These are ad valorem tax cases. The controlling issue is whether the interest held by certain corporations in real estate financed through a development authority is taxable as being fee simple or leasehold, or is it only a usufruct. The trial court detеrmined the interest to be taxable as a leasehold. We agree.
The leases in question were individually executed between the DeKalb County Development Authority (hereinafter “Authority”) and W. C. Harris & Co., Ohio-Sealy Manufacturing Co., Noland Co., and Lanier Business Products, Inc. (hereinafter “Taxpayers”). Each case originated with a decision by the DeKalb County Board of Tax Assessors (hereinafter “Assessors”) that the long-term leases were in effect delayed warranty deeds which would subject the properties to valuation as a fee simрle interest. Each Taxpayer appealed to the DeKalb County Board of Equalization (hereinafter “Equalization Board”) which determined that the interest under each lease agreement was a leasehold and developed a formula for ad vаlorem tax valuation.
The Assessors appealed that decision to the superior court. Both sides moved for summary judgment and the court granted summary judgment to the Taxpayers, upholding the decision of the Equalization Board. The Assessors now appeal those judgments and the Taxpayers have each filed a cross appeal, contending that if the Equalization Board’s decision was in error in its determination of the leasehold interests then the lease agreements must be construed to give the Taxpayers only a usufruct whiсh would not be subject to ad valorem taxation.
1. These cases were originally docketed in the Court of Appeals which transferred the cases here on the basis of our decision in
Collins v. State,
The Collins decision was necessitated by an enactment of the legislature attempting to change Supreme Court jurisdiction by statute. The act at issue stated in part “The Supreme Court shall have jurisdiction of the trial and correction of errors of law in cases involving State revenue, contested elections, and the validity of legislative enactments of muniсipalities.” Ga. L. 1977, pp. 710-711. After holding the legislature could not by statute change the constitutional jurisdiction of this court, we ordered the above-stated classes of cases to be docketed in the Court of Appeals and transferred to “effectuate the legislative intent of Act No. 299, Ga. L. 1977, p. 710.” Collins, at 403.
Since that order went into effect, there have been contested ad valorem tax cases handled by the Court of Appeals as well as by this court. See
Henderson v. Tax Assessors, Camden County,
It is the opinion of this court that the Court of Appeals properly entertained jurisdiсtion in the cases cited above. These were disputes between property owners and local governing authorities concerning valuation of ad valorem tax assessments and not questions of “State revenue” as contemplated by Ga. L. 1977, p. 710, and as intеrpreted by Collins. This type of appeal from a local tax assessment does not challenge a state law or state assessment. Furthermore, there is no challenge to any ruling by the State Revenue Commissioner. In fact, the commissioner’s authority does not genеrally extend to local ad valorem tax assessment or collection. Code Ann. § 91A-207 (d) (1) (former Code § 92-8447). Since the issue of jurisdiction in ad valorem tax assessment cases of this type had not been addressed since Collins, we shall reach the merits of the present case. However, we hold that in the future, appeals from a local governing authority’s assessment of ad valorem taxation which do not raise the constitutionality of a statute or ordinance nor involve equitable remedies shall be in the jurisdiction of the Court of Appeals and not *279 transferred to this court under Collins.
2. In the case of each Taxpayer, the Authority issued industrial development revenue bonds and acquired fee simple title to the tracts of land in question. The property was then leased to the Taxpayers for the purposes of manufaсturing, assembling and storing goods handled by the respective companies. The Authority executed a deed to secure debt as security for the bonds. The rights of the Authority to receive rental payments under the leases were also assigned.
The leases are for twеnty and twenty-five year terms, and each contains a contract whereby the Authority agrees to sell the property and the Taxpayers agree to purchase the property for the consideration of ten dollars, once the revenue bonds are paid in full. The Assessors contend that the substance of the transactions give the Taxpayers a fee simple interest for ad valorem tax purposes.
The DeKalb County Development Authority was established pursuant to Chapter 69-15 of the Georgia Code. As an entity fоrmed under this chapter, the Authority is exempt from the payment of taxes. Code Ann. § 69-1510. While the Authority is exempt, a business which takes a leasehold from the Authority is subject to ad valorem taxation on the fair market value of the possessory interest held.
Delta Air Lines v. Coleman,
In determining the interest held by the lessee, the court will look to the interest the parties to the agreement intended to create, although this intent may not be controlling.
Allright Parking of Ga., Inc. v. Atlanta-Fulton Bd. of Tax Assessors,
“An absolute or fee-simple estate is one in which the owner is entitled to the entire property, with unconditional power of disposition during his life, and which descends to his heirs and legal representatives upon his death intestate.” Code Ann. § 85-501. The leases require the Taxpayers to maintain insurance against all risks of the companies involved and requirе that the Taxpayers be liable for all taxes on their interest in the property. The Taxpayers may assign *280 and sublease the property and may in their discretion make modifications or improvements at their own expense. If the taxpayers perform under the leases, the Authority is obligated to convey title to the projects for a consideration of ten dollars.
