Opinion ID: 1058012
Heading Depth: 3
Heading Rank: 1

Heading: Chandler Policy

Text: The City first contends that the circuit court erred in holding that the Chandler policy was inconsistent with Code § 58.13221 and City Code § 27-83. Whether the Chandler policy comports with the requirements of Code § 58.1-3221 and City Code § 27-83 is a question of statutory interpretation. As such, it `presents a pure question of law and is accordingly subject to de novo review by this Court.' Warrington v. Commonwealth, 280 Va. 365, 370, 699 S.E.2d 233, 235 (2010) (quoting Jones v. Commonwealth, 276 Va. 121, 124, 661 S.E.2d 412, 414 (2008)). As with any question of statutory interpretation, our primary objective is `to ascertain and give effect to legislative intent,' as expressed by the language used in the statute. Commonwealth v. Amerson, 281 Va. 414, 418, 706 S.E.2d 879, 882 (2011) (quoting Conger v. Barrett, 280 Va. 627, 630, 702 S.E.2d 117, 118 (2010)). `When the language of a statute is unambiguous, we are bound by the plain meaning of that language.' Ford Motor Co. v. Gordon, 281 Va. 543, 549, 708 S.E.2d 846, 850 (2011) (quoting Conyers v. Martial Arts World of Richmond, Inc., 273 Va. 96, 104, 639 S.E.2d 174, 178 (2007)). Because the words of a statute are chosen with care, we will not read a legislative enactment in a manner that renders any portion of that enactment useless. Antisdel v. Ashby, 279 Va. 42, 48, 688 S.E.2d 163, 166 (2010). Rather, we will apply an act of the legislature by giving reasonable effect to every word used. Id. With these principles in mind, we turn to the language of Code § 58.1-3221 and City Code § 27-83. As relevant here, Code § 58.1-3221 provides: A. The governing body of any county, city or town may, by ordinance, provide for the partial exemption from taxation of real estate on which any structure or other improvement no less than twenty years of age, or fifteen years of age if the structure is located in an area designated as an enterprise zone by the Commonwealth, has undergone substantial rehabilitation . . . subject to such conditions as the ordinance may prescribe. . . . The governing body of a county, city or town may establish criteria for determining whether real estate qualifies for the partial exemption authorized by this provision and may require the structure to be older than twenty years of age, or fifteen years of age if the structure is located in an area designated as an enterprise zone by the Commonwealth, or place such other restrictions and conditions on such property as may be prescribed by ordinance. . . . B. The partial exemption provided by the local governing body may not exceed an amount equal to the increase in assessed value resulting from the rehabilitation. . . as determined by the commissioner of revenue or other local assessing officer. City Code § 27-83, which was adopted pursuant to Code § 58.1-3221, in pertinent part, provides: (a) Exemption authorized. Partial exemption from real estate taxes is provided for qualifying property rehabilitated . . . if eligible according to the terms of the Constitution, the Code of Virginia and the provisions of this section and Section 27-86. (b) When deemed rehabilitated. For the purposes of this section, commercial or industrial real estate shall be deemed to be substantially rehabilitated when a structure. . . has been so improved by renovation, reconstruction or replacement as to increase the assessed value of the structure by no less than forty (40) percent. . . . Upon receipt of an application for tax exemption, the Assessor shall determine the assessed value (hereafter referred to as base value) of the structure prior to commencement of rehabilitation. Such assessment shall serve as a basis for determining whether the rehabilitation undertaken increases the assessed value of such structure by at least forty (40) percent. The application to qualify for tax exemption shall be effective until December 31 of the third calendar year following the year in which [the] application is submitted. . . . When it is determined that a forty-percent increase in assessed value . . . has occurred, the tax exemption shall become effective beginning on January 1 of the next calendar year. . . . . (g) Commercial or industrial structures in enterprise zones. Commercial or industrial structures that are . . . qualified under this section shall be entitled to a fifteen-year period of exemption in the full amount of the difference in taxes computed upon the base value and the initial rehabilitated assessed value of the property for each year of the fifteen (15) years. According to City Code § 27-83(g), the amount of a partial exemption awarded under the Program is to be determined based on the difference between a property's base value (assessed value before rehabilitation) and its initial rehabilitated assessed value. The City argues that initial rehabilitated