79 A.3d 960
Md. Ct. Spec. App.2013Background
- Two parcels within the University of Maryland BioPark are fee-owned by the State for University use; the land was conveyed to the State by Baltimore for nominal consideration.
- The State leased the land to RPC, a 501(c)(3) nonprofit, under a 60-year ground lease; improvements are deemed owned by RPC during the lease term and vest in the landlord at expiration.
- RPC subleases one parcel to Townsend Baltimore Garage, LLC (for-profit) for 60 years plus; improvements are owned by the subtenant during the term, with ownership reverting to the sublandlord at the end.
- RPC subleases the other parcel to Baltimore LSRP One Business Trust (for-profit) for 60 years plus; improvements are owned by the subtenant during the term, with ownership reverting to the sublandlord at the end; portions of both properties are used for University purposes (Office 85%, Parking 25%).
- Financing and construction involving private developers allowed depreciation for tax purposes; ownership documents label for-profit as owner, but record ownership follows land title.
- The Tax Court found the appellants owned the improvements for tax purposes; on review, the court held that GBMC controls, and the State is the owner of both land and improvements for property tax purposes; the University portions remain exempt.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is the property exempt under TP 7-210 due to State ownership and University use? | Townsend/BLSRP rely on exemption since land is State-owned and used for University programs. | Supervisor contends exemptions do not apply due to ownership/lease structure implying taxable use. | Yes; land and improvements used by University are exempt. |
| Are the appellants' leasehold interests taxable under TP 6-102(e) because the land is leased for profit use? | Leases create taxable interests under 6-102(e) due to profit-related use. | Not controlling; leases do not establish taxable ownership given record ownership remains with State. | Not controlling; exemption analysis follows GBMC; not taxable as leasehold interests. |
| Who is the owner of the improvements for tax purposes, given the record title and financing arrangements? | Documents show for-profit owns improvements for tax purposes. | GBMC holds that record owner (State) owns land and improvements for tax purposes. | State owns land and improvements for tax purposes; improvements portion used for University remains exempt. |
| Does GBMC control require that record title governs tax ownership despite unrecorded agreements? | Unrecorded private agreements show beneficial ownership by for-profit; should affect taxation. | GBMC rejects unrecorded instruments; record title governs. | GBMC governs; record title remains with the State; exemptions apply to University-used portions. |
Key Cases Cited
- GBMC v. Supervisor of Assessments, 202 Md.App. 282 (2011) (record owner rules; improvements follow land title for tax purposes)
- Johns Hopkins Univ. v. Bd. of County Comm’rs of Montgomery County, 185 Md. 614 (1946) (land records define real property ownership for tax assessments)
- Read v. Supervisor of Assessments, 354 Md. 383 (1999) (administrative review standards for Tax Court orders)
- Mayor & City Council of Baltimore v. Boitnott, 356 Md. 605 (1999) (uniform treatment of real property ownership for tax purposes)
- Allentown Plaza Assocs. v. Suburban Propane Gas Corp., 43 Md.App. 337 (1979) (definition of real property and improvements; attachment to land)
- Colonial Pipeline Co. v. State Dep’t of Assessments & Taxation, 371 Md. 16 (2002) (agency interpretation of tax assessments)
- Frey v. Comptroller of the Treasury, 422 Md. 111 (2011) (administrative standards and taxation decisions)
- Md. Economic Dev. Corp. v. Montgomery Co., 431 Md. 189 (2013) (standard of review for administrative agency decisions on tax matters)