Case Title: IN THE MATTER OF THE APPEAL OF THE TOWN OF THERMOPOLIS FROM A DECISION OF THE STATE BOARD OF EQUALIZATION-2000 PROPERTY VALUATION

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2002-05-07T00:00:00Z

Document:
IN THE MATTER OF THE APPEAL OF THE TOWN OF THERMOPOLIS FROM A DECISION OF THE STATE BOARD OF EQUALIZATION-2000 PROPERTY VALUATION2002 WY 7045 P.3d 1155Case Number: 01-194Decided: 05/07/2002

APRIL TERM, A.D. 2002

 

                                                                                                            

 

IN THE 
MATTER OF THE APPEAL OF

THE TOWN 
OF THERMOPOLIS FROM A

DECISION 
OF THE STATE BOARD OF

EQUALIZATION 
- 2000 PROPERTY

VALUATION 
(TOWN OF THERMOPOLIS,

PARCEL 
2486-OLD WEST WAX MUSEUM)

 

TOWN OF 
THERMOPOLIS, 

Appellant(Petitioner),

 

v.

                                                                                                

SHELLEY 
DEROMEDI, HOT SPRINGS

COUNTY 
ASSESSOR, 

Appellee(Respondent).

 

 

W.R.A.P. 
12.09(b) Certification from the District Court of Hot Springs 
County

The 
Honorable Gary P. Hartman, Judge 

 

Representing 
Appellant:

Michael 
S. Messenger of Messenger & Jurovich, P.C., Thermopolis, Wyoming.

Representing 
Appellee:

Dan O. 
Caldwell III, Hot Springs County and Prosecuting Attorney, Thermopolis, 
Wyoming.

 

Before 
LEHMAN, C.J., and GOLDEN, HILL, KITE, JJ., and SPANGLER, D.J., 
Retired

 
  

GOLDEN, 
Justice. 

[¶1]           
In a 
companion decision, we held that by establishing a public museum to house 
donated western wax figures and provide other scientific, educational, and 
cultural activities and displays, Appellant Town of Thermopolis (Town) had acted 
with a governmental purpose that entitled it to its requested exemption from 
property tax for the tax year 1999.  
In this appeal, Appellee Hot Springs County Assessor (Assessor) denied 
the same tax exemption for the tax year 2000.  The Hot Springs County Board of 
Equalization (CBOE) reversed the Assessor's decision; the CBOE was reversed by 
the Wyoming State Board of Equalization (SBOE), and the district court certified 
the appeal to this Court.  

 

[¶2]           
For the 
tax year 1999, although the museum was not yet operating, we found that the 
evidence did support the CBOE's findings and conclusions, and we upheld its 
decision to grant the Town its requested tax exemption.  When the CBOE considered this issue in 
2000, the museum was operating, and it found that strong evidence supported a 
decision to grant the Town its tax exemption.  We agree that the record of evidence 
strongly supports the CBOE's decision, and for the same reasons stated in our 
decision for the 1999 tax year, we reverse and reinstate the CBOE decision 
granting the property tax exemption for the year 2000.  Deromedi v. Town of Thermopolis, 
2002 WY 69. 

 

 

ISSUES

 

[¶3]           
The Town 
presents the following issue for our review:

 

Was the 
decision of the Hot Springs County Board of Equalization that real property 
assessed to the Town of Thermopolis by the Hot Springs County Assessor is used 
primarily for a governmental purpose and is therefore exempt from property 
taxation pursuant to Wyo. Const. Art. 15, § 12 and Wyo. Stat. Ann. § 
39-11-105(a)(v) arbitrary, capricious, an abuse of discretion or otherwise not 
in accordance with law, or unsupported by substantial 
evidence?

 

The 
Assessor states that the issues are:

 

            
Whether the Hot Springs County Board of Equalization's August 1, 2000 
Findings of Fact, Conclusions of Law and Order were arbitrary, capricious, an 
abuse of discretion or otherwise not in accordance with law, or unsupported by 
substantial evidence; and

            
Whether the Wax Museum which is the subject of this appeal is used 
primarily for a governmental purpose?

