Hanover’s Perspective

Land Use Tax Deferral Program Expanded to Include Selected Commercial & Industrial Uses

For decades now, Hanover County has had a successful land use tax program in place to encourage the conservation of land devoted to agricultural, horticultural, forest and open space uses. Countywide in 2012, there were currently 3,595 properties with 191,914 acres in the Land Use Program. In 2012, there were 242 parcels totaling 20,051 acres located inside the Suburban Services Area and which are designated on the Comprehensive Plan Land Use Map for business use (commercial, industrial or mixed use). These potentially eligible properties represent less than 10% of the land currently under the land-use tax program. The General Assembly recently amended the Code of Virginia [§58.1-3237(G)] to allow localities to permit a property owner to rezone to certain uses without requiring them to immediately leave the land use taxation program. This amendment can provide a substantial financial incentive for property owners to rezone their sites to eligible commercial and industrial use; thereby increasing the inventory of marketable sites for the development pipeline.

In response to this state legislative change, Hanover County recently adopted an expansion to its existing land-use tax program to stimulate commercial development within the suburban service area of the County. This approved expansion encourages and supports the development of suitable commercial sites by the private sector to further the economic well-being of the County.

The Land Use Program allows qualified land to be taxed on a deferred basis. Five years of qualifying real estate taxes can be deferred (with accruing interest) until there is a change to a disqualifying use. Previously, if the parcel was rezoned to anything other than its qualified agricultural use, the deferred taxes (and accrued interest) would have been due at the time of rezoning from its qualified agricultural use.

The amended program enables property, enrolled in the Land Use Program, to remain eligible –and not be immediately subject to roll-back taxes—when it is rezoned from agricultural use to specific commercial and industrial uses. The qualified uses permitted include Manufacturing, Transportation and Warehousing, Professional, Scientific and Technical Services, Hotels and Motels and Professional Offices, as described in the North American Industrial Classification System (NAICS). To increase the odds of a successful rezoning application, the land should be designated for such uses on the County’s adopted Land Use Plan map and located inside the Suburban Service Area.

With this expanded program, the deferred taxes for the rezoned property would not be required until the issuance of a building permit or when the physical attributes of the property are modified.

Currently, Hanover is home to approximately 9% of the commercial space in the metro Richmond region. The amount and quality of available and ready commercial property in Hanover is key to improving the opportunity for private sector development and investment in the County, particularly as the economy improves and the private sector is poised for activity. In a recent article in the Herald-Progress, Edwin Gaskin, Hanover County Economic Development Director, notes, “This is not going to make the whole county re-zone to commercial by any stretch of the imagination and it’s not going to immediately cause commercial investments to land on our shores. But incrementally it will move some parcels closer to that state of being ready and therefore more marketable.”

The land use taxation program is one of several Federal, State and local financial incentives and financing programs offered by Hanover County available to support eligible business attraction and expansion opportunities.

“Hanover County competes regionally for new business investment, both from the kind recruited here from out-of-town as well as business investment from the expansion of existing businesses. In both cases, that business investment must be housed somewhere – and thus, the stock and quality of available commercial property is vital to Hanover in terms of being able to host new business investment,” commented Gaskin.

For information regarding eligibility and to request forms in order to apply for the land use tax program, contact the Commissioner of Revenue at 804-365-6128. If you currently have property in the County’s land use tax program and are interested in rezoning to one of the qualified uses at this time, please contact Economic Development at 804-365-6464.