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On January 8, the Virginia Supreme Court announced its opinion reversing a Circuit Court decision and dismissing a case against a Hirschler Fleischer client related to efforts by a locality to force a sale of property to pay outstanding assessments of a Community Development Authority.  Real estate taxes levied by the locality were not sufficiently delinquent to allow the locality to initiate a tax sale.  Representing the landowner, we argued that a suit to collect CDA assessments could only be brought “at the same time and in the same manner” as the locality collects on its own real estate tax assessments.  Thus, the suit was premature and should be dismissed.

Justice Millette, writing for the majority, undertook an in-depth discussion of the statutory framework surrounding the imposition of “special taxes” and “special assessments” on real estate and the enforcement mechanisms available with respect to each.  Importantly, the opinion construes the locality’s ability to collect under the typically cited provision, § 15.2-5158(A)(3), to be limited to “special taxes;” and that “special assessments” are subject to a different statutory provision, § 15.2-5158(A)(5), which has no independent enforcement mechanism.

Significantly, the Virginia Code contains a provision, § 58.1-3965.1, which would allow a locality to separate collection of its own taxes and CDA assessments.  However, this Code section requires activation by local ordinance and the locality in this case had not done so.  Absent such activation by local ordinance, the Virginia Code does not authorize collection of CDA assessments by suit.  This case, argued by John Walk and briefed by Jaime Wisegarver, will have broad application to CDA’s throughout the Commonwealth of Virginia.

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Heather A. Scott

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