CVAS 2, LLC v. CITY OF FREDERICKSBURG
Record No. 140505
Supreme Court of Virginia
January 8, 2015
Present: Lemons, C.J, Goodwyn, Millette, Mims, McClanahan, and Powell, JJ., and Koontz, S.J.
FROM THE CIRCUIT COURT OF THE CITY OF FREDERICKSBURG
Gordon F. Willis, Judge
In this appeal we consider whether a circuit court had authority to enter a decree of sale of real estate pursuant to a locality‘s suit to collect delinquent real estate taxes and delinquent special assessments.
I. Facts And Proceedings
The City of Fredericksburg (the “City“) created the Celebrate Virginia South Community Development Authority (the “CDA“) in 2000 by resolution, and ratified and amended that resolution in 2005. CVAS 2, LLC owns real estate located within the City‘s geographic area. The City has levied that real estate with taxes, and the local governing body has levied that real estate with special assessments for the CDA‘s benefit. CVAS 2 has not paid all these taxes and special assessments. CVAS 2 has outstanding real estate taxes dating back to the 2012 fiscal year, and has outstanding special assessments dating back to the 2009 fiscal year.
On June 13, 2013, the City brought suit against CVAS 2. The City sought to have CVAS 2‘s real estate sold in order to collect
CVAS 2 filed a motion to dismiss along with its amended answer. The motion to dismiss asserted in relevant part that the City failed to comply with
CVAS 2 timely filed a petition for appeal with this Court. We granted CVAS 2‘s single assignment of error:
1. The trial court erred in its construction of
Virginia Code §§ 15.2-5158 and58.1-3965(A) by ordering the sale of CVAS 2‘s [real estate] when taxes are less than two (2) years delinquent.
II. Discussion
A. Standard Of Review
Whether this Court has jurisdiction of an appeal is a question of law we review de novo. See Henderson v. Ayres & Hartnett, P.C., 285 Va. 556, 563, 740 S.E.2d 518, 521 (2013). Issues of statutory interpretation are questions of law we review de novo. Commonwealth v. Herring, 288 Va. 59, 66, 758 S.E.2d 225, 229 (2014).
B. The City‘s Motion To Dismiss CVAS 2‘s Appeal To This Court
Pursuant to Rule 5:4, the City filed a motion to dismiss CVAS 2‘s appeal to this Court on the basis that the circuit court‘s entry of the decree of sale was not a final order giving rise to this Court‘s jurisdiction under
Final orders, as envisioned by
The decree of sale from which CVAS 2 appeals is an interlocutory decree in a case on an equitable claim, even though that claim
As the City‘s case is a “case on an equitable claim” and does not involve an administrative agency, the Virginia Workers’ Compensation Commission, or domestic relations, this Court has jurisdiction to resolve this appeal from the interlocutory order “[r]equiring . . . title of property to be changed.”
C. Localities, Community Development Authorities, And The Imposition Of Taxes And Assessments On Real Estate
This appeal requires us to address how different governmental entities may levy and collect certain taxes and assessments on real estate. In particular, five statutory provisions allowing for such action are implicated in this dispute. “Because we do not read statutes in isolation, and because statutes dealing with a specific subject must be construed together in order to arrive at the object sought to be accomplished,” we first review these relevant statutes so that we can more readily resolve the issues on appeal. Bailey v. Loudoun Cnty. Sheriff‘s Office, 288 Va. 159, 169-70, 762 S.E.2d 763, 765 (2014) (internal quotation marks omitted).
1. How A Locality May Levy And Collect Taxes On Real Estate
In compliance with the Constitution of Virginia, the General Assembly directs that certain real estate “shall be assessed for local taxation in accordance with the provisions of [Chapter 32 of Title 58.1,
When any taxes on any real estate in a locality are delinquent on December 31 following the second anniversary of the date on which such taxes have become due . . . such real estate may be sold for the purpose of collecting all delinquent taxes on such property.
2. How A Locality May Levy And Collect Special Taxes On Behalf Of A Community Development Authority
Localities may, “by ordinance or resolution[,] create a community development authority.”
The General Assembly has established the following method for a locality to collect such special taxes:
The special taxes shall be collected at the same time and in the same manner as the locality‘s taxes are collected, and the proceeds shall be kept in a separate account and be used only for the purposes provided in this chapter.
