Mountain Vista Retirement Residence v. Fremont County Assessor , 356 P.3d 269 ( 2015 )

IN THE SUPREME COURT, STATE OF WYOMING
2015 WY 117
APRIL TERM, A.D. 2015
September 2, 2015
MOUNTAIN VISTA RETIREMENT
RESIDENCE,
Appellant
(Petitioner),
S-14-0282
v.
FREMONT COUNTY ASSESSOR,
Appellee
(Respondent).
Appeal from the District Court of Fremont County
The Honorable Norman E. Young, Judge
Representing Appellant:
Thomas N. Long and Aaron Lyttle of Long Reimer Winegar Beppler LLP,
Cheyenne, WY. Argument by Mr. Lyttle.
Representing Appellee:
Jodi A. Darrough, Deputy Fremont County Attorney, Lander, WY.
Before BURKE, C.J., and HILL, *KITE, DAVIS, and FOX, JJ.
* Justice Kite retired from judicial office effective August 3, 2015, and pursuant to Article 5, § 5 of the
Wyoming Constitution and Wyo. Stat. Ann. § 5-1-106(f) (LexisNexis 2015) she was reassigned to act on
this matter on August 4, 2015.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be
made before final publication in the permanent volume.
HILL, Justice.
[¶1] Mountain Vista Retirement Residence (Mountain Vista) challenged the Fremont
County Assessor’s 2012 property tax assessment to the Fremont County Board of
Equalization (County Board), claiming an exemption. The County Board affirmed the
county assessor’s determination that Mountain Vista is nonexempt from paying property
taxes. The Wyoming State Board of Equalization (State Board of Equalization) affirmed
the County Board, as did the district court. On appeal, Mountain Vista argues that it
should be exempt based upon its status as a charitable or benevolent association. We will
affirm the County Board.
ISSUES
[¶2] Mountain Vista presents three issues on appeal:
1. Whether the Fremont County Board of Equalization (the
County Board) erred in determining that Mountain Vista
Retirement Residence (Mountain Vista) is not entitled to
exemption from ad valorem tax as a charitable or
benevolent association because it serves a limited number
of people, notwithstanding the substantial benefit to the
entire public of providing senior independent living
services at or below cost.
2. Whether Chapter 14, § 13(a)(ii) of the Department of
Revenue’s rules, forbidding a tax-exempt senior housing
facility from charging costs or allowing residents to
provide their own furnishings, as interpreted by the
County Board and applied to Mountain Vista, exceeds the
Department of Revenue’s statutory authority.
3. Whether the County Board erred in determining that
Mountain Vista uses its property for primarily commercial
purposes, despite the fact that Mountain Vista’s provision
of independent living services not available in commercial
housing is central, rather than collateral, to its charitable
purpose.
STANDARD OF REVIEW
[¶3] The Wyoming Administrative Procedure Act governs this Court’s review of a
decision by a county board. Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2015) provides
in pertinent part:
1
(c) To the extent necessary to make a decision and
when presented, the reviewing court shall decide all relevant
questions of law, interpret constitutional and statutory
provisions, and determine the meaning or applicability of the
terms of an agency action. In making the following
determinations, the court shall review the whole record or
those parts of it cited by a party and due account shall be
taken of the rule of prejudicial error. The reviewing court
shall:
....
(ii) Hold unlawful and set aside agency
action, findings and conclusions found to be:
(A) Arbitrary, capricious, an abuse of
discretion or otherwise not in accordance with
law;
....
(B) In excess of statutory jurisdiction,
authority or limitations or lacking statutory
right;
....
(E) Unsupported by substantial evidence in
a case reviewed on the record of an agency
hearing provided by statute.
[¶4] In Britt v. Fremont County Assessor, 2006 WY 10, 126 P.3d 117 (Wyo. 2006), we
explained how we apply this statute in our review:
We review both the agency’s findings of fact and law:
“Considerable deference is accorded to the findings of
fact of the agency, and this Court does not disturb them
unless they are contrary to the overwhelming weight of
the evidence. Amoco Production Co. v. Wyoming State
Bd. of Equalization, 12 P.3d 668, 671 (Wyo. 2000). An
agency’s conclusions of law can be affirmed only if they
are in accord with the law. Id. at 672. Our function is to
correct any error that an agency makes in its
interpretation or application of the law.”
