Monday, January 30, 2023

In ‘unprecedented’ move, Colonial Williamsburg asks region for tax relief

(Courtesy Colonial Williamsburg)

The day after Colonial Williamsburg announced it would outsource commercial operations and lay off 71 employees, it asked local governments for help.

In a letter dated June 27 and sent out June 30, Colonial Williamsburg President Mitchell Reiss requested a three-year period of tax relief from the City of Williamsburg, James City County and York County.

“We need help,” he wrote in the letter addressed to Williamsburg, James City and York County officials. “To support our efforts to bring long term financial stability and sustainability to Colonial Williamsburg, I am respectfully requesting that the City waive, for a period of three years, the collection of real estate and personal property taxes as well as service fees and business license fees from Colonial Williamsburg… I am making similar requests of James City County and York County.”

Reiss also requested the City “place a moratorium on the imposition of new taxes on Colonial Williamsburg,” which would include the recently proposed admissions tax.

The request comes as the Foundation works to lessen reliance on its endowment. In an analysis of the past 11 years of Foundation tax returns, WYDaily found the organization has suffered significant financial shortfalls, leading Colonial Williamsburg to transfer funds from its endowment to cover operations and debt repayments.

In 2015, the most recent tax year available, Colonial Williamsburg transferred $83 million from its endowment to cover its expenses.

The finances have become so dire, Reiss claimed the very “future of the Foundation” is at stake.

What it means for the City

According to the Williamsburg Commissioner of Revenue’s Office, the for-profit arm of Colonial Williamsburg has seven business licenses within the City: Colonial Williamsburg Concessions, Commissary Bake Shop, the Governor’s Inn, Williamsburg Inn, Williamsburg Lodge, the Spa of Colonial Williamsburg and Williamsburg Woodlands.

According to data provided by Colonial Williamsburg, the company paid $179,525.21 in taxes for business licenses in the City last year. The Commissioner of Revenue for both James City and York counties said Colonial Williamsburg has no business licenses in either jurisdiction.

This year, Colonial Williamsburg estimates it will pay $1,496,330 in real estate taxes to the City, plus an additional $363,072 in personal property taxes and $108,046 in services charges. The total taxes paid to the City will exceed $2.1 million, the Foundation states.

“Right now city staff is assessing the impact of this property tax relief on our budget,” said Councilman Benming Zhang, who said the Foundation’s request was “unprecedented.”

The estimated 2.1 million the Foundation says it will pay in 2017 represents 3.5 percent of the city’s projected Financial Year 2018 budget.

“If we offered them one hundred percent of the relief they asked for, where would we make up that money in the city’s budget?” City Councilman Doug Pons said.  “We have to be fiscally responsible to our residents.”

In order for the City to make up the $2.1 million in taxes Colonial Williamsburg says it estimates paying this year, Pons said City Council would need to raise property taxes by nearly 11.5 cents for every $100 in assessed real estate value — a 20 percent increase. 

“The only tax relief I can recall giving, which I do think is appropriate, is for the widowed spouse of a service member killed in action,” said Pons.  “These two are wholly different. One I can support and did. This one requires much consideration.”

The real estate tax in the City of Williamsburg is currently set at 57 cents for every $100 of assessed value on a home. For example, residents with a home assessed at $250,000 would pay $1,425 in real estate taxes.

If the rate increased by 11.5 cents, to 68.5 cents, a resident with a $250,000 home would pay $1,712.50 in real estate taxes — an increase of $287.50. Real estate taxes are paid twice a year

“I recognize that this is a significant request, and I do not make it lightly,” Reiss wrote. “But I believe that this contribution by the City to our efforts is critical to our success.”

Investing in land

According to online property records, Colonial Williamsburg Foundation owns 11 parcels in James City County, which represent 143 acres with a total assessed value of $8,369,800. The property is mostly undeveloped land, primarily along Pocahontas Trail.

The Colonial Williamsburg Foundation’s property holdings in York County are loosely borders by Waller Mill Reservoir to the north, Richmond Road to the west, Bypass Road and Route 132 to the south and I-64 to the east. (Courtesy Google Maps)

The Foundation owns 873.52 acres in York County, with an assessed land value of $14,367,100. The property, loosely bordered by Mooretown Road, Waller Mill Park and Bypass Road, represents 11 parcels of woodland, purchased over several decades.

In 1970, the Foundation purchased two of the parcels, each smaller than an acre, for a combined sum of more than $600,000. The parcels are currently assessed at a combined $5,000, online property records state.

Many nonprofits are exempt from paying real estate taxes under Virginia Code, but that property must be used for “exempt purposes,” such as housing a museum, church or hospital. Regardless of an organization’s nonprofit exemption status, local governments are permitted to levy service charge taxes on nonprofits.

The Foundation estimates it will pay $114,218 in real estate taxes to York County in 2017, and $75,235 to James City County during the same period.

Reiss said at this “critical time” for the Foundation, he must ask for more from local governments.

“We share the great privilege and responsibility to serve as stewards of one of America’s most historically important regions,” Reiss wrote. “Together, we can preserve that legacy, and insure its availability for future generations.”

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