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PRESENT: Kinser, C.J., Lemons, Millette, Mims, McClanahan, and 

Powell, JJ., and Koontz, S.J.

CITY OF RICHMOND

OPINION BY

v. Record No. 102409 JUSTICE LEROY F. MILLETTE, JR.

 March 2, 2012

SUNTRUST BANK

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND

Beverly W. Snukals, Judge

The question presented by this appeal is whether a 

municipal corporation has the authority to tax a non-exempt 

entity for an exempt entity's ownership interest in property 

owned by the two entities as tenants in common. We hold that 

it does not.

I.

A.

SunTrust Bank and the Richmond Redevelopment and Housing 

Authority (RRHA) own two properties – 901 and 1001 Semmes 

Avenue – in the City of Richmond as tenants in common. 

SunTrust holds undivided interests of 62% and 80.27%, and the 

RRHA holds undivided interests of 38% and 19.73%. To define 

their rights and obligations with respect to their ownership 

interests, SunTrust (then Crestar Bank) and the RRHA executed 

two operating agreements, one for each property. In pertinent 

part, the operating agreements provide that SunTrust "shall 

have the exclusive right to use and occupy the [properties]" 

and that it "shall have sole and exclusive management and 
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control over, and shall make all decisions affecting, the 

business, management, leasing, operation and disposition of the 

[properties], as fully and completely as if [it] owned the 

entire fee simple interest[s] in the [properties] and subject 

only to the rights of [the RRHA]." The operating agreements 

further provide that "[n]o rent or other charges shall be 

payable by [SunTrust] or its Affiliates to the [RRHA] as a 

result of their possession of the [properties]."

B.

Before 2009, the City taxed SunTrust only for its 

ownership interests in the properties. (The RRHA was not taxed 

for its ownership interests because property owned by a 

political subdivision of the Commonwealth is exempt from 

taxation under Code § 58.1-3606.) In 2009, however, the City 

determined that SunTrust was liable not only for the taxes on

its ownership interests, but also for the taxes on the RRHA's 

ownership interests. The City accordingly corrected the 

assessments against SunTrust for the years 2006 through 2009 to 

reflect that it was liable for taxes on both its ownership 

interests and the RRHA's.1

 1 An assessment may only be corrected "within three years 

from the last day for which such assessment is made." Code 

§§ 58.1-3980(A), -3981(D).
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C.

SunTrust filed an "Application for Correction of Erroneous 

Assessment of Real Property Taxes," pursuant to Code § 58.1-

3984. On cross-motions for summary judgment, the circuit court 

ruled that the City had no authority to tax SunTrust for the 

RRHA's ownership interests in the properties and, consequently, 

granted SunTrust partial summary judgment. The City, while 

preserving its right to appeal the circuit court's ruling, then 

reached an agreement with SunTrust on the amount to be 

refunded; and the circuit court entered a final order in accord

with that agreement.

The City now appeals.

II.

A.

Whether the City has the authority to tax SunTrust for the 

RRHA's ownership interests in the properties is a question of 

law, which we review de novo. Marble Techs., Inc. v. City of 

Hampton, 279 Va. 409, 416, 690 S.E.2d 84, 87-88 (2010). The 

factual findings made by the circuit court as to the nature of 

the relationship between SunTrust and the RRHA, however, are 

presumed to be correct, and will not be set aside unless they 

are plainly wrong or without evidence to support them. County 

of Mecklenburg v. Carter, 248 Va. 522, 526, 449 S.E.2d 810, 

812-13 (1994).
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B.

For a tax to be valid, it must be supported by express 

legislative authority. Woodward v. City of Staunton, 161 Va. 

671, 673, 171 S.E. 590, 591 (1933); see also Hampton Nissan

Ltd. P'ship v. City of Hampton, 251 Va. 100, 105, 466 S.E.2d 

95, 98 (1996) ("[A] city can derive its taxing power only 

through positive grants of authority from the General 

Assembly."). As this Court has explained:

"Taxes are imposed by the State in the exercise 

of its sovereign power. This power is exerted 

through the legislature, and an executive officer who 

seeks to enforce a tax must always be able to put his 

finger upon the statute which confers such authority. 

Taxes can only be assessed, levied and collected in 

the manner prescribed by express statutory authority. 

Tax assessors have no power to make an assessment 

except in the manner prescribed by law, and if the 

statute prescribes a method of assessment which is 

invalid, the assessor has no power or authority to 

adopt a method of his own which would have been legal 

if it had been prescribed by the legislature."

Woodward, 161 Va. at 673, 171 S.E. at 591 (quoting Commonwealth 

v. P. Lorillard Co., Inc., 129 Va. 74, 82, 105 S.E. 683, 685 

(1921)).

C.

