The Actual Revenue Sharing Agreement

With all of this talk about the revenue sharing agreement between the city and the county, it seemed best to actually take a look at the thing. I asked city spokesman Ric Barrack for a copy, and Jeanne Cox was kind enough to provide to have a copy scanned in—it’s old enough that it exists only on paper—and sent along to share with y’all, managing to do so in just over 24 hours. This is the revenue sharing agreement:

Let’s see who can spot some interesting tidbits in here.

42 Responses to “The Actual Revenue Sharing Agreement”


  • Note that the references in this to the Tayloe Murphy Institute are talking about the organization at UVA that is now the Weldon Cooper Center for Public Service.

  • My reading of the formula for contributions and distributions suggests that the only reason why the County gets screwed by the Agreement is that Albemarle County has a much higher population. Nowhere does it say that the City automatically gets the lion’s share.

    Therefore, whichever entity controls development and growth more effectively will emerge as the beneficiary of this Agreement. If Albemarle sharply limits major new developments while more and taller apartment and condo buildings go up in Charlottesville, then eventually the tables will be turned.

    Also, Section VI, paragraph B could be invoked some day under unintended circumstances.

    It says “… in such a
    manner that real property in the city becomes a part of the County’s tax base…”

    But it doesn’t say ALL of the real property. Presumably a change to state law that resulted in *any* taxed piece of land being legally taxed by the County would nullify this whole agreement.

  • I’m surprised by how simple that this is. I’d expected something much longer and more complicated.

  • The most bothersome part of the Revenue Sharing agreement to me is and always has been the basis of the calculation, which is the County’s “total assessed values of taxable property.” Since 60% of the acreage of Albemarle is in land use, we in the County get thoroughly hosed here. A much more equitable approach to this – especially because of the value-added nature to Charlottesville of preserving the rural character of Albemarle, which, inter alia, is one of the purposes of the land use taxation system – would be to calculate the contribution instead as some percentage of total property taxes collected.

    But then again, if we can renegotiate that portion, I feel we’d likely want to renegotiate a lot else. Thanks for putting this up online, Waldo.

  • Yeah. Cuz after the county sets their property rate well below the city’s, and after the county decides about ‘land use’ deductions, I want to be run over by a Pepsi truck.

  • I found this very interesting reading. I find it notable that it’s actually called Revenue and Economic Growth Sharing funds. It recognizes that the expansion of the hospital (non-taxable) into increasingly larger areas of the city is beneficial to both the city and the county economically.

  • So, almost any kind of conservation, except buying it, relies on policies that reduce the taxable property values. As cjdumler pointed out, that means that the county gets penalized for any kind of conservation, including land use. A very wise change in revenue sharing could be to increase the rate off of commercial proparties and then account for conservation in the formula. Essentially the amount might stay the same, but the conservation penalty could be removed. Or, better yet, perhaps the city could pledge the difference to conservation programs of joint interest?

  • This agreement and the resulting analysis so far are a lot more interesting than I’d suspected!

  • Also, did anyone else catch the reference to Pen Park? My understanding is that this was due to the scheduled destruction of the McIntire golf Course because of the Meadwcreek Parkway. Wouldn’t it then have been quite interesting if the City didn’t build the parkway, since they’d have taken a county park, and built a new golf course, for apparently no good reason?

    IMHO, they would have done much better to simply consolidate some services like parks and schools rather that pass cash around. As my wife mentioned, this would also put an end to practices like charging higher fees to county residents at pools (Hey, wait, why isn’t that Discriminatory Taxation under the contract?)

  • ” My understanding is that this was due to the scheduled destruction of the McIntire golf Course because of the Meadwcreek Parkway.” Where is the evidence of this statement or is this conjecture?

  • Also, charging county residents a larger fee to use city-owned facilities or to attend city schools is not considered a tax but rather a fee.

  • C-ville Eye,

    All you have to do is read the Counties’ website which explains that bit of history, saying “The final plan recommends that golf at McIntire Park be phased out and replaced by a new golf course planned for Pen Park.” I also know this because I was here when they decided to build the Meadowcreek course, and I wrote local officials at that time to protest the decision (as did many other people too). I was told explicitly that the Meadowcreek course had to be built because it was the replacement for the one at McIntire. Even many of the golfers have reluctantly acknowledged this bit of history; however, they maintain it was never an adequate replacement. You can probably guess what my response to that is…

  • Perhpas it was the county’s intention and not the city’s. Somehow I can’t help but feel that if both parties had that intention there’s no apparent reason why it didn’t happen. I think citizens entered into the process and changed the outcome so the final intention was to retain the McIntire golf course. Now those plans have changed since the city has signed off on the construction of the road.

