Information Charlottesville

Tax relief changes deferred until November 7

The Charlottesville City Council voted on October 17, 2022 to update the city’s transient lodging tax ordinance to reflect recent changes in Virginia law.

“The General Assembly for the last two years has made some significant changes to provision of sales tax and local transient occupancy tax to try to address various issues raised by online travel agencies and online travel platforms like AirBnB and others,” Divers said. 

Divers said Council made some changes last year, but the 2022 legislation forces the city to make new ones related to how the taxes are collected and reported. The new law allows the taxation on the total charge for a stay, such as cleaning fees.

Divers said the ordinance needed to be adopted immediately because the new online intermediaries will begin collecting local lodging taxes this month.  He added that he expects more legislative changes in three months in the next General Assembly. 

Several Councilors asked if there was anything in the update that would make it easier to police short-term rentals that are in violation of zoning. Divers said that was a separate issue related to staffing. 

“Right now, you’ve got one guy policing this, [Zoning Administrator Read Brodhead],” Divers said. “It’s very difficult for one person to do it. He operates on complaints. There aren’t many complaints for as many people who do complain about it.”

The update also prepares for a new hotel within Charlottesville’s borders.

“In anticipation of the University of Virginia opening up a hotel in town, there was a curious little exemption in the local code that exempted stays in educational institutions,” Divers said. “Our position is the lodging tax, transient occupancy tax, will be applicable to stays in that hotel when it is built.”

The new code specifies that dormitories are exempt. Ground was broken for a new 214-room hotel earlier this month with completion expected in the spring of 2025. 

A second reading of this ordinance was waived and the updates passed 5 to 0. 

Council also voted to note that collection of the city’s cigarette taxes is now handled by the Blue Ridge Cigarette Tax Board operated by the Thomas Jefferson Planning District Commission. That passed 5 to 0 with little discussion. Second reading was also waived. 

Tax relief changes deferred until November 7

There was also another vote to amend the city code related to tax relief for elderly and disabled persons. Divers said his intention had been to merge that program with the Charlottesville Housing Affordability Program (CHAP). 

“We obviously cannot merge those programs but this kind of closes the loop on this and brings the real estate tax relief program in close to inline with CHAP as we can,” Divers said. 

Changes include dropping the eligibility threshold for net worth for the non-CHAP tax relief program. There was a long discussion about the numbers being used in the various calculations and a lot of wordsmithing until Councilor Brian Pinkston raised a procedural question. 

“I’m wondering, do we feel like this whole ordinance might profit with two more weeks of conversation or do we feel like we’re close to a resolution?” Pinkston asked. 

Robertson agreed it would be good to resolve the dispute, which related to the method to be used to calculate income and eligibility. This item will come back to Council at their next meeting on November 7. But we first have to get through items from the rest of the October 17 meeting first.