Philip Dooly, et al v. Tennessee State Board Of Equalization, et al

The petitioners are holders of special use permits issued by the federal government allowing them to own and use for non-commercial recreational purposes certain improvements on federally-owned national forest land. The Polk County tax assessor valued and assessed the petitioners’ interests in the properties as leasehold interests. The Petitioners brought this action challenging their real estate tax assessments. The issues presented include whether the appraisal methodology used in valuing the petitioners’ leasehold interests violated the governing leasehold valuation statute, Tennessee Code Annotated § 67-5-605, and whether the petitioners should receive an offsetting tax credit for monies allegedly paid by the federal government to Polk County pursuant to 16 U.S.C. § 500. We affirm the judgment of the trial court holding that the appraisal methodology violated the statute by arbitrarily applying a static 99-year term when the express term of the special use permits was less than seven years during the tax years in question, 2003 through 2008. We reverse the trial court’s judgment ordering the tax assessor to allow an offsetting credit because the petitioners have cited no legal authority requiring or permitting such a result. The case is remanded with instructions to the Polk County Tax Assessor to reassess the petitioners’ leasehold interests for the years 2003 through 2008 in a manner consistent with this opinion.