Platte River Crane Trust v. Hall Cty. Bd. of Equal. , 298 Neb. 970 ( 2018 )


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  • Nebraska Supreme Court Online Library
    www.nebraska.gov/apps-courts-epub/
    03/09/2018 12:13 AM CST
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    Nebraska Supreme Court A dvance Sheets
    298 Nebraska R eports
    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
    Cite as 
    298 Neb. 970
    Platte R iver Whooping Crane M aintenance
    Trust, Inc., appellant, v. H all County
    Board of Equalization, appellee.
    ___ N.W.2d ___
    Filed February 9, 2018.   No. S-17-389.
    1.	 Taxation: Judgments: Appeal and Error. Appellate courts review
    decisions rendered by the Tax Equalization and Review Commission for
    errors appearing on the record.
    2.	 Judgments: Appeal and Error. When reviewing a judgment for errors
    appearing on the record, an appellate court’s inquiry is whether the deci-
    sion conforms to the law, is supported by competent evidence, and is
    neither arbitrary, capricious, nor unreasonable.
    3.	 Taxation: Statutes: Appeal and Error. The meaning of a statute is a
    question of law, and a reviewing court is obligated to reach its conclu-
    sions independent of the determination made by the Tax Equalization
    and Review Commission.
    4.	 Taxation: Charities. A tax exemption for charitable use is allowed
    because those exemptions benefit the public generally and the orga-
    nization performs services which the state is relieved pro tanto from
    performing.
    Appeal from the Tax Equalization and Review Commission.
    Reversed and remanded with directions.
    Jordan W. Adam, of Fraser Stryker P.C., L.L.O., for
    appellant.
    Timothy L. Moll, of Rembolt Ludtke, L.L.P., for appellee.
    Heavican, C.J., Miller-Lerman, Cassel, Stacy, K elch, and
    Funke, JJ.
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    Nebraska Supreme Court A dvance Sheets
    298 Nebraska R eports
    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
    Cite as 
    298 Neb. 970
    K elch, J.
    NATURE OF CASE
    The issue presented is whether the Platte River Whooping
    Crane Maintenance Trust, Inc. (Crane Trust), is a char-
    itable organization within the meaning of Neb. Rev. Stat.
    § 77-202(1)(d) (Cum. Supp. 2014).
    BACKGROUND
    A pplication for Exemption
    The Crane Trust is a nonprofit corporation dedicated to
    conserving and protecting the natural habitat for whooping
    Cranes, sandhill Cranes, and other migratory birds along the
    Platte River in central Nebraska. For the last decade, the
    Hall County Board of Equalization (Board) granted a chari-
    table tax exemption under § 77-202(1)(d) to various properties
    owned by the Crane Trust. In December 2014, the Crane Trust
    sought a property tax exemption for six additional parcels
    of land (Subject Properties). The Subject Properties consist
    of 829.68 acres of land and carry a property tax liability of
    approximately $22,000 for 2015, the tax year in question. At
    that time, the Board denied the Crane Trust’s application for
    a property tax exemption for the Subject Properties. There is
    no explanation in the record as to why the Board granted tax
    exemption to some of the Crane Trust’s properties, but not to
    the Subject Properties.
    The Crane Trust appealed to the Nebraska Tax Equalization
    and Review Commission (TERC). A hearing was held, dur-
    ing which the Crane Trust presented evidence about its edu-
    cational efforts, contributions to the scientific community,
    and other benefits to the public. The evidence was largely
    undisputed.
    Evidence Presented at Hearing
    The Crane Trust presented evidence showing that its con-
    servation efforts benefit the thousands of people who visit
    its property each year to observe the crane migration, learn
    about the prairie, and interact with nature. The Crane Trust
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    298 Nebraska R eports
    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
    Cite as 
    298 Neb. 970
    provides free public tours during crane season, and its prop-
    erty is open year round at no charge to the public. The Crane
    Trust also has a large network of public trails, which are used
    by the public for exercise and for an annual cross-country race
    for a local high school.
    Students, researchers, and scientists from all across the
    country visit the Crane Trust to perform scientific research
    on the Subject Properties every week. The Crane Trust also
    performs research on the land and has published more than 30
    articles in the past decade, which are available to the public for
    free. Some of the articles come from research that the Crane
    Trust performed on the Subject Properties in 2015.
