TO:                 Board of Supervisors

 

FROM:           Larry W. Davis, County Attorney

 

DATE:            July 15, 2004

 

RE:                  Funding Options for Meadowcreek Parkway Interchange           

                                                                                                                                                             

 

This memorandum identifies options available to the County to assist in funding the proposed Meadowcreek Parkway interchange at the intersection of McIntire Road and the 250 Bypass.  Because the County cannot directly appropriate funds to the City of Charlottesville, the two options available are to provide funding through the joint creation of a transportation district by the County and City or the joint creation of a service district by the County and City.

 

I. Direct Appropriation of County Funds to the City of Charlottesville

 

            In Virginia the powers of boards of supervisors are fixed by statute and are limited to those conferred expressly or by necessary implication.  Arlington County v. White, 259 Va. 708, 710 (2000).  Although the Virginia Code expressly confers the power to counties to appropriate money to incorporated towns, there is no express authority to appropriate funds to a municipal corporation such as the City of Charlottesville.  Va. Code § 15.2-1202.  “To imply a particular power from a power expressly granted, it must be found that the legislature intended that the grant of the express also would confer the implied.”  Commonwealth v. County Board of Arlington County, 217 Va. 558, 577 (1977).  No power is implied unless it is reasonably necessary to effectuate an express power granted to counties.  Id.  There is no express power given to counties to build transportation improvements in a city which requires the implied power to appropriate funds to a city in order to be effectuated.  Va. Code § 15.2-950.  Therefore, it would not be proper for Albemarle County to directly appropriate money to the City of Charlottesville to fund the interchange project. 

 

II. Transportation District

 

            The Transportation District Act of 1964 enabled localities to jointly plan and develop transportation systems to promote orderly growth and development through the creation of transportation districts.  Va. Code § 15.2-4501.  Localities may create transportation districts under Title 15.2 or under Title 33.1.  The powers given to transportation districts, the processes for creating those districts, and their planning and approval processes differ under each Title.

 

 

a.       Powers of transportation districts under Title 15.2

 

            The powers of these transportation districts are set forth in sections 15.2-4515, 15.2-4518, and 15.2-4519.  A district commission manages and controls the functions of the district.  A district may construct and operate transportation facilities.  The Code defines “transportation facilities” as “all those matters and things utilized in rendering transportation service by means of rail, bus, water or air and any other mode of travel.”  § 15.2-4502.  Though much of the language of the Transportation Act refers to mass transit services, the declaration of policy in section 15.2-4501 expressly includes public highways as a mode of transport necessary for the orderly growth and development of the urban areas of the Commonwealth.  Additionally, section 15.2-4534 states that the Act is to be liberally construed to effectuate its purposes.

 

            There are several ways to fund transportation improvements in these types of districts.  The commission may enter into contracts with localities to provide transit facilities and services and can use payments under those contracts to fund construction of transportation facilities.

 § 15.2-4515(A)(4).  A locality may meet its obligation to such a contract by appropriations from general revenues or from the proceeds of a bond issue or issues.  § 15.2-4521(A).  Such contracts must specify the locality’s annual maximum obligation for payments or provide a formula to determine the locality’s payments to meet the expenses and obligations of the transportation district.  Id.  The County cannot contract a bonded debt to finance such a contract without approval by a majority vote of the county voters.  § 15.2-4521(B)(1).  Localities may appropriate funds for the administrative and other expenses and obligations of the commission, of an agency it creates, and “for such other purposes as may be specified in a law creating a transportation district.”  § 15.2-4524.  The commission may apply for and accept loans and grants of money, materials, or property from the federal government, the Commonwealth, or any agency or instrumentality thereof. § 15.2-4518(5).  Finally, a transportation district may issue bonds or other interest-bearing obligations for any of its purposes. § 15.2-4519(A)(1). 

 

            A transportation district has taxing authority only if granted such by an act of the General Assembly.  In 1980 the General Assembly authorized the imposition of a motor vehicle fuel sales tax within the localities that composed the Northern Virginia Transportation District.  1980 Va. Acts ch. 225, § 58-730.5.  Currently, the localities within the NVTD and contiguous localities that are part of a transportation district are the only localities with the power to impose a two percent sales tax on motor vehicle fuels.  Va. Code § 58.1-1720.  A locality must deposit all revenue generated by the tax into an account for the sole use of its transportation district.  § 58.1-1724. 