“[I]n the same manner” means that a special tax must be collected in accordance with the procedural provisions that govern the collection of “the locality‘s taxes.” That is, how a special tax is collected is determined by the manner in which “the locality‘s taxes” are collected.
“[A]t the same time” must mean something different than “in the same manner.” To reason otherwise contravenes our repeated admonition of making any portion of a statute meaningless or surplusage. See, e.g., Idoux v. Helou, 279 Va. 548, 554, 691 S.E.2d 773, 776 (2010). The preposition “at” in this phrase is “used as a function word to indicate [a] position in time.” Webster‘s Third New International Dictionary 136 (1993). The position in time to which this phrase relates is when the locality collects “the locality‘s taxes.” That is, when a special tax is collected is determined by the time when “the locality‘s taxes” are collected.
The General Assembly coupled the collection of special taxes under
This case is illustrative. The City sought to collect delinquent real estate taxes as the type of “locality‘s taxes” serving as the prerequisite necessary to collect delinquent special taxes. Delinquent real estate taxes are collected pursuant to
3. How A Local Governing Body May Levy And Collect A Special Assessment On Behalf Of A Community Development Authority
As part of the powers the General Assembly afforded to all community development authorities, a development authority has the ability to have a “special assessment . . . imposed by the local governing body” in order to “[f]inance the services and facilities [the development authority] provides to abutting property within the district.”
The General Assembly has established the following method for a local governing body to collect such special assessments:
Notwithstanding any other provision of law, any assessments made pursuant to this section may be made effective as a lien upon a specified date, by ordinance, but such assessments may not thereafter be modified in a manner inconsistent with the terms of the debt instruments financing the improvements.
Moreover, the method in which a delinquent special assessment is collected differs significantly from the method in which a delinquent special tax is collected. Unlike
4. Additional Methods To Collect Special Taxes And Special Assessments
Finally, the General Assembly has provided additional methods to expedite the collection of special taxes or special assessments:
In addition to the authority provided by subsection A of § 58.1-3965, a locality may provide, as part of any ordinance[:]
(ii) to levy special taxes or special assessments on real property within any district covered by the community development
authority or on abutting property within the district, that proceedings be instituted to sell any such real property when any special tax or special assessment described under subdivision A 3 or A 5 of [Code] § 15.2-5158 imposed on the property is delinquent on the first anniversary of the date on which the tax or assessment became due.
Such an ordinance, as pertaining to special taxes, would separate the collection of special taxes from the default requirement under
Additionally, such an ordinance, as pertaining to special assessments, would bring the locality‘s collection of special assessments under the umbrella of Article 4 of Chapter 39 of Title 58.1. Such an ordinance would authorize the sale of the subject real estate to collect a special assessment under
D. The City‘s Suit Against CVAS 2: Collection Of Delinquent Real Estate Taxes
Having laid out the statutory framework relevant to the City‘s suit, we now turn to whether the circuit court erred in entering the decree of sale.
The City‘s suit against CVAS 2 sought, in part, collection of delinquent real estate taxes. As discussed, the sale of real estate for the collection of delinquent real estate taxes by the City is governed by
CVAS 2‘s delinquent real estate taxes date back to the 2012 fiscal year. The City‘s local ordinances provide that its fiscal year ends on June 30, and that all real estate taxes for any given fiscal year are due in two installment payments, the first on November 15 and the second on May 15. Fredericksburg City Code §§ 2-491; 70-93. The City has further explained to this Court that its fiscal year ends prior to the end of the calendar year, so that the 2012 fiscal year began on July 1, 2011 and ended on June 30, 2012. Thus, CVAS 2‘s first delinquent installment payment on its 2012 taxes occurred on November 15, 2011.
The December 31 two years following the anniversary of November 15, 2011 is December 31, 2013. Thus, the City‘s suit, filed on June 13, 2013, to collect those delinquent real estate taxes was premature and requires dismissal of the City‘s complaint as to the delinquent real estate taxes. See
A suit to sell real estate to collect delinquent taxes on that property is purely a creature of statute. See Lester Group, Inc. v. Little, 238 Va. 54, 57, 381 S.E.2d 3, 5 (1989) (“The power of a governmental entity to sell land for nonpayment of taxes is not a common law power, but arises entirely from statute.” (internal quotation marks and citation omitted)). A party‘s ability to “enforce” such a statutory right “rest[s] upon compliance with the statute.” Isle of Wight Materials Co. v. Cowling Bros., 246 Va. 103, 105, 431 S.E.2d 42, 43 (1993) (internal quotation marks and citation omitted). Because the
E. The City‘s Suit Against CVAS 2: Collection Of Delinquent “Special Assessments”
The City‘s suit against CVAS 2 also sought, in part, collection of delinquent “special assessments.”
