t appears likely the largest airport hotel in Platte County will have to pay its share of real estate taxes after all.
On Tuesday, Platte County Circuit Court Judge Thomas Fincham reversed the Missouri State Tax Commission’s ruling that set the taxable value of Grady Hotel Investments’ interest in the KCI Marriott Hotel at zero.
The judge sent the case back to the Missouri State Tax Commission for reconsideration, stating the tax commission’s ruling “was arbitrary, capricious, and unsupported by the law and the facts.”
The ruling comes more than a year after the Platte County Assessor and the Park Hill School District filed court documents initiating a judicial review of the Missouri State Tax Commission’s decision to exempt the hotel entity from taxation on the basis the property lies on airport property.
“The court’s overturning of the Missouri State Tax Commission’s ruling means that the case will be remanded back to the state tax commission for further consideration,” stated David Cox, Platte County Assessor. “While there still may be further appeal of this case, we are pleased with the court’s finding, as it found that the commission’s decision was not, in fact, supported by the applicable law.
“We believe the appeal our office undertook represents the best interests of Platte County taxpayers, and we will continue to represent the county’s interest through the rest of the legal process,” Cox added.
Grady Hotel Investments purchased the Kansas City Marriott Hotel, located at 775 N. Brasilia Avenue in Kansas City, in 2015 for $8.5 million. Since then, it has spent more than $1.2 million to improve the 384-room hotel.
Following those improvements, the assessor’s office appraised the hotel property at $11,222,000. That was a $2,722,000 increase in value from 2015 to 2016.
Grady Hotel Investments disputed the 2016 property taxes and appealed the matter to the Platte County Board of Equalization (PCBOE). The PCBOE upheld the property assessment, prompting the hotel owner to appeal the ruling to the Missouri State Tax Commission.
After considering all the evidence, officer John Treu of the Missouri State Tax Commission then decreased the taxable value of the hotel property to $7.3 million.
Despite the property’s reduction in value, Grady next appealed to the Full Commission of the Missouri State Tax Commission. Grady Hotels argued their true value in the hotel property was $0.00, contending they merely possessed a leasehold interest in the hotel and were owners of neither the hotel or land. They contend the property is located within the Kansas City International Airport, which is owned by the City of Kansas City, and thereby exempt from real property taxes.
The tax commission ruled in Grady Hotel’s favor, citing the hotel owner’s interest in the property was indeed a leasehold interest. The Full Commission’s ruling overturned Officer Treu’s previous decision to tax the hotel entity.
Court to intervene
Platte County Counselor Robert Shaw represented the assessor’s office in this legal matter. He contends the Full Commission’s Order “results in exempting property from taxation, treats property inside and outside of the Kansas City Airport in a non-uniform fashion, conferring a windfall to those inside airport property, and confers an irrevocable grant of special privilege.”
The Park Hill School District relies heavily on funding generated from property tax assessments. Up to this point, the lion’s share of the property taxes assessed on the Marriott property went to the school district.
Without the hotel paying taxes, the district would sustain a loss of revenue estimated somewhere between $200,000 to $300,000 a year.
But at this point it doesn’t appear that will happen.
On Aug. 6, Judge Fincham reversed the decision and returned the case to the Missouri State Tax Commission for reconsideration.
The judge cited the sale price of the property as strong evidence of its value to Grady Hotel Investments. Judge Fincham also pointed out that the leasehold improvements located on the property are owned by Grady Hotel Investments and not the city.