Case Title: EILEEN OAKLEY, FREMONT COUNTY ASSESSOR V. FREMONT COUNTY COMMUNITY COLLEGE DISTRICT d/b/a CENTRAL WYOMING COLLEGE

Citation: 

Docket Number: S-09-0261

State: wyoming

Court: Wyoming Supreme Court

Date: 2010-07-30T00:00:00Z

Document:
EILEEN OAKLEY, FREMONT COUNTY ASSESSOR V. FREMONT COUNTY COMMUNITY COLLEGE DISTRICT d/b/a CENTRAL WYOMING COLLEGE2010 WY 106Case Number: S-09-0261Decided: 07/30/2010NOTICE:  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.
APRIL 
TERM, A.D. 2010

 
 
EILEEN 
OAKLEY, FREMONT COUNTY 
ASSESSOR,Appellant(Respondent),v.FREMONT COUNTY 
COMMUNITY COLLEGE DISTRICT d/b/a CENTRAL WYOMING 
COLLEGE,Appellee(Petitioner).
 
 
Appeal 
from the District Court of Fremont County

The 
Honorable Norman E. Young, Judge

 
 

Representing 
Appellant:

Jodi 
A. Darrough, Fremont County Attorney's Office, Lander, 
Wyoming.

 
 

Representing 
Appellee:

Frank 
B. Watkins of Frank B. Watkins, P.C., Riverton, Wyoming.

 
 
Before 
KITE, C.J., and GOLDEN, VOIGT*, and BURKE, JJ, and BROOKS, 
D.J.

 
 
*Chief 
Justice at time of oral argument.

 
 

BROOKS, 
District 
Judge.

 
 
[¶1]      The Fremont 
County Assessor (the Assessor) appeals from a decision of the district court 
exempting from taxation certain property in Riverton owned by Central Wyoming 
College (CWC).  We reverse because 
the district court's holding was not in accordance with Article 15, § 12 of the 
Wyoming Constitution.  

 
 
ISSUE

 
 
[¶2]      The parties agree 
that the sole issue on appeal is whether certain lots within CWC's business park 
are exempt from taxation based on their current use.

 
 
FACTUAL 
BACKGROUND

 
 
[¶3]      CWC is a public, 
non-profit, fully accredited, two-year community college that was established in 
1966.  CWC is primarily funded by 
state and local taxes, scholarship funds, tuition, and fees.  CWC established a business park in 1967 
to generate revenue from the leasing of land owned by the college.  The CWC Foundation manages the business 
park property pursuant to a long-term management lease with CWC.  Community college foundations are 
recognized by statute for the purpose of raising additional revenues for the 
college.  Wyo. Stat. Ann. § 
21-16-1102 (a)(iii) (LexisNexis 2009). 

 
 
[¶4]      CWC currently 
owns 333 acres;  193 acres are 
contiguous in Riverton and include 50 acres comprising the business park.  Twenty-five acres of the business park 
are divided into lots, and have been developed and leased by CWC to 10 
for-profit tenants.  These 25 acres 
and lots are the subject of this appeal.

 
 
[¶5]      The lots in 
question are leased to a daycare facility, a law office, a doctor's office, an 
investment company, a development company, and other private businesses that are 
independent from and unrelated to CWC.  
The business park tenants are, in theory, selected to enhance the 
educational purpose of the college and may provide internships.  The record does not indicate, however, 
that any of the businesses actually hire, train, or have any significant contact 
with students, staff, or faculty of CWC.  
Neither the Assessor nor CWC contend otherwise. The revenues derived by 
the business park are collected and managed by the CWC Foundation.  The Foundation receives a fee and the 
residual income is used for CWC student scholarships, programs, and 
activities.

 
 
[¶6]      The Assessor 
issued a 2007 Notice of Tax Assessment for the business park property leased to 
the for-profit tenants.  The 
Assessor concluded that because the subject property was being leased for 
commercial profit, it was subject to taxation.  CWC protested the tax assessment and a 
hearing was held before the Fremont County Board of Equalization.  That board affirmed the decision of the 
Assessor.  It specifically found: 

 
 
4.    All lots involved in this 
protest are leased and all Lessees are private individuals or business entities 
and thus, the primary use of the lots in question are used for a commercial 
purpose. 

