Request By:
Mr. John C. Wagner
General Manager
Frankfort Plant Board
315 W. Second Street
P.O. Box 308
Frankfort, Kentucky 40602
Opinion
Opinion By: Steven L. Beshear, Attorney General; By Alex W. Rose, Assistant Attorney General
In your letter to the Attorney General, you ask three questions concerning KRS 96.179:
1. By what methods should "fair cash value" be determined?
2. Should the Board elect to make in lieu of tax payments to one or more taxing entities within whose jurisdiction property of the Board is located, must it make such payments to all such entities?
3. With respect to those eligible taxing entities which the Board may elect to pay or may be required to pay, (a) Must the Board pay all or none? i.e. must it pay the full value of its property in that jurisdiction times the appropriate prevailing tax rate, or could it pay any percentage of this amount up to the maximum? (b) If the Board could elect to pay a percentage, must that percentage be the same for any others it pays?
The Frankfort Plant Board owns property in the City of Frankfort, the Frankfort Independent School District, and the Franklin, Woodford and Shelby Counties School Districts.
All property in Kentucky must be assessed at fair cash value. Section 172 of the Kentucky Constitution defines fair cash value as ". . . the price it would bring at a fair voluntary sale. . . ." Russman v. Luckett, Ky., 391 S.W.2d 700 (1965).
The answer to your second question involves an interpretation of the statute. The intent of KRS 96.179 appears to be to exempt the Plant Board from state and county taxes if it chooses to make in lieu payments to the cities and school districts. The statute requires the Plant Board to make a decision as to whether it will make the in lieu payments or pay the taxes. The statute requires the Plant Board to make in lieu payments to the school districts and municipalities at the same rate as it would pay the ad valorem taxes of their districts. Consequently, there appears to be no difference in the amount of money paid to the school districts and municipalities whether or not the Plant Board chooses to make in lieu payments or not. The only taxes affected are taxes to the state and county. Since the decision required by the statute is whether to make in lieu payments or pay the taxes, it is our opinion that the statute makes the decision apply to all applicable school districts and municipalities. This appears to be the logical and reasonable interpretation. Wesley v. Board of Education of Nicholas County, Ky., 403 S.W.2d 28 (1966).
The third question asks whether the Board must pay on the full value of the property in the jurisdiction times the appropriate tax rate or pay only a percentage. The statute clearly states that in lieu of taxes the Board must pay to each applicable district an amount "equivalent to an annual ad valorem tax on the fair cash value of the property of the Board located in each such jurisdiction, determined upon the tax rate prevailing in such year." This is a specific amount and there is no provision in the statute for paying less than this amount. It is our opinion that the Board must pay this equivalent amount in full to each district.