 

 

FACTS

 

[¶4]           
In 1997, 
the Town received donated western wax museum figures.  It sought and received a community 
development grant that it used to purchase property to house the figures and 
establish a museum with several different kinds of displays, objects, and 
activities.  The Assessor denied the 
Town's tax exemption requests in both 1999 and 2000, and the Town objected, 
contending that the museum was used primarily for a governmental purpose.  The Town received a contested case 
hearing before the CBOE in each of those years.  For the year 2000, the Town also 
challenged the Assessor's valuation method.  However, the CBOE upheld it, and the 
Town does not challenge that ruling in this appeal.

 

[¶5]           
In 1999, 
when the CBOE first considered the nature of the museum's purpose, the museum 
was still establishing itself but was to be operated in part by the for-profit 
corporation, Big Horn Prospecting, Inc (BHP).  When the matter came before the CBOE in 
2000, the museum was operating and found to hold the historical wax museum, the 
"old Mac's Bar," numerous artifacts, maps, etchings, interpretative materials, a 
historical teddy bear collection and other educational displays.  The museum also contained a textile 
studio for displays, spinning, weaving, a studio and a gallery for art and 
handcrafts, and accommodations for public and private 
meetings.

 

[¶6]           
The CBOE 
found that the primary purpose of the museum was to provide educational and 
recreational benefit to the citizenry and to economically benefit the local 
economy in general, although its purpose also included enhancing sales tax 
revenues, and promoting tourism.  
BHP charged admission fees, but use of the gallery for public meetings 
was provided at no charge.  
Operating rights were granted to BHP in exchange for $1,000.00 per year 
rent.  Additionally, the Town 
subsidized the museum in the amount of $1,200.00 annually for providing water, 
sewer and sanitation services.  The 
Town was also obligated to assume some financial obligations until BHP showed 
positive cashflow.  At the time of 
the hearing, BHP had lost $129,992.02, but was expected to eventually break 
even. The Big Horn Basin Foundation, a non-profit organization, operated some of 
the facilities and programs.

 

[¶7]           
For its 
first legal conclusion, the CBOE applied a Department of Revenue rule1 that states in part that if a 
service is rendered gratuitously, supported by taxes, and rendered for the 
public welfare or enjoyment generally, the property associated with providing 
such service is exempt.  Based on 
the museum's present financial condition, the CBOE concluded that the Town is 
gratuitously providing the public with museum services and benefits and not for 
a commercial purpose. 

 

[¶8]           
Secondly, 
the CBOE examined subsection (v) of the Department of Revenue rule which 
states:  "where a city enters the 
field of private competitive business for profit or into activities which may be 
and frequently are carried on through private enterprises," the property would 
not be exempt.  The CBOE found that, 
generally, public museums serve a governmental purpose, and concluded that, 
because the museums were different in nature and purpose, this museum did not 
compete with the Dinosaur Center, BHP's privately owned and operated 
museum.  

 

[¶9]           
For its 
third legal conclusion, the CBOE determined that the museum was a recreational 
facility, and the gallery an auditorium, within the meanings intended in Wyo. 
Stat. Ann. § 39-11-105(a)(v)(D)2 for which charges had not exceeded 
the cost of operating and maintaining it, and this entitled the Town to the 
exemption.  Based on these three 
conclusions, the CBOE determined that the Town should be granted the 
exemption.  

 

[¶10]       
The 
Assessor appealed the decision to the SBOE which reversed after again 
concluding, as it had in its earlier decision, that the primary purpose was 
economic development which is not a governmental function.  It found that the museum's current 
unprofitability was irrelevant because the Town intended that the museum be 
profitable, and it rejected the conclusion that the Town's museum was not a 
competitor with the dinosaur museum.  
The Town filed a petition for review, and the district court certified 
the appeal to this Court pursuant to W.R.A.P. 12.09(b).

 

 

STANDARD OF 
REVIEW

 

[¶11]       
As 
stated in our first decision, our standard of review for cases arising from a 
county board contested case proceeding, appealed to a state agency, and finally 
arriving in this Court on appeal is as follows:  

 

Since in 
this case the county board was the finder of the fact and the state board heard 
no additional testimony, we will treat the state board as an intermediate level 
of review and accord deference only to the county board's findings of fact.  Thus, the primary focus of our review 
will be whether the county board's decision was lawful and supported by 
substantial evidence.