 

            Legislative efforts during the last session of the General Assembly to increase the fuel tax or extend it to other transportation districts failed.  Senate Bill 458E proposed increasing the sales tax from two to four percent.  It passed the Senate but was then passed by indefinitely in the House Committee on Finance.  House Bill 146E proposed extending the taxing power to transportation districts within the City of Fredericksburg and Caroline, King George, Stafford, and Spotsylvania Counties.  The House rejected the bill on a full vote.  Finally, Senate Bill 357 sought to create a transportation authority similar to the Northern Virginia Transportation Authority in each of VDOT’s nine construction districts and fund those authorities by a seven cent increase in the motor fuels tax.  Senate Bill 635 incorporated Bill 357.  It passed the Senate but was then passed by indefinitely in the House Committee on Finance. 

 

b.       Creation and procedures of transportation districts under Title 15.2

 

            Section 15.2-4504 sets forth the procedure for creation of transportation districts.  Albemarle County and the City of Charlottesville can create a multi-member district by ordinances adopted by both localities.  These ordinances would fix the boundaries of the district.  The ordinances must be filed with the Secretary of the Commonwealth and the district is created once the Secretary certifies that ordinances satisfy all legal requirements.  Alternatively, either locality could create a single jurisdiction district which the other locality could join at a later date.  § 15.2-4504(2).  Localities may withdraw from a district by resolution or ordinance.  § 15.2-4530.

            A commission consisting of the number of members the County and City agree upon would manage and control the functions of the district.  The governing bodies of each locality select the commissioners who serve at the pleasure of the appointing body.  § 15.2-4507(A). One member of the governing body can be appointed to serve as a commission member.  In addition, “[t]he Chairman of the Commonwealth Transportation Board, or his designee, shall be a member of the commission, ex officio.”  Id.

 

            The commission must follow the planning process and procedures in sections 15.2-4527 and 15.2-4528 when it decides upon a transportation plan for the district.  The commission must cooperate with the localities within the transportation district and with the Commonwealth Transportation Board (“CTB”).  The commission must transmit a proposed transportation plan or amendment to the County, the City, the CTB, and the public and then hold public hearings before adopting such proposals.  § 15.2-4528(4).

 

c.       Powers of transportation districts under Title 33.1

 

            In 1993 the General Assembly authorized localities to create transportation districts with important differences from transportation districts created under Title 15.2.  In 2004 the General Assembly specifically authorized Albemarle and Charlottesville to create a transportation district possessing the powers of those districts.  2004 Va. Acts ch. 966.  A district commission for this type of transportation district has the power to construct, operate, and acquire transportation improvements.  § 33.1-452(1)-(2).  The definition of “transportation improvements” includes “any highway, or portion or interchange thereof.”  § 33.1-447. 

 

            These districts can also enter into continuing service contracts and accept funds from any available source.  § 33.1-452(4)-(5).  Localities within the district “may advance funds or provide matching funds [to the district] from money not otherwise specifically allocated or obligated.”  § 33.1-456.  These funds “may be received or generated from whatever source, including, without limitation, general revenues, special fees and assessments, state allocations, and contributions from private sources.”  § 33.1-456. 

 

            This type of transportation district does not have the authority to issue bonds.  Instead, the imposition of a property tax finances transportation improvements.  The commission may request and the localities “may levy and collect an annual special improvements tax on taxable real estate zoned for commercial or industrial use or used for such purposes and taxable leasehold interests in that portion of the improvement district within its jurisdiction.”  §§ 33.1-452(8), 33.1-453.  The maximum rate of this tax is $.25 per $100 of assessed value.  § 33.1-453.  Localities must pay the tax revenue to or at the direction of the district commission. 

 

            The commission can use this tax revenue to make payments for continuing service contracts.  § 33.1-452.  Specifically, the commission may contract with the CTB for services and pay revenues from the special improvements tax directly to the CTB.  § 33.1-454.   

 

            In 1987 the General Assembly created three chapters within Title 15.1 that provided authority for the creation of this type of transportation district.  1987 Va. Acts chs. 646, 662, 672.  These chapters were targeted specifically to Fairfax County and counties adjacent to Fairfax and are now codified as chapters 46, 47, and 48 of Title 15.2.  Only three transportation districts have been created under those chapters: those for the Rt. 234 Bypass and the Prince William Parkway in Prince William County and one for Rt. 28 in Fairfax and Loudon County.  Chapter 13 of Title 33.1, enacted in 1993, allowed creation of these districts outside those specific localities.  The new authority provided by Chapter 16 to Albemarle and Charlottesville increased the maximum rate of the special improvements tax by $.05 and changed the number of commission members.  Otherwise, the transportation districts created under Chapter 13 and 16 are the same.

