RICHMOND, Va. – Based on the story in today’s Richmond Times Dispatch, it is necessary to ask whether the Mayor’s taxing plan to pay for his Shockoe stadium is legal.
The following exchange is reported this morning on a story about a public meeting on the proposed Shockoe Stadium held by Charles Samuels for his second district residents last night:
Attendee George Schick asked city officials to release more of the “meat” behind the assertion that the Shockoe development, which also would include a grocery store, a hotel, apartments and a parking deck, would generate enough revenue to pay off the debt that taxpayers would incur.
“When I hear from a politician that something will pay for itself, alarm bells start going off,” Schick said.
“The development agreement with the developers will say, at a minimum, you must pay X number of dollars in taxes,” replied Chief Administrative Officer Byron C. Marshall. “And when we aggregate those dollars, they will pay the debt service.”
Say what?
It is illegal for the Mayor or his aides or anyone else in City government to force anyone to pay more taxes – that is to say a minimum amount of taxes – than would otherwise be due under state or local law.
A special taxing district still requires that the taxes owed be applied in accordance with the equity principles in federal, state and local law.
So yes, only some individuals and/or business can be required to pay a special tax based on a special taxing district created for special circumstances.
But requiring X amount as a minimum in such taxes unconnected to levels of activity and principles of equal application for those similarly situated is illegal.
Can there be a contractual agreement with a developer to pay certain sums not required of others similarly situated?
Yes.
But under Virginia Supreme Court law, a tax by another name is still a tax: the test is whether it operates like a tax for the purposes of raising money to be spent by the locality, not the “title” of the levy.
WHICH ALL RAISES ANOTHER QUESTION NOT YET EXPLORED: The Mayor envisions running all these development “agreements” though the Economic Development Authority. Why is this important? Because by using the EDA, the Mayor and his people can avoid all the state and local laws which create a level playing for all those in the city and elsewhere you want to bid on projects, etc. connected with the Boulevard Development and apparently Shockoe too.
Since the EDA is not subject to these laws, they are NOT STOPPED FROM HANDING OUT CONTRACTS TO WHOMEVER MAY BE CONNECTED TO THOSE CONNECTED TO CITY HALL FAVORITES.
I just report the law, there is no suggestion one way or another, merely the legal facts. Mr. Schick, this is the reason you are still looking for the “meat” as you put it: It isn’t necessary if you use the EDA. All you need to do are promises, you don’t actually need to have any actual developer on paper at this point with a firm commitment.
As the Mayor proposes the deal, once it is approved, his folks run the show and you don’t have any say.
That might be good, it might not. I can’t say. I explain, you decide.
The law is clear, taxes imposed on citizens and businesses are subject to the same constitutional and other statutory protections available to all citizens similarly situated. Moreover, under Virginia Supreme Court decisions, a tax by any other name is still a tax if it used for the things taxes are generally used for.
It is not possible, based on the RTD story, therefore to know for certain what Mr. Marshall may have meant in the paper. But we do know this: what he said, taken literally, isn’t legal.
Paul Goldman is in no way affiliated with WTVR. His comments are his own, and do not reflect the views of WTVR or any related entity. Neither WTVR nor any of its employees or agents participated in any way with the preparation of Mr. Goldman’s comments.