1. Special Taxes Are Different From Special Assessments
Despite the City and CVAS 2 repeatedly acknowledging that the City was seeking to collect special assessments, both parties argued before the circuit court whether CVAS 2‘s real estate could be sold under
This confusion between special taxes and special assessments, and what statutory provisions are applicable to each type of obligation, persists on appeal. In briefs submitted to this Court, the City now refers to the delinquent special assessments as “special tax assessments,” and argues that
During oral argument, the City assured this Court that no practical difference exists between special taxes and special assessments. We disagree. The General Assembly gave these words particular and fixed meanings in the statutory scheme pertaining to community development authorities, and we must give different effect to these different statutory provisions. PKO Ventures, LLC v. Norfolk Redevelopment & Hous. Auth., 286 Va. 174, 183, 747 S.E.2d 826, 831 (2013).
Longstanding jurisprudence has distinguished between special taxes and special assessments. See 1 William Herbert Page & Paul Jones, A Treatise on the Law of Taxation by Local and Special Assessments § 4, at 4 (1909) (defining a special assessment, when used in this context, as “a charge upon
property, imposed by proper authority, usually in return for special benefits conferred upon such property by an improvement of a public character for the expense of making which the assessment is levied“); id. § 7, at 11-13 (further defining what constitutes a special assessment); id. § 35, at 59-62 (distinguishing a tax, which is a “recurring charge” that “is levied for the purpose of raising revenue for paying the expenses of the government,” from a special assessment, which is only levied “occasionally” and for purposes of paying for the “special benefits
In the context of community development authorities, the General Assembly has acted in accordance with this longstanding law by distinguishing between a special tax and a special assessment. On the one hand, a special tax must come as an “annual[]” “[r]equest” by the community development authority for the locality to “levy and collect” that tax so as to “finance the services and facilities provided by” the development authority.
2. Determining Whether An Obligation Is A Special Tax Or Special Assessment Is A Mixed Question Of Law And Fact
Determining whether a particular obligation levied against real estate is a special tax or a special assessment under the Code
As such, whether an obligation is a special tax or a special assessment for purposes of the Code is a mixed question of law and fact. See Smyth County Cmty. Hosp. v. Town of Marion, 259 Va. 328, 336, 527 S.E.2d 401, 405 (2000). The factual predicate for such a determination in this case is poorly developed. The circuit court – understandably, in light of the parties’ confusion of the issue – failed to make factual findings germane to whether the obligation in question is a special tax or a special assessment. Moreover, the parties did not brief the issue before the circuit court, and provided only a cursory discussion of the issue before this Court.
Considering the insufficiency of the record in this regard, and the parties’ continuing disagreement about this fundamental aspect of the case, we decline to make a factual finding ourselves. See Bailey, 288 Va. at 181, 762 S.E.2d at 773 (“[W]e are a court of review, not of first view.” (internal quotation marks and citation omitted)). However, we need not decide the issue, nor must we remand the case to develop such factual findings, because the circuit court erred as a matter of law in entering the decree of sale regardless of whether the delinquent special assessments are categorized as special taxes or special assessments under the Code. See D.R. Horton, Inc. v. Board of Supervisors, 285 Va. 467, 471-75, 737 S.E.2d 886, 888-90 (2013) (addressing each of the appellant‘s alternative legal arguments as applied to the same set of facts).
