The state Revenue Cabinet filed a brief Tuesday with the state Board of Tax Assessment Appeals saying the Madison County Property Valuation Administrator and the county assessment appeals board failed to follow its “direction and advice” in denying tax exemption to the Grand Campus residential property leased by Eastern Kentucky University.
Several statutes require PVAs and local assessment appeals board to follow the Revenue Department’s advice in assessing value and granting exemptions, the brief states.
It adds that “property owned and occupied by … an institution of education not used or employed for gain by any person or corporation” is exempt from taxes.
The department reviewed EKU’s lease before drafting its July 2014 opinion, copies of which were provided to both the university and the PVA. And the PVA’s denial of exemption was in “direct contravention” of the the department’s advice, the brief adds.
Built by private developers and leased to the university, EKU would pay more than $253,000 to local taxing entities this year on assessed value of $26 million if it is not exempt. The university’s lease requires it to pay any taxes on the property.
Local assessment board members, in denying the exemption, said a July 2014 Revenue Department letter to EKU and a July 16 conference call with the county board expressing an “opinion” did not qualify as the “advice” that state law required it to follow. The department “declined to make judicial determination,” according to the local board’s written decision.
The board also agreed with Jerry Gilbert, the attorney for both the county school and library boards, that EKU’s agreement with the Grand Campus owners resembles a conventional triple net lease.
Madison County PVA Billy Ackerman said he denied the exemption because he received no direct instructions from the Revenue Department, and he could find no reason in the state’s manual for PVAs to grant the exemption.
After the county assessment appeals board denied the exemption following a July 17 public hearing, EKU took its case to the state appeals board.
The university’s appeal states that unlike a conventional lease, its lease gives it an “equitable interest” in the property, if not outright ownership.
If the state board refuses to grant the exemption, the Revenue Department’s brief states the Grand Campus property should be assessed at $28.5 million. That was Ackerman’s original assessment, which was lowered to $26 million by the county assessment appeals board.
The school and library boards have already authorized its attorney to take the issue to a court of law if administrative appeals fail.