Submitted: June 4, 2013
Upon Appellant's Appeal from the Decision of the Board of Assessment Review of New Castle County,
William J. Rhodunda, Jr., Esq., Rhodunda & Williams, Wilmington, Delaware, Attorneys for Appellant.
Wilson B. Davis, Esq., Assistant County Attorney, New Castle County Office of Law, New Castle, Delaware, Attorney for Appellees.
OPINION AND ORDER
The Maurice J. Moyer Academy ("Moyer Academy"), a public charter school, commenced operations in 2006 at 610 and 611 East 17th Street ("Property"). The Property originally belonged to the Sills/Moyer Education Fund until the Education Fund defaulted on its mortgage obligation to the Reinvestment Fund. After defaulting, on July 15, 2010 the Sills/Moyer Education Fund transferred the Property to Reinvestment II, a wholly-owned subsidiary of the Reinvestment Fund,  via a deed in lieu of foreclosure. Reinvestment II permitted the Moyer Academy to continue operations on the Property through a lease.
K12 Classroom DE, LLC ("K12"), which was appointed by the State of Delaware to manage the Moyer Academy, currently has a lease agreement with Reinvestment II for the Property, on which the Moyer Academy operates. Based on the current record, which does not include the lease agreement, the record does not reflect what rights, if any, the Moyer Academy has under K12's lease with Reinvestment II. The lease agreement requires an annual rent of $615, 299.44 to be paid to Reinvestment II. K12 pays this rent through funds it receives from the Department of Education. Reinvestment II contends that it does not profit from the rent because the rent is needed to maintain the Property. Additionally, Reinvestment II states that it only took title to the Property to permit the Moyer Academy to continue operating and would prefer to transfer the Property to a willing party such as the State of Delaware, but has been unable to because of the encumbrances on the land from other mortgages.
Because the Property is being used for educational purposes, Reinvestment II applied for a property tax exemption under 9 Del. C. § 8105, which applies to property that is owned by a school and used for educational or school purposes. This exemption would allow Reinvestment II to avoid paying property taxes for the land on which the Moyer Academy operates. On August 23, 2011, the New Castle County Office of Law denied Reinvestment II's application. Reinvestment II filed a timely appeal of this denial on September 22, 2011 and the Board of Assessment of Review ("Board") held a hearing about this matter on November 8, 2012. The Board's decision resulted in a two-two vote. Therefore, the Board denied Reinvestment II's appeal because a majority of the members of the Board failed to vote in favor of reversal.
II. Parties Contentions
A. Reinvestment II
Reinvestment II argues that the New Castle County attorney made misstatements of law to the Board that improperly influenced its decision, resulting in the Board denying the property tax exemption. Reinvestment II contends that the New Castle County attorney incorrectly stated in both her Letter of Opinion and presentation in front of the Board that the education exemption should be "strictly construed against the property owner." Reinvestment argues that both the education exemption, 9 Del. C. § 8105, and the exemption that is extended to fiduciaries of schools through Section 14.06.401C of New Castle County's municipal code should be construed broadly. Reinvestment II argues that if 9 Del. C. § 8105 is construed broadly, then Reinvestment II would be entitled to the education exemption from property taxes.
Reinvestment II also asserts that the New Castle County attorney erred when she stated that the exemption provided by § 8105 is limited to land that is not held by way of investment, and further asserted that Reinvestment uses the land to attempt to recoup its investment.Reinvestment II claims that it does not matter whether the Property is held by way of investment, because 9 Del. C. § 8105, it argues, allows land held by way of investment to be exempt so long as the land is owned by a school and used for educational or school purposes. Reinvestment II ...