assessed value does not mean the first assessed value after rehabilitationor, in other words, the first value after rehabilitation that is determined by an appraiser for tax purposes. See Black's Law Dictionary 1691 (9th ed.2009) (defining assessed value as [t]he value of an asset as determined by an appraiser for tax purposes); see also DKM Richmond Assocs. v. City of Richmond, 249 Va. 401, 408, 457 S.E.2d 76, 80 (1995) ([T]he word `assessment' in [the] context [of City Code § 27-83] refers to the determination of the value of the property as a result of an appraisal.). Instead, citing a parenthetical found in City Code § 27-86(b), the City contends that the phrase means the value attributable to rehabilitation. We disagree. As relevant here, City Code § 27-86(b) provides: The Director of Finance. . . shall cause to be prepared a credit in an amount equal to the difference in taxes as computed upon the base value and the initial rehabilitated assessed value (i.e., value attributable to rehabilitation). [4] Contrary to the City's contention, the parenthetical in this section does not define initial rehabilitated assessed value, but rather describes what remains when the base value is subtracted from the initial rehabilitated assessed value, which is then used to calculate the amount of the tax credit to which an owner is entitled under the Program. Accordingly, we read initial rehabilitated assessed value to mean what it says: the first assessed value after rehabilitation. As noted earlier, the Chandler policy does not use the first assessed value after rehabilitation to determine the amount of a partial exemption. Instead, it uses a hypothetical value based on backdating, which is employed only for purposes of determining the amount of a partial exemption. The Chandler policy thus effectively reads the word assessed out of City Code § 27-83. The City submits that the Chandler policy's departure from the language of City Code § 27-83 is permissible because Code § 58.1-3221(B) provides that the increase in assessed value resulting from the rehabilitation is to be determined by the local assessing officer. We find this contention unpersuasive. Code § 58.1-3221(A) gives the City Counciland not the City Assessorthe authority to establish by ordinance the Program's criteria. Among the criteria the City Council prescribed pursuant to that authority was the methodology for determining the amount of a partial exemption found in City Code § 27-83(g)which, as described above, employs a property's first assessed value after rehabilitation. The City Assessor was thus obligated to follow that methodology, even if he believed that a different methodology using a hypothetical value based on backdating would better ensure that the amount of a partial exemption did not exceed the increase in assessed value resulting from the rehabilitation. Code § 58.1-3221(B). The City also contends that, if the Chandler policy is not applied, and the initial rehabilitated assessed value is determined as of the date the rehabilitation was completed, then the Taxpayers will receive a partial exemption that is greater than the increase in the Property's assessed value resulting from the rehabilitation, in violation of Code § 58.1-3221(B). That is so, it argues, because the partial exemption will include market appreciation. While it is possible that determining a property's initial rehabilitated assessed value as of the date the rehabilitation is completed might give an owner a partial exemption that is greater than the increase in assessed value resulting from the rehabilitation, there is no evidence of that in this case. Uncontroverted evidence established that the Property sold for $85 million one month before the City Assessor's office conducted its final inspection. Instead of using the amount of that contemporaneous sale to determine the Property's initial rehabilitated assessed value, the City Assessor's office chose to apply the cost approach to valuation, determining the Property's value in accordance with the cost of the rehabilitation$63.8 million. The difference between the two amountsalmost $22 millionis, as argued by the Taxpayers, attributed to market appreciation. Thus, based on the evidence presented, the Property's initial rehabilitated assessed value was limited to the cost of the rehabilitation and did not include market appreciation. In sum, we hold that the circuit court did not err in holding that the Chandler policy was inconsistent with City Code § 27-83, because that ordinance requires that a property's first assessed value after rehabilitation be used to determine the amount of a partial exemption. We further hold that the Taxpayers were not given a partial exemption that was greater than the increase in assessed value resulting from rehabilitation, because the first assessed value after rehabilitation did not include market appreciation. [5]