Kansas City, Mo. – August 11, 2020 – Rouse Frets White Goss Gentile Rhodes successfully represented the Park Hill School District in a property tax case with significant financial consequences for the school district. A co-party in the case in the Circuit Court and before the Court of Appeals Western District was the Platte County Tax Assessor, represented by Bob Shaw and Stephen Magers. Grady Hotel Investments, LLC was the opposing party and appellant.
The case involved whether or not Grady Hotel Investments owed property taxes on the Marriott Hotel located within the Kansas City International Airport property. The legal question was whether, under Grady’s lease agreement (and related documents) with the City of Kansas City, Grady owned the hotel or simply had a leasehold interest. The Platte County Assessor, the Platte County Board of Equalization and a hearing officer at the State Tax Commission affirmed that Grady Hotel Investments did have to pay property taxes. However, the full State Tax Commission (STC) agreed with Grady, stating it had only a leasehold interest in the hotel, and that the leasehold interest was worth $0.
The assessor appealed the case to the Circuit Court of Platte County, where the Park Hill School District intervened. A majority of the funding for the education of students in the school district comes from property taxes, and the airport and the Marriott Hotel are in the school district boundaries. The STC decision meant that the school district would lose anywhere between $200,000 and $300,000 a year in tax revenues that Grady would not be paying. Prior to Grady’s purchase of the hotel in 2015, the previous owner had paid real property taxes yearly for decades.
The Circuit Court of Platte County reversed the decision of the State Tax Commission. Grady appealed to the Missouri Court of Appeals, Western District. The Court of Appeals held that the STC erred as a matter of law in finding that Grady had only a leasehold interest in the hotel because the plain language of the lease said Grady owned it, and because Grady owned the hotel, application of the bonus value method – finding the taxable value was $0.00 — was improper. The Court has remanded the case to the STC for reconsideration of the taxable value of the Marriott Hotel in light of the Court’s decision.
Leading the case from Rouse Frets White Goss Gentile Rhodes was Mary Jo Shaney.
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