 

Laramie 
County Bd. of Equalization v. Wyo. State Bd. of Equalization, 915 P.2d 1184, 1188 (Wyo. 1996) (quoting Union Pacific Railroad Co. v. Wyo. State 
Bd. of Equalization, 802 P.2d 856, 859 (Wyo. 1990)).  

 

The 
party challenging the sufficiency of the evidence has the burden of 
demonstrating the agency's decision is not supported by substantial 
evidence.  If the agency action is 
supported by substantial evidence, its decision should be reversed only for 
errors of law.  If the agency did 
not apply the correct rule of law, or applied it incorrectly, this Court does 
not defer to the agency's conclusion.  
The agency's errors of law are corrected by this 
Court.

 

Id. 
(quoting 
Butts v. Wyo. State Bd. of Architects, 911 P.2d 1062, 1065 (Wyo. 
1996)).

 

[¶12]       
The 
scope of appellate review of agency decisions is provided by 
statute:

 

(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:

(i) 
Compel agency action unlawfully withheld or unreasonably delayed; 
and

(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) 
Contrary to constitutional right, power, privilege or 
immunity;

(C) In 
excess of statutory jurisdiction, authority or limitations or lacking statutory 
right;

(D) 
Without observance of procedure required by law; or

(E) 
Unsupported by substantial evidence in a case reviewed on the record of an 
agency hearing provided by statute.

 

Wyo. 
Stat. Ann. § 16-3-114(c) (LexisNexis 2001).

 

 

            
We examine the entire record to determine if there is substantial 
evidence to support an agency's findings.  
If the agency's decision is supported by substantial evidence, we cannot 
properly substitute our judgment for that of the agency, and must uphold the 
findings on appeal.  Substantial 
evidence is relevant evidence which a reasonable mind might accept in support of 
the conclusions of the agency.  It 
is more than a scintilla of evidence.

 

Laramie 
Cty. Bd. of Equalization, 915 P.2d  
at 1188.

 

 

DISCUSSION

 

[¶13]       
Although 
under Title 39, taxation of property is generally the rule, the exemptions 
provided for by § 39-11-105(a)(v) require that we apply the rule that where the 
established policy of the State is to exempt publicly owned property, the burden 
is placed on the taxing authority to establish taxability.  Deromedi, at ¶10 (citing City 
of Cheyenne v. Bd. of Cty. Comm'rs of the Cty. of Laramie, 484 P.2d 706, 
708-09 (Wyo. 1971)).  The mere 
ownership of property by a town does not exempt the property; it must also be 
used primarily for governmental purposes.  
Id.  When a town uses 
the property in a proprietary manner, the property is not exempt from 
taxation.  Town of Pine Bluffs v. 
State Board of Equalization, 79 Wyo. 262, 288, 333 P.2d 700, 710 (Wyo. 
1958).  The taxable status of 
property owned by a governmental entity must be determined as a question of fact 
by the use made of the property.  
City of Cheyenne v. Sims, 521 P.2d 1347, 1349 (Wyo. 1974).   

 

[¶14]       
We have 
recognized that the term "used primarily for a governmental purpose" is 
difficult to define but have found that it applied to buildings leased to 
profit-making corporations although located upon a municipally owned and 
operated airport. City of Cheyenne v. Bd. of Cty. Comm'rs of the Cty. of 
Laramie, 484 P.2d  at 709.  
There, we said that the mere fact that the city accomplishes such use 
through a lessee or receives rent in return for such use is not 
controlling.  Id.  We later decided that "[w]here the 
primary and principal use to which property is put is public, the mere fact that 
income is incidentally derived from it does not affect its character as property 
devoted to a public use, so as to prevent its being exempt from taxation."  State Bd. of Equalization v. City of 
Lander, 882 P.2d 844, 850 (Wyo. 1994).  

