Oral arguments were heard Tuesday on a motion by Cookeville Boat Dock asking a judge to reconsider a recent ruling that it must pay over $200,000 in DeKalb County property taxes, interest and penalties.
After hearing from attorneys on all sides in the case, Judge Amy Hollars requested they submit to the court supplemental briefs within the next few days before she makes her decision. Cookeville attorney Jon Jones represents Cookeville Boat Dock. Vester Parsley is the county’s tax attorney. And Mary Ellen Knack of Nashville is representing the state on the constitutionality of issues being challenged by the marina.
“We have ten days to file supplemental briefs. Mr. Jones will then have ten days beyond that to file his supplement so at least twenty days out from now she (Judge Hollars) can make a decision, but whether she does it that soon I’m not sure,” Parsley told WJLE.
The boat dock has refused to pay the taxes since 1998 and Judge Hollers ruled in April that the dock’s challenge to the tax was invalid.
The attorney for the marina, now argues the county cannot collect taxes beyond 10 years; that the judge’s ruling on the “Supremacy Clause” of the U.S. Constitution was incorrect; and that the amount of interest the county wants to charge is above what is allowed by law.
In the motion for “additional consideration of issues,” attorney Jones points to a Tennessee law that states, “All taxes assessed against real property and personal property in this state shall be barred, discharged and uncollectible after the lapse of 10 years from April 1 of the year following the year in which such taxes become delinquent, whether suit be brought within that time or not to collect the taxes…”
As for the interest issue, the defendants argue “prejudgment interest may be awarded by courts or juries in accordance with the principles of equity at any rate not in excess of a maximum effective rate of 10 percent per annum.”
The motion states that the county “has not provided a breakdown regarding its proposed computation of prejudgment interest. However, defendant (boat dock) expects the county will claim prejudgment interest at a rate of 18 percent per annum. This exceeds the maximum rate of prejudgment interest this court is allowed to award.”
The defendant goes on to suggest the interest rate “should correspond with the interest rate DeKalb County has paid during the relevant time.” Showing documentation the county borrowed money or issued bonds in recent years at rates varying from one to 5.5 percent, the defendant claims “these rates should provide the upper limit on an award of prejudgment interest that the court may make in this case.”
In relation to the “Supremacy Clause,” the defendant asks the court “to reconsider its opinion in this regard.”
Initially the defendant had claimed a section of Tennessee law violated the Supremacy Clause of the U.S. Constitution by discriminating against a lessee of the United States in favor of lessees of the State of Tennessee. It was argued since the boat dock pays fees to the U.S. Army Corps of Engineers which are used, in part, to pay DeKalb County a sum of “in lieu of taxes,” that having to pay property tax to the county was, in effect, double taxation.
In April Judge Hollers ruled the Supremacy Clause “does not prevent a state or local government from imposing a tax on an individual or a corporation ‘using government property in connection with a business conducted for its own private gain.’” The defendant now claims “the court ‘short circuited’ the issue of whether” the state law “is reconcilable with the Supremacy Clause.”
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