    The Crane Trust also provides educational activities to teach
    the public about habitat and conservation. It posts informa-
    tional signs along its trails and hosts a program for public
    schools in which students visit its property every month to
    study the plants, wildlife, insects, and habitat with the help of
    a Crane Trust biologist.
    The evidence also showed that a portion of the Subject
    Properties was leased to a farming operation for cattle graz-
    ing, for which the Crane Trust received $9,300. The Crane
    Trust’s chief executive officer testified that the lease money
    was not distributed to its members, directors, officers, or any-
    one else and that the cost of managing the Subject Properties
    far exceeded the amount of lease money. The chief executive
    officer testified that the cattle grazing was part of the Crane
    Trust’s habitat management program—that the grazing and
    hoof compaction on the soil provides a natural disturbance on
    the grassland that helps promote and sustain different species
    on the parcels, cycle nutrients on the prairie, open up the grass-
    land for the crane to use, and keep invasive species of plants
    at bay.
    TERC A ffirms Board’s
    Denial of Exemption
    Following the hearing, TERC affirmed the Board’s deci-
    sion to deny tax exemption to the Subject Properties. It stated
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    298 Nebraska R eports
    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
    Cite as 
    298 Neb. 970
    that the issue was whether the term “charitable organization”
    in the relevant statute was broad enough to include an orga-
    nization devoted to protecting natural habitat. It concluded
    that although the Crane Trust provides educational, scientific,
    and recreational benefits to the public, Nebraska courts have
    limited charitable exemptions to “traditional charitable enter-
    prises providing relief [to] the poor and distressed.” Therefore,
    it concluded that the policy question of whether to expand
    the definition to include conservation efforts must be left to
    the Legislature.
    TERC found that the Crane Trust provided some level of
    mental, social, and physical benefits to the public, but ulti-
    mately determined that it was not a charitable organization
    because § 77-202(1)(d) has never been applied to conservation
    groups or activities.
    The Crane Trust now appeals from TERC’s decision.
    ASSIGNMENT OF ERROR
    The Crane Trust assigns that TERC erred in affirming
    the Board’s decision to deny tax exemption for the Subject
    Properties for the 2015 tax year.
    STANDARD OF REVIEW
    [1-3] Appellate courts review decisions rendered by TERC
    for errors appearing on the record.1 When reviewing a judg-
    ment for errors appearing on the record, an appellate court’s
    inquiry is whether the decision conforms to the law, is sup-
    ported by competent evidence, and is neither arbitrary, capri-
    cious, nor unreasonable.2 The meaning of a statute is a ques-
    tion of law, and a reviewing court is obligated to reach its
    conclusions independent of the determination made by the Tax
    Equalization and Review Commission.3
    1
    Cain v. Custer Cty. Bd. of Equal., 
    291 Neb. 730
    , 
    868 N.W.2d 334
    (2015).
    2
    Id.
    3
    Creighton St. Joseph Hosp. v. Tax Eq. & Rev. Comm., 
    260 Neb. 905
    , 
    620 N.W.2d 90
    (2000).
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    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
    Cite as 
    298 Neb. 970
    ANALYSIS
    The Nebraska Constitution authorizes the Legislature to
    exempt from taxes “property owned and used exclusively
    for educational, religious, charitable, or cemetery purposes,
    when such property is not owned or used for financial gain or
    profit to either the owner or user.”4 Pursuant to this authority,
    the Legislature adopted a statute that exempts from prop-
    erty taxes:
    Property owned by educational, religious, charitable, or
    cemetery organizations, or any organization for the exclu-
    sive benefit of any such educational, religious, charitable,
    or cemetery organization, and used exclusively for educa-
    tional, religious, charitable, or cemetery purposes, when
    such property is not (i) owned or used for financial gain
    or profit to either the owner or user, (ii) used for the sale
    of alcoholic liquors for more than twenty hours per week,
    or (iii) owned or used by an organization which discrimi-
    nates in membership or employment based on race, color,
    or national origin.5
    The parties stipulated that the Subject Properties were not
    used for the sale of alcohol and were not owned or used by an
    organization which discriminates in membership or employ-
    ment based on race, color, or national origin. Furthermore, the
    Crane Trust applied for exemption as a charitable organization;
    it does not argue that it qualifies as an educational, religious, or
    cemetery organization. Thus, the issues are limited.
    For Crane Trust to be entitled to a property tax exemption
    for its six parcels, it must show (1) that the parcels are owned
    by a charitable organization; (2) that the parcels are used
    exclusively for educational; religious, charitable, or cemetery
    purposes; and (3) that the parcels were not owned or used
    for financial gain or profit to either the owner or user. TERC
    concluded that the Crane Trust failed to show the parcels were
    4
    Neb. Const. art. VIII, § 2.