EOG Resources, Inc. v. Wyoming Dep’t of Revenue, 2004
WY 35, ¶ 12, 86 P.3d 1280, [1284] (Wyo. 2004).
2
....
“The district court and this Court are charged with
reviewing an agency’s decision for substantial evidence.
That duty requires a review of the entire record to
determine if there is relevant evidence that a reasonable
mind might accept in support of the agency's decision.
…”
McTiernan v. Scott, 2001 WY 87, ¶ 16, 31 P.3d 749, [756]
(Wyo. 2001) (citations and footnote omitted).
....
Findings of ultimate fact are reviewed de novo:
“When an agency’s determinations contain elements of
law and fact, we do not treat them with the deference we
reserve for findings of basic fact. When reviewing an
‘ultimate fact,’ we separate the factual and legal aspects
of the finding to determine whether the correct rule of
law has been properly applied to the facts. We do not
defer to the agency’s ultimate factual finding if there is
an error in either stating or applying the law.”
Basin Elec. Power Co-op., Inc. v. Dep’t of Revenue, State of
Wyo., 970 P.2d 841, 850-51 (Wyo. 1998) (citations omitted).
Britt, ¶ 17, 126 P.3d at 122-123, (quoting BP Am. Prod. Co. v. Dep’t of Revenue, 2005
WY 60, ¶¶ 10-13, 112 P.3d 596, 602-603 (Wyo. 2005)). Neither the decision of the
district court nor that of the State Board of Equalization is entitled to deference; rather,
the court conducts “an independent inquiry into the matter, just as if it had proceeded
directly to us from the agency.” Id.
FACTS
[¶5] Mountain Vista is a non-profit corporation that owns real property in Fremont
County, Wyoming, which it uses to provide independent living services to elderly
residents. To qualify to live at Mountain Vista, resident applicants may join through a
membership fee or by agreeing to a month-to-month lease. Applicants must be age 55 or
older and capable of living independently without the assistance of a third-party and
without assistance from anyone employed by Mountain Vista. This means residents must
be able to perform alone the tasks of day-to-day life, such as cooking, eating, cleaning
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and grooming. Support provided by Mountain Vista includes transportation, meal service,
exercise classes, socialization with other residents, and safety services. These support
services are paid for through usage fees from residents of Mountain Vista. Residents are
expected and permitted to provide their own furnishings.
[¶6] To qualify for resident status at Mountain Vista, each resident application must
complete an Independent Living Assessment and meet physical requirements, which
demonstrate that the individual can live independently or with the aid of a spouse or
roommate. Physical health is continually monitored and reassessed after an illness or a
fall. This is done in order to determine that residents can continue to live at Mountain
Vista independently. Applicants must also meet financial requirements to qualify to live
at Mountain Vista. Members of Mountain Vista are assessed a one-time membership fee,
which is calculated in increments of $10,000. The membership fee determines a monthly
service fee, which includes property tax, cable, water, sewer, garbage and snow removal,
lawn care, window washing, common area usage, security, and general maintenance.
The higher the membership fee, the lower the monthly service fee. Residents choose
their initial membership fee based on their personal finances and choice of housing unit,
which does not give them a property interest. A unit may not be sold, but may be
subleased, and if a resident moves or dies, the membership fee is reimbursed on a sliding
scale based on length of residence.
[¶7] In 2012, the Fremont County Assessor issued its notice of property valuation to
Mountain Vista, assessing its commercial land and improvements at $1,327,908 and its
personal property at $8,246. Mountain Vista contested this valuation on the basis that it
should be exempt from property tax because it is a charitable or benevolent association
that uses its property for primarily non-commercial purposes. The County Board, the
State Board of Equalization, and the district court upheld the valuation. This appeal
followed.
DISCUSSION
[¶8] The Wyoming Constitution specifies that certain property shall be exempt from
taxation and authorizes the legislature to exempt other property by statute. It provides:
The property of the United States, the state, counties,
cities, towns, school districts and municipal corporations,
when used primarily for a governmental purpose, and public
libraries, lots with the buildings thereon used exclusively for
religious worship, church parsonages, church schools and
public cemeteries, shall be exempt from taxation, and such
other property as the legislature may by general law provide.
