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2004 SESSION
042983796Be it enacted by the General Assembly of Virginia:
1. That § 58.1-3203 of the Code of Virginia is amended and reenacted as follows:
§ 58.1-3203. Taxation of certain leasehold interests.
All leasehold interests in real property which is exempt from assessment for taxation from the owner shall be assessed for local taxation to the lessee. If the remaining term of the lease is fifty years or more, or the lease permits the lessee to acquire the real property for a nominal sum at the completion of the term, such leasehold interest shall be assessed as if the lessee were the owner. Otherwise, such assessment shall be reduced two percent for each year that the remainder of such term is less than fifty years; however, no such assessment shall be reduced more than eighty-five percent. If the lessee has a right to renew without the consent of the lessor, the term of such lease shall be the sum of the original lease term plus all such renewal terms.
When any real property is exempt from taxation under Section 6 (a) (1) or (2)
or by designation under Section 6 (a) (6) of Article X of the Constitution of
Virginia, the leasehold interest in such property may also be exempt from
taxation, provided that the property is leased to a lessee who is exempt from
taxation pursuant to § 501 (c) of the Internal Revenue Code and is used
exclusively by such lessee primarily for charitable, literary, scientific, or
educational purposes. No leasehold interest of tax exempt property of a
governmental agency shall be subject to assessment for local property tax
purposes where the property (i) is leased to a public service corporation or
subsidiary thereof or , (ii) is leased to a nonstock, nonprofit corporation
whose occupation, use or operation of the tax exempt property is in aid of or
promotes the governmental purposes set out in Chapter 10 (§ 62.1-128 et seq.)
of Title 62.1, or (iii) (a) constitutes a "qualifying project", (b) the
leasehold interest of such property is held by the "operator" of the qualifying
project, and (c) such operator is actually operating the qualifying facility or
carrying on a trade or business at the location of the qualifying facility.
For purposes of this section, "qualifying project" and "operator" mean the same
as those terms are defined pursuant to the Public-Private Education Facilities
and Infrastructure Act of 2002 (§ 56-575.1 et seq.).
The provisions of this section shall not apply to any leasehold interests exempted or partially exempted by other provisions of law.