City of Richmond v. SunTrust Bank, 722 S.E.2d 268

SunTrust Bank and RRHA own two Richmond properties as tenants in common with varying undivided interests.
Operating agreements grant SunTrust exclusive right to use, manage, and control the properties as if it owned the entire fee simple interest, with RRHA rights intact and no rent payable by SunTrust to RRHA.
Before 2009, the City taxed SunTrust only on its ownership interests; RRHA, as a political subdivision, was exempt from taxation.
In 2009, the City revised assessments to tax SunTrust for RRHA's ownership interests as well, adjusting 2006–2009 taxes accordingly.
SunTrust filed an Application for Correction of Erroneous Assessment; circuit court granted partial summary judgment for SunTrust, finding no authority to tax for RRHA's interests; the City appealed and the court entered a refund order.
The issue on appeal is whether the City has statutory authority to tax SunTrust for RRHA's ownership interests in the properties; the court holds it does not.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Authority to tax for RRHA interests	SunTrust contends it cannot be taxed for RRHA's ownership interests given tenancy in common and the lack of a statutory leasehold.	City argues exclusive use and possession under the operating agreements create a taxable interest in SunTrust for RRHA's share.	No statutory authority; SunTrust not taxed for RRHA interests.
Public purpose/public-exemption rationale	Property owned by RRHA is exempt; SunTrust should not be taxed for RRHA's share.	Public purpose rationale supports taxation of RRHA-owned property, not SunTrust; and current constitution/code require RRHA tax, not SunTrust.	Public purpose argument misapplied; RRHA would be taxed, not SunTrust; no authority to tax SunTrust.
Leasehold theory under Code § 58.1-3203	Operating agreements create a leasehold by SunTrust in RRHA's undivided interests.	Contends this issue is procedurally barred because the circuit court held the agreements are not leases and no error assignment was made.	Procedurally barred; no review on appeal.

City of Norfolk v. Perry Co., 108 Va. 28, 61 S.E. 867 (1908) (tenancy/possession issues; perpetual leasehold distinction)
Woodward v. City of Staunton, 161 Va. 671, 171 S.E. 590 (1933) (need statutory authority for taxation; express authority required)
Hampton Nissan Ltd. P'ship v. City of Hampton, 251 Va. 100, 466 S.E.2d 95 (1996) (tax power derived from positive legislative grants)
County of Mecklenburg v. Carter, 248 Va. 522, 449 S.E.2d 810 (1994) (statutory interpretation of taxing authority)
Commonwealth v. P. Lorillard Co., Inc., 129 Va. 74, 105 S.E. 683 (1921) (statutory construction and taxation authority)