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Wyo. Const. art. 15, § 12.
[¶9] The statutory exemption at issue in this case exempts property from taxation if it
is:
Property used by a secret, benevolent and charitable
society or association including any fraternal organization
officially recognized by the University of Wyoming or any
community college, and senior citizens centers to the extent it
is not used for private profit nor primarily for commercial
purposes by the society, association or center, or lessee
thereof[.]
Wyo. Stat. Ann. § 39-11-105(a)(xxvi) (LexisNexis 2013).
[¶10] Mountain Vista argues that the County Board erred when it decided that Mountain
Vista is not entitled to exemption from ad valorem tax as a charitable or benevolent
association. Mountain Vista does not claim to be a senior citizen center as that term is
defined by statute and rule, but instead contends that it is exempt from taxation as a
charitable and/or benevolent association. Mountain Vista also argues that it uses its
property for primarily non-commercial purposes. We disagree and affirm the County
Board’s decision, addressing each of Mountain Vista’s contentions hereinafter.
A. Charitable Association
[¶11] The Department of Revenue’s rules define charity as follows:
“Charity” is a gift for the benefit of an indefinite number of
persons in Wyoming, by bringing their minds or hearts under
the influence of education or religion, by relieving their
bodies from disease, suffering or constraint, by assisting them
to establish themselves in life, or by erecting or maintaining
public buildings or works. The fundamental basis for this
exemption is the benefit conferred upon the public, and the
consequent relief, to some extent, of the burden upon the state
to care and advance the interests of its citizens.
Department of Revenue Rules, ch. 14, § 13 (a)(ii) (2014).
[¶12] The County Board affirmed the county assessor’s determination that Mountain
Vista is not a charitable association, and we agree and find that substantial evidence
exists in the record to support the finding that Mountain Vista is not a charitable
association. A strong presumption favors the county assessor’s valuation. Britt, ¶ 20,
126 P.3d 124. “In the absence of evidence to the contrary, we presume that the officials
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charged with establishing value exercised honest judgment in accordance with the
applicable rules, regulations, and other directives that have passed public scrutiny, either
through legislative enactment or agency rule-making, or both.” Amoco Prod. Co. v.
Dep’t of Revenue, 2004 WY 89, ¶ 7, 94 P.3d 430, 435 (Wyo. 2004). Here, Mountain
Vista had the initial burden of presenting evidence sufficient to overcome the
presumption. Id., ¶ 8, 94 P.3d 435. If successful, then the County Board was “required
to equally weigh the evidence of all parties and measure it against the appropriate burden
of proof.” Colo. Interstate Gas Co. v. State Dep’t of Revenue, 2001 WY 34, ¶ 10, 20
P.3d 528, 531 (Wyo. 2001). The burden of going forward would then have shifted to the
county assessor to defend her valuation. Id. Mountain Vista carried “the ultimate burden
of persuasion to prove by a preponderance of the evidence that the valuation was not
derived in accordance with the required constitutional and statutory requirements for
valuing … property.” Id.
[¶13] The County Board considered the testimony and exhibits presented in the context
of § 39-11-105 and the Department of Revenue rules and concluded:
a. Regarding the first factor, whether the purpose of the
Taxpayer’s operation is charitable in nature, has not been
proven by the taxpayer. Their membership is for a finite
number of members who must have the financial, physical
and mental capabilities to be accepted which is targeting a
specific group of persons and is therefore not an indefinite
number of persons as required by DOR rules Chapter 14 §
12(a)(ii). This property simply does not meet the threshold
intended by the Wyoming Legislature to qualify for tax-
exempt status as a charitable organization. The County Board
notes that a potential applicant who “is not known by a Board
Member, Staff Member or Resident, a personal interview may
be required.” . . .
b. The purpose of the Taxpayer’s property is for housing
which their members must pay for and is not subsidized in
any fashion.
c. The Assessor’s argument that the taxpayer’s property
is used for a commercial purpose is also compelling, but not
necessary as the County Board finds this is not a charity. (see
DOR Rules, Chapter 14, § 13(a)(ii)).
d. The dissenting County Board member notes that the
taxpayer does relieve a burden on the citizens of Wyoming by
fulfilling an intermediate stage of living between a personal
home and a nursing home[.]