3. Analysis Of The “Special Assessments” As Special Taxes
The collection of a delinquent “special tax” on behalf of a community development authority is governed by
The City chose delinquent real estate taxes to be the type of “locality‘s taxes” to which the collection of these particular delinquent special taxes was coupled by operation of
4. Analysis Of The “Special Assessments” As Special Assessments
The collection of a delinquent “special assessment” on behalf of a community development authority is governed by
A suit to collect delinquent special assessments is purely a creature of statute. See Lester Group, 238 Va. at 57, 381 S.E.2d at 5. A party‘s ability to “enforce” such a statutory right “rest[s] upon compliance with the statute.” Isle of Wight Materials, 246 Va. at 105, 431 S.E.2d at 43 (internal quotation marks and citation omitted). The City, being the party asserting the statutory right which has been challenged, has the burden of proving compliance with the statutory scheme. See Moore v. Commonwealth, 155 Va. 1, 15, 155 S.E. 635, 639 (1930); see also, e.g., Glasser & Glasser, PLC v. Jack Bays, Inc., 285 Va. 358, 369-71, 741 S.E.2d 599, 605 (2013) (party asserting the statutory right to enforce a mechanic‘s lien has the burden of naming all necessary parties so as to comply with the statutory scheme).
CVAS 2 challenged the City‘s ability to file suit to collect the delinquent special assessments, and the City failed to establish that it complied with the statutes actually pertaining to the collection of special assessments. Because the City has not shown that it has strictly complied with
III. Conclusion
The General Assembly has established a comprehensive statutory scheme affording localities, local governing bodies, and community development associations the ability to levy and collect real estate taxes, special taxes, and special assessments owed to a governmental entity by a property owner, including the right to sell the subject real estate. However, the governmental authority must act pursuant to, and in compliance with, that statutory scheme in order to bring suit to collect such delinquent obligations.
We reverse the circuit court‘s judgment because the City failed to act in compliance with the relevant statutory provisions. With the City having no basis for relief under those statutes, the circuit court lacked authority to order the sale of CVAS 2‘s real estate. We will vacate the decree of sale and dismiss the City‘s suit against CVAS 2.
Reversed, vacated, and dismissed.
JUSTICE McCLANAHAN, concurring in part and dissenting in part.
CVAS 2 admitted in its answer to the City‘s complaint that the levy was a special assessment, which is exclusively controlled by subsection (A)(5) of
As indicated above, the “special assessment,” which is the sole subject of
special assessment, the legislature did not establish two different schemes
similar authority for local governments to impose “taxes or assessments” on properties located in a particular area in order to fund a variety of permitted improvements that would specifically benefit those properties).
The description of the special assessment authorized under
In City of Richmond v. Richmond-Petersburg Turnpike Authority, 204 Va. 596, 600, 132 S.E.2d 733, 736 (1963), this Court recognized that a special assessment like the one at issue here is most assuredly a tax on real estate. There, the Richmond-Petersburg Turnpike Authority contended that, as a political subdivision of the Commonwealth, it was exempt from special assessments made against it by the City of Richmond for the construction of sidewalks abutting the Authority‘s properties. The City countered that the Authority was only exempt from taxes, whereas the assessments at issue were not taxes.
Id. at 600, 132 S.E.2d at 736 (emphasis added). See City of Roanoke v. Fisher, 193 Va. 651, 654, 70 S.E.2d 274, 277 (1952) (identifying a “special
Finally, because the special assessment under
For these reasons, I would affirm the circuit court in ordering the sale of CVAS 2‘s property pursuant to
JUSTICE POWELL, with whom JUSTICE GOODWYN joins, concurring.
Although I agree with the outcome of this case, I write separately because I disagree with the majority with regard to its analysis of
As an initial matter, in my opinion the majority applies an incorrect standard of review in its analysis of the ordinance at issue in this case. The majority relies on Smyth County Community Hospital v. Town of Marion, 259 Va. 328, 336, 527 S.E.2d 401, 405 (2000), where this Court held that “application of the requirements of [a statute] is a mixed question of fact and law.” The issue in Smyth County Community Hospital was whether a property was used in a manner that “immediately and directly promote[d] the charitable purposes of the hospital,” thereby exempting that property from taxation. Id. In other words, it was necessary for us to examine the facts before we could determine whether the law applied. The question in the present case, however, is not whether the ordinance applies to CVAS 2‘s property; rather, the question is what type of obligation is created by the ordinance.
In support of its holding, the majority explains that “[d]etermining whether a particular obligation levied against real estate is a special tax or a special assessment under the Code requires evaluating the specific obligation imposed relative to the different statutory definitions.” It is unclear, however, how such a determination requires any form of factual predicate. Indeed, the majority fails to explain what factual findings, if any, a trial court could make that would be germane to the issue of whether the ordinance created a special tax or a special assessment.