  • Referendum was held. Albemarle voted yes for the issue. Supes signed it. Otherwise Cville would hold all that 29N tax base.

    Perhaps all the Albmarle peopple should just be happy they have so far less a tax rate and build their own pools and downtown mall area.

    You just cannot have you cake and eat it too.

  • From what I understand, the crux of the current conflict has to do with how this agreement impacts state education funding for the County. Even as a city resident, I feel like the County’s getting hosed on this deal as the revenue they pay the City is counted against them, but not against the City, by the state. How is that right?

  • taxation and representation

    re:”A very wise change in revenue sharing could be to increase the rate off of commercial proparties [sic] and then account for conservation in the formula.”

    Except that this would potentially violate state law. Localities are legally required to assess real property to within a certain percentage of market value. A commercial property owner, upon receiving his reassessment, may appeal that assessment. The assessment then must be justified to a review board. I don’t believe that ‘wanting to increase the locality’s tax base’ would fly before the review board as a legitimate justification for increasing a property’s assessment.

    A locality doesn’t assess individual properties with the overall tax base in mind. A property is assessed with the market value of the property in mind. That is precisely why the overall tax base fluctuates from year to year.

  • I took the statement to mean having different rates, one for commercial and at least one othe for non-commercial property.

  • If I remember correctly, the city was also worried at the time that the University as well as the hospital would continue to expand onto taxable property within the city, as it is currently doing rather than expand in the larger county. The city was trying to devise ways to limit UVA’s growth. The city and county hoped that the Revenue and Economic Growth Sharing funds would help ameliorate the effect of the ounty’s land remaining taxable as the city’s taxable land being reduce. The idea was to let UVA grow thereby providing high-paying jobs and development in the city and the county. That’s part of the sharing.

  • taxation and representation

    cville eye, the bottom line is assessments need to conform to what the market is doing. Most likely there ARE different rates as commercial properties sell for different values. But to jerry-rig the assessment process in order to promote an agenda would most likely run afoul of the assessment review board.

  • taxation and representation

    I’m sorry, he meant in regards to the revenue sharing agreement and not real estate tax assessments. My bad and never mind!!

  • Yes, that’s what I meant. I would not advocate raising taxes on businesses. I meant that the county could pay the city more through revenue sharing for these properties.

    Then, the formula would account for those properties that had voluntarily lowered their assessments by taking advantage of conservation programs. (In other words, use the true assessment). The goal being that around the same amount would change hands, but it’d come from a different place as to remove the conservation penalty currently in effect.

  • Oh, not use differentiated rates but use the actual assessment values that are used to determine the property owner’s tax bill. Thanks for the clarification.

  • C-villle Eye, nice point about UVa. I do remember that too being a point of discussion that having a large (and growing) non-profit in your midst can eat away your tax base.

    Also, regarding Pen Park, I could easily refute your assertion that the city no longer intends to remove the golf course; however, we’d be better served by saving our voices for the master planning process.

    Besides, I may end up joining your side regarding the botanical garden. Right now, I’m getting the same feeling from the MBG as I get from some estate owners that think that just because they can pay a gardener or a landscape architect that they actually know something about gardens. (That’s how all the mistakes at Lewis Ginter were made.) I’d be like me conducting an orchestra (and trust me, that wouldn’t turn out well).

  • It is my understanding that UVA is pushing their future expansions through the Foundation and that the Foundation does in fact pay property taxes. Can someone more knowledgeable in this area comment?

  • The foundation pay taxes but if something becomes UVa proper then it becomes state property, off the taxes roles and in some cases it is then considered Albemare County- yeah I know, that’s weird.

  • That was an essential distinction that I was lacking, perlogik. (Or, more likely, that I once knew, fleetingly, but long ago forgot. :)

  • But what portion of the UVA expansion talked about here is through UVA proper or the Foundation? Not just the past, but going forward as well.

  • Could somebody please explain why nonprofits and state agencies don’t have to pay local property taxes?