[¶14] Mountain Vista never overcame the presumption favoring the county assessor’s
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valuation. The county assessor reviewed the exemption statutes and determined that
Mountain Vista was not a charitable association. The county assessor concluded that the
exclusivity of Mountain Vista’s membership, the membership fees, security deposit, and
monthly fees and charges for additional services, in addition to the health requirements
and the fact that the residents do not own the property and must provide their own
furnishings, established the use of the property as commercial and disqualified it for
exemption. We are in total agreement. While Mountain Vista does provide beneficial
services to its occupants, those services cannot be classified as a gift such that Mountain
Vista is then classified as a charity. Mountain Vista’s policies require residents to pay for
the costs of operating the property, as well as extra amenities. It is difficult to view such
an arrangement as charitable. See Friendship Manor Corp. v. Tax Comm’n, 26 Utah 2d
227, 487 P.2d 1272 (1971) (requiring that a charity relieve the burden of government or
benefit the general welfare); United Presbyterian Asso. v. Board of County Comm’rs, 167
Colo. 485, 448 P.2d 967 (1968) (where material reciprocity between alleged recipients
and their alleged donor exists -- then charity does not).
[¶15] Mountain Vista also argues that it should be classified as a charitable organization
because the services it provides are “for the benefit of an indefinite number of persons.”
We disagree. As testified to by the county assessor, Mountain Vista’s facility “is for a
finite number of individuals who have adequate financial resources and the gift of good
health.” Mountain Vista’s facility consists of 19 units and thus serves a very limited
number of residents. However, Mountain Vista argues that “all charities benefit only a
limited number of persons” and refers to Department of Revenue & Taxation v. Casper
Legion Baseball Club, 767 P.2d 608 (Wyo. 1989) where this Court determined that in
deciding whether an organization is eligible for a charitable tax exemption, the focus
must be “on whether the charity primarily engages in activities providing an indefinite
number of persons in the general public with benefits designed to aid them in an
educational, moral, physical, or social manner” and “whether the charity provides access
to those benefits in an equal and nondiscriminatory way.” Id., 767 P.2d at 611. There, all
youth who chose to participate positively benefit from the “physical,” “social,” and
“moral” experience of trying out for a baseball team. Here, there is no public benefit to
the members of the general public that apply for membership and are theoretically
denied.
[¶16] Other courts have spoken on this very subject. In an Idaho Supreme Court case,
the following discussion occurred:
The question of whether a non-profit corporation provides a
general public benefit, so as to be entitled to property tax
exemption, is somewhat complex. Tax exemptions are
disfavored generally, perhaps because they seem to conflict
with principles of fairness – equality and uniformity – in
bearing the burdens of government. See, Hilltop Village, Inc.
7
v. Kerrville Independent School District, 426 S.W.2d 943,
947 (Tex.1968) overruled on other grounds in City of
McAllen v. Evangelical Lutheran Good Samaritan Society,
530 S.W.2d 806 (Tex.1976). They are said to be justified, in
cases of a charitable or benevolent organization for example,
by an offsetting benefit to the community (monetary or
otherwise). Hence has arisen the test that an institution may
be entitled to an exemption where it performs a function
which might otherwise be an obligation of government. A
nonprofit corporation may benefit only a limited group of
people and still be considered “charitable” if that group of
people possess a need which government might be required to
fill. For example, a facility for physically handicapped
persons might be “charitable” even though those persons
were all members of a particular church or club because the
facility is providing a general benefit to the community by
relieving a potential obligation of government. However,
where there is no assistance to individuals which might
normally require governmental funds, as is the case with
Sunny Ridge, the institution must meet a stricter test: it must
provide benefits to the community at large (or, as some
courts have stated it, to an “indefinite number of
persons”). See, e.g., Oasis, Midwest Center for Human
Potential v. Rosewell, 55 Ill.App.3d 851, 13 Ill. Dec. 97, 370
N.E.2d 1124, 1130 (1977); Benton County v. Allen, 170 Or.
