Can a Virginia county Community Development Authority finance and build a retaining wall as part of its infrastructure project?

Subject

Whether a Virginia Community Development Authority (CDA) created by a county under §§ 15.2-5152 through 15.2-5157 may finance and construct a retaining wall, even though the term "retaining wall" does not appear in § 15.2-5158's list of permissible infrastructure improvements.

Plain-English summary

Virginia counties can authorize a Community Development Authority, a special-purpose financing vehicle, when 51% of the landowners (by area or assessed value) in a tract petition for one. The CDA's job is to fund and build the infrastructure that supports development of the area, often through bond financing repaid by special assessments or tax increments. The statute lists the kinds of infrastructure a CDA can build: "roads, bridges, parking facilities, curbs, gutters, sidewalks, traffic signals, storm water management and retention systems," and more.

Delegate Wiley asked whether a retaining wall counted as eligible infrastructure for a CDA project. AG Miyares said yes, for three reasons. First, the statute uses "including, but not limited to," which in Virginia statutory construction signals a non-exhaustive list, not a closed one. Second, a retaining wall is the legal equivalent of "storm water management and retention systems" already in the list: both serve to hold back pressure (a retention system holds back water; a retaining wall holds back soil and water pressure). Third, the General Assembly amended § 15.2-5158 in 2009 to permit CDA financing of infrastructure that is "necessary or desirable," not just "necessary," which signals a broader, more permissive reading. When the developer told the delegate the retaining wall would make the development more desirable, that fit within the statute's amended scope.

The AG also flagged a practical follow-up: the opinion notes that the CDA may obtain a definitive approval of a bond financing for the retaining wall through a bond validation proceeding, which gives a court's approval of the bonds. The opinion uses the general term "bond validation proceeding" and does not cite a specific Code section for it.

What this means for you

If you are a developer working with a CDA

The opinion holds that an infrastructure item does not have to appear by name in § 15.2-5158 to be CDA-financeable, so long as it is the legal equivalent of a listed item and is necessary or desirable for the development. It reaches that result for retaining walls by treating them as the equivalent of the listed "storm water management and retention systems," relying on the statute's "including, but not limited to" language and the 2009 amendment broadening "necessary" to "necessary or desirable."

If you are a county attorney or county administrator

The opinion holds that the § 15.2-5158 list is illustrative, not exhaustive, and that an unlisted item can qualify if it is the legal equivalent of a listed item and is necessary or desirable for development or redevelopment. It applies that test only to retaining walls and does not opine on other unlisted items.

If you are a CDA board member or bond counsel

The opinion holds that a CDA may finance a retaining wall under § 15.2-5158, reasoning from the closest listed analog (retention systems) and the "necessary or desirable" standard. It notes that the CDA "may obtain a definitive approval of a bond financing for the retaining wall through a bond validation proceeding," without requiring one.

If you are a property owner near a proposed CDA district

The opinion addresses only whether a retaining wall is an eligible CDA infrastructure item; it concludes that it is, given the equivalence and "necessary or desirable" analysis. It does not address the petition's procedural requirements or any grounds for challenging the creation of a CDA.

Common questions

Q: Does the developer need to show the retaining wall is necessary, or just helpful?
A: After the 2009 amendment to § 15.2-5158, the standard is "necessary or desirable." The retaining wall does not need to be required to make the development possible; it is enough that it makes the development more desirable.

Q: What other items not specifically listed might a CDA be able to finance?
A: The opinion does not answer that question, but its reasoning suggests CDAs can finance items that are the legal equivalent of listed items. Broadband conduit might be analogized to utility infrastructure. Electric vehicle charging stations might be analogized to traffic-related infrastructure. Each requires its own analysis.

Q: Who pays for CDA infrastructure?
A: The CDA itself, which raises money through bond issuances repaid by special assessments on property within the CDA district or by tax increment financing arrangements with the locality. The locality is not on the hook for the debt unless the CDA's authorizing documents say so, but in practice some localities provide credit enhancement to help the CDA's bonds sell.

Q: What is a bond validation proceeding?
A: A proceeding in which a public body that is about to issue bonds asks a circuit court to confirm the legal validity of the bonds before they are sold. A validation order forecloses later legal challenges to the bonds, which makes them easier to sell. The opinion mentions this procedure as available to the CDA but does not cite a specific Code section for it.

Q: Can a CDA build a retaining wall on private property?
A: The retaining wall has to be infrastructure, which generally means it serves a public or development-wide purpose. A retaining wall that protects a public road or stabilizes a slope serving the entire development is clearly infrastructure. A retaining wall on a single homeowner's lot may not be, depending on its function. The CDA's petition needs to describe what the wall is for.

Q: Can a town or city CDA finance a retaining wall, or only a county CDA?
A: The opinion specifically addresses CDAs created by a county under § 15.2-5152(C). Cities and towns have their own enabling authority, and the same analysis would likely apply. Check the specific enabling section that governs the CDA in question.

Background and statutory framework

The Community Development Authority statute (§§ 15.2-5152 to 15.2-5158) was enacted to give counties and other localities a financing mechanism for infrastructure that supports new development, without putting general fund tax dollars at risk. The CDA is a separate legal entity that can issue bonds, levy special assessments within the CDA district, and own and operate the infrastructure it builds.

The petition process is owner-driven. Landowners owning at least 51% of the land area or assessed value in the proposed district petition the local governing body to create the CDA. The petition has to describe the proposed services and facilities, the plan for providing them, the proposed CDA district boundaries, the proposed financing structure, and other information specified in § 15.2-5154.

