G4, LLC v. Pearl River Cnty. Bd. of Supervisors

289 So.3d 283

G4, LLC, a Mississippi Limited Liability Company

v.PEARL RIVER COUNTY BOARD OF SUPERVISORS

NO. 2018-CA-01227-SCT

Supreme Court of Mississippi.

February 6, 2020

ATTORNEYS FOR APPELLANT: ROBIN L. ROBERTS, HATTIESBURG, J. MARC McMILLIAN, CHRISTOPHER D. NOBLES

ATTORNEY FOR APPELLEE: JOE H. MONTGOMERY, POPLARVILLE

BEFORE KITCHENS, P.J., COLEMAN AND GRIFFIS, JJ.

KITCHENS, PRESIDING JUSTICE, FOR THE COURT:

¶1. G4, LLC, entered into a lease in 2009 with the City of Picayune, Mississippi, for land on the grounds of the Picayune Municipal Airport. After the Pearl River County Board of Supervisors assessed ad valorem taxes on the leased land, G4 paid the taxes under protest and petitioned the Board for a refund and for a refund of taxes it had paid on lots in the Tin Hill subdivision. The Board denied G4's petition, and G4 appealed to the Circuit Court of Pearl River County, which affirmed. Now, G4 appeals, asserting that, according to this Court's decision in Rankin County Board of Supervisors v. Lakeland Income Properties, LLC , 241 So. 3d 1279 (Miss. 2018), it was exempt automatically from paying ad valorem taxes on the airport property. We agree, and we reverse and render the circuit court's decision that affirmed the Board's refusal to refund the airport property taxes. We affirm the circuit court's decision that G4 was not entitled to a refund of taxes paid on the Tin Hill subdivision lots.

FACTS AND PROCEDURAL HISTORY

¶2. G4 filed an original and two amended petitions with the Pearl River County Board of Supervisors seeking tax relief regarding the leased airport property and Tin Hill subdivision lots. When the petition was denied, G4 filed a notice of appeal and bill of exceptions in the circuit court.

1. Airport Lease

¶3. On February 3, 2009, G4 entered into a fifteen-year lease with the City of Picayune for property situated at the Picayune Municipal Airport. The lease is devoid of language specifying either that ad valorem taxes would be paid or that a tax exemption applied. G4's manager, Tyrone Gill, at a 2014 city council meeting, testified that his understanding was that G4 would be exempt from all ad valorem taxes under the lease. Nevertheless, Pearl River County assessed taxes for the airport lease beginning in 2009. This triggered protracted proceedings to ascertain the tax status of the airport lease.

¶4. Initially, Gill contacted Gary Beech, the Pearl River County Tax Assessor and Collector, to protest the 2009 tax bill. Beech requested an attorney general opinion on whether the lease should be exempt from taxes. Miss. Att'y Gen. Op., No. 2010-00370, 2010 WL 3281487, Beech , at *1 (July 23, 2010). The attorney general opinion concluded that the leased property would be exempt from ad valorem taxation "if a determination is made that the lease satisfies the requirements of [Mississippi Code] Section 61-5-11." Id. Section 61-5-11 provides that a municipality's lease of airport property for certain statutorily enumerated purposes will be tax exempt. Miss. Code. Ann. § 61-5-11 (Rev. 2013). The attorney general also opined that a municipality may execute a lease of airport property under Mississippi Code Section 61-5-9 (Rev. 2013), and that such a lease would not be tax exempt. Miss. Att'y Gen. Op., No. 2010-00370, 2010 WL 3281487, Beech , at *2 (July 23, 2010). The attorney general advised that, if a certain lease does not reference Section 61-5-11, then outside evidence, such as board minutes, could be consulted to determine whether the lease was intended to be subject to the tax exemption. Id.

¶5. After obtaining the attorney general opinion, the city council met on September 7, 2010, and reviewed its airport leases. The city council placed in its minutes that the G4 lease had been entered into under Section 61-5-9 and thus was not exempt from ad valorem taxes. Gill claims that he did not receive notice of the city council's meeting or its decision.

¶6. G4 was assessed taxes for the lease from 2009 to 2012 but failed to pay, and the property was sold for taxes for the years 2009, 2010, and 2011. While the sales matured, G4 attempted to resolve its tax status. On August 22, 2012, G4 petitioned the Pearl River County Board of Supervisors to strike the tax sale for 2009 taxes. The Board entered an order striking that tax sale.

¶7. On August 5, 2013, the Board granted G4 a one-year extension to prove that it was entitled to receive a valid tax exemption and struck the 2011 tax sale for nonpayment of 2010 taxes. But the Board received excerpts of the city council's September 7, 2010, minutes denying tax exempt status to G4. The Board then reconsidered and rescinded its August 5, 2013, order and "requested the Tax Collector to proceed with assessment and collection of all unpaid taxes due and owing."