481, 133 P.2d 991, 992 (1943). Since the residents at Sunny
Ridge must be able to pay completely for the benefits they
receive, and since they must be physically able to care for
themselves, they are not a group of persons for whom any
government assistance would be needed. Therefore, Sunny
Ridge must provide some general benefit to the community as
a whole. However, the benefits available at the center are
reserved for the restricted group of persons who have met the
entrance qualifications, and while in theory any member of
the community who can meet those qualifications may join,
in actual effect only a limited number of openings can exist
during a given period of time. We find no fault in this; we
simply recognize that benefits provided by Sunny Ridge must
necessarily be limited to a relative few. It may be that an
indirect benefit flows to the community; however, as pointed
out by the court in Massachusetts Medical Society v.
Assessors of Boston, 340 Mass. 327, 164 N.E.2d 325 (1960),
8
“Whether an institution is in its character literary,
benevolent, charitable or scientific will depend upon
the declared purposes and the actual work performed.
(Citations omitted.) An institution will be classed as
charitable if the dominant purpose of its work is for the
public good and the work done for its members is but
the means adopted for this purpose. But if the
dominant purpose of its work is to benefit its members
or a limited class of persons it will not be so classed,
even though the public will derive an incidental benefit
from such work.” Id. at 328. (Emphasis added.)
We find it laudable that Sunny Ridge provides the care it
does; however, as this court stated in Sunset Memorial
Gardens v. Idaho State Tax Commission, 80 Idaho 206, 219,
327 P.2d 766, 774 (1958), “[t]he basis of tax exemptions is
the accomplishment of public purpose and not the favoring of
particular persons or corporations at the expense of taxpayers
generally.” If Sunny Ridge attempted to provide its services
based on need to a greater extent, there might be more of a
direct public benefit, even though the center can
accommodate only a limited number of persons. As the
record shows, however, there is no means provided by which
individuals having particular needs for the types of services
Sunny Ridge can provide are singled out for admission, or for
assistance. Although the record shows that Sunny Ridge
provides its care at substantial savings over what would be
charged at a nursing home, for example, there is nothing in
the record to indicate that this benefit of reduced costs is
directed toward those who particularly need it. The savings
may well benefit primarily persons who could afford to pay
higher costs. In any case, the type of individual who needs
nursing home care could not pass the entrance qualifications
at Sunny Ridge.
....
Based on the factors already discussed, and after
consideration of the authorities cited, we hold as a matter of
law that Sunny Ridge -- under the particular circumstances of
this case -- is not a “charitable corporation” under I.C. § 63-
105C. We emphasize that our determination is a narrow one:
we are persuaded of a need to be flexible in such cases. We
9
agree with the Colorado Supreme Court when it stated:
“We shall not attempt in this opinion to enunciate a
fixed definition of the phrase ‘strictly charitable
purposes,’ ‘lest by words of exclusion we might
unintentionally seem to impose a legal restraint upon
that cardinal grace which by its very nature thrives in
proportion to the freedom of its proper exercise.”
United Presbyterian Ass’n v. Board of County
Comm’rs, 167 Colo. 485, 448 P.2d 967, 972 (1968).
We leave for determination at another time whether a similar
nonprofit corporation -- or, for that matter, whether this
corporation, under different circumstances -- is entitled to a
property tax exemption under the terms of I.C. § 63-105C as
it now reads.
In re Appeal of Sunny Ridge Manor, 675 P.2d 813, 817-818 (Idaho 1984) (emphasis
added).
[¶17] The decision of the Idaho court is on point. Here, we agree that the service
Mountain Vista provides is an important one. However, it does not qualify as a
charitable association. Mountain Vista’s services are not a gift pursuant to Department of
Revenue rules, nor does Mountain Vista benefit an indefinite number of persons.
Furthermore, Mountain Vista’s services do not provide educational or religious benefits,
or relief from suffering. There is no public benefit provided, nor a public burden relieved
and, accordingly, Mountain Vista does not qualify as a charitable association.
