Virginia Headlines

AOBA joined numerous business organizations and industry groups for a ceremonial signing of H.B. 2313, this year’s landmark transportation funding package, which will invest $1.5 billion in Northern Virginia roads and transit systems and permanently cap the local option commercial real estate tax applied in Fairfax and Arlington Counties.  Governor Bob McDonnell signed the legislation, flanked by supporters on the steps of the Capitol building in Richmond.  The event marked the first significant investment of funding into the Commonwealth’s critical transportation infrastructure in more than 25 years.

 

AOBA's Virginia Legislative and Regulatory Issues Committee and Metropolitan Political Action Committee will host Democratic candidate for Virginia Governor and former Democratic National Committee Chairman Terry McAuliffe at its next meeting.  The meeting is scheduled for Friday, May 24 at 1:30 p.m. at the Metropolitan at Pentagon City, located at 901 S. 15th Street in Arlington. Owners and managers with interests in Virginia are invited to attend.  Please let us know if you will be able to participate by emailing Brian Gordon at bgordon@aoba-metro.org.

The Arlington County Board approved a set of proposed interim revisions to the guidelines by which food trucks and other street vendors must abide.  The changes extend the duration of time that a vendor may operate from a single location, from one to two hours, and close an unintended loophole discovered by County staff which provided an exemption for all sales between the hours of 7:00 a.m. and 8:00 p.m.  The County continues its more comprehensive evaluation of food truck operations and will return to the Board with recommendations for further amendments at some point in the future, though no timetable has been identified.  Some AOBA members have experienced problems with food trucks operating on or adjacent to their properties.

The landmark transportation funding package passed by the Virginia General Assembly earlier this year has cleared yet another hurdle as the General Assembly resoundingly approved of the Governor’s amendments to the bill in its reconvened session on April 3.  The Governor’s amendments addressed Constitutionality questions raised by Attorney General Ken Cuccinelli in addition to reducing certain fees adopted as part of the funding package.  A key component of the legislation for AOBA members in addition to the long-needed influx of investment into critical infrastructure is that the commercial real estate tax surcharge adopted by Fairfax and Arlington Counties will be permanently capped at 12.5 cents per $100 assessed value.  This rate would have reverted to 25 cents in a few years without General Assembly action.  Delegate Bob Marshall (R-Manassas) hinted, however, that he would still attempt a legal challenge of the bill at some point in the future.

 

On March 13, Gov. Bob McDonnell signed H.B. 1598 into law.  The bill was introduced this year by Delegate Richard Anderson (R-Woodbridge) at AOBA’s request.  Its passage represents a significant legislative victory for AOBA members and will provide a more balanced and equitable process for appealing local government real property tax assessments.  The bill amends several code provisions with regard to local government real estate tax assessments and the process through which aggrieved taxpayers may appeal their assessed values.  The amendments initiated by AOBA seek to bring Virginia’s code into alignment with nationally accepted standard assessment practices and create a level playing field for aggrieved taxpayers in order to establish a fair market valuation or real property for tax purposes.

In the first meaningful infusion of funding into the Commonwealth’s critical transportation infrastructure in nearly 30 years, the Virginia General Assembly passed a sweeping transportation funding plan. The statewide plan would generate approximately $454 million in new money next year, and $870 million per year when fully implemented beginning in 2018

Of perhaps the greatest significance to AOBA members in this deal is the freezing of the commercial and industrial tax rate cap at 12.5 cents in perpetuity. AOBA secured a reduction of the maximum rate to this level in previous Sessions. However, that cap was scheduled to sunset in 2015, after which time it would rise to 25 cents per $100 assessed value.

Moreover, AOBA successfully urged rejection of a provision in the original draft conference committee report which would have compelled all Northern Virginia jurisdictions to adopt the commercial real estate tax surcharge as a condition of receiving regional funding. Currently, only Arlington and Fairfax Counties have adopted the levy - Arlington at 12.5 cents and Fairfax at 11 cents.  The original conference committee language would have meant that AOBA members with properties in every other Northern Virginia jurisdiction would see a property tax increase of 12.5 cents per $100 assessed value on all commercial buildings.  AOBA lobbied conferees to support an alternative approach recommended by Alexandria Delegate Rob Krupicka that, instead of forcing the commercial property surtax on local governments, would only require that local governments put forward an "equivalent local effort," i.e., localities could provide matching funds from other revenue sources of their choice (e.g. other taxes, bonding/other investments in infrastructure improvement).

This legislation represents a significant victory for AOBA members on this and several other fronts.

Cobbled together from numerous funding sources in an effort to secure the necessary number of votes in each Chamber, the legislation consists of the following basic components:

• Eliminates the states current 17.5 cents per gallon gas tax and replaces it with a 3.5% tax on gas “at the rack” (at the wholesale level) and a 6% tax on diesel fuel.

• Raises the statewide sales tax from 5% to 5.3%

• Raises the titling tax on vehicles from 3% to 4.3%

• Charges a $100 registration fee on electric vehicles

• Dedicates a portion of any future proceeds from internet sales taxes (pending action by Congress) to transportation. (A trigger mechanism is also included in case Congress fails to act, which would replace such funds with an additional 1.6% on the gas tax.)

• Increases the portion of sales taxes statewide currently dedicated to transportation from 0.5% to 0.67%.

• Adopts an additional 0.7% regional sales tax in Northern Virginia to be dedicated to new transportation construction.

• Increases the existing grantor’s tax in Northern Virginia by 25 cents per $100 assessed value.

• Adds an additional 3% transient occupancy tax to hotel stays in Northern Virginia only.