 

 

d.       Creation and procedures of transportation districts under Title 33.1

 

            The creation of these districts differs from the creation of districts under Title 15.2.  The County and City may create a district by resolutions of their governing bodies.  § 33.1-448(A).  But they may do so only upon petition to each locality “of the owners of at least 51 percent of either the land area or the assessed value of land, in each locality, which (i) is within the boundaries of the proposed district and (ii) has been zoned for commercial or industrial use or is used for such purposes.”  Id.  The petition fixes the boundaries of the district, describes the proposed transportation improvements, and proposes a plan for providing them.  § 33.1-448(B).  The localities must then hold hearings in which all residents or owners of real estate in the district have the right to appear.  § 33.1-448(C).  The County and City could then pass resolutions adopting the proposed district.  § 33.1-448(D).  The localities can abolish the district only upon joint petition by the district commission and a majority of landowners in the district.  § 33.1-462.

 

            The district commission would consist of two members each from the governing bodies of Charlottesville and Albemarle as well as the Chairman of the CTB or his designee.  § 33.1-449.  Each locality must appoint six members, who own or represent commercially or industrially zoned land within the district, to a district advisory board.  § 33.1-451.  The advisory board presents an annual report to the commission on the transportation needs of the district or special reports as requested.  Id. 

 

            This district cannot construct or improve any transportation improvements without the approval of the locality in which the improvement will be located.  § 33.1-460.  Upon the commission’s request, the Commonwealth Transportation Commissioner may exercise his powers of condemnation for the purpose of acquiring property for transportation improvements within the district.  Id.

 

III. Service District

 

a.       Powers of service districts

 

            Localities may create service districts “to provide additional, more complete or more timely services of government than are desired in the locality or localities as a whole.”    § 15.2-2400.  Localities have the power to provide transportation and transportation services within a service district.  § 15.2-2403(2).  A recent amendment to section 15.2-2403(2) expressly states that “transportation and transportation services” includes “road construction.”   2004 Va. Acts ch. 810.  This amendment became effective on July 1, 2004.  The amendment also provides that any roadway created under this power “that will be operated or maintained by [VDOT] shall be established with the involvement of the governing body of the locality and meet the appropriate requirements of the Department.”  Id. 

 

            Localities may acquire facilities, equipment, and real estate to construct roads within a service district.  §15.2-2403(3).  Localities may contract with any person, municipality, or state agency to construct and maintain roads within service districts.  §15.2-2403(4).   

 

            There are various funding alternatives for a service district.  Localities may make payments to a service district under a contract between the locality and the district to provide services.  §§ 15.2-2403(12), 15.2-950.  Localities may levy and collect an annual tax upon any property within the district to pay the expenses of providing services such as road construction.  § 15.2-2403(6).  Localities must expend these tax proceeds “in the district in which raised.”  Id.  Service districts may “accept the allocation, contribution or funds of, or to reimburse from, any available source, including, but not limited to, any person, authority, transportation district, or state or federal agency” for costs of construction.  § 15.2-2403(7). 

 

A locality cannot obligate its general tax revenues or pledge its full faith and credit to finance, construct, or operate facilities and services within the district.  § 15.2-2403(12).  Article VII, § 10(b) of the Constitution of Virginia prohibits localities from contracting debt unless the proposed debt is authorized by general law and approved by referendum.  The payment of tax revenue to a service district cannot be unrelated to the services performed by the district.  A contract with a service district “to provide specified services for a fixed amount paid annually or semiannually, or on a ‘cost-plus’ basis not to exceed revenue from the service district tax, or on some other basis,” would be constitutional.  2002 Op. Att. Gen. Va. 34 (May 13, 2002).  

 

b.       Creation and procedures of service districts

 

            Albemarle and Charlottesville can create a service district by concurrent ordinances adopted after they hold public hearings.  § 15.2-2400.  The ordinances must (1) name and describe the boundaries of the proposed district, (2) describe its purposes and the facilities and services proposed within the district, (3) describe a proposed plan for providing such facilities and services, and (4) describe the benefits which can be expected from the provision of such facilities and services.  § 15.2-2402. 