¶8. Aggrieved, on August 19, 2014, Gill appeared before the city council requesting reconsideration of an exemption. He attempted to show that because G4 was engaged in commercial activities on the leased property, the tax exemption in Section 61-5-11 applied. The city council voted to deny the exemption. On August 22, 2014, before maturation of a tax sale, G4 paid $34,557 in ad valorem taxes under protest for the airport property for tax years 2009, 2010, and 2011.

¶9. On October 28, 2014, G4 petitioned the Pearl River County Board of Supervisors for a refund of all taxes paid, plus interest, and reinstatement of the tax exemption on the airport property. In this petition, G4 also requested a refund of taxes paid on the Tin Hill property discussed below.

¶10. At a February 3, 2015, city council meeting, the council acknowledged G4 as a commercial operator, and it cancelled the 2009 ground lease with G4 and issued a new lease specifically declaring G4 tax exempt under Mississippi Code 61-5-11. But the city council did not make the tax exemption retroactive to 2009.

2. Tin Hill Property

¶11. G4 owns certain lots in the Tin Hill subdivision in Pearl River County. The Board of Supervisors approved the final Tin Hill subdivision plat on September 13, 2010. G4 assigned initial values to the lots before they were to be sold. In 2015, G4 appeared before the Pearl River County Board of Supervisors, arguing that "[t]he value of the lots [had been] incorrectly determined using a flawed formula" beginning in 2011. According to G4, "[e]xtensive meetings with the Board of Supervisors Attorney and the Tax Assessor have resulted in an agreed and proper determination of value," to begin in 2014, and "[t]hese corrected property values should be utilized to retroactively ... correct land values in the Tin Hill development."¹

¶12. Alternatively, G4 requested a retroactive refund through the application of a "Developer's Discount," claiming a 75 percent tax deduction on the lots under Pearl River County Subdivision Regulation Section 603. G4 argued that it had been entitled to, but had not received, the regulatory discount for its Tin Hill Subdivision lots but that other Pearl River County property developers had gotten the discount. Additionally, G4 requested that tax sales for the parcels from 2011 to 2013 be set aside and that it receive a refund for amounts overpaid in consideration of the reassessed Tin Hill Subdivision parcel values.

¶13. On April 22, 2015, the Board of Supervisors denied relief on G4's petition for tax relief concerning the airport property and the Tin Hill property. G4 appealed to the Circuit Court of Pearl River County, which affirmed the decision of the Board of Supervisors concerning the airport property and the Tin Hill property.

STANDARD OF REVIEW

¶14. The Court will not disturb a decision by a county board of supervisors unless the decision was "not supported by substantial evidence, was arbitrary or capricious, was beyond the board's scope or powers, or violated the constitutional or statutory rights of the aggrieved party." Seyfarth v. Adams Cty. Bd. of Supervisors , 267 So. 3d 767, 770 (Miss. 2019) (citing Hooks v. George Cty. , 748 So. 2d 678, 680 (Miss. 1999) ). On questions of law, a county board of supervisors' decision is reviewed de novo . A & F Props., LLC v. Madison Cty. Bd. of Supervisors , 933 So. 2d 296, 300 (Miss. 2006) (citing Harrah's Vicksburg Corp. v. Pennebaker , 812 So. 2d 163, 170 (Miss. 2001) ).

DISCUSSION

I. Whether G4, LLC, was exempt automatically from ad valorem taxes on the airport lease under Mississippi Code Section 61-5-11.

¶15. Because a presumption favors the taxing power, G4 had the burden to prove clearly its right to the claimed tax exemption. Lakeland , 241 So. 3d at 1287 (citing Kerr-McGee Chem. Corp. v. Buelow , 670 So. 2d 12, 16 (Miss. 1995) ). G4 argues that, based on Lakeland , it was exempt from paying ad valorem taxes the moment it entered into the airport lease. We agree with G4's analysis of Lakeland . Just as in this case, the Court in Lakeland was tasked with determining whether a lessee of airport property was entitled to an automatic ad valorem tax exemption. Lakeland , 241 So. 3d at 1287. Mississippi Code Section 61-3-21, which governs regional and municipal airport authorities, was the statute at issue in Lakeland . Miss. Code Ann. § 61-3-21 (Rev. 2013). Under Section 61-3-21(1),

(1) In connection with the operation of an airport or air navigation facility owned or controlled by an authority, the authority may enter into contracts, leases and other arrangements for terms not to exceed fifty (50) years with any persons:

(a) Granting the privilege of using or improving the airport or air navigation facility or any portion or facility thereof or space therein for commercial purposes;

(b) Conferring the privilege of supplying goods, commodities, things, services or facilities at the airport or air navigation facility; and

(c) Making available services to be furnished by the authority or its agents at the airport or air navigation facility.

Miss. Code. Ann. § 61-3-21(1) (Supp. 2019). Section 61-3-21(3) requires that

[a]ll airport-related contracts, leases and other

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