 

[¶15]       
In our first 
decision, we held that the CBOE's finding that the museum would be used by the 
Town primarily for the governmental purpose of providing scientific, 
educational, and cultural activities in a museum was supported by substantial 
evidence, and decided that it properly concluded that the Town was entitled to 
the statutory tax exemption.  
Deromedi, ¶13.  We held that any fees charged or profits 
generated by its lessee do not alter the Town's tax exempt status. Id. at ¶15.  Despite the Assessor's challenges to the 
CBOE's findings and conclusions in this case, our review shows that the CBOE's 
findings were again supported by substantial evidence and its conclusions 
proper.  Its decision to grant the 
Town's tax exemption was again correct and will be upheld.  

 

[¶16]   This latest appeal raises questions 
whether this museum is a "recreational facility" or the gallery an "auditorium" 
within the meaning of the statute's language.  The CBOE also queried whether the 
statute limits the lessees to charging only an amount equal to the cost of 
operations and maintenance.  Because 
the property is owned by the Town and it has been proved that it will be used 
primarily for a governmental purpose, we need not consider these questions 
although we believe our previous decisions distinguished between profit-making 
ventures and charging for the cost of the operation and maintenance of the 
facilities.  See City of Cheyenne 
v. Bd. of Cty. Comm'rs of the Cty. of Laramie, 484 P.2d 706, 708-09 (Wyo. 
1971).

 

[¶17]   The SBOE's decision is reversed, 
and the CBOE's decision granting the exemption is 
reinstated.

 

FOOTNOTES

1Below is the applicable 
law:

 

Department of Revenue, Ad Valorem Tax 
Exemption Standards, Ch. 4, § 4 (filed February 11, 
1999):

Section 4.  Publicly owned property - W.S. 
39-11-105(a)(i)-(vi).

(a) Publicly owned property is not, per 
se, exempt from taxation. The property is exempt only "when used primarily for a 
governmental purpose."

(b) The phrase "governmental purpose" 
cannot be precisely defined.  The 
following considerations should be evaluated:

(i) If a service or function is 
obligatory (one the governmental entity must perform as a legal duty imposed by 
statute), the function is governmental and the associated property is 
exempt.

(ii) If a service is rendered 
gratuitously, supported by taxes, and for the public welfare or enjoyment 
generally, the property associated with providing such service is 
exempt.

(iii) W.S. 39-11-105(a)(v) specifically 
identifies certain municipal property which is exempt (used primarily for a 
governmental purpose).

(iv) W.S. 39-11-105(a)(i)(A)-(E) and 
(ii)(A)-(D) identify specific uses of federal and state property which are 
not exempt (not used for governmental 
purposes).

(v) Property owned by a governmental 
entity acting in its proprietary capacity is not exempt, (e.g. where a city 
enters the field of private competitive business for profit or into activities 
which may be and frequently are carried on through private 
enterprises).

 

Wyo. 
Const. Art. 15, § 12 states:  "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."

Wyo. Stat. Ann. § 39-11-105 (LexisNexis 
2001) governs exemptions and provides:

            
(a) The following property is exempt from property 
taxation:

                        
****

            
 (v) Property of Wyoming 
cities and towns owned and used primarily for a governmental purpose 
including:

            
(A) Streets and alleys and property used for the construction, 
reconstruction, maintenance and repair of streets and 
alleys;

            
(B) Property used to furnish sewer and water 
services;

            
(C) City or town halls, police stations and equipment, traffic control 
equipment, garbage collection and disposal equipment and lands and buildings 
used to service and repair the halls, stations or 
equipment;

            
(D) Parks, airports, auditoriums, cemeteries, golf courses, playgrounds 
and recreational facilities.  Any 
charges for the use of the facilities shall not exceed the cost of operation and 
maintenance to qualify for the exemption;

            
(E) Personal property used exclusively for the care, preservation and 
administration of city or town property;

            
(F) Parking lots operated on a nonprofit 
basis.

 

 

2(D) Parks, airports, auditoriums, 
cemeteries, golf courses, playgrounds and recreational facilities.  Any charges for the use of the 
facilities shall not exceed the cost of operation and maintenance to qualify for 
the exemption.