Collegiate Times

The new medical school collaboration between Virginia Tech and Carilion Clinic is set to break ground later this month, though questions regarding the building's financing remain largely unanswered.

As with any building construction, developers are required to pay real estate taxes on land and establishments.

By agreeing to host the health care center and school, the city of Roanoke stands to make considerable profits from tax money on the planned 154,000-square-foot medical school.

However, problems have begun to circulate, as Tech will not be expected to pay taxes on the building.

Legally, the party that owns the building is responsible for paying taxes. Though this construction is cooperative between Carilion and Tech, Tech is considered the owner of the building, while Carilion owns the deed to the land.

Carilion is the legal owner of the South Jefferson Street property on which the school will sit. It has been paying property taxes on this land since it was purchased in 2001.

Tech spokesman Mark Owczarski said that because Tech is a nonprofit state agency, it is not a tax-paying entity. As such, the university has no intentions of paying real estate taxes to the city of Roanoke.

"We don't pay taxes on Burruss Hall, for example, on Slusher, or on the student union, because we are a state organization and not for profit," Owczarski said. "State schools aren't private individuals who pay taxes."

The only immediate cost that Tech expects to pay is that of construction, something covered in a $59 million grant from the state. The grant was approved last spring as part of Virginia Gov. Tim Kaine's $1.47 billion statewide college construction bond package. Public financing is what makes the building a Tech structure.

"Paying property taxes was something we wanted to be able to do from the very beginning," Eric -Earnhart said. "The goal has always been to support the city through taxes."

Earnhart said that Carilion plans to sit down with the city and discuss possible solutions. Since the building is state property, and thus not taxable, Carilion plans to cover that lost cost of taxes with Roanoke.

"We will cover the property taxes on the land, and we will come up with an equitable or appropriable amount with the city to pay what the taxes would be on the building," Earnhart said. "There won't be a tax bill for the building. We can determine what an appropriate tax amount would be though."

The present tax situation will not halt construction plans for the school, as the final financial step is to find an appropriate compensation amount.

"The school of medicine is a partnership that is going to lead to the creation of a new entity that hasn't been defined or flushed out yet," Owczarski said. "In terms of paying taxes, we may be getting ahead of ourselves since there's no building and it's all to be announced. How it will legally work, we don't know yet. It's a work in progress."

Though the funding has yet to be determined, the development agreement between Roanoke and Carilion did establish an agreement on March 19, 2001 that all properties in the project area will have to pay full real estate taxes to the city.

"At the time that we had that discussion, no one envisioned that a state-owned building would sit on that property," Earnhart said. "Now that it's become a reality, it's our intention to make sure the city receives something equal to what taxes on the building would be."

Officials in the city planning office did not return calls to the Collegiate Times.

"We do not have any information that would suggest that there would not be real estate taxes paid," Darlene Burcham said in an interview with the Roanoke Times.

Total tax estimates will not be available until the building is completed, as they are proportionate to property value, something that has yet to be determined.