An upscale Botetourt County retirement community n Daleville that lost its tax-exempt status earlier this month owes more than $250,000 in back taxes and penalties and will owe more than $200,000 for the tax year 2007 by the end of the year.
Real estate tax exemptions for churches and religion-based, nonprofit retirement communities are common in Virginia.
But in a June 6 ruling, Circuit Court Judge Michael Irvine sided with Botetourt County, which sued The Glebe, a nonprofit retirement community in Daleville that opened in 2005 and charges six-figure entrance fees to some residents.
Irvine ruled there were no religious or benevolent aspects of The Glebe’s operations at its retirement community that warranted such a tax exemption.
James Campbell, executive director of the Virginia Association of Counties, said not-for-profit organizations, including many retirement facilities, must jump through various, well-established hoops to avoid real estate taxes.
Real estate taxation of continuing-care retirement communities is “all over the board” in Virginia, said Sandee Levin, president of the Virginia Association of Nonprofit Homes for the Aging.
Among the state’s 46 registered CCRCs, some pay real estate taxes and some don’t, she said.
There’s variability in how local taxing authorities have addressed the issue, Levin said.
The Glebe claimed its tax-exempt status through its parent company, Virginia Baptist Homes. VBH is a nonprofit organization headquartered in Culpeper that was granted a tax-exempt designation by the General Assembly in 1976. At the time, VBH was operating two CCRCs, in Newport News and Culpeper, that subsidized the cost of some residents’ care.
It still operates those facilities and another one in Richmond.
But unlike those organizations, The Glebe, which opened in August 2005, is not yet offering subsidies to residents.
Botetourt County sued The Glebe and VBH in 2006, contending that the facility’s six-figure entrance fees and upscale accommodations separated it from the average faith-based retirement homes.
County officials also said they found no religion-based operating procedures at The Glebe and no benevolent signs that the facility was admitting residents who couldn’t afford to pay their expenses to live there.
VBH argued that it had created a fund to subsidize future residents, but was not currently doing so. VBH could not show at trial that it endorsed specific religious practices at the facility or required residents or employees to be of a particular religious faith.
Two weeks ago, following a three-day trial in March, Irvine sided with the county.
The Glebe and VBH must pay just over $215,000 in back real estate taxes for the portion of 2005 that it operated and all of 2006, as well as a 10 percent late fee and 10 percent interest on the unpaid taxes. Those penalties amount to about $35,000, said Botetourt County treasurer Benton Bolton.
In October, when the county sends out its real estate tax bills, The Glebe will owe about $204,000 in taxes assessed on the facility’s land and buildings, according to Botetourt County Commissioner of the Revenue Jay Etzler.
The Glebe has been paying its personal property taxes all along, assessed on vehicles and equipment. That bill this year will amount to about $40,000, Etzler said.