While the leases contain terms consistent with absolute ownership, we agree with the trial court that other restrictions in the leases are not consistеnt with fee simple ownership. The leases require the Taxpayers to operate the projects throughout the terms of the lease for the sole purpose of continuing their respective business operations. The leases limit the expenditures which thе Taxpayers can make on the properties and any plans for modification must be submitted to the Authority which has retained the right to inspect the premises. The Taxpayers are obligated to maintain their corporate existence throughout the lease terms. If the premises are sublet, the Taxpayers are still primarily responsible for rental payments and the premises must continue to be operated for the same project purposes. The Taxpayers agree not to convey their interests during thе lease term and the Authority agrees that it will not convey or sell the property during the lease term except for the security instruments executed for the financing of the project. Furthermore, in the event of default by the lessee, the agreement gives the Authority the right to terminate the lease and exclude the lessee from possession.
The Taxpayers argue that under our decision in
Allright Parking of Ga.,
supra, their interest under the lease must be construed as a usufruct which is not subject to ad valorem taxation. That decision, however, points out that during the term of the lease, the lessor had the sole power to determine if the lessee could occupy the premises at all and could totally “preclude Allright from using any and all portions of the property during the construction and operation of MARTA and other ‘public projects.’ ”
Allright,
at 387. There is a presumption in this state that where a lease agreement is for a term of more than five years, an estate for years is created.
Warehouses, Inc. v. Wetherbee,
3. The remaining issues in these appeals concern the valuation formula applied by the Equalization Board and upheld by the trial court as well as the determination of time of possession. The first question to bе determined is what is the fair market value of the leasehold interests held by the Taxpayers. Code Ann. § 91A-1008 (former Code Ann. § 92-5701.) “The fair market value of land, whether it be the fee, a leasehold, or any other interest, is a question which *281 necessarily addresses itself to the honesty, thе experience, and the familiarity with land values in a given locality of the person or persons whose duty it becomes to determine and fix it.” Coleman, supra at 18.
The Equalization Board examined the lease transactions and expert appraisal evidence was offerеd. The Equalization Board then held: “The appraisal technique to be used is as follows: First determine the total value of the property based on market rent. Second, determine the value of the leased fee by capitalizing the yearly bond repayment. Third, subtrаct this lease fee value from the total. Add to this figure the estimated reversion. This technique should be repeated on an annual basis, as the values will change over the period of the lease.” The record shows that the formula is intended to take into account the fair market value of similarly leased property and to be based upon prevailing rents in the area. The potential reversionary interest is added to the base tax and will increase throughout the terms of the lease as the potential of the vеsting of the potential reversionary interest in the Taxpayers increases. The fair market value of a leasehold interest must necessarily vary in accordance with the terms and conditions of each agreement as well as the nature and locatiоn of the property involved. We do not find the method of valuation utilized by the Equalization Board to be an arbitrary or unreasonable one, and hold the trial court did not err in approving the formula adopted in these cases.
4. The final point raised by the Assessors involves a determination by the Equalization Board that Noland Company and Lanier Business Products, Inc. owed no ad valorem taxes for the year 1979. These two projects were not completed as of January 1,1979. A taxpayer must return property for taxation for property held as of January 1. Code Ann. § 91A-1Q08 (former Code Ann. § 92-6202). These two taxpayers did not obtain possession of the property in question until long after January 1, 1979. The lease agreements state that the Authority retains possession of the projects during construction, and thаt exclusive possession of the project be delivered to lessee on the date of completion. The agreements further state that the lease will become effective at the date of delivery. The trial court held that since Noland and Laniеr had no right to possess or occupy the leasehold on January 1,1979, the Equalization Board was correct in finding no ad valorem taxes were due for that period. The Assessors contend that since Noland and Lanier in fact “owned” the property once the lease agreements were executed and that the agreements were executed prior to January 1, 1979, those projects were subject to taxation on that date. Since we have held that the agreements do not constitute a conveyanсe for ad valorem tax purposes, the property was held by the Authority until delivery was *282 later made upon completion.
We affirm the ruling of the trial court in these cases. The judgment below granted a complete summary judgment as moved for by the Taxpayers in the superior court. Therefore, the alternative cross-appeals filed by each Taxpayer are hereby dismissed.
Judgment affirmed in case numbers 37319, 37321, 37323 and 37325; case numbers 37320, 37322, 37324 and 37326 axe dismissed.