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Georgian Towers Apartments

Stellar GT, TIC, LLC, et al. v. Supervisor of Assessments. This case involved a tax appeal filed by Stellar GT, TIC, LLC, et al., owner of Georgian Towers Apartments, located in Silver Spring, regarding an out-of-cycle real property tax increased assessment of approximately $36,000,000 for "new lobby construction" shortly after the normal 3-year re-assessment in Maryland had taken place.

An appeal was taken challenging the legality of the mid-cycle assessment, which was performed under questionable circumstances by reassessing the construction, when in actuality the assessment was triggered by the $89,000,000 sale of the building at the height of the commercial real estate market in 2004.

The Property Tax Assessment Appeals Board, the Maryland Tax Court and the Montgomery County Circuit Court all affirmed the reassessment. However, in a reported decision issued on March 3, 2008, the Court of Special Appeals of Maryland reversed and remanded the case for the entry of judgment in favor of our client.

Oral argument was held before the Court of Appeals in early October, which appeared to go very well for our side. On December 12, the Court of Appeals issued its Opinion affirming the decision of the Court of Special Appeals. As we successfully argued in the Court of Special Appeals, the Court of Appeals found that the mid-cycle reassessment of the Georgian Towers property in Silver Spring was "caused" by its sale for $89 million and not caused by permissible reasons under the statute for a mid-cycle reassessment, and the resulting reassessment from $52 million to $88 million was an illegal "retroactive assessment".

Relying on one of its prior decisions, the Court of Appeals stated the following in the key language of the Opinion:

In Chase Associates, 306 Md. at 577, 510 A2d. at 572, we equated "cause" in the statute [mid-cycle reassessment statute] with "linkage" rather than "trigger" as the Tax Court opined in the present case. Linking reassessment to the occurrence of certain specified events, as defining causation, differs from the Supervisor’s and the Tax Court’s concept of causation; both would obviate any direct linkage between the change in value and its cause and rely only on the proffered existence of one of the statutory factors, even if the revaluation was not based upon that statutory factor. The Supervisor must assert that linkage exists between substantially completed improvements and the new value."

Although the Court of Appeals’ decision does not become final for thirty days, we are hopeful that no motion for reconsideration or other events will prevent that decision from becoming final. Once the decision becomes final, the client will be entitled to a refund of over $1 million in back taxes paid during 2004-2006, plus interest, as a result of the Court’s finding that the $36 million increase in the assessment was invalid.