PRESENT: Kinser, C.J., Lemons, Millette, Mims, McClanahan, and
Powell, JJ., and Koontz, S.J.

CITY OF RICHMOND
                                          OPINION BY
v.   Record No. 102409             JUSTICE LEROY F. MILLETTE, JR.
                                         March 2, 2012
SUNTRUST BANK

         FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
                    Beverly W. Snukals, Judge

     The question presented by this appeal is whether a

municipal corporation has the authority to tax a non-exempt

entity for an exempt entity's ownership interest in property

owned by the two entities as tenants in common.    We hold that

it does not.

                               I.

                               A.

     SunTrust Bank and the Richmond Redevelopment and Housing

Authority (RRHA) own two properties – 901 and 1001 Semmes

Avenue – in the City of Richmond as tenants in common.

SunTrust holds undivided interests of 62% and 80.27%, and the

RRHA holds undivided interests of 38% and 19.73%.   To define

their rights and obligations with respect to their ownership

interests, SunTrust (then Crestar Bank) and the RRHA executed

two operating agreements, one for each property.    In pertinent

part, the operating agreements provide that SunTrust "shall

have the exclusive right to use and occupy the [properties]"

and that it "shall have sole and exclusive management and


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control over, and shall make all decisions affecting, the

business, management, leasing, operation and disposition of the

[properties], as fully and completely as if [it] owned the

entire fee simple interest[s] in the [properties] and subject

only to the rights of [the RRHA]."   The operating agreements

further provide that "[n]o rent or other charges shall be

payable by [SunTrust] or its Affiliates to the [RRHA] as a

result of their possession of the [properties]."

                                B.

     Before 2009, the City taxed SunTrust only for its

ownership interests in the properties.   (The RRHA was not taxed

for its ownership interests because property owned by a

political subdivision of the Commonwealth is exempt from

taxation under Code § 58.1-3606.)    In 2009, however, the City

determined that SunTrust was liable not only for the taxes on

its ownership interests, but also for the taxes on the RRHA's

ownership interests.   The City accordingly corrected the

assessments against SunTrust for the years 2006 through 2009 to

reflect that it was liable for taxes on both its ownership

interests and the RRHA's. 1




     1
       An assessment may only be corrected "within three years
from the last day for which such assessment is made." Code
§§ 58.1-3980(A), -3981(D).


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                                  C.

        SunTrust filed an "Application for Correction of Erroneous

Assessment of Real Property Taxes," pursuant to Code § 58.1-

3984.    On cross-motions for summary judgment, the circuit court

ruled that the City had no authority to tax SunTrust for the

RRHA's ownership interests in the properties and, consequently,

granted SunTrust partial summary judgment.    The City, while

preserving its right to appeal the circuit court's ruling, then

reached an agreement with SunTrust on the amount to be

refunded; and the circuit court entered a final order in accord

with that agreement.

        The City now appeals.

                                 II.

                                  A.

        Whether the City has the authority to tax SunTrust for the

RRHA's ownership interests in the properties is a question of

law, which we review de novo.     Marble Techs., Inc. v. City of

Hampton, 279 Va. 409, 416, 690 S.E.2d 84, 87-88 (2010).    The

factual findings made by the circuit court as to the nature of

the relationship between SunTrust and the RRHA, however, are

presumed to be correct, and will not be set aside unless they

are plainly wrong or without evidence to support them.     County

of Mecklenburg v. Carter, 248 Va. 522, 526, 449 S.E.2d 810,

812-13 (1994).


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                                 B.

     For a tax to be valid, it must be supported by express

legislative authority.    Woodward v. City of Staunton, 161 Va.

671, 673, 171 S.E. 590, 591 (1933); see also Hampton Nissan

Ltd. P'ship v. City of Hampton, 251 Va. 100, 105, 466 S.E.2d

95, 98 (1996) ("[A] city can derive its taxing power only

through positive grants of authority from the General

Assembly.").   As this Court has explained:

          "Taxes are imposed by the State in the exercise
     of its sovereign power. This power is exerted
     through the legislature, and an executive officer who
     seeks to enforce a tax must always be able to put his
     finger upon the statute which confers such authority.
     Taxes can only be assessed, levied and collected in
     the manner prescribed by express statutory authority.
     Tax assessors have no power to make an assessment
     except in the manner prescribed by law, and if the
     statute prescribes a method of assessment which is
     invalid, the assessor has no power or authority to
     adopt a method of his own which would have been legal
     if it had been prescribed by the legislature."

Woodward, 161 Va. at 673, 171 S.E. at 591 (quoting Commonwealth

v. P. Lorillard Co., Inc., 129 Va. 74, 82, 105 S.E. 683, 685

(1921)).

                                 C.

