The Supreme Court of Appeals of West Virginia's recent decision in Musick v. University Park at Evansdale marks an important affirmation of West Virginia law on taxation of leasehold interests. It has important and positive implications for the West Virginia's economic development efforts that have lured more than $1 billion in capital investment and 3,000 jobs.
The Musick case nominally centered on a dispute between the Monongalia County Assessor, Mark Musick, and the taxpayer, University Park at Evansdale, over how to assess UPE's leasehold interest in a student-housing development owned and operated by West Virginia University. UPE successfully argued in the lower court its leasehold interest had no assessable value under the Maplewood framework-so named for the Supreme Court of Appeals decision in which it was adopted-because it was neither "freely assignable" or a "bargain lease." The Assessor argued, both in the lower court and on appeal, that Maplewood was wrongly decided and, in any event, did not apply to UPE's leasehold interest. It was this attack on Maplewood that lent the Musick v. University Park at Evansdale special significance. In addition to facilitating public-private partnerships like the one between UPE and West Virginia University, the Maplewood framework has been used to offer tax abatements as part of economic incentive packages for new businesses. In short, the Assessor's challenge to Maplewood was a challenge to the State of West Virginia's economic development framework itself.
In a victory for stability and predictability, the Supreme Court of Appeals rejected the Assessor's challenge in Musick v. University Park at Evansdale and unequivocally affirmed the Maplewood framework as West Virginia law on the assessment of leasehold interests. In the process, the Supreme Court of Appeals also provided guidance on what it means for a leasehold to be "freely assignable" and a "bargain lease." The net result is an endorsement of the legal structures that have proved vital to West Virginia's continued economic development.
Jim Walls and Joseph Schaeffer of Spilman Thomas & Battle's Morgantown, West Virginia office represented University Park at Evansdale in the trial court and on appeal.
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