The City advances three arguments for why it has the 

authority to tax SunTrust for the RRHA's ownership interests in 

the properties.2 We address these arguments in turn and 

 2 The City makes a fourth argument, based on an expansive 

reading of Code § 58.1-3200, in its reply brief. At oral 
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conclude that they are either without merit or procedurally 

barred.

1.

The City first contends that it has the authority to tax 

SunTrust for the RRHA's ownership interests because, pursuant 

to the operating agreements, SunTrust has the exclusive right to 

use and possess the properties as if it were the fee simple 

owner. In making this argument, the City cites no statutory 

authority; instead, it relies on City of Norfolk v. Perry Co., 

108 Va. 28, 61 S.E. 867 (1908). There, we upheld a tax imposed 

by a municipal corporation upon two perpetual leaseholders for 

property owned by the municipal corporation, explaining that

the leaseholders were "the substantial and real owners of the 

property" because they "ha[d] the right of possession, use and 

occupation forever." Id. at 30, 61 S.E. at 868. In so ruling, 

we observed that, "as a general rule, in the absence of a 

covenant the landlord under an ordinary lease is responsible 

for taxes on the property leased by him; but this general rule 

can have no application to the case of a perpetual 

leaseholder." Id.

We reject the City's argument based on Perry. That case 

is simply inapposite here because SunTrust is not a perpetual 

 

argument, however, the City's counsel correctly conceded that 

the argument runs contrary to well-established rules of 

statutory construction. We therefore do not address it.
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leaseholder; indeed, it is not a leaseholder at all. The RRHA, 

as the circuit court found, did not lease the properties to 

SunTrust. Rather, the RRHA and SunTrust own the properties as 

tenants in common — a fact that the City conceded below and 

concedes on the first page of its opening brief. As a tenant 

in common, SunTrust has the right to use and possess the 

properties without any agreement with the RRHA. Graham v. 

Pierce, 60 Va. (19 Gratt.) 28, 38 (1869) ("[E]very tenant in 

common has a right to possess, use and enjoy the common 

property without being accountable to his co-tenants for rents 

or profits, except under the statute [now Code § 8.01-31] for 

so much as he may receive beyond his just share or 

proportion.").

2.

Next, the City argues that it has the authority to tax 

SunTrust for the RRHA's ownership interests, since SunTrust 

does not use the properties for a "public purpose." As support 

for this contention, the City points to Article XIII, Section 

183(a) of the 1902 Constitution of Virginia, which exempted 

from taxation "property lawfully owned by counties, cities,

towns, or school districts, used wholly and exclusively for 

county, city, town or public school purposes."

We conclude that the City's "public purpose" argument is 

incorrect for two reasons. First, neither the current
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Constitution nor Code requires that property owned by a 

subdivision of the Commonwealth be used for a "public purpose" 

in order to be exempt from taxation. See Va. Const. art. X, 

§ 6(a)(1); Code § 58.1-3606. Second, even if there were still a 

"public purpose" requirement, that would only mean that the 

RRHA — not SunTrust — could be taxed by the City. In each of 

the "public purpose" cases cited by the City, a tax was imposed 

on a municipal corporation, not on a private business. See

City of Norfolk v. Bd. of Supervisors, 168 Va. 606, 611, 192 

S.E. 588, 589 (1937) (municipal-owned waterworks taxed by 

county); Commonwealth v. City of Richmond, 116 Va. 69, 70-71,

81 S.E. 69, 70 (1914) (municipal-owned waterworks taxed by the 

Commonwealth).

3.

Lastly, the City contends that it has the authority to tax 

SunTrust for the RRHA's ownership interests in the properties 

under Code § 58.1-3203, which states in relevant part: "All 

leasehold interests in real property which is exempt from 

assessment for taxation from the owner shall be assessed for 

local taxation to the lessee." According to the City, "[t]he 

practical effect of the [operating] [a]greements was to create 

a leasehold interest by SunTrust in the [RRHA's] undivided 

ownership interest in the [p]roperties."
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We find this contention procedurally barred. In granting 

SunTrust's motion for partial summary judgment, the circuit 

court held that the operating agreements are not leases and

that SunTrust and the RRHA are tenants in common. The City did 

not assign error to these rulings; thus, they will not be 

reviewed on appeal. Rule 5:17(c); State of Maine v. Adams, 277 

Va. 230, 241-42, 672 S.E.2d 862, 868 (2009) ("A party who asks 

this Court to consider whether a circuit court's holding was 

erroneous is required to assign error to the challenged holding 

so that it may be identified properly for our consideration.").

III.

The City has failed to "put [its] finger upon the statute 

which confers" upon it the authority to tax SunTrust for the

RRHA's ownership interests in the properties. Woodward, 161 

Va. at 673, 171 S.E. at 591 (internal quotation marks and 

citation omitted). We therefore hold that it has no such 

authority and will, accordingly, affirm the circuit court's 

judgment.

Affirmed.