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The Virginia Appellate Lawyer’s Court of Appeals of Virginia Blog

NIMBY does not convey Standing for Tax Assessment Challenge

The Court of Appeals had a single publihsed opinion this week after having none the week before and it's not much of an opinion as Mary Pat Martin v. Ryan S. Lafountain, Commissioner of Revenue for the City of Roanoke barely tops 5 pages. But as short as it is, it still packs a punch given that the issue is whether a citizen can seek declaratory relief against the tax assessor who, according to the citizen, is arbitrarily refusing to impose business taxes on the owner and the lessee of a neighboring property. The property in question is a residential home in the Oak Hill neighborhood of Roanoke, Virginia that is being used as a "half-way house" for recovering substance abusers.

The property is pictured below in an image from Google Street View® from July of this year and appears to be a well-maintained and relatively upscale home. According to Zillow, it has 5 bedrooms, 3 baths and an estimated market value of $526,400.

Other residents of the neighborhood banded together in 2020 to block the establishment of the half-way house through a zoning challenge, which failed. The Zoning Administrator ruled that the property was compliant with the local zoning designation as a "group home" and did not require a special use permit. Some of the residents successfully applied for lower assessments of their properties after the halfway house was allowed to continue to operate in the neighborhood.

One of those residence, Mary Pat Martin, tried a different approach. Martin filed a declaratory judgment action against the Roanoke Commissioner of Revenue asserting that the property was being operated as a business and was not being properly taxed as such. The company that operates the half-way house has a clinic elsewhere in the city and is properly licensed and taxed at that location, but according to Martin the half-way house was a separate business. Now its not to much of a stretch to say that what Martin was really angling for was a court ruling that the property was being used for a comericial, not residential, purpose, thus being able to collaterally challenge the Zoning Administrator's determination that the use was permitted as a residential group home.

The Commissioner, however, was more interested in whether a private citizen had standing to bring an action seeking declaratory and injunctive relief to compel him to levy a tax. The circuit court found that Martin did not have standing and dismissed without reaching the merits of the case. The Court of Appeals, Judge Causey joined by Judges Beals and Ortiz affirms.

Martin asserted that Roanoke City Code § 19.1-3(7) and Virginia Code § 58.1-3703(7) provided standing for her action as a taxpaying resident of the city. Ordinarly merely being a taxpayer does not convey standing to challenge a governmental act as unlawful. The principal execption to this rule is where the taxpayer challenges "the legailty of expenditures by local governments." As the Court of Appeals observes, "A decision to refrain from taxing an entity is not an expenditure."

The Court goes on to say that even if the concept of standing could be extended the the failure to assess taxes, the standing conveyed to taxpayers is not general, but limited to specific instances were the taxpayer can show a particularized harm from the practice, rather than one that is sepculative or merely nominal. Here, the Court finds that Martin merely is expressing a disagreement with a policy of an elected consitutional officer, and it is well-established that the courts will not interfere with policy decisions of the elected branches.

There are several aspects of this case that trouble me. First, the case probably should have been brought as a mandamus action, though it likely would have run up against the same objections as to standing. Second, even assuming that the half-way house is a "business," it seems to clearly be part of a business that operates with a license in the city and the revenues of which are being taxed, so I am doubtful that a finding that the home was a part of a "commerical" enterprise would impact the zoning anymore than if a landlord owned and rented several residential properties in a locality, but managed those properties from a commerical office. Finally, I am doubtful that even if the Commissioner was to determine that the home was being used for a commercial purpose that this would necessarily require the City to revisit the zoning determination. I can think of several examples where a zoning ordinance would permit a commerical use in a residential zone -- indeed, there is nothing to suggest that a "group home" permitted in the zone could not be a for-profit operation.

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