Leaders approve tax exemption for nonprofit Mid-Atlantic Broadband

By: Michael Campbell | Twitter: @itsthesoup
Posted: Dec. 30, 2017 | 3:15 p.m.

DINWIDDIE – After taking a month to wait for the entire board to be present before taking a vote, Dinwiddie supervisors unanimously approved a proposed a multi-year tax exemption to Mid-Atlantic Broadband Communities Corporation during their final meeting of 2017.

Through a 5-0 vote, supervisors approved the exemption from local property taxes to South Boston-based fiber optic network organization Mid-Atlantic Broadband Communities Corporation for a period of five years, running through tax years 2018 through 2022.

Last month, a public hearing was held on the matter, but, according to Chairman Harrison Moody, he asked that the vote be tabled until their December meeting as to allow for Supervisor Dr. Mark Moore, who was absent from the board’s November meeting, to be present to share in conversation and vote on a matter related to taxes.

In a report from Dinwiddie County Attorney Tyler Southall leading up the last week’s eventual vote in favor of the exemption, he explained that the Code of Virginia allows “local tax exemption, by ordinance, of real or personal property, or both, owned by a nonprofit organization that uses such property for religious, charitable, patriotic, historical, benevolent, cultural, or public park and playground purposes,” while requiring the local governing body, in this case, the Dinwiddie Board of Supervisors, to “strictly construe exemptions of property” and to consider a number of questions as part of the request, such as if the organization is a registered 501(c) organization, or if “the organization is providing services for the common good of the public,” among others.

According to their website, Mid-Atlantic Broadband Communities Corporation, or MBC is a nonprofit organization that is a “Virginia-based leader in creating unique public-private partnerships to build and operate open-access fiber networks,” having constructed “over 1,800 route miles of fiber in Southern Virginia to bring competition and drive down costs to accelerate digital inclusiveness.”

“The broadband capacity MBC has brought to Southern Virginia has attracted numerous companies to the region and has helped to bring more than 1,100 jobs and $2.1 billion of private sector investment to the region,” the company reported on their website. “Most notably, MBC was a critical component in securing the Microsoft data center project for Southern Virginia, which has already announced more than $1.7 billion in private sector investment and 222 high-paying jobs,” referring to the Washington-based technology company’s center in the county bordering North Carolina.

According to Dinwiddie County Administrator Kevin Massengill, fiber from MBC runs along U.S. Routes 460 and 1, along with Interstate 85 in the county.

MBC is a registered 501(c)(4), which, according to the Internal Revenue Service, means “an organization must not be organized for profit and must be operated exclusively to promote social welfare.”

In regards to the tax exemption, documents show that the assessed value of the real property that was considered for the exemption totaled $2,976,800 and, based on the real estate rate of $0.79 per $100 of assessed value, an annual total of $23,516.72 would not be collected by the county for five years.

The organization’s personal property was assessed at $59,679 and, based on the personal property tax rate of $4.90 per $100 of assessed value, resulted in an annual assessment of $2,924.26 in personal property taxes that would be exempt.

According to county officials, as they worked to craft this exception with Mid-Atlantic Broadband Communities Corporation, the question was raised regarding what would happen to taxes from the bills already sent out by the county. Tax bills for the second half of 2017 were sent out during the week of September 25.

According to County Administrator Massengill, through discussions with MBC and the Dinwiddie Commissioner of Revenue Lori Stevens, it was the county’s understanding that “the taxes are owed.”

In order to address this, Massengill explained that a solution for collecting the taxes while offering a benefit to both the county and MBC has been proposed. According to the administrator, the idea is to receive the funds but, as Dinwiddie County continues to pursue funding from the Virginia Tobacco Commission as part of its joint proposal with neighboring Amelia County to help expand broadband internet access to over 90 percent of the county’s residents, the county would take those funds and “reimburse them to MBC if they could show they could work with the county’s broadband expansion effort.”

“We would be able to give those funds back and allow for further investment into Dinwiddie County,” Massengill said.

The county administrator stressed that the action would require a further vote that is expected during 2018, but supervisors see the idea as a positive for both sides.

“I think it’s a win-win,” Chairman Harrison Moody remarked. “They would have to pay the money for this year and the taxpayers would see that we are collecting the money, but we are then using the money for broadband. I think it’s a great way to do it.”

“I think we have worked through this very well to get to this point and, even with the taxes they have and us taking that to put into MBC and broadband, I am on board with this and seeing how they are going to further along broadband here in the county,” Supervisor Brenda Ebron-Bonner said.

Prior to the vote on approving the tax exemption, both Supervisors Bill Chavis and Daniel Lee said they believed the organization didn’t need to be paying taxes given that they are a registered nonprofit organization.

“I didn’t think you needed to pay taxes,” Lee remarked. “I never saw where you used private money to put fiber in the ground so I believe you should’ve been tax exempt.”

The tax exemption would run through Tax Year 2022. The idea of collecting the organization’s currently-owed taxes to re-invest in MBC and broadband expansion is expected to return before the board in 2018 but no specific timetable for the proposal’s formal presentation has been made.

Copyright 2017 by Womack Publishing
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