After reconsidering a law that would charge tax-exempt nonprofits fees to cover their share of the city's trash pickup and fire and police protection, City Council is pulling back a proposal to require payments from those groups starting Jan. 1.
A 1993 city ordinance calls for charging tax-exempt organizations as much as 20 percent of the real estate taxes they would pay if they were for-profit entities. But the fees were never collected. After City Assessor James Hester brought the law to council's attention, it repealed it April 13. But some members warned that it might reappear in the future.
City Council President Kathy Graziano says she didn't like the idea of enforcing a city ordinance for the first time 16 years after it was passed, and said at the time that none of the nonprofits “had a heads up so they could put it in their budgets for this year.”
But the mayor's proposed budget includes revenue from a full year of those fees in its projections — roughly $800,000. Council introduced an ordinance April 27 delaying the fees till Jan. 1 and cutting the projected revenue in half.
This week, council revised its budget revenue projections to exclude the fees.
“It's not unexpected,” says Deborah Williamson, executive director of the Virginia Network of Nonprofit Organizations, whose group has been lobbying council to get rid of the fees.
“What we were a little alarmed at was how quickly [the Jan. 1 fees were proposed],” she says, “because it was our understanding, particularly from the finance committee, that they were willing to take a more deliberate approach and we thought they were committed to studying it this summer.”
Further complicating matters, state law may restrict what nonprofits may be charged the fee. State code specifies that certain museums — including the Association for the Preservation of Virginia Antiquities, the Historic Richmond Foundation and the Virginia Historical Society — are exempt.
It also states that buildings “used or operated exclusively for nonprofit private educational or charitable purposes,” are free from charges, though it's unclear how the city will parse those exemptions.
Nonprofit advocates are working to schedule a meeting with the city assessor and city attorney’s offices in the next two weeks to discuss how the state law may restrict those organizations that can be charged, and how that might shrink the expected revenue.
Dana Hand Evans, director of the Wilton House Museum, says if the ordinance passes she will have to cut one of her three part-time staffers, a conservator who has worked there for 30 years. “Instead of working with us,” she says, “the city is trying to torpedo us, is how it feels.”
A public hearing on the measure will be held May 11 at 6 p.m. at City Hall.
