A riddle wrapped in an enigma

 

At a meeting of the Goochland County Audit Committee on May 2, District 5 Supervisor Ken Peterson gave an overview of the history of the Tuckahoe Creek Service District debt. Go here to view the presentation: https://www.goochlandva.us/DocumentCenter/View/9557

The TCSD was created in 2002 to foster economic development. Bonds were issued through the Virginia Resources Authority to fund construction of water and sewer trunk lines in eastern Goochland. District boundaries are roughly the Henrico line on the east, the Hanover line on the north, Rt.  6 to the south, and Manakin Road to the west.

The TCSD in purple

Not all of West Creek is part of the TCSD and not all of the TCSD is in West Creek. The Capital One Campus, for instance, was built before the TCSD was created and obtains  utilities via a different arrangement.

The machinations behind the 2002 VRA bond issue are murky. An assumption used to justify Goochland’s ability to service the debt was an expected annual growth rate of seven percent. Part of the debt is in bonds that cannot be paid off early, a sign of how poorly the first funding mechanism was structured.

The documents creating the TCSD included the levy of an ad valorem tax was levied on all of its property. Landowners in the “footprint” of the TCSD were invited to join. Some did, others declined. Inclusion in the TCSD runs with the land, no matter how many times it is subdivided. Some landowners in the TCSD have paid ad valorem tax for more than 20 years and have no prospect of utility service.

During meetings encouraging landowners to join the TCSD, the proposed ad valorem tax was 15 cents per $100 of valuation. When imposed, it was 50 cents and levied before construction began to create a “cushion” to meet debt service obligations.  The ink was barely dry on the approval documents before the county went to war with the owners of West Creek over real estate valuations of the 3,500-acre business park.

Two multi day trials challenging the 2001 West Creek assessment were held in Goochland Circuit Court. One in 2003, whose decision was overturned, resulted in a second trial in 2006. It is believed that the county spent more than $1 million in legal fees and related expenses on this litigation.

In the interim, the only development in West Creek was the CarMax headquarter complex. Indeed, West Creek resembled a nature preserve more than an economic engine. Growth in the rest of the TCSD was feeble. There were rumors that the owners of West Creek investigated putting their land into a conservation easement, which would have significantly lowered land values crippling the TCSD and county finances.

When the Great Recession kicked in, property values declined, reducing the county’s ability to service the TCSD debt. In 2011, before new supervisors, better able to understand and fix its abysmal dysfunction, took office, the TCSD had a lower rating than the Detroit sewer system.

Peterson, a retired Wall Street bond trader, used his expertise to restructure the TCSD debt to avert default and reduce the cost of debt service. The deal went from horrible to manageable, a gargantuan task.

At its start, the only residential development envisioned in the TCSD was Kinloch. The 2002 supervisors refused to even consider creation of high-density zoning districts supported by public utilities. A few years later, desperate for users of the TCSD water and sewer, residential enclaves that paid ad valorem tax were permitted.

In 2012, the supervisors approved building apartments on 60 acres of West Creek. This spurred development in The Notch, opposite Wawa on Broad Street Road. To date, the north end of West Creek includes the Retreat Apartments, Sheltering Arms Rehabilitation Hospital, the Residence Inn, medical office buildings, and Avery Point, an upscale continuing care community. A Honda dealership and medical office building west of 288 are in the development pipeline. Apartments have been added in the center and south end of West Creek, along with a couple of breweries. Mosaic, a 55+ community with about 500 homes, is under development there.

On the north side of Broad Street Road, also in the TCSD, are the Audi dealer, Drive Shack, and the county’s first Chick fil-A.

The ad valorem tax is rarely, if ever, mentioned by realtors, developers, or builders. New homeowners learn about it when they receive a “bonus” tax bill.

While the ad valorem tax is clearly shown on the county website under “taxes,” few home buyers seem to bother to research this.  Ad valorem taxes obscurely appear on settlement statements listed as “town taxes”.

Following Peterson’s presentation, residents of Parkside Village, who have a chronic and virulent case of buyer’s remorse, complained about the tax.

 (These are the people who bought homes near an active rock quarry and whined when they found out. Didn’t they investigate where all the dump trucks driving by their new homes were coming from? Haven’t they ever heard of Google Earth? They also failed to notice that Ashland Road is an industrial corridor and objected to “Project Rocky” which will also pay ad valorem tax.)

One man declared the valorem tax is “taxation without representation.” The tax was imposed in 2002 by duly elected officials of Goochland County on land voluntarily included in the TCSD. Another resident screamed about how much she was paying for water. She refused to understand that the ad valorem tax revenue is used only to service the debt on the TCSD bonds.

Wherever she came from—it’s doubtful she lived in a dwelling served by an on-site well—the municipality funded installation of public utilities whose costs were undoubtedly woven into her property tax rates.  Even with the 32-cent ad valorem tax on top of the 53-cent real estate rate, Goochland tax rates are the same as Henrico, and lower than Chesterfield’s 91 cents, and Richmond’s $1.20. Hanover uses a complicated formula for its real estate tax, which makes it difficult to compare and not very transparent.

No one likes to pay taxes. The services we need, especially at the local level, are not funded by fairy dust. The supervisors, and everyone who pays the ad valorem tax, want it to go away as soon as possible. This does not involve waving a magic wand.

Goochland should put warning signs at its border in a large, easy to read font, “Move here at your own risk.” Maybe then people would do research before they sign on the dotted line.

(Full disclosure. In 2021, GOMM World Headquarters moved to the TCSD and pays ad valorem tax.)