The Joint Subcommittee to Study Real Property Tax Relief for Persons who Rehabilitate Their Property was established pursuant to House Joint Resolution Number 127 of the 1978 Session of the General Assembly.

The membership was composed as follows: Delegate C. Richard Cranwell, Vinton; Delegate Ray L. Garland, Roanoke; Delegate Evelyn M. Hailey, Norfolk; Delegate Franklin P. Hall, Richmond; Delegate Johnny S. Joannou, Portsmouth; Delegate Robert E. Washington, Norfolk; Senator William B. Hopkins, Roanoke; Senator Madison E. Marye, Shawsville; Senator J. Harry Michael, Jr., Charlottesville; Senator Frank W. Nolen, New Hope; Senator William F. Parkerson, Jr., Henrico; Senator Edward E. Willey, Richmond.

Delegate Hall and Senator Parkerson were elected Chairman and Vice-Chairman, respectively.

Staff assistance was provided by the Division of Legislative Services, through E. M. Miller, Jr., Jill M. Pope and John A. Garka, and the Office of the Clerk of the House of Delegates.

The charge of the Joint Subcommittee was to· study, propose, and draft enabling legislation for the proposed constitutional amendment allowing tax relief for renovated, rehabilitated, or replaced property. The amendment was initiated by House Joint Resolution No. 177 in 1977 (Appendix A). The second reference was embodied in House Joint Resolution No. 15 in 1978 (Appendix B). The amendment was overwhelmingly approved by the voters on November 7, 1978 by a vote of 690,479 to 324,236.

Tax incentives for the rehabilitation of real property was first seriously considered in Virginia in 1976 when the General Assembly enacted sections 58-759.1 and 58-759.2. These statutes set up rehabilitated residential property and rehabilitated industrial and commercial property as separate classifications. for taxation purposes allowing a county, city or town to set a real estate tax for these classes at a rate lower than the rate for all other real property. Residential property was required to be 30 years of age or older and improved to such an extent as to increase the appraised value by $5,000.00 or more. Commercial and industrial property was required to be 45 years of age or older and improved to such an extent as to increase the appraised value by $25,000 or more. The reduction in the real estate tax rate for both classes had a longevity of ten years. It should be noted that the real property tax rate reduction applied to the full assessed value of the property and not just to the portion rehabilitated. The 1976 statute became effective on January 1, 1977.

Constitutional questions clouded the statutes' movement through the legislative process and primarily for this reason, only one locality has adopted an ordinance pursuant to the statute. The Hampton. ordinance which·. was adopted January 26, 1977, to become effective January 1, 1978, placed the rate reduction at seventy-eight percent of the local real property tax rate.