The owners of a string of Little Rock-area hotels and motels have taken a shared property tax grievance to Pulaski County Circuit Court that could have implications across the state.
The basic bone of contention is whether the value of a hotel franchise, the banner or flag under which it does business, is a tangible or an intangible asset. Under Arkansas law, intangible property isn’t taxable for property tax purposes.
“They’re making an argument that we don’t agree with,” said Joe Thompson, chief administrator at the Pulaski County Assessor’s Office. “They’re saying the value of their franchise is intangible and that we shouldn’t be taxing that. If they set a precedent here, property owners in other counties will follow suit.”
The plaintiffs argue the taxable value of their 13 properties sprinkled across Jacksonville, North Little Rock, Maumelle and Little Rock should be lowered because the assessor is wrongly including the value of their franchise. The group represents about 10% of the estimated 125 motels-hotels in Pulaski County.
The group’s move to circuit court follows unsuccessful appeals to the Pulaski County Board of Equalization in August and County Judge Barry Hyde in December.
For now, the appeals are separated into 13 cases spread across the dockets of six judges: Herbert Wright, four; Mackie Pierce, three; Tim Fox and Alice Gray, two each; and Wendell Griffen and Patricia James, one each.
Pulaski County lawyers are attempting to get all the cases removed from court on constitutional grounds. They believe the appeals should be heard in another forum even though the Arkansas Constitution specifies circuit court as the next avenue for appealing property tax disputes.
“The new wrinkle is the county’s allegation that this is unconstitutional,” said Junius Cross Jr. of the Little Rock law firm of Newland & Associates, who is representing the 13 hotels.
The county’s argument: Assessment of property is an executive function. Because of the separation of powers doctrine, it is not within the province of state courts to assess property.
Under the separation of powers argument, the judiciary is the wrong branch of government to consider the appeal despite the provision in the state constitution.
“This provision requires a court to affirm or deny a petitioner’s alleged valuation,” according to the Pulaski County counterclaim. “To affirm a petitioner’s valuation requires the court to perform an executive function by assessing the value of real property.”
The county claims the proper venue for the appeal is the Arkansas Assessment Coordination Division, which is “granted the full power and authority in the administration of the tax laws of this state to have and exercise general and complete supervision and control over the valuation, assessment, and equalization of all property for ad valorem tax purposes, except common carrier property.”
In its response and counterclaim to the 13 cases, the county is asking for a ruling to declare the provision regarding circuit court’s involvement in the property tax appeals process unconstitutional.
“It will be interesting to see what happens in court,” said Junius Cross, attorney for the plaintiffs.
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