This legislation more than closes the existing maintenance funding gap, whereby construction funds are currently being depleted at a rate of roughly $400-500 million per year to support maintenance needs in other areas of the state. Regional funds generated by way of the additional sales, grantor’s and transient occupancy tax levies would stay in Northern Virginia, with 70% going towards regional projects to be administered by the Northern Virginia Transportation Authority and 30% to be granted to local governments that meet established thresholds for infrastructure investment. The regional funding sources in Northern Virginia total approximately $350 million per year.

AOBA led a coalition of stakeholder groups opposing legislation before the Virginia General Assembly to transfer administration and oversight of fire inspection fees from the Board of Housing and Community Development to the Fire Services Board.  S.B. 822 would have made it easier for fire services agencies to seek fee increases by removing the oversight out of the existing codes update process and instead placing the decision in the hands of a 15-member body, of which 13 positions are legislatively proscribed to represent local government and fire services interests.  The bill was passed by indefinitely in the Housing Subcommittee of the House Committee on General Laws.

 

 

Efforts of the Northern Virginia business community, including AOBA, to secure a long-needed infusion of funding for the Commonwealth's transportation infrastructure hit a snag this week, as the Senate failed to pass any of the various plans that have been proposed.  Senate inaction came on the heels of the House of Delegates' passage of the Governor's funding plan.  While the House plan still survives, there currently appears to be little prospect for consensus in the sharply divided Senate. House Speaker Bill Howell, as anticipated, did effectively kill the Senate’s redistricting plan on Wednesday; it remains to be seen whether removal of that thorn in the Senate Democrats’ side will make them amenable to considering the Governor’s/House bill.

As the Virginia General Assembly prepares to convene for the 2013 legislative session, Gov. Bob McDonnell unveiled his long-awaited transportation funding proposal.  The plan would raise $3.1 billion over the next five-year period, closing the existing structural deficit where maintenance projects are currently drawing away from the transportation construction fund to the tune of about $400 million per year. In addition, the proposal would generate net new revenue of approximately $1.8 billion for construction projects throughout the Commonwealth. The plan consists of several elements, including:

1.)   Gradually increasing the percentage of sales tax revenues dedicated to transportation from 0.5% to 0.75%

2.)   Increasing fees (automobile registration/other transportation related sources)

3.)   Eliminating the existing 17.5 cent/gallon gas tax

4.)   Raising the existing sales tax to approximately 5.8% and dedicating the new revenues to transportation

5.)   Designating a percentage of the proposed internet sales tax to local governments for transportation purposes (requires federal action)

In addition to funding critically needed new infrastructure, new revenues would reduce pressure on localities to exercise the existing authority to levy a commercial real estate tax surcharge for transportation.

 

The office of Attorney General Ken Cuccinelli recently released a report confirming what AOBA members already know – that utility customers have paid more under Virginia’s monopolistic egulatory scheme adopted in 2007. Drawing on five years of data dating back to the adoption of the 2007 legislation, the Attorney General found that:

The adders have contributed to increases in customer bills and reduce the chance
the customers will be entitled to future rate decreases
The adders are particularly costly to consumers as they may be applied not just to
investments in renewable energy, but to the utility’s entire rate base

The Attorney General is expected to press for legislation during the 2013 session to eliminate or significantly reform the adder provisions. In a presentation to the Commission on Electric Utility Regulation, the Attorney General’s office recommended the following legislative changes:

Eliminate the 50 basis points return on equity adder prospectively for meeting the
state’s voluntary renewable portfolio standards goals.
Eliminate the new generation return on equity adders prospectively for any new
projects.
Eliminate the provisions which preclude a utility’s return on equity from being adjusted
downward for poor performance or customer service if it has not met renewable
portfolio standard goals, and return the range for possible adjustment to +/-
50 basis points

The Commission instructed the Attorney General’s office to work with the incumbent utilities (Dominion Virginia Power and Appalachian Power Company) to reach consensus on legislation for the 2013
session. The Commission will meet again Jan. 16 to hear a report from the stakeholders and consider legislative changes.

 

 

The Fairfax County Board of Supervisors has advertised a public hearing for Dec. 4 to solicit public input on the creation of a new service tax district to fund transportation infrastructure improvements to facilitate the redevelopment and urbanization of the Tysons urban center.  The Board recently endorsed a proposed funding plan, which included the establishment of the new service tax district.  Early estimates suggest an initial tax rate of seven to nine cents per $100 assessed value.  All properties, residential and commercial, would be subject to the new levy. AOBA will testify at the Dec. 4^th hearing; members are encouraged to contact Brian Gordon at bgordon@aoba-metro.org to provide input.

The Fairfax County Board of Supervisors voted this week to endorse and advance a proposed infrastructure financing plan for Tysons.  The Board’s action is designed to fund approximately $3.2 billion in transportation improvements over the next 40 years in order to achieve the vision for the redevelopment of Tysons as a high-density, mixed-use, urban downtown.  AOBA succeeded in convincing the Board pursue an alternate approach, dividing the implementation of project delivery and financing into more manageable phases, thus eliminating uncertainty associated with projecting over a 40-year term and providing for some measure of consistency in the rate.  By identifying a defined list of projects to be constructed over a shorter term, the costs of construction can be much more easily identified and the number of unknown variables substantially reduced, cutting down on potential for overruns.  At its Oct. 16 meeting, the Board directed staff at AOBA’s request to segment the project list into phases and develop a corresponding cash-flow analysis to include tax projected levy rates.  AOBA further succeeded in defeating a proposed exemption from the service district tax for owner-occupied residential properties.  Had such a provision been included, apartments would have been subjected to a tax from which single-family home and condominium owners would have been spared.