EKU appeals tax-exemption denial
This from the
Richmond Register:
The question of
whether the Grand Campus student housing complex leased by Eastern
Kentucky University is tax exempt has reached the second level of
appeal.
At stake is more than $253,000 in revenue that local taxing districts would collect if the exemption is finally denied.
In
March, Madison County Property Valuation Administrator Billy Akerman
refused to exempt the property, assessed at $26 million, from taxes. EKU
then took its case to the county’s Board of Assessment Appeals. After a
public hearing July 17, the board upheld the PVA’s decision.
A
state statute requires local assessment boards to follow the “advice”
of the state Revenue Department. But the board concluded the “opinion”
EKU obtained from the department was not binding on it or the PVA.
In
the recording of a conversation with Revenue Department officials,
board chair John Gilliam can be heard asking for the department’s
advice. After first saying its “advice” was to exempt the property,
David Gordon, Office of Property Valuation’s executive director,
backtracked and said, “That is our opinion.”
The recording was played before the board went into closed session to deliberate.
In
a decision mailed after the meeting, the board concluded EKU’s
agreement with the Grand Campus owners resembles a conventional
triple-net lease and does not constitute the “equitable interest” the
university asserts is tantamount to ownership. Because state revenue
officials continued to offer an “opinion” rather that give “advice,”
board members said they did not believe it was binding, their statement
added.
At
the hearing, Jerry Gilbert, attorney for the Madison County School
Board and the county library board, argued against exemption, calling
the lease unexceptional.
In
its Aug. 7 appeal to the state assessments board, the university notes
its expressly asked the Revenue Department in July 2014 if the property
would be tax exempt. EKU also informed the board it submitted the lease
to state revenue officials and told them the property would not be
leased without assurance it was tax exempt.
In its opinion to
EKU, the Revenue Department stated the agreement between EKU and the
Grand Campus owners was “inconsistent with those of a convention lease.
Rather the agreement reflects an intention to transfer practical
ownership of the Property to EKU.”
Also
under the agreement, “virtually all present rights of ownership … vest
in EKU,” the opinion stated. And “the fact that Grand Campus will retain
bare legal title poses no obstacle to this interpretation.”
The
opinion noted EKU had first refusal rights if the property were to be
sold. And insurance proceeds would be shared with the university’s in
proportion to its remaining “equitable interest” if the property were
destroyed by fire or other disaster.
By Friday, the school and library boards had not responded to the university’s appeal.
After the state board’s decision, either party may take the issue to a court of law.
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