The parent group of Richmond CenterStage holds the largest delinquent property tax bill in the city.

Richmond Performing Arts Center, with a board chaired by Dominion Resources Chief Executive Tom Farrell, owes $1.75 million to the city in unpaid taxes for leases it holds on the Altria Theater and the Carpenter Center downtown.

Representatives of RPAC said Thursday they didn’t know they’d be liable for real estate taxes on the buildings when they leased them. RPAC was created as part of a public-private partnership to leverage federal historic tax credits to renovate the two theaters.

RPAC officials are asking the city to give them $1.75 million, which they say they’ll immediately give back to the city in the form of a tax payment.

Mayor Dwight Jones’ office signed off on the request. Jones’ chief of staff, Grant Neely, told a City Council committee Thursday that making the group pay its bill would lead to dramatically increased ticket prices and “deny access to a lot of folks.”

Dolly Vogt, the local head of SMG, the company hired by RPAC to operate the theaters, went further, telling council she couldn’t raise ticket prices or rents for the local nonprofit groups that use the space, such as the Richmond Symphony and the Virginia Opera.

“These nonprofits are already barely limping by,” she said. “This would be such a hardship on us.”

Style recently reported on a recent increase in rents, for which CenterStage's resident companies held a fundraiser in the form of a fall preview.

City Council members were lukewarm on the proposal. “I can’t understand how one might think that they wouldn’t be required to pay real estate taxes from a private entity,” 5th District Councilman Parker Agelasto said.

The management of the theaters is complex. The Altria Theater is owned by the EDA, while the Carpenter Center is owned by the city. Both are leased to RPAC, which hires SMG to manage operations and turns to the nonprofit CenterStage Foundation to oversee educational programs and fundraising.

Because both theaters are owned by an entity of the city, they wouldn’t be liable for real estate taxes. But state law requires tax payments on public property when it’s leased to a for-profit company, in this case RPAC. Neither nonprofits nor municipalities are eligible for the federal historic tax credits used to finance the projects.

Therese Evans, the senior vice president of RPAC, told council that when the group worked out its financials prior to both renovations, it never occurred to officials that they’d be asked to pay real estate taxes.

Neely, from the mayor’s office, called it a technicality.

Agelasto took a different view, saying the request put the city in a position where it’s “skirting federal law.”

Council members Kathy Graziano and Ellen Robertson appeared more open to the proposal, but made it clear they weren’t willing to make it an annual arrangement.

“I feel these entities might have been a little misguided in real estate law,” Graziano said.

The second highest delinquent real estate tax bill in Richmond is $264,000, owed by a company called Platinum Management, according to a list compiled by the city.