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Bean, Kinney & Korman Attorneys Win Virginia Supreme Court Appeal Involving Local Taxation of Transferable Development Rights

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January 9, 2017

Bean, Kinney & Korman announced that a team of its land use and litigation attorneys prevailed in a novel Virginia Supreme Court case involving a challenge to Arlington County’s real estate taxation of transferable development rights (“TDRs”).

This case involved the historically designated Wakefield Manor and Courthouse Manor properties. In 2012, Arlington County for the first time began taxing TDRs on the properties. These properties ultimately became the “sending site” for TDRs which were sold to Carr Properties in 2016 as part of the development of a new office tower at 2025 Clarendon Boulevard (the Wendy’s site).

The owners of the properties, led by Ralph Johnson, filed suit in Arlington County Circuit Court challenging the County’s new TDR tax. Jonathan C. Kinney and Zachary G. Williams led the zoning analysis and litigation efforts respectively. The trial court upheld the County’s tax after the parties filed cross-motions for summary judgment.

The owners appealed the case to the Virginia Supreme Court. In a land use and real estate taxation case of first impression, the Virginia Supreme Court accepted the appeal for a hearing before the full panel. After further briefing, Zachary G. Williams argued the appeal before the Virginia Supreme Court.

On December 22, 2016, the Virginia Supreme Court released its written decision unanimously reversing the ruling of the Circuit Court. The Court held that Arlington County did not have the authority to tax TDRs prior to the County Board’s approval of the receiving site, which in this case did not occur until March 14, 2015.       

Beyond the immediate financial remuneration for the Wakefield Manor and Courthouse Manor properties, the ruling is an important development in the fields of land use and real estate taxation in Virginia. “Transferable development rights are a cutting edge tool in Virginia land use. Our firm has been a leader in the definition, implementation, adoption and use of TDRs,” said Tim Hughes, managing shareholder of the firm. “It is exciting for us to also help our clients manage the financial interpretations and implications that follow use of these new devices.”

Additional Bean, Kinney & Korman attorneys that contributed to the victory include Jennifer Brust, Matthew G. Roberts, Richard C. Sullivan, Jr., and William Krebs.