County Judge Considers University Tax Exemptions

Wednesday, November 14, 2012

— County Judge Marilyn Edwards said Tuesday she will decide sometime in the next 20 days if the University of Arkansas is immune from paying real and personal property taxes in Washington County.

Scott Varady, general counsel, and Don Pederson, vice chancellor for finance and administration, argued the university doesn’t have to pay the taxes because it is a state entity entitled to immunity under the state Constitution and Arkansas Supreme Court rulings.

At A Glance

The Case

The market value on 65 properties the University of Arkansas wants exempted from personal and real property taxes has declined from $17.9 million in 2009 to $16.6 million this year. Taxes are paid on the assessed value, which was $3.6 million in 2009 and $3.3 million in 2012.

Source: Staff Report

Assessor Jeff Williams declared 65 parcels are subject to property taxes totaling about $170,000 based on an assessed valuation of $3.3 million. The Equalization Board upheld Williams’ denial of exemption on the properties.

The university appealed the case to Edwards, who can uphold the denial or grant the exemptions. The next appeal would be in Washington County Circuit Court.

Varady said the university, under protest, paid the taxes for 2009 and 2010. If Edwards rules in favor of the university, the taxes would be refunded.

The Fayetteville School District, represented by its attorney, Rudy Moore Jr., objected to the exemptions because the district stands to lose about $130,000 as its portion of the property taxes.

Williams said the basis for denying the exemptions was the use of the property. He said there was no argument the state owned the property. The review considers the public purpose and if profit is involved, Williams said.

“There are a number of hurdles for any organization to qualify for exemptions,” Williams said. “I don’t believe the university has passed on all the hurdles.”

Pederson said the tax payments takes money away from other needs at the university, such as salaries for faculty or scholarships for students.

“Paying taxes is detrimental to the university,” Pederson said, noting the university is more challenged than ever by the demands of a larger student body.

Any profit the university may earn from food service or other auxiliary services to keep students on campus and engaged in their education go into the education program at the university, he said.