 

            The localities would have the option to create a development board or other body to control and manage the projects within a service district.  §15.2-2403(9).  The enacting ordinances would define the powers of a development board.  The power to control development boards and to define the purpose and plans of a service district gives localities substantial control over the projects within a district as well as the duration of the service district itself. 

 

IV. Summary

 

            Albemarle County cannot directly appropriate funds to the City of Charlottesville to fund transportation improvements in the City because counties lack the express or necessarily implied authority to appropriate funds to cities for this purpose. 

 

            Titles 15.2 and 33.1 essentially provide the option to create two different types of transportation districts.  Albemarle and Charlottesville can create a transportation district under Title 15.2 by ordinance.  This district could fund road construction using funds the City or County appropriate to it, from bonds issued by the district, or from bonds issued by either locality to meet its obligation under a contract with the district. 

 

            Albemarle and Charlottesville can create a transportation district under Title 33.1 only upon petition of a majority of industrial and commercial landowners in the proposed district.  This district would not have the power to issue bonds but could fund road construction through the imposition of a special improvements tax upon industrially and commercially zoned land within the district.  The maximum rate of the tax would be $.25 per $100 of assessed value.  It is unlikely that this type of transportation district would be a practical option for the interchange project. 

 

            An additional motor vehicle fuel sales tax would be available to fund construction in either type of transportation district only if the tax is approved by the General Assembly.

 

            Albemarle and Charlottesville can create a service district by ordinance.  A service district can fund road construction from a tax on property within the district, money appropriated to it by the localities, or by payments for services the district renders under a contract with the localities.

            A joint transportation district pursuant to Title 15.2 or a joint service district created by the County and City could be viable vehicles for the County to assist in funding a Meadowcreek  Parkway interchange project in the City.

 

Attachment 1

 

POWERS AND PROCEDURES OF TRANSPORTATION AND SERVICE DISTRICTS

 

 

Transportation District – Title 15.2

Transportation District – Title 33.1

Service District

Procedure for Creation of District

Ordinance passed by both localities fixes the boundaries.

 

§ 15.2-4504

Resolution upon petition of 51% of commercial and industrial land-owners within district.

§ 33.1-448(A)

Ordinances passed by both localities fix its boundaries and create a plan for the district.

§ 15.2-2400, -2402

Dissolution of District

Individual localities can withdraw from district by ordinance.

 

§ 15.2-4530

Only upon petition of the district commission and 51% of landowners within the district.

§ 33.1-462

The ordinance creating the district can define its duration.

 

§ 15.2-2400

Managing Authority

Commission: number of members from each locality is set out in ordinance; the Chair of the CTB is a member.  One BOS member may be appointed.

§§ 15.2-4506, -4507

Commission: consists of two members of the BOS and City Council and the Chair of the CTB.

 

 

 

§ 33.1-449

Optional: localities can manage directly or create a development board or other body.  The CTB is not a member on the board.

 

§15.2-2403(9)

Power to Contract with Localities to Finance District

Yes

 

§ 15.2-4515(A)(4)

Yes; may contract with the CTB also.

§ 33.1-452(4), -454

Yes.

 

§15.2-2403(4), (12)

Power of District to Issue Bonds

Yes.

§ 15.2-4519(A)(1)

No.

No.

Power of County to Issue Bonds

Yes, subject to approval by referendum

Power of Locality to Impose an Additional Property Tax to Finance the District

No.

Yes: the commission can request and the locality may impose a special improvements tax.  Max rate of $.25 per $100.

§§ 33.1-452(8), -453

Yes: rate to be determined by the locality

 

 

§ 15.2-2403(6)

Power of Locality to Appropriate Funds to the District

Yes.

 

 

§§ 15.2-4521(A), 15.2-4524

Localities may advance funds (that must be reimbursed) or provide matching funds.

§ 33.1-456, -457

Yes.

 

 

 

§ 15.2-2403(7)

Power of District to Exercise Eminent Domain

Yes.

 

§ 15.2-4518(11)

The CTB can exercise its powers for the district.

§ 33.1-460

No.  Localities would have to exercise this power

Power of District to Accept Loans/Grants from VA or the US

Yes.

 

§ 15.2-4518(5)

Yes.

 

§ 33.1-452(5)

Yes.

 

§ 15.2-2403(7)

Fuel Tax

Requires General Assembly approval.

No precedent for fuel sales tax in service districts.

 


 

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