Opinion
42009 Record No. 6589.
October 9, 1967
Present, Eggleston, C.J., Buchanan, Snead, I'Anson, Carrico and Gordon, JJ.
Taxation — Payments in Lieu of Taxes — Not Required.
Prior opinion held Code provision for payments in lieu of taxes unconstitutional. Only payment of taxes properly assessed required.
Upon a Petition for Rehearing.
Denied.
Harry Frazier, III (Jack H. Spain, Jr.; Hunton, Williams, Gay, Powell and Gibson, on brief), for petitioner.
James M. Pickrell (James A. Johnson; Kellam and Kellam, on brief), for respondent.
The Industrial Development Authority of the City of Chesapeake has filed a petition for rehearing directed to Part V of the opinion handed down by this court on June 12, 1967. ( 208 Va. 51, 155 S.E.2d 326.) The Authority states in its petition that it is uncertain whether we intended to hold unconstitutional only the fourth sentence of Code, Sec. 15.1-1382 or whether we intended, as well, to hold unconstitutional the third sentence of the Code section.
The third sentence of Code, Sec. 15.1-1382 provides that a lessee of industrial authority property shall pay, as additional rent, "an amount in lieu of and equal to local property taxes and assessments." The fourth sentence of the Code section permits an authority and the political subdivision in which the facility is located to "agree at any time to a definite sum to be paid as local property taxes and assessments throughout the duration of the lease."
The Authority contends, in its petition for rehearing, that the third sentence of Code, Sec. 15.1-1382 was not challenged in this proceeding. That contention, however, overlooks the position taken by the respondent in his brief where he stated:
"Evans Products Company on the matter of taxation (its leasehold interest) is not entitled to any exemption or deviation and must be taxed upon the same basis as any other holder of a leasehold interest IN the City of Chesapeake," and where he stated that "Section 15.1-1382 insofar as it provides [quoting the third and fourth sentences] is unconstitutional."
For reasons set forth in our opinion of June 12, 1967, we held unconstitutional not only the fourth sentence of Code, Sec. 15.1-1382 but also the third sentence of that Code section, which provides for payments in lieu of taxes. We pointed out that Code, Sec. 15.1-1382 "has the effect of exempting the lessee of industrial authority property from the payment of a leasehold interest tax imposed pursuant to Code, Sec. 58-758," and "has the further effect of permitting taxation by agreement rather than by the levy and collection of taxes under general law as required by Sec. 168 of the Constitution." 208 Va., at 61, 155 S.E.2d, at 334.
The Authority, in its petition for rehearing, expresses concern that a lessee of industrial authority property may be obligated to make payments in lieu of taxes under the third sentence of Code, Sec. 15.1-1382 and to pay also the leasehold interest tax assessed under Code, Sec. 58-758. There should be no reason for such concern, however, in view of the holding in our opinion of June 12, 1967, that the provisions of Code, Sec. 15.1-1382 relating to payments in lieu of taxes are unconstitutional.
The petition for rehearing is, therefore, denied.
Rehearing denied.