Attorney General Opinions

County Attorney for Smyth County

You relate that Smyth County provides water service to the towns of Marion, Chilhowie, and Saltville. Additionally, the Rye Valley Water Authority serves part of the county, and the local governing bodies control the other water systems in the county. The county does not tax these systems or the locality that operates them.

The ratified amendment to Article X, § 6 provides:

• • • • (a) Except as otherwise provided in this Constitution, the following property and no other shall be exempt from taxation, State and local, including inheritance taxes:

        (6) Property used by its owner for religious, charitable, patriotic, historical, benevolent, cultural, or public park and playground purposes, as may be provided by classification or designation by a three-fourths vote of the members elected to each house of the General Assembly an ordinance adopted by the local governing body and subject to such restrictions and conditions as may be prescribed provided by general law.^[6]

A 1976 opinion of the Attorney General concludes that under § 6(a)(6), the General Assembly could exempt the Thomas Bridge property from local property taxes.⁸ The opinion recognizes the authority of the General Assembly to enact legislation to exempt property used for "‘charitable or benevolent’" purposes.⁹ The power to make such determinations is now vested in the local governing body.¹⁰ § 58.1-3651 governs the procedures for making such determinations. To the extent, the General Assembly could deem Thomas Bridge a "charitable or benevolent" entity for the purposes of § 6(a)(6), so may the Smyth County Board of Supervisors.

The 1976 opinion recognizes that the General Assembly could deem an organization "benevolent" for the purposes of tax exemption.¹¹ Similarly, local governing bodies are now authorized to make such determinations based on a reasonable definition of the term. Of course, a local governing body may not arbitrarily exercise such discretion and adopt a definition of "benevolent" so broad as to give the word no meaning.¹²

Whether the Thomas Bridge Water Corporation is a benevolent entity for the purposes of § 6(a)(6) is a determination to be made by the Smyth County Board of Supervisors consistent with the procedures in § 58.1-3651. § 58.1-3651(B)(1)-(8) requires the governing body to consider a series of questions in determining whether to grant an exemption. Nothing in § 58.1-3651 requires a governing body to answer each of the considerations listed in subsection B in the affirmative. Presumably, these factors assist in making the determination whether "[p]roperty [is] used by its owner for religious, charitable, patriotic, historical, benevolent, cultural, or public park and playground purposes."¹³ Such a determination necessarily is fact dependent. After careful consideration of all the attendant facts, should the board of supervisors decide that such an entity meets the definition of "benevolent," it is authorized to grant the tax-exempt status.

For many years, Attorneys General have concluded that § 2.2-505, the authorizing statute for official opinions of the Attorney General, does not contemplate that such opinions be rendered on matters requiring factual determinations, rather than matters interpreting questions of law.¹⁴ Consequently, I am not authorized to opine on whether the Thomas Bridge Water Corporation is, in fact, a "benevolent" entity for the purposes of § 6(a)(6).

¹2002 Va. Acts chs. 825, 630, at 1999, 2000, 895, 896, respectively; 2001 Va. Acts ch. 786, at 1074, 1075.

²Va. Code Ann. § 58.1-3651(A) (LexisNexis Supp. 2003).

³A "general election" is held "on the Tuesday after the first Monday in November … for the purpose of filling offices regularly scheduled by law to be filled at those times." Va. Code Ann. § 24.2-101 (LexisNexis Supp. 2003) (defining "general election," as that term is used in Title 24.2, which governs elections held in the Commonwealth).

⁴See 2002 Va. Acts ch. 630, § 1, supra note 1, at 896 (directing officers of election to "take the sense of the qualified voters upon the ratification or rejection of the proposed amendment to [Article X, § 6]" at the November 5, 2002 election).

⁵2002 Va. Acts, supra note 1, at 2000, 896; 2001 Va. Acts, supra note 1, at 1075 (providing for submission to voters of proposed amendment to Article X, § 6(a)(6), replacing language requiring that exemptions be granted by "a three-fourths vote of the members elected to each house of the General Assembly," with "an ordinance adopted by the local governing body," subject to restrictions and conditions as "provided by general law").

⁶2002 Va. Acts, supra note 1, at 1999-2000, 896; 2001 Va. Acts, supra note 1, at 1075.

⁷2003 Va. Acts ch. 1032, § 3, available at http://leg1.state.va.us/cgi-bin/legp504.exe?031+ful+CHAP1032 (declaring that Chapter 1032 "is in force on and after January 1, 2003").

⁸See 1976-1977 Op. Va. Att’y Gen. 277.

⁹Id. (citing Va. Const. art. X, § 6(a)(6)).

¹⁰2002 Va. Acts, supra note 1, at 2000, 896; 2001 Va. Acts, supra note 1, at 1075. (amending Va. Const. art. X, § 6(a)(6)).

¹¹See 1976-1977 Op. Va. Att’y Gen., supra note 8, at 277.

¹²The ability of a taxpayer to test the legality of expenditures by a local government is premised on the "‘peculiar relation of the corporate taxpayer to the [municipal] corporation’ [that] makes the taxpayer’s interest in the application of municipal revenues ‘direct and immediate.’" ASARCO, Inc. v. Kadish, 490 U.S. 605, 613 (1989) (quoting Massachusetts v. Mellon, 262 U.S. 447, 486-87 (1923)). Thus, a local taxpayer may have standing to challenge the granting of a tax exemption where such exemption is improperly granted as a procedural or substantive matter. See generally Burk v. Porter, 222 Va. 795, 284 S.E.2d 602 (1981) (determining that taxpayers had standing to seek in equity accounting and reimbursement of expenditures from members of county board of supervisors for allegedly unauthorized travel); Armstrong v. County of Henrico, 212 Va. 66, 76-77, 182 S.E.2d 35, 43 (1971) (determining that taxpayers had standing to challenge legality of authority delegated by sanitary district to county to impose rates and connection charges for countywide water and sewerage systems); Gordon v. Bd. of Supvrs., 207 Va. 827, 153 S.E.2d 270 (1967) (determining that taxpayer landowners’ had right to test legality of authority of county board of supervisors to lend money to airport authority for costs preliminary to construction of airport); Appalachian Elec. Power Co. v. Town of Galax, 173 Va. 329, 4 S.E.2d 390 (1939) (determining that taxpayers had standing to resort to equity to prevent allegedly illegal issuance of local bonds to finance construction of electric generating plant). Cf. Sauer v. Monroe, 171 Va. 421, 199 S.E. 487 (1938) (determining that taxpayer, who has suffered no special damage, may not sue on behalf of municipality to recover money he contends has been illegally disbursed, without first requesting proper authorities to sue or showing that such request would have been unavailing).

¹³Va. Const. art. X, § 6(a)(6).

¹⁴See 2001 Op. Va. Att’y Gen. 73, 74; see also Op. Va. Att’y Gen.: 1999 at 132, 132; 1986-1987 at 1, 6 (interpreting former § 2.1-118, recodifed at § 2.2-505); accord 1991 Op. Va. Att’y Gen. 122, 124.