s something to consider that when we take, we are taking from our neighbors.