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Reinvestment II, LLC v. Board of Assessment Review of New Castle County

Superior Court of Delaware, New Castle

January 27, 2014

REINVESTMENT II, LLC, Appellant,
v.
BOARD OF ASSESSMENT REVIEW OF NEW CASTLE COUNTY and NEW CASTLE COUNTY, a Political Subdivision of the State of Delaware Appellees.

Submitted: October 3, 2013.

Upon Appellant's Motion for Reargument, DENIED.

William J. Rhodunda, Jr., Esq., Rhodunda & Williams, Wilmington, Delaware, Attorney for Appellant.

Wilson B. Davis, Esq., Assistant County Attorney, New Castle County Office of Law, New Castle, Delaware, Attorney for Appellees.

OPINION

M. Jane Brady, Superior Court Judge.

I. Introduction

Before the Court is a Motion for Reargument filed by Reinvestment II, LLC. Reinvestment II seeks to reargue the Court's September 20, 2013, decision which concluded that Reinvestment II is not entitled to a property tax exemption pursuant to 9 Del. C. § 8105, which applies to property that is owned by a school and used for educational or school purposes.[1] New Castle County filed a response in opposition to the Motion for Reargument on October 3, 2013. For the reasons stated below, Reinvestment II's Motion for Reargument is DENIED.

II. Facts[2]

A. Background

The Maurice J. Moyer Academy ("Moyer Academy") is a public charter school that commenced operations in 2006 at 610 and 611 East 17th Street ("Property").[3] The Property originally belonged to the Sills/Moyer Education Fund until the Education Fund defaulted on its mortgage obligation to the Reinvestment Fund.[4] 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, [5] via a deed in lieu of foreclosure.[6] Reinvestment II permitted the Moyer Academy to continue operations on the Property through a lease.[7]

K12 Classroom DE, LLC ("K12"), which was appointed by the State of Delaware to manage the Moyer Academy, has a lease agreement with Reinvestment II for the Property on which the Moyer Academy operates.[8] It is unclear 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.[9] K12 pays this rent through funds it receives from the Department of Education.[10] According to Reinvestment II, the rent it receives indirectly from the Department of Education is "insufficient even to cover the debt service on the [Property's] mortgage, "[11] and therefore it "does not secure any profit."[12]

In 2011, because the Property was being used for educational purposes, Reinvestment II filed for a property tax exemption under 9 Del. C. § 8105. This exemption would allow Reinvestment II to avoid paying property taxes for the land on which the Moyer Academy operates.[13] On August 23, 2011, the New Castle County Office of Law denied Reinvestment II's application, finding the Property was not owned by a school.[14] Reinvestment II filed a timely appeal of this denial on September 22, 2011 and the Board held a hearing on November 8, 2012.[15] The Board's decision resulted in a two-two vote, with two members finding Reinvestment II to be a fiduciary of the Moyer Academy, and therefore entitled to the property tax exemption under Section 8105.[16] In accord with the Board's rules and procedures, Reinvestment II's appeal was denied because a majority of the Board members failed to vote in favor of reversal.[17] Reinvestment II thereafter appealed to this Court, contending it was entitled to the exemption under Section 8105.

B. Court's Decision Reinvestment Seeks to Reargue

On appeal from the Board's decision, neither party disputed that the Property is being used for educational purposes, because the Moyer Academy, which operates as a school, is located on the Property.[18] The Court's decision, which Reinvestment II now seeks to reargue, was limited to the second element of Section 8105, i.e., whe ...


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