Nov. 10, 2008
Supreme Court Affirms Woodlands Tax Valuation
Injects That Residents, Not Corporation, Responsible for Paying Taxes
By Tony Rutherford Huntingtonnews.net Reporter
Huntington, WV (HNN) – The West Virginia Supreme Court of Appeals has upheld Cabell County Circuit Judge John Cumming’s ruling that the Woodlands property has a value of $29,759,000.00 for the 2007 tax year. The property includes 93 acres of real estate with numerous buildings.
Attorneys for the non-profit Foster Foundation had argued that its tax-exempt status required a lower property tax assessment. One of the Foundation’s arguments was that as a non-profit corporation it must provided “continued housing for the remainder of [the life of 300 residents] and provide such housing in the form of independent living facilities, assisted living facilities, and nursing home facilities. All residents of the Woodlands are assured of continued housing regardless of their ability to pay.”
Where the Foundation argues the encumbrance of these life estates reduce the entity’s value, the court in a footnote opined: “We believe, typically , a life tenant in possession , not a remainderman, pays the property taxes due and owning on his /her interest in the property.” According to West Virginia Code 11-4-3(a)(1) (2007), “owner” for real estate assessment purposes is “the person…who is possessed of the freehold , whether in fee or for life.” Thus, if the residents of the Woodlands actually held life estates in their Woodlands residences, they, and not the Foster Foundation, would be responsible for paying the taxes at issue.”
The County Commission disputed the Foundation’s non-profit status assertions. “The Commission suggest that only one resident in the Woodland’s history has become unable to pay , and that there exists a waiting list of approximately 470 people who are interested in living at the Woodlands.”
The Foundation had challenged the “impartiality” of the Cabell County Commission to sit as a Board of Equalization, thus denying the Foundation due process. The Foundation argued that “the county commission lacks expertise in property evaluation but is extraordinarily knowledgeable about the government’s need for money, an ingrained bias that is particularly harmful to non-voting entities.”
However, the Commission asserted that in tax year 2007 of 27,000 assessed pieces of property with increased assessments only “twenty one property owners requested a hearing on their assessment, and all except one of those property owners either had their dispute resolved, did not appear for the hearing, or received a lower assessment.”
The Commission acknowledged that any conflict of interest would be “slight” as the Commission receives sixteen cents and the Cabell County Board of Education sixty seven cents…[the commission] has no real incentive to artificially inflate tax assessments.”
Foster argued that the state’s statutory procedure is unconstitutional in that “the County Commission’s interest in maximizing revenue is at odds with granting reductions in the assessment values of real estate because it would result in a reduction of the tax base. (The Foundation argued that it should be assessed at $14,859,000, which would have reduced the county’s tax base by $200,000 annually.)
Ruling that the Foundation could not show that a conflict, the WV Supreme Court relied on a U.S. Supreme Court holding that by “questioning the impartiality of a hearing tribunal…a direct pecuniary [financial] interest in the outcome” must be found. The high court cited cases involving a significant amount of money, such as where an Ohio mayor receiving additional compensation from fees and costs levied.
The opinion includes a 1972 case where a salaried mayor sitting as a judge over traffic offenses and fines was not impartial “where mayor also was responsible for accounting for village revenues which were in large part , from fines, forfeitures, costs and fees imposed by him in his mayor’s court.”
One could conceivably argue that Cabell County’s tight finances due , in part, to the Western Regional Jail costs might be arguable.
But, the West Virginia Supreme Court found “the Foundation has not proved the Cabell County Commissioner’s partiality or that their dual role as members of the Board of Equalization and Review was compromised by this alleged divided loyalty. There is no indication in the facts that the Commissioners received additional compensation for upholding the Assessor’s tax assessments or that the County Commission, itself, benefitted from this revenue.”
Based on the above, the court found that the West Virginia legislative statute constitutional.
Foster Foundation argued that court precedent was inconsistent in the burden necessary to prove an unjust amount. The Commission had advised them that “it will be necessary for you to present clear and convincing evidence which means formal appraisals and/or expert testimony by qualified people to prove that the assessment is erroneous.”
The state’s highest court held that placing this burden on the taxpayer would not violate the Fourteenth Amendment of the United States Constitution or any portion of the West Virginia Constitution.
The entity has 90 days from the ruling to petition the U.S. Supreme Court to challenge these findings. The nation’s highest court is not compelled to accept the petition. It grants only about 1% of 7,000 that it receives annually.
