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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.
STATE LAW PREVAILS?
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.