State Supreme Court overturns taxation, valuation decision of WVU apartment

By Russell Boniface | Nov 10, 2016

CHARLESTON -- The West Virginia Supreme Court overturned a decision by a Monongalia County judge Oct. 26 in a case involving the taxation and valuation of a West Virginia University apartment complex.

The case involves University Park at Evansdale, an on-campus apartment that was developed as a public-private partnership between WVU and developer University Park at Evansdale, LLC. University Park at Evansdale agreed to a 40-year lease with WVU, the property owner, and is expected to pay around $90 million in rent over the lifetime of the lease.

In January 2015, Monongalia County Assessor Mark Musick assessed University Park’s leasehold interest on the property at $9 million. University Park disagreed with that valuation, arguing its interest should be valued at $0. University Park appealed the assessment to the Monongalia County commissioners, which acted as the Board of Equalization and Review.

University Park argued Musick didn’t follow the state tax commissioner’s method for assessing leasehold interest. The board determined it was a taxability issue—whether the lease can be taxed at all when valued at $0—rather than a valuation issue, and is reviewable only by the state tax commissioner and, therefore, beyond its jurisdiction.

University Park appealed the decision to the circuit court. The circuit court agreed with the board’s conclusion that when leasehold interest is valued at $0 the challenge should be one of taxation rather than valuation. Judge Lawrence Miller upheld the board’s decision and denied University Park’s appeal, agreeing the board had no jurisdiction to review the case and that it, instead, needed a ruling from the state tax commissioner.

The case was appealed to the state Supreme Court, which reversed the circuit court’s decision, holding the circuit court was erroneous in concluding the case was a taxability issue and ordering the circuit court to rehear the case with instructions to argue the valuation assessment of the leasehold interest, not the taxability.

“Because the lower court did not address this issue of whether the lease has separately assessable value, we have no factual determinations upon which to base any review of this issue,” the Supreme Court opinion said. “Absent these necessary factual rulings, we cannot perform any meaningful appellate review of this issue.”

“We are obviously very pleased with the Supreme Court’s thorough and thoughtful ruling,” plaintiff attorney James A. Walls of Morgantown-based Spilman Thomas & Battle told The West Virginia Record. “While the case is not officially over, the recent decision is a huge step in that direction. We will have more to say about this case when it is officially over.”

The case is of interest to West Virginia county commissioners because it was based on a public-private partnership between WVU and the county. WVU entered into the public-private agreement with University Park at Evansdale in an attempt to address declining support from state tax dollars and to stay competitive.

“This is still in litigation and no comments are available at this time,” Monongalia assessor Musick said in an email to The West Virginia Record.

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