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Supreme Court Affirms Woodlands Tax Valuation
Injects That Residents, Not Corporation, Responsible for Paying Taxes
By Tony Rutherford Huntingtonnews.net Reporter
Huntington, WV (HNN) – The West Virginia Supreme Court of Appeals has upheld Cabell County Circuit Judge John Cumming’s ruling that the Woodlands property has a value of $29,759,000.00 for the 2007 tax year. The property includes 93 acres of real estate with numerous buildings.
Attorneys for the non-profit Foster Foundation had argued that its tax-exempt status required a lower property tax assessment. One of the Foundation’s arguments was that as a non-profit corporation it must provided “continued housing for the remainder of [the life of 300 residents] and provide such housing in the form of independent living facilities, assisted living facilities, and nursing home facilities. All residents of the Woodlands are assured of continued housing regardless of their ability to pay.”
Where the Foundation argues the encumbrance of these life estates reduce the entity’s value, the court in a footnote opined: “We believe, typically , a life tenant in possession , not a remainderman, pays the property taxes due and owning on his /her interest in the property.” According to West Virginia Code 11-4-3(a)(1) (2007), “owner” for real estate assessment purposes is “the person…who is possessed of the freehold , whether in fee or for life.” Thus, if the residents of the Woodlands actually held life estates in their Woodlands residences, they, and not the Foster Foundation, would be responsible for paying the taxes at issue.”
The County Commission disputed the Foundation’s non-profit status assertions. “The Commission suggest that only one resident in the Woodland’s history has become unable to pay , and that there exists a waiting list of approximately 470 people who are interested in living at the Woodlands.”
The Foundation had challenged the “impartiality” of the Cabell County Commission to sit as a Board of Equalization, thus denying the Foundation due process. The Foundation argued that “the county commission lacks expertise in property evaluation but is extraordinarily knowledgeable about the government’s need for money, an ingrained bias that is particularly harmful to non-voting entities.”
However, the Commission asserted that in tax year 2007 of 27,000 assessed pieces of property with increased assessments only “twenty one property owners requested a hearing on their assessment, and all except one of those property owners either had their dispute resolved, did not appear for the hearing, or received a lower assessment.”
The Commission acknowledged that any conflict of interest would be “slight” as the Commission receives sixteen cents and the Cabell County Board of Education sixty seven cents…[the commission] has no real incentive to artificially inflate tax assessments.”
Foster argued that the state’s statutory procedure is unconstitutional in that “the County Commission’s interest in maximizing revenue is at odds with granting reductions in the assessment values of real estate because it would result in a reduction of the tax base. (The Foundation argued that it should be assessed at $14,859,000, which would have reduced the county’s tax base by $200,000 annually.)
Ruling that the Foundation could not show that a conflict, the WV Supreme Court relied on a U.S. Supreme Court holding that by “questioning the impartiality of a hearing tribunal…a direct pecuniary [financial] interest in the outcome” must be found. The high court cited cases involving a significant amount of money, such as where an Ohio mayor receiving additional compensation from fees and costs levied.
The opinion includes a 1972 case where a salaried mayor sitting as a judge over traffic offenses and fines was not impartial “where mayor also was responsible for accounting for village revenues which were in large part , from fines, forfeitures, costs and fees imposed by him in his mayor’s court.”
One could conceivably argue that Cabell County’s tight finances due , in part, to the Western Regional Jail costs might be arguable.
But, the West Virginia Supreme Court found “the Foundation has not proved the Cabell County Commissioner’s partiality or that their dual role as members of the Board of Equalization and Review was compromised by this alleged divided loyalty. There is no indication in the facts that the Commissioners received additional compensation for upholding the Assessor’s tax assessments or that the County Commission, itself, benefitted from this revenue.”
Based on the above, the court found that the West Virginia legislative statute constitutional.
Foster Foundation argued that court precedent was inconsistent in the burden necessary to prove an unjust amount. The Commission had advised them that “it will be necessary for you to present clear and convincing evidence which means formal appraisals and/or expert testimony by qualified people to prove that the assessment is erroneous.”
The state’s highest court held that placing this burden on the taxpayer would not violate the Fourteenth Amendment of the United States Constitution or any portion of the West Virginia Constitution.
The entity has 90 days from the ruling to petition the U.S. Supreme Court to challenge these findings. The nation’s highest court is not compelled to accept the petition. It grants only about 1% of 7,000 that it receives annually.
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