B. Benevolent Association
[¶18] We turn to our next consideration: whether or not Mountain Vista is a benevolent
association. The Department of Revenue’s rules define benevolent as follows:
“Benevolent” includes purposes which may be deemed
charitable, as well as acts dictated by kindness, good will, or a
disposition to do good, the objects of which have no relation to
the promotion of education, learning, or religion, the relief of
the needy, the sick, or the afflicted, the support of public
works, or the relief of public burdens. The term has wider
significance than “charitable” as a legal tenet but shall be
limited to purposes or activities of sufficient public importance
and wide-spread social value.
10
Department of Revenue Rules, ch. 14, § 13(a)(iii) (2014).
[¶19] The Department of Revenue’s rules preclude application of the benevolent
association exemption if the entity uses its property primarily for commercial purposes.
Specifically, the rules provide:
Housing made available to senior citizens which is not part of
a senior citizens’ center (such as a retirement home) is
exempt only if the entity owning the property meets the
criteria of a “charitable and benevolent society or association”
in Section 13 of this Chapter. A retirement home is taxable
if the residents provide their own furnishings and are
charged for the cost of operating the home, including extra
amenities enjoyed by the residents. Such a retirement home
constitutes a commercial enterprise, even if operated on a
non-profit basis with reduced charges.
Department of Revenue Rules, Chapter 14, § 14(a)(ii) (2014) (emphasis added).
[¶20] The County Board made no specific findings based upon the definition of a
benevolent association and instead upheld the county assessor’s determination based
upon the assessor’s conclusion that Mountain Vista’s property was primarily used for
commercial purposes. More specifically, the county assessor found:
“Mountain Vista residents must provide their own furnishings
and are charged for the cost of operating the home. …
[The rule] goes on further to state that, ‘A retirement home is
taxable if the residents provide their own furnishings and are
charged for the cost of operating the home…’
....
Section 12 defines commercial purpose as ‘The property at
issue shall not be used primarily for a commercial purpose,
that is, use of a property or any portion thereof to provide
services, merchandise, areas or activities for a charge which
are generally obtainable from any commercial enterprise and
are collateral to the purpose of secret, benevolent and
charitable. …
‘The use of property for commercial purpose is controlling,
not whether or not a profit is actually made nor how the
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revenue is ultimately used. If an activity is considered
commercial, it does not become noncommercial merely
because the revenue derived from the commercial use is
devoted to charitable and authorized purposes.’
[¶21] We find this conclusion to be supported by substantial evidence. The county
assessor testified that “[t]he residents provide their own furnishings and pay for their own
utilities, phone, gas, electric and personal property.” The record also shows that the
property is used as housing for senior citizens with means to live independently, and the
property is in the competitive housing market. Furthermore, residents pay for the
services used in the daily operation of the housing, as well as utilities.
[¶22] Mountain Vista attempts to avoid the application of this rule by arguing that the
Department of Revenue exceeded its authority in promulgating the rule. In so arguing,
Mountain Vista contends that the rule is clearly contrary to a legislative intent and policy
to encourage these types of residential facilities. We disagree. The legislature has made
numerous revisions to the statutory tax exemptions, the most recent changes taking effect
on January 1, 2015. Those changes in fact specifically addressed the exemptions at issue
and separated out the exemptions for senior citizens, charitable associations, and
benevolent associations. The current exemptions for senior centers and benevolent
associations still, however, condition their exemption on a showing that the property is
used for primarily noncommercial purposes. The legislature did not add a “commercial
purposes” definition, nor did it make changes to address the Department of Revenue’s
interpretation of that term. We presume that when the legislature enacts laws, it does so
with full knowledge of the existing law. In re Estate of Scherer, 2014 WY 129, ¶ 17,
336 P.3d 129, 134 (Wyo. 2014). Because the legislature has revised these exemptions
without addressing the Department of Revenue’s interpretation of the exemption, we
conclude that the Department of Revenue’s interpretation is consistent with the
legislature’s intent.
CONCLUSION
[¶23] We affirm the County Board’s decision to uphold the Fremont County Assessor’s
original status determination and tax assessment and ultimately deny Mountain Vista a
property tax exemption.
[¶24] We conclude that Mountain Vista is neither a charitable or benevolent association
and that its property is primarily used for commercial purposes.
[¶25] Affirmed.
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