  • The part of UVA that’s in the county has always been in the county. There was no way that the city could argue that it would be the best provider of urban services in order to lay the foundation for annexation. The property that is owned by the University Real Estate Foundation is taxable until it is deeded to UVA. The city and UVA have an understanding that if the futre use is for hospital or education it is taxempt, otherwise it’s taxable. Thus, the hospital on Lee Street is not taxed nor is the South Lawn project (both in the city, not county). UVA gives the city some money each year called “payment in lieu of taxes” using some kind of long-standing agreement. If you go tohttp://realestate.charlottesville.org/LandRover.asp and search by owner using University of Virginia, you will find a list of property owned in the city by university of Virginia Foundation that are taxable and tax-exempt.
    A good example of government ownership is the county’s office building. Lane High is in the city, but the county owns it. If the county sells it to a corporation, then the property becomes taxable again and is in the city, not county.

  • @Pete, non-profits are not automatically exempt from paying real extate taxes. The Paramount Theater applied to the city for real estate tax exemption while the city had a moratorium on exmptions and won. Live Arts or whatever its name is applied and didn’t get it. According to the discussion at Council’s meeting last night, Region Ten (a State mandated agency and non-profit) is paying the city approx. $70k a year in taxes.
    “…state agencies don’t have to pay local property taxes?” I don’t think state agencies have to pay any taxes because the “locality is subordinate to the state concept.” In the case of real estate tax, the agency may pay it indirectly if it is renting a privately-owned facility – the landlord would pass on the tax to the state in its rent.

  • Thank you very much Cville Eye. That is very informative. So the big concerns for the City people could then be that the tax base moves to the county or that the “in lieu of taxes” payment is inferior to the normal taxation method?? I suppose the County then also has the benefit of increased taxable property possible outside of the former County boundaries. Does all UVA land exist outside the City limits?

  • “Does all UVA land exist outside the City limits?” No, the old
    Sears building on W. Main and the old Reids store beside it are in the city, for example. Also the new Hospital and auxilliary buildings are completely in the city.
    “… or that the “in lieu of taxes” payment is inferior to the normal taxation method?” I would think so, since it has to be negotiated in order to come up with a dollar amount, otherwise we’d still be getting Seventies’ dollars. It’s done behind closed doors.
    Without the revenue and economic growth agreement the city would be more and more devasted as UVA grows along Emmet Street. The old hotel at the intersection of Emmet and University Av, the Villa Capri and the gas station beside it, and the old L-shaped motel across the street from both are slated to become UVA development in the relatively near future, for example. Prime city real estate.

  • Actually there are parts of the county that are surrounded the city- Guess what folks JPJ -it’s in the county

  • I understand that generally UVA is in the county, but what methodology is used to determine if new development is in the County or City? The hotel on the corner of Ivy and Emmet for example; was that formerly in the County and will now be in the City or something else? Are there examples where a property formerly in the County reverts to the City through UVA’s involvement? Also it seems to me that a distinction needs to be made between UVA proper and the Foundation. If there exists a choice between assigning property to the City or County and thereby what tax rate would apply the choice seems straight forward.

  • Several years ago the “old” bruton building on preston ave. was taken off the tax roles when the southern environmental law non profit occupied/bought the space. At the time it was removed from the tax roles it was assessed at around 900K. the city has a tremendous amount of property which is not taxed under the name of non-profit (excluding UVA). The city needs to every few years conduct a review of the non’profit status of organizatons which own property within the city limits and determine if they should continue to enjoy tax exempt status.

  • jogger, that building is home to the Legal Aid Justice Center, not the SELC as you state.

  • Map of the city/county line. UVa would not have the power to change it, but it has mapped it meticulously. For instance, the front left corner of the JPJ arena is in the city.
    http://www.web.virginia.edu/srem/teams/PDFs/ParcelMap2007.pdf
    What comes up for discussion though is which of UVa’s activities are taxable, and in what district. Also, kids living at UVa have local public school districts.

  • My comment did go through for some reason, maybe the link to the map. All of JPJ is in the county except for the front right corner. Only the state leg. can change the lines. The issue they haggle over here sometimes is what portion of UVa’s activities might be taxable.

    (By the way, WINA has a snippet on why a bill is pending on Scottsville’s borders.)

  • I’m sorry about that, Colfer—sometimes comments are flagged as spam for reasons that mystify me. I’m not notified, either—I have to discover that they’re sitting in a queue, waiting for me. I’ve approved your prior comment now.

  • Several respondents have said something similar to what Belmont Buck said, that “the County’s getting hosed” That’s what Boyd, Bell et al want people to believe…but there’s far more to the story.