     The City advances three arguments for why it has the

authority to tax SunTrust for the RRHA's ownership interests in

the properties. 2   We address these arguments in turn and


     2
       The City makes a fourth argument, based on an expansive
reading of Code § 58.1-3200, in its reply brief. At oral


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conclude that they are either without merit or procedurally

barred.

                                  1.

     The City first contends that it has the authority to tax

SunTrust for the RRHA's ownership interests because, pursuant

to the operating agreements, SunTrust has the exclusive right to

use and possess the properties as if it were the fee simple

owner.    In making this argument, the City cites no statutory

authority; instead, it relies on City of Norfolk v. Perry Co.,

108 Va. 28, 61 S.E. 867 (1908).       There, we upheld a tax imposed

by a municipal corporation upon two perpetual leaseholders for

property owned by the municipal corporation, explaining that

the leaseholders were "the substantial and real owners of the

property" because they "ha[d] the right of possession, use and

occupation forever."    Id. at 30, 61 S.E. at 868.     In so ruling,

we observed that, "as a general rule, in the absence of a

covenant the landlord under an ordinary lease is responsible

for taxes on the property leased by him; but this general rule

can have no application to the case of a perpetual

leaseholder."    Id.

     We reject the City's argument based on Perry.       That case

is simply inapposite here because SunTrust is not a perpetual


argument, however, the City's counsel correctly conceded that
the argument runs contrary to well-established rules of
statutory construction. We therefore do not address it.


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leaseholder; indeed, it is not a leaseholder at all.      The RRHA,

as the circuit court found, did not lease the properties to

SunTrust.   Rather, the RRHA and SunTrust own the properties as

tenants in common — a fact that the City conceded below and

concedes on the first page of its opening brief.   As a tenant

in common, SunTrust has the right to use and possess the

properties without any agreement with the RRHA.    Graham v.

Pierce, 60 Va. (19 Gratt.) 28, 38 (1869) ("[E]very tenant in

common has a right to possess, use and enjoy the common

property without being accountable to his co-tenants for rents

or profits, except under the statute [now Code § 8.01-31] for

so much as he may receive beyond his just share or

proportion.").

                                2.

     Next, the City argues that it has the authority to tax

SunTrust for the RRHA's ownership interests, since SunTrust

does not use the properties for a "public purpose."    As support

for this contention, the City points to Article XIII, Section

183(a) of the 1902 Constitution of Virginia, which exempted

from taxation "property lawfully owned by counties, cities,

towns, or school districts, used wholly and exclusively for

county, city, town or public school purposes."

     We conclude that the City's "public purpose" argument is

incorrect for two reasons.   First, neither the current


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Constitution nor Code requires that property owned by a

subdivision of the Commonwealth be used for a "public purpose"

in order to be exempt from taxation.     See Va. Const. art. X,

§ 6(a)(1); Code § 58.1-3606.     Second, even if there were still a

"public purpose" requirement, that would only mean that the

RRHA — not SunTrust — could be taxed by the City.     In each of

the "public purpose" cases cited by the City, a tax was imposed

on a municipal corporation, not on a private business.     See

City of Norfolk v. Bd. of Supervisors, 168 Va. 606, 611, 192

S.E. 588, 589 (1937) (municipal-owned waterworks taxed by

county); Commonwealth v. City of Richmond, 116 Va. 69, 70-71,

81 S.E. 69, 70 (1914) (municipal-owned waterworks taxed by the

Commonwealth).

                                  3.

     Lastly, the City contends that it has the authority to tax

SunTrust for the RRHA's ownership interests in the properties

under Code § 58.1-3203, which states in relevant part:     "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."     According to the City, "[t]he

practical effect of the [operating] [a]greements was to create

a leasehold interest by SunTrust in the [RRHA's] undivided

ownership interest in the [p]roperties."




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     We find this contention procedurally barred.    In granting

SunTrust's motion for partial summary judgment, the circuit

court held that the operating agreements are not leases and

that SunTrust and the RRHA are tenants in common.   The City did

not assign error to these rulings; thus, they will not be

reviewed on appeal.   Rule 5:17(c); State of Maine v. Adams, 277

Va. 230, 241-42, 672 S.E.2d 862, 868 (2009) ("A party who asks

this Court to consider whether a circuit court's holding was

erroneous is required to assign error to the challenged holding

so that it may be identified properly for our consideration.").

                                III.

     The City has failed to "put [its] finger upon the statute

which confers" upon it the authority to tax SunTrust for the

RRHA's ownership interests in the properties.   Woodward, 161

Va. at 673, 171 S.E. at 591 (internal quotation marks and

citation omitted).    We therefore hold that it has no such

authority and will, accordingly, affirm the circuit court's

judgment.

                                                         Affirmed.




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