THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, August 16, 1995 TAG: 9508160415
SECTION: LOCAL PAGE: B7 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 71 lines
Hospitals, charities and museums, normally exempt from real estate taxes, would have to pay some taxes if the City Council approves a proposal under a state law allowing such levies.
The levy, if imposed, is expected to raise $1.6 million a year, the equivalent of raising the regular real-estate tax on home owners more than 2 cents. In financially crunched Norfolk, this is a substantial sum.
Although labeled a ``service charge,'' the tax would be 28 cents for every $100 of assessed value of property, or one-fifth of the city's regular real-estate tax rate of $1.40.
Although it would appear to be impossible to tax properties that are tax-exempt, a state law allows cities or localities to charge some non-profit institutions for the cost of services, including fire and police protection.
Norfolk has long complained that a substantial share of the properties in the city - almost 40 percent - are tax-exempt. The city staff sees the new tax as a way of raising more money and having non-profit facilities pay their fair share for city services.
Not all non-profit organizations would be covered. The state law exempts churches, educational institutions, and federal and state property. That means Old Dominion University would not be covered, as well as the Norfolk Naval Base, probably the single-largest tax-exempt property in the city.
The largest new taxpayers would be hospitals, such as Sentara Norfolk General Hospital and DePaul Medical Center. Although officially non-profit facilities, these institutions own property and buildings worth hundreds of millions of dollars. Norfolk estimates that the city's non-profit hospitals would pay $850,000 under the proposal, or roughly half of the $1.6 million the proposal would be expected to generate.
Councilman Mason C. Andrews, a physician and faculty member at the Jones Institute who has helped build and promote the medical complex off Colley Avenue, said he was not opposed to the new levy.
``I'm not leading the charge on this,'' Andrews said, ``But (a hospital) pays to fix a roof, it pays for electricity. It's not unreasonable to pay for what city services there are.''
If the hospital caught fire, Andrews noted, Norfolk firefighters would no doubt labor to put out the flames despite the institution's tax-exempt status.
Norfolk International Airport would be another big contributor. With property valued at $227 million, the airport would pay more than $600,000 in new revenue, city officials estimate.
The tax generally would not apply to educational institutions such as Norfolk State University or Norfolk Academy, but it could apply to peripheral parts of these institutions, like faculty housing. Under state law, these facilities could be taxed at a rate of one-half the regular real-estate tax rate.
According to state law, the tax must be based on the cost of providing fire, police and trash removal to non-federal, tax-exempt properties.
According to city calculations, the city would have to charge 67 cents per $100 to recover the cost of providing these services. This is well above the one-fifth cap of 28 cents put on most of the new taxes.
The tax would not be imposed until the next fiscal year begins in July 1996, city officials said.
Council members, who were briefed on the proposal Tuesday at their regular meeting, said they would discuss the proposal over the coming month.
According to staff members, 12 other cities and five counties in Virginia have enacted ordinances that allow them to tax non-profit facilities.
If approved, the city would set up a mechanism to notify affected property owners, and hire a contractor to complete assessments of tax-exempt property. The city would give affected property owners a year's warning before imposing the new levy. by CNB