Board denies tax refund to nonprofit
WOODSTOCK – Shenandoah County supervisors declined Tuesday to give a tax refund to Hupps Hill LLC.
The Board of Supervisors also decided to postpone action on the nonprofit’s request to grant an exemption from local real estate taxes for its property at 33229 Old Valley Pike in Strasburg.
Supervisors voted 4-2 against a motion to give a donation of almost $49,000 to Hupps Hill LLC – real estate taxes the organization paid to the county from 2012-2015 and the first half of this year. Several supervisors expressed concern that The Bernstein Family Foundation of Washington, D.C., does not donate to Shenandoah County-based nonprofits or charities. Hupps Hill operates as an enterprise of the foundation. The property transferred from the Wayside Museum of American History and Arts Inc. to the foundation in February 2011.
Local attorney Paul J. Neal Jr. represented Hupps Hill and appeared before the board.
Vice Chairman Richard Walker and District 1 Supervisor John R. “Dick” Neese, District 4 Supervisor Cindy Bailey and District 5 Supervisor Marsha Shruntz voted against the motion to grant the donation. Chairman Conrad Helsley and District 2 Supervisor Steven Baker voted in favor of the motion to grant the request.
“My concern here as I looked at those charities being supported (by the foundation),” Walker said. “They weren’t Shenandoah County charities and I would feel a whole lot better about it if those monies were going back into our own county. There seems to have been some confusion as to what the legal ramifications have been regarding the transfer of the property and that sort of thing.”
Walker compared the situation with one that involved a property owner forced to pay back taxes to the county because she failed to meet requirements under the land-use taxation program. Walker said the board took the stand that ignorance of the law was no excuse and she could not receive special treatment. Neal responded by saying that the foundation overlooked the fact that the property’s tax exemption was not in effect under Hupps Hill.
Helsley, who represents District 6, said Hupps Hill provides a benefit to the county and serves as home to the visitors’ center.
“We get people who come to visit Shenandoah County,” Helsley said. “They don’t put any pressure on our school system. They don’t put any pressure on social services or anything like that. … They spend money on hotels or eat in restaurants.
“From that standpoint, I think the benefit to Shenandoah County with the visitors’ center and with what is down there would be worth the donation,” Helsley added.
Bailey echoed Walker’s concerns about how much the foundation gives to nonprofits outside the county. Bailey said she would like to see some of those funds from any tax break come back to the county.
Supervisors granted a tax exemption on the property in May 2005 in the name of Wayside Museum of American History and Arts Inc. At the time the property was assessed at roughly $612,000. The property transferred to Hupps Hill LLC in February 2011. The tax exemption did not transfer and the owner began paying taxes on the property.
The 2016 real estate assessment listed the Hupps Hill property value at $1.83 million with a yearly tax revenue of approximately $11,005.
The board earlier voted 6-0 to table for an indefinite period of time the nonprofit’s request for an exemption from local real estate tax.
Walker, who represents District 3, initiated the questioning about the foundation’s reported activities in the county. Walker asked Neal if a new rental agreement had been reached between the Cedar Creek Battlefield Foundation and Hupps Hill. Neal said he did not know.
“I have no problem whatsoever in allowing a tax exemption for the battlefield foundation,” Walker said. “I do have a hesitation that the LLC is in fact merely providing rental income to the nonprofit.”
The latest financial reports the nonprofit filed with the Internal Revenue Service showed that the Bernstein Foundation made no contributions to charitable organizations based in Shenandoah County, Walker noted.
“None of this money was going to benefit our local nonprofits,” Walker said.
The vice chairman reiterated his suggestion that Hupps Hill representatives look into putting the property into a conservation easement – a move that would help reduce the tax burden on the owners.
“Right now, it almost looks like this is being used as a rental property in order to maintain future development,” Walker said.
The Bernstein Foundation remains D.C.-centric and gives $500,000-$600,000 to charity, Neal said. Leo Bernstein’s passion did lie with the valley, Neal added. The attorney said that the amount charged for rent covers the property insurance deductible.
“They’re not trying to make money off the leasing of the property,” Neal said. “The LLC was not set up as a way of doing anything other than protecting the rest of the assets of the foundation.”
Walker suggested that the board postpone the request for the exemption until the battlefield and the Bernstein Foundation come up with a long-term rental agreement.
Contact staff writer Alex Bridges at 540-465-5137 ext. 125, or firstname.lastname@example.org