Potomac Yard Special Tax Districts come under fire from local residents

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By Chris Teale (file photo)

On the surface, Alexandria City Council’s plan to help fund the Potomac Yard Metrorail station by establishing two Special Tax Districts near the proposed site is legal under Virginia law and a practice that is used regularly across the country.

But a group of residents in Potomac Yard believe that the way it has been formulated is fundamentally unfair, and have organized themselves into a committee to rally against it.

Known as the Potomac Yard Special Tax District Committee for Tax Fairness, the grassroots group is made up of around 10 members and has been in operation since March, with its first formal meeting held on March 31. They said they represent approximately 300 homes between U.S. Route 1 and Potomac Avenue, to the southwest of the site of the proposed station.

The group’s concern focuses on the fact that their community is within Tier II of the Special Tax District — taxed an extra 10 cents per $100 of valuation on their property — with the neighborhood being made up primarily of single-family residential units. Two similar communities were part of the Special Tax District’s second tier, but were able to be excluded from the district before its approval in 2011: Old Town Greens and Potomac Greens.

Group leaders said homeowners were aware that their properties may be subject to an additional tax in their closing documents, but that city officials were reticent to discuss too many details on the financing of the Metro station. They added that they are in favor of the proposed Metro station at Potomac Yard generally speaking, but find this aspect of its financing troubling.

“I think the main issue there was everybody was aware that we could have a Special Tax District … but nobody knew or was completely sure as to whether only our community was in that Special Tax District,” said member Rafael Lima. “Once we started investigating and understanding both how this tax district was constructed and why in the end only our community was included, we thought that was the wrong thing and the city was taking an unfair approach generally.”

The committee has two requests: either the city should include more nearby communities in the district or remove their neighborhood completely from the proposed district as they did with Potomac Greens and Old Town Greens.

“I think the city will be ultimately the main beneficiary from [the station],” said Lima. “The way we saw it, and if you go to the dockets of the meeting, we found evidence that as the city declared the area of public interest, there were several communities being established, among which Old Town Greens and Potomac Greens and ourselves were initially considered as part of the contributors to a portion of the Special Tax District.

“As the Special Tax District evolved, these two communities somehow managed to be excluded from the Special Tax District. The reasons are by and large applicable to us as a community.”

To try and achieve their goals, the committee said they have met one-to-one with every city councilor, and have a petition with more than 210 signatures that they presented at the public hearing. They said that residents and city councilors alike have been supportive of their point of view.

City Councilor Tim Lovain said he understands the group’s viewpoint and is sympathetic to their position. But he noted that there has yet to be a formal decision on whether the tax districts will be amended.

“As I heard them out and what they had to say, it does seem to me that it might be possible to change the taxing district in a way that maintains roughly the same level of funding in a somewhat fair way,” he said. “It’s something that’s going to take some thought, and because the taxes don’t kick in for a couple of years, we have some time. I thought they made some cogent arguments that council should consider.

“I think special tax districts are very common, perfectly legal and appropriate but sometimes the devil is in the details. We just need to figure out how you define the Special Tax District in a fair and equitable way. I certainly don’t want to do away with either of the special tax districts, but it may be possible to revisit the details.”

City Councilor Paul Smedberg took a similarly pragmatic view.

“In the beginning when the city was looking at the Metro and we knew that this was really going to happen this time, we did look at setting up two [Special Tax Districts] as a way to put together what was rather a complex financial package at the time to help finance the building of the station,” he said. “Each piece, even though it was small, was important to that puzzle. If one piece goes, it’s not complete or it falls down.

“It was very carefully crafted and there were some other decisions made, I know some other people were taken out who were already living there or had been living there for quite a while, so that’s also a concern. At the end of the day, we had to move together and move forward with something, so the current plan is what we have now.”

Time is running out for any changes, but the members are confident it can be done, and say they are willing on an individual level to continue to challenge the districts.

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2 COMMENTS

  1. It’s an unfair tax for an additional reason. The homes proposed for a special tax (including OTG and PG in earlier plans) will most likely see their property assessments go up because of the metro, and therefore they will be paying additional property taxes to the city even without the “special” tax.

  2. The current plan is only for the additional tax to apply to the houses that have been built in Potomac Yards, not elsewhere, which were purchased when the plans to move forward were clear.

    And the property tax increase due to the rise in assessments will be small, because the property tax as percent of valuation is small. The added tax is thus eminently fair, IMO.