Here, the plain language of the relevant ordinance unequivocally establishes that the obligation levied on the property is a special assessment. The ordinance consistently refers to the obligation as a special assessment and never once refers to it as a tax of any sort. Further, the ordinance specifically provides that the debt incurred by the CDA will be “covered by . . . special assessments pursuant to Virginia
Thus, it is readily apparent that the ordinance at issue in the present case created a special assessment. Accordingly, the majority should have limited its analysis in this case to the application of
Notwithstanding the fact that I believe the majority‘s analysis of
Thus, under this logic,
However, I believe the majority‘s analysis goes awry when it creates a “prerequisite for collecting special taxes.” Nothing in the statute indicates any such prerequisite. Indeed, such an interpretation adds an additional procedural requirement to the collection of special taxes, thus running counter to the previously established definitions of “at the same time” and “in the same manner.” Rather, the statute merely states that the locality must use the same procedural and temporal provisions that govern the collection of its other taxes.1
Furthermore, the majority fails to give proper weight to the plain language of
The majority‘s holding with regard to special taxes results in a curious taxing scheme. It makes no sense to allow a property owner to disregard special taxes with impunity, so long as he continues to pay the requisite “locality‘s taxes” on time. Indeed, it is unclear how a locality could ever collect delinquent special taxes, absent the existence of the necessary “prerequisite” delinquent “locality‘s taxes.”3
In my opinion, the ordinance unequivocally created a special assessment under
Notes
A. Each community development authority created under this article, in addition to the powers provided in Article 3 (§ 15.2-5110 et seq.) of Chapter 51 of this title, may:
. . . .
5. Finance the services and facilities it provides to abutting property within the district by special assessment thereon imposed by the local governing body. All assessments pursuant to this section shall be subject to the laws pertaining to assessments under Article 2 (§ 15.2-2404 et seq.) of Chapter 24; provided that any other provision of law notwithstanding, (i) the taxes or assessments shall not exceed the full cost of the improvements, including without limitation the legal, financial and other directly attributable costs of creating the district and the planning, designing, operating and financing of the improvements which include administration of the collection and payment of the assessments and reserve funds permitted by applicable law; (ii) the taxes or assessments may be imposed upon abutting land which is later subdivided in accordance with the terms of the ordinance forming the district, in amounts which do not exceed the peculiar benefits of the improvements to the abutting land as subdivided; and (iii) the taxes or assessments may be made subject to installment payments for up to 40 years in an amount calculated to cover principal, interest and administrative costs in connection with any financing by the authority, without a penalty for prepayment. Notwithstanding any other provision of law, any assessments made pursuant to this section may be made effective as a lien upon a specified date, by ordinance, but such assessments may not thereafter be modified in a manner inconsistent with the terms of the debt instruments financing the improvements. All assessments pursuant to this section may also be made subject to installment payments and other provisions allowed for local assessments under this section or under Article 2 of Chapter 24. All revenues received by the locality pursuant to any such special assessments which the locality elects to impose upon request of the development authority shall be paid over to the development authority for its use under this chapter, subject to annual appropriation, and may be used for no other purposes.
(Emphasis added.)
I do, however, agree with the majority that a locality is allowed to choose which of its taxes will provide the necessary procedural and temporal provisions for the collection of special taxes.
Subsection (A)(3) is not controlling in this case, in light of the provisions and application of subsection (A)(5). I note my agreement, however, with the concurring opinion‘s interpretation of the phrase “at the same time and in the same manner” in subsection (A)(3), which is the linchpin of the majority‘s analysis. More specifically, I agree that this phrase is not in reference to
Furthermore, I note that nowhere does
There is a distinction between public improvements, which benefit the entire community, and local improvements, which benefit particular real estate or limited areas of land. The latter improvements are usually financed by means of special, or local, assessments. These assessments are, in a certain sense, taxes. But an assessment differs from a general tax in that an assessment is levied only on property in the immediate vicinity of some local municipal improvement and is valid only where the property assessed receives some special benefit differing from the benefit that the general public enjoys.
Robert Kratovil, Real Estate Law § 690, at 465 (6th ed. 1974). Under the majority‘s interpretation of