Money At Stake In UA Tax Conflict

Should the University of Arkansas pay property taxes on some of its holdings in Washington County?

The university says no.

The county says yes.

It’s a complicated question that gets into what the university’s purpose is, how the state Constitution applies to a state-sponsored institution and just who should be burdened with local property taxes.

This particular question arises annually and will most likely not be fi nally answered until it reaches the Arkansas Supreme Court. Meanwhile, the UA is jumping through the required hoops to challenge the levies the county is trying to collect for itself and for cities and schools.

So far, both County Tax Assessor Jeff Williams and the Washington County Equalization Board have said the UA must pay taxes on more than $10 million in real estate and personal property the UA has asked not be taxed this year.

Washington County Judge Marilyn Johnson will get the question next. The university is expected to appeal the matter to her before an Oct. 14 deadline.

She must hold a hearing and decide by Nov. 15whether select holdings by the UA are taxable.

The $10 million in property in question is a small part of the UA’s holdings. Most UA property, whether instructional buildings or sports facilities, is not taxed.

The disputed property includes an on-campus pharmacy and convenience store, a number of on-campus eateries franchised by popular chains and a variety of property the UA has acquired and is holding for future development, including houses and apartments rented to students and others until the land is needed.

Assessor Williams put the disputed property on the tax roles a few years back after determining they should be taxed, just like similarly used, privately owned property is.

The university, through its attorneys, hasconsistently argued the university is not subject to local property taxes.

All of its property is used exclusively for the public purpose of operating a modern public university and is immune from taxation, according to Scott Varady, associate general counsel for the UA.

Each year since Williams put such property on the tax rolls, the institution has gone through the same appeals process open to any property taxpayer who doesn’t agree with a tax assessment, appealing fi rst to the Board of Equalization.

That board is made up of representatives of each of the taxing entities (the county, cities and school districts) and can exempt or alter the taxes on any given property.

If the taxpayer still disagrees, the next step is to appeal to the county judge in her capacity as judge of the Washington County Court.

Last year, when the university appealed to Judge Edwards for exemption of its property, she denied the exemptions. In January, the university took the issue to the next rung of the appeals ladder.

The university asked Circuit Judge William Storey to refund taxesthe university paid in 2010 and 2011 and to stop Washington County from taxing the university.

The lawsuit hasn’t been heard yet and will be amended to include the latest levy.

The reason for the delay is the parties agreed to wait for a similar case fi led by the University of Arkansas for Medical Sciences to be heard by the Supreme Court.

UAMS sued Pulaski County over some property on which the campus planned to build a clinic. The case got to deposition, and the county and UAMS agreed to a $9,000 settlement rather than further pursue appeal.

Presumably, the Washington County case will be reactivated to get a fi nal determination on whether this UA-owned property may be taxed.

However it is decided, the case would be a precedent-setting decision impacting all universities and colleges.

Again, there’s nothing simple about the case and an awful lot of people - pretty much everyone in Arkansas - have a stake in its eventual outcome.

BRENDA BLAGG IS A FREELANCE COLUMNIST AND LONGTIME JOURNALIST IN NORTHWEST ARKANSAS.

Opinion, Pages 10 on 09/29/2013

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