    First, and perhaps foremost, [as danpi pointed out]the revenue-sharing agreement with Charlottesville was approved by the county Board of Supervisors (including a yes vote by current Board member, Lindsay Dorrier), AND it was approved by 60 percent of county voters. The purpose of the agreement was to keep the city from annexing tax-producing real estate along the 29 North corridor, including Fashion Square Mall.

    Second, the county uses Use Valuation Tax (what’s commonly called land use taxation) MORE than any other locality in Virginia. Fully 60 percent of the land in the county is in land use. Yet, according to the county’s own planning documents, agricultural production and agricultural jobs are in decline in the county. A good overview of land use can be found here:

    http://www.readthehook.com/stories/2003/04/10/coverLandUseFarmersFriendO.html

    Third, given that so much land in the county is taken off the normal tax rolls, that in turn (a) increases the value of other land (this is basic economics at work), making Albemarle County a fairly expensive place in which to live; (b) it places the tax burden for public services – including education – predominately on the middle and lower classes (people who cannot afford to own 5 or 10 or 20 or more acres in the county….see the land use article cited above); (c) it reduces potential tax revenues available to county government; and (d) it means that as growth continues – growth that typically does NOT pay for itself – it makes the county more susceptible to budgetary problems and it means that the county leaders have to either raise taxes – which they’ve been reluctant to do – or balance budget problems on the backs of county employees (which county leaders have done repeatedly), or both.

    The bill introduced into the General Assembly by Rob Bell (R) and pushed by Ken Boyd (R) is a red herring. It’s a way to circumvent the position the county finds itself in as a result of conservative policies, at the local, state and national levels. The money that goes to land use stands at close to $20 million…..clearly, this is a subsidy for those who have the means to afford large tracts of land. If the county cut this in say, half, there’d be no local budget problem. Instead, Bell and Boyd go after a legally binding contract that was entered into voluntarily and approved democratically.

    Lastly, Bell and Boyd say that the state Composite Index – a measure of a locality’s ability to fund public services, including education – should be altered to reflect the revenue shared with Albemarle. Then it also should be adjusted to reflect the amount of money that goes to the land use subsidy.

    Probably the best document on education and the Composite Index is titled “Review of Elementary and Secondary School Funding.” It was authorized by the General Assembly and prepared by the Joint Legislative Audit and Review Commission (JLARC) in 2002.
    That report can be found at: http://openlibrary.org/b/OL3625631M/Review_of_elementary_and_secondary_school_funding

    The report makes a number of points important to the revenue-sharing agreement and the bill pushed by Bell & Boyd.

    1. JLARC defines the composite index. It says “local ability to pay is a measure of a locality’s wealth (the size of its tax base or resource base), which could be used to pay for the necessary government services required by its citizens” (p. 125). The county provides considerable subsidies to larger landowners thus limiting its tax revenues and creating a high cost of living.

    2. JLARC says that “the willingness of the locality to tax its base is another factor that may impact the revenues that are raised”(p. 126) and “decision-makers of that locality may be relatively unwilling to pay for public services and may opt for low taxes, resulting in low revenues” (p.127). JLARC continues: “The particular tax rates that the locality chooses to impose…are considered to be a decision within local control that is rooted in local WILLINGNESS to pay.” {emphasis mine]

    3. JLARC explains how the Composite Index was developed and how it’s been adjusted over time…and it openly addresses – and refutes – criticisms. In general, the Composite Index has there main tax bases: a. real estate true values, b. taxable sales c. other revenues like property taxes, regulatory licenses, fines, permit fees, etc.

    4. JLARC’s analysis finds that the single biggest factor associated with government spending levels is population density. Thus, “…higher local population density may require more local spending in local government functions” (p.130). JLARC analysis finds that there are three government functions that typically require “..higher levels of service in densely populated areas…these three government functions are public safety, public works, and health and welfare” (p. 131). But you won’t find Bell or Boyd mentioning any of this.

  • D-mocracy,

    I think you’ve hit the nail on the head there about what the real problem is.

    There’s another negative factor at work too. When a property sells real estate agents market the property with land use as an amenity. That can increase property value by thousands (when the tax break is 4000 dollars, there are people that would pay that much, or more, for that amenity).

    The question becomes what is an effective solution? I can’t see this BOS changing either the tax rate nor the land use qualification criteria.

    BTW, did you know that private golf courses qualify for land use valuation? Why the heck should country clubs like Farmington or Glenmore be exempt from taxes? Can we say regressive taxation?

  • Indeed, D-mocracy, well played. I’ve been looking for this kind of analysis to figure out where I stand on the issue. What you wrote makes a lot of sense to me.

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