.jpg)
Editorial
To tax or not to tax – that is a question before Lexington and Buena Vista city councils regarding tax abatement requests made by separate entities for specific development projects.
Echelon Resources Inc. is seeking a 50 percent abatement on property taxes for 15 years for apartments the company plans to develop on formerly city-owned property on Spotswood Drive in Lexington.
The Advancement Foundation is seeking to be fully exempt from paying property taxes on the Virginia Innovation Accelerator that TAF owns and is operating out of the former Mundet-Hermetite factory building on 21st Street in Buena Vista.
When Echelon first presented an unsolicited proposal three years ago for building multi-family housing on the then city-owned Spotswood Drive property, one of the selling points was to put on the tax rolls what is one of the last developable tracts of land in Lexington.
The original proposal, presented in January of 2021, called for developing 150 apartment units in two multi-story buildings, along with accompanying amenities, on what was then a 3.3-acre site. “What we do produces new taxes, new jobs, and most importantly, highquality space,” said an Echelon spokesperson at the time. This early proposal called for razing the Piovano building that houses the Rockbridge Area Relief Association’s food pantry. RARO wound up purchasing the Piovano building and its 1-acre site to preserve the food pantry and community space within the building, which formerly housed the Lexington Rescue Squad.
A revised proposal by Echelon, presented in the spring of 2021, called for developing a three-story, 62-unit apartment complex on the remaining 2.3-acre site. Competing proposals were presented by a group of local professionals known as the Spotswood Collaborative that called for developing, variously, condominiums, townhouses and single-family dwellings. Estimates for how much real estate taxes the various proposals would generate annually ranged from $68,900 to $250,000, with the highest estimate attributed to the Echelon proposal.
Echelon is now saying that current economic conditions – rising construction costs and high interest rates – are making the development less feasible without the substantial tax break it is requesting. Echelon is looking at potential financing through Virginia Housing that would designate 20 percent, or 12 to 13 of the 62 apartment units, for affordable housing so that lower income folks would be able to rent these units.
Because affordable housing is in short supply in Lexington, this provision for adding to the available stock is an appealing aspect of this evolving proposal. However, is adding a dozen units of affordable housing to Lexington’s supply worth forgoing half of the real estate taxes on this apartment complex for 15 years? Lexington City Council members need to carefully scrutinize the numbers before making a decision on whether to grant this considerable tax break.
The tax question before Buena Vista City Council from TAF, on the other hand, seems to be a more simple and straight forward request.
The Virginia Innovation Accelerator was never conceived as a tax-making generator itself. What VIA does is spawn and cultivate start-up businesses that, after a period of time, it is hoped, will generate profits for those businesses and tax revenues for the city. Not taxing the accelerator will make it easier to keep start-up costs low for these fledgling businesses.
So, we would advise Buena Vista City Council to make TAF exempt from paying real estate taxes on its VIA property. However, individual businesses that occupy space in the TAF building should be subject to paying taxes to the city such as those for sales, meals, and machinery and tools, if applicable. Once a business is generating income, it should pay its fair share of taxes.