    5
    § 77-202(1)(d).
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    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
    Cite as 
    298 Neb. 970
    owned by a charitable organization and thus did not address
    the other two requirements.
    Nature of Organization
    In concluding that the Crane Trust was not a charitable
    organization, TERC noted that the Supreme Court has never
    held that a conservation group may fit within the definition of
    “charitable organization” under § 77-202. While true, we have
    also never considered it.
    Section 77-202(1)(d) provides that a “charitable organiza-
    tion means an organization operated exclusively for the pur-
    pose of the mental, social, or physical benefit of the public
    or an indefinite number of persons.” Applying this statutory
    language, TERC acknowledged that the Crane Trust’s conser-
    vation efforts provided mental, social, and physical benefits
    to the public, but concluded, without explanation, that the
    Subject Properties were not operated exclusively for those
    purposes.
    We conclude that TERC’s finding that the Crane Trust did
    not operate exclusively for the public’s benefit is not supported
    by the evidence. The term “exclusively” means the primary
    or dominant use of the property is controlling in determining
    whether the property is exempt from taxation.6 And as TERC
    noted, the Crane Trust adduced considerable evidence of its
    efforts to provide educational, scientific, and recreational ben-
    efits to the general public. The evidence shows that the Crane
    Trust’s efforts to protect the natural habitat for migratory birds
    ensures that the public can continue to enjoy and learn about
    that habitat and birds and wildlife thereon.
    Additionally, the evidence shows that the Crane Trust is
    engaged in numerous endeavors to educate the public about the
    habitat, the wildlife on the habitat, and conservation in general.
    The Crane Trust’s land, including the Subject Properties, is
    6
    See Fort Calhoun Bapt. Ch. v. Washington Cty. Bd. of Eq., 
    277 Neb. 25
    ,
    
    759 N.W.2d 475
    (2009).
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    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
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    298 Neb. 970
    also open for and subject to scientific study. While the Board
    argues that the evidence discussed in this paragraph is irrel-
    evant, because the Crane Trust is not applying for exemption as
    an educational organization, we disagree. We find this evidence
    relevant to whether the Crane Trust is providing a mental ben-
    efit to the public. “‘[M]ental’” means “‘intellectual,’” which in
    turn means, among other things, “‘engaged in creative literary,
    artistic, or scientific labor.’”7
    After reviewing the evidence, we conclude that the Crane
    Trust operated exclusively for the purpose of the mental,
    social, or physical benefit of the public.
    [4] TERC found, and the Board argues, that the Legislature
    did not intend for conservation groups to be considered a
    “charitable organization” under § 77-202(1)(d). Although we
    appreciate TERC’s deference to the Legislature, we respect-
    fully disagree. A tax exemption for charitable use is allowed
    because those exemptions benefit the public generally and the
    organization performs services which the state is relieved pro
    tanto from performing.8 In Neb. Rev. Stat. § 37-803 (Reissue
    2016) of the Nongame and Endangered Species Conservation
    Act, the Legislature declared that the “state shall assist in the
    protection of [certain] species of wildlife and wild plants which
    are determined to be threatened or endangered” and that “it
    is the policy of this state to conserve species of wildlife for
    human enjoyment” and other purposes. Because the Legislature
    views the conservation of endangered species as a policy of the
    state, and conservation groups like the Crane Trust relieve the
    state of that burden, we conclude that the Legislature intended
    for those groups, provided they otherwise meet “charitable
    organization” criteria, to be considered “charitable organiza-
    tions” under § 77-202(1)(d).
    7
    Neb. State Bar Found. v. Lancaster Cty. Bd. of Equal., 
    237 Neb. 1
    , 15, 
    465 N.W.2d 111
    , 120 (1991).
    8
    Bethesda Found. v. Buffalo Cty. Bd. of Equal., 
    263 Neb. 454
    , 
    640 N.W.2d 398
    (2002).
