The City of Richmond is stepping back from its pursuit of $56 million in real estate tax payments from VCU Health, a decision influenced by new budget language from the Virginia General Assembly. This marks a significant shift under Mayor Danny Avula, who took office this January and has indicated a preference for collaboration over legal action.
Originally, VCU Health agreed to these payments over a 25-year period linked to a downtown development project that ultimately fell through, resulting in at least $80 million in costs for the health system. Despite contractual obligations, the state budget amendments this year allowed VCU Health to halt the payments, which have been structured to compensate the city due to the high number of tax-exempt properties in the area.
Richmond’s situation is particularly pressing, as nearly 23% of its land is tax-exempt, which Mayor Avula notes costs the city approximately $63 million in potential revenue annually. During his tenure thus far, Avula has emphasized the importance of maintaining a strong partnership with both VCU and VCU Health, viewing them as essential collaborators in addressing the challenge posed by tax-exempt properties.
His approach seeks to foster constructive discussions on co-investment opportunities. Recent comments highlighted that both VCU and VCU Health have shown commitment to working toward mutually beneficial initiatives—such as Richmond’s City Center project—to enhance the city’s economic landscape.
This pivot away from litigation not only reflects a pragmatic approach from the new administration but also opens the door for future collaboration that could yield benefits for all parties involved, enhancing educational and healthcare infrastructure in the Richmond area. The decision signifies a hopeful trajectory as the city seeks to partner effectively with major local institutions for the greater good of the community.