Monongalia County won’t pursue additional litigation in public, private tax issue

MORGANTOWN — Based on a ruling issued Nov. 8 by the West Virginia Supreme Court (WVSC) and the advice of its legal counsel, Monongalia County does not intend to move forward with any additional litigation in regard to the tax liability of University Park at Evansdale (UPE).
The WVSC ruled on behalf of UPE in a multi-year legal battle with the Monongalia County Assessor’s office regarding a property assessment issued by the county for the 2015 tax year.
In a 34-page,  5-0 decision issued by Justice Beth Walker, the court said the proper valuation for the $90 million public-private student housing development near WVU’s Evansdale Campus is zero.
Even so, the assessor’s office could have pushed ahead with litigation pertaining to the 2016, 2017 and 2018 tax years.
Jay Arceneaux, of Bailey Glasser, is serving as counsel for Monongalia County Assessor Mark Musick in the matter.
“You’re not going to be able to show, because it’s the same lease, that once the Supreme Court says it’s a matter of law that this lease is not freely assignable — and that must be shown in order for it to be a taxable leasehold interest — there’s no way we can overcome that legal determination,” Arceneaux explained during a work session with Musick and the county commission. “Therefore, I can’t in good conscious recommend that we pursue anything further with UPE.”
Because the public, private leases through WVU are essentially the same, Arceneaux went on to say that legal action against another private developer, West Virginia Campus Housing, would very likely come to the same end.
In the public, private setup, the university owns the land; the property is leased to the developer, who pays for the construction of the project. The facility is then subleased back to WVU for the purposes of offering, managing and operating the student housing. As a state entity, WVU has no tax liability.
Musick assessed the lease for University Park at more than $9 million for the 2015 tax year, kicking off a legal scrum during which the case has had multiple appearances before the  Monongalia  County Commission sitting as the board of equalization and review, the Monongalia County Circuit Court and the WVSC.
Arceneaux said the decision came down to the WVSC’s interpretation of Maplewood Community, Inc. v. Craig, which provides a two-factor threshold — first, that the lease is not a bargain lease and, second,  that it is not freely assignable.
“We argued that they had to show both of those in order to prevail. The Supreme Court didn’t agree with that. The Supreme Court said if they can show one factor, then that’s good enough and it’s not a taxable leasehold interest,” Arceneaux said, adding that the WVSC also admitted to mistakenly using a document that was not part of the tax commissioner’s leasehold appraisal policy in its original Maplewood decision.
“We proved that the prior Maplewood decision was incorrectly decided and we thought that would give us a leg to stand on,” he said.
Arceneaux pointed to an amicus brief provided to the WVSC by the West Virginia Department of Commerce that indicated investments worth approximately $1.5 billion statewide were based on the precedent set by the Maplewood decision as a reason why the court would be wary to “upset the applecart” by creating a new standard.
The issue now becomes how to go about refunding taxes paid by UPE since 2015; taxes that upon the direction of the West Virginia Auditor’s Office have been distributed by the county.
According to Monongalia County Chief Tax Deputy Kelly Palmer, University Park paid $225,029.78 in the 2015 tax year alone.
She explained that those funds were distributed to the state ($892.47), the county’s general fund ($42,828.79), the county board of education ($69,239.86), the board of education excess levy ($60,638.55) the board of education bond levy ($6,816.83) and the City of Morgantown ($44,613.28).
“They all received a letter indicating how much they would be responsible for refunding if the case should go this way,” Palmer said. “They are aware of how much money they’ll need to pay back.”
Arceneaux said he’s working with counsel for UPE to draft a series of court orders that will initiate the refunding of taxes paid by UPE since 2015.
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