Section 15.2-5158 is the powers section. It authorizes the CDA, once created, to "finance, fund, plan, establish, acquire, construct or reconstruct, enlarge, extend, equip, operate, and maintain" infrastructure necessary or desirable for development. The 2009 amendment that added "or desirable" was important: before the amendment, the CDA could only finance infrastructure strictly necessary for the development, which forced narrow readings of the statute. After the amendment, the test is broader.

The opinion's reasoning, which uses the closest-analog method ("retaining wall is like a retention system because both hold back pressure"), is consistent with a 1980-1981 AG opinion that applied the same approach to a different infrastructure question. The combination of the broad statutory list, the "including, but not limited to" language, and the "necessary or desirable" standard gives counties and CDAs substantial flexibility.

Citations and references

Statutes:

• Va. Code Ann. § 15.2-5152 (county election to consider CDA petitions)
• Va. Code Ann. § 15.2-5153 (petition requirements)
• Va. Code Ann. § 15.2-5154 (petition contents)
• Va. Code Ann. § 15.2-5158 (CDA powers and infrastructure list)

The opinion also refers to a "bond validation proceeding" without citing a specific Code section.

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2022/22-017-Wiley-issued.pdf

Original opinion text

Best-effort transcription from a scanned PDF. Minor errors may remain; the linked PDF is authoritative.

COMMONWEALTH of VIRGINIA

Office of the Attorney General

Jason S. Miyares
Attorney General
202 North Ninth Street
Richmond, Virginia 23219
804-786-2071
Fax 804-786-1991
June 10, 2022
Virginia Relay Services
800-828-1120
7-1-1

The Honorable William D. Wiley
Member, Virginia House of Delegates
Post Office Box 2034
Winchester, Virginia 22604

Dear Delegate Wiley:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

ISSUE PRESENTED

You ask whether retaining walls constitute infrastructure that is permissible for a Community Development Authority ("CDA") created by a county pursuant to §§ 15.2-5152 through 15.2-5157 to finance, fund, plan, establish, acquire, construct or reconstruct, enlarge, extend, equip, operate, and maintain.

RESPONSE

It is my opinion that a CDA may finance, fund, plan, establish, acquire, construct or reconstruct, enlarge, extend, equip, operate, or maintain retaining walls.

BACKGROUND

You indicate that there is certain property that is suitable for development but that to make the development more desirable, a retaining wall would be necessary. You ask if a CDA is a mechanism that is appropriate for the development to use to plan, finance, construct and own a retaining wall.

APPLICABLE LAW AND DISCUSSION

Section 15.2-5152(C) of the Code of Virginia allows counties to "by ordinance[,] elect to assume the power to consider petitions for the creation of community development authorities." In a county with such an ordinance, the landowners of at least 51 percent of the land area or assessed value may petition the county to create a CDA. Among the requirements for the petition is a description of the services and facilities proposed to be "undertaken by the [CDA]" and a plan for providing the services and facilities.

Once created, the CDA is authorized to "finance, fund, plan, establish, acquire, construct or reconstruct, enlarge, extend, equip, operate, and maintain the infrastructure improvements enumerated in the ordinance or resolution establishing the district, as necessary or desirable for development or redevelopment within or affecting" the CDA district. Virginia Code § 15.2-5158(A)(1)(a) provides an illustrative list of such infrastructure "including, but not limited to . . . [r]oads, bridges, parking facilities, curbs, gutters, sidewalks, traffic signals, storm water management and retention systems . . . ." (Emphasis added.)

The basis of statutory construction is determining the intention of the legislature. The intention when using the words, "including, but not limited to" indicates that the legislature did not mean the infrastructure list was entirely exhaustive. According to Black's Law Dictionary, "including" followed by a list "typically indicates a partial list." "But some drafters use phrases such as including without limitation and including but not limited to, which mean the same thing."

In other instances where this Office has been asked to opine on whether something not on a partial list is to be included, attention was given to whether the thing to be included would be the legal equivalent of those things enumerated in the statute. It would appear that the closest equivalent to a retaining wall that is enumerated in the statute would be retention systems.

The retaining wall you reference seems to be best described as a structure that serves to block pressure such as water or sliding earth. The retention system referenced in the statute would indicate a "system" or complex unity to form a common plan, which in this case would be a "system" to hold something such as water in a canal or reservoir.

There is some similarity in purpose between a retaining wall and a retention system. Further, the General Assembly has taken a more liberal approach regarding CDA financings than was originally provided. In 2009, § 15.2-5158 was amended so that the infrastructure financed did not need to be necessary; rather, it could be necessary or "desirable" (emphasis added). When the General Assembly amends a statutory provision, there is a presumption that a change to existing law was intended.

You have indicated that the retaining wall will make the proposed development more desirable. Given that there are similarities between the retaining wall and the infrastructure specifically listed as appropriate for CDA financing and the liberal statutory language, I would conclude that the retaining wall may be financed by the CDA. I would note that the CDA may obtain a definitive approval of a bond financing for the retaining wall through a bond validation proceeding.

CONCLUSION

It is my opinion that a CDA may finance, fund, plan, establish, acquire, construct or reconstruct, enlarge, extend, equip, operate, or maintain retaining walls.

With kindest regards, I am,

Very truly yours,

Jason S. Miyares
Attorney General