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    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
    Cite as 
    298 Neb. 970
    Our decision is supported by several other states’ inter-
    pretations of similar statutes. For example, in Francis Small
    Heritage v. Town of Limington,9 the Maine Supreme Judicial
    Court held that a conservation group qualified as a charitable
    organization because the organization lessened the burdens
    of the government by assisting the state in achieving its con-
    servation policy goals. The Maine court concluded that the
    Legislature enunciated a strong public policy in favor of con-
    servation when it declared in a section of its Natural Resources
    Protection Act that the state’s wetlands and wildlife habitat are
    “‘resources of state significance’” and that they benefit the
    state’s citizens.10
    And in Turner v. Trust for Public Land,11 a Florida court
    concluded that a conservation group qualified as a charitable
    organization because there was “little question that conserva-
    tion serves a public purpose” where Florida’s state constitution
    provided that it was “‘the policy of the state to conserve and
    protect its natural resources and scenic beauty . . . .’” A number
    of other states, using rationale similar to that in Francis Small
    Heritage and Turner, have also concluded that conservation
    organizations may qualify as charitable organizations.12
    Use of Subject Properties
    In addition to showing that the Subject Properties are owned
    by a charitable organization, the Crane Trust must also show
    that the Subject Properties are used exclusively for educational,
    religious, charitable, or cemetery purposes.13
    9
    Francis Small Heritage v. Town of Limington, 
    98 A.3d 1012
    (Me. 2014).
    10
    
    Id. at 1020.
    11
    Turner v. Trust for Public Land, 
    445 So. 2d 1124
    , 1126 (Fla. App. 1984).
    12
    See, New England Forestry v. Board of Assessors, 
    468 Mass. 138
    , 
    9 N.E.3d 310
    (2014); Pecos River Open Spaces, Inc. v. Cnty. of San Miguel,
    2013 NMCA 029, ___ P.3d ___ (2013); Little Miami v. Kinney, 68 Ohio
    St. 2d 102, 
    428 N.E.2d 859
    (1981); Mohonk Trust v. Assessors, 
    47 N.Y.2d 476
    , 
    392 N.E.2d 876
    , 
    418 N.Y.S.2d 763
    (1979).
    13
    See Lincoln Woman’s Club v. City of Lincoln, 
    178 Neb. 357
    , 
    133 N.W.2d 455
    (1965).
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    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
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    In this case, the Crane Trust’s status as a charitable organi-
    zation and its use of the Subject Properties are closely related
    issues. For this reason, the parties largely repeat their argu-
    ments or incorporate them by reference. For the same reasons
    that we found the Crane Trust qualified as a charitable orga-
    nization, we find that the Subject Properties were used exclu-
    sively for charitable purposes.
    Financial Gain or Profit
    Finally, the Crane Trust must show that the Subject
    Properties were not owned or used for financial gain or profit
    to either the owner or user. The Board argues that the Subject
    Properties were used for financial gain or profit solely because
    the Crane Trust entered into a lease agreement for cattle graz-
    ing with a farming operation for $9,300. However, the fact
    that income is generated as a result of an exempt use of the
    property does not make the property taxable.14 Property is not
    used for financial gain or profit to either the owner or user if
    no part of the income from the property is distributed to the
    owners, users, members, directors, or officers, or to private
    individuals.15
    Here, the evidence showed that the lease money was not
    distributed to its owners, users, members, directors, officers,
    or anyone else, and that the cost of managing the Subject
    Properties far exceeded the amount of lease money. Although
    there was some evidence that the cattle grazing furthered the
    Crane Trust’s habitat management program, even if it did not,
    the use of the land for cattle grazing was incidental to the
    Crane Trust’s primary purpose of conserving and protecting the
    natural habitat for migratory birds and wildlife for the public’s
    benefit. We therefore conclude that the Subject Properties were
    not owned or used for financial gain or profit to either the
    owner or user.
    14
    Neb. Unit. Meth. Ch. v. Scotts Bluff Cty. Bd. of Equal., 
    243 Neb. 412
    , 
    499 N.W.2d 543
    (1993).
    15
    Fort Calhoun Bapt. Ch., supra note 6.
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    PLATTE RIVER CRANE TRUST v. HALL CTY. BD. OF EQUAL.
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    Because the Subject Properties meet the requirements for a
    charitable tax exemption under § 77-202(1)(d), we conclude
    that they are entitled to exemption for the tax year in question.
    We therefore reverse TERC’s decision and remand the cause
    for an order in accordance with this opinion.
    CONCLUSION
    For the reasons set forth above, we reverse TERC’s deci-
    sion and remand the cause for TERC to enter an order that
    the Subject Properties are entitled to a property tax exemption
    under the provisions of § 77-202(1)(d).
    R eversed and remanded with directions.
    Wright, J., not participating.
    Cassel, J., dissents.