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Slavery Museum cites state exemption
Nonprofit tax exemptions debated

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Date published: 6/22/2008


Many of the debates Fredericksburg's City Council members have had about the U.S. National Slavery Museum have focused on the museum's potential benefit to the city's economy and the need to tell the story of one of the darkest periods in American history.

But when council members sit down on Tuesday to consider the museum's request for a real-estate tax exemption, their discussion will likely be steeped in complex legal arguments.

City Manager Phillip Rodenberg has said the museum's 38 acres aren't eligible for a tax exemption because the museum is not using all of the land, and hasn't filed any documents to start construction on the land.

A city ordinance says Fredericksburg can grant exemptions to any nonprofit organization "that uses such property solely" for a qualifying purpose.

Rodenberg recommended that the council grant an exemption on the 0.29 acre on which the museum operates its Spirit of Freedom Garden. That would be worth $327 a year. He said further exemptions could be considered as the museum develops more of the land.

Local attorney Charlie Payne, who is representing the Slavery Museum in its request, said he thinks the city doesn't have the power to grant or deny exemptions for any museum.

He said the state has already done that.

"It comes down to whether we're exempt for the purposes of who we are, how we operate and why we're holding that property," Payne said.


Payne bases his argument on a state law that says property owned by "any nonprofit corporation organized to establish and maintain a museum" shall be exempt.

The city's ordinance is based on a more recent law that applies to exemptions granted after Jan. 1, 2003.

That same law specifically states that it doesn't apply to exemptions granted before 2003 by the code section Payne references.

Payne argues that that code section effectively grants the Slavery Museum an exemption, and therefore the city doesn't get to make its decision based on whether the museum is currently using the land.

City officials read that provision as simply grandfathering pre-existing exemptions.

Since the Slavery Museum didn't have an exemption when the law was passed, it doesn't get to argue that it has one now.

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OTHER SUPPORT Nonprofit groups don't automatically get to be exempt from local real-estate taxes just because they have tax-exempt status from the federal government.

State law says a lot about what kinds of groups are exempt, and in 2002, voters passed a constitutional amendment that shifted a lot of that power from the state to the localities.

That amendment led to the local ordinance Fredericksburg follows today.

Fredericksburg has used that ordinance to grant exemptions to the Fredericksburg Area Museum, the Thurman Brisben Homeless Shelter and three other groups. Exemptions last three years.

On the same night the Slavery Museum made its pitch for a tax exemption, the council unanimously approved the Area Museum's request for a renewal of its exemption.

The difference between the requests from the Area Museum and the Slavery Museum, City Manager Phillip Rodenberg wrote, is that the Area Museum is actively using its property. Contractors have been working there for two years, and the expansion is expected to open in November.

The Slavery Museum, by contrast, has not raised the money to build its project, and is seeking an extension on the construction start date required in one of its zoning approvals.

--Emily Battle

NONPROFIT TAX EXEMPTIONS One could argue that the U.S. National Slavery Museum was the first Celebrate Virginia project to get financial incentives from the city.

Years before the council considered controversial tax-rebate incentives for Wegmans and Kalahari Resorts, the city gave the museum $1 million to perform certain "governmental services."

That money was paid back with interest by landowners in Celebrate Virginia.

Now, City Manager Phillip Rodenberg has suggested that the council use its powers to grant economic development incentives--not a tax exemption--if it wants to give more financial aid to the Slavery Museum.

The museum's founder, former Gov. Douglas Wilder, has told council members that the three-year, $42,745-a-year tax exemption would help the museum get its long-struggling efforts to raise $200 million off the ground.

Councilwoman Debby Girvan questions that premise.

"We're looking at a $200 million museum, and they're saying that without this $130,000, they can't raise that?" she said. "I'm not following that logic."

Although almost all council members say they'd like to see more communication and a firmer game plan from the museum, a few have said they'd be willing to consider helping it financially at some point, if it appears closer to becoming a reality.

To do that, Rodenberg suggests using economic incentives governed by a performance agreement like the ones Wegmans and Kalahari have signed--not a real-estate tax exemption.

He suggested that a performance agreement would hold the museum to a set opening date, and should take into account the fact that the museum will qualify for a real-estate tax exemption when built.

--Emily Battle



Amount of annual real-estate taxes at stake with the Slavery Museum's request.


Real-estate tax bill the museum paid before this year--after the value of its property soared from $381,700 to $7.6 million in the 2007 reassessment.


Percentage of city real-estate value that is non-taxable, according to the Board of Equalization. That includes land owned by nonprofits, state agencies like the University of Mary Washington and the city.