 
 
5.    All these Lessees are in a 
commercial venture in that, as the Assessor['s] uncontroverted testimony 
indicates each exists to obtain profit, that each sells a product or service, 
that none are exempt under the Internal Revenue Service tax code . . . 
.

 
 
[¶7]      CWC appealed the 
matter to the State Board of Equalization.  
The State Board heard the matter and affirmed the decision of the County 
Board.  CWC next filed a Petition 
for Review in the Ninth Judicial District Court.  The district court reversed the decision 
of the State Board of Equalization.  
The court found that the business park was reasonably necessary to the 
efficient operation and maintenance of CWC.  The district court noted that the 
original plan for the business park was to help provide for the technical and 
vocational education of its students.  
The court also emphasized that taxing CWC would result in the useless 
endeavor of having one government entity taxing another.

 
 
STANDARD 
OF REVIEW

 
 
[¶8]      Administrative 
action is reviewed pursuant to Wyo. Stat. Ann. § 16-3-114(c) (LexisNexis 2009), 
which provides in pertinent part: 

 
 
(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;

 
 
. 
. . .

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

 
 
. 
. . ; or

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

 
 
[¶9]      The Supreme Court 
reviews both the agency's findings of fact and conclusions of law. 
"[C]onsiderable 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 evidence."  Amoco Prod. Co. v. Wyo. 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.  Our function is to correct any error 
that an agency makes in its interpretation or application of the law."  
EOG Res., Inc. v. Wyo. Dep't of 
Revenue, 2004 WY 35, ¶ 12, 86 P.3d 1280, 1284 (Wyo. 2004) (citation 
omitted). 

 
 
[¶10]   No deference is afforded the 
appellate review conducted by the State Board or by the district court.  Laramie County Bd. of Equalization v. Wyo. State Bd. of Equalization, 915 P.2d 1184, 1188 (Wyo. 
1996).  An independent inquiry into 
the matter is conducted, just as if it had proceeded directly to the Supreme 
Court from the agency.  Wyo. Dep't of Revenue v. Guthrie, 2005 WY 79, ¶ 11, 115 P.3d 1086, 1091 (Wyo. 
2005).

 
 
DISCUSSION

 
 
[¶11]   The Wyoming Constitution at Article 
15, § 12 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 school and 
public cemeteries, shall be exempt from taxation, and such other property 
as the legislature may by general law provide.

 
 
(Emphasis 
supplied.)  Similarly, Wyo. Stat. 
Ann. § 39-11-105(a)(i-v) (LexisNexis 2009) provides that property owned and used 
by a state, county, school district, city, or town that is used primarily for a 
governmental purpose is exempt from taxation.

 
 
[¶12]   The parties agree that the CWC 
property is tax exempt if used primarily for a governmental purpose.  CWC asserts that the business park 
property at issue was intended to enhance the educational purpose of the 
college.  Furthermore, CWC points 
out that the leased property generates revenue that is used for the college's 
support and maintenance.  The 
Assessor contends to the contrary that the lessee's use of the property is 
clearly non-governmental and therefore is taxable.

 
 
[¶13]   In 1956, Article 15, § 12 of the 
Wyoming Constitution was amended to provide an exemption for governmental 
property only when used "primarily for a governmental purpose."  Prior to that time the Constitution 
provided that all property of the state, counties, cities, towns, and school 
districts was exempt from taxation.  
Thus, the amendment to Article 15, § 12 shifted the exempt status from 
property ownership to property use.  
See Town of Pine Bluffs v. State 
Bd. of Equalization, 79 Wyo. 262, 333 P.2d 700, 703-04 (Wyo. 
1958).   

 
 
[¶14]   This Court has, on several 
occasions, acknowledged that property use is the critical issue in determining 
tax-exempt status.  In City of Cheyenne v. Sims, 521 P.2d 1347, 1348-49 (Wyo. 1974), 
we held that exemption from taxation is a factual issue which is determined by 
the use of the property.  Similarly, 
in Deromedi v. Town of Thermopolis (In re 
Deromedi), 2002 WY 69, ¶ 10, 
45 P.3d 1150, 1154 (Wyo. 2002), 
this Court stated that the mere ownership of property by a governmental entity 
does not exempt the property.  The 
property must be used primarily for a governmental 
purpose.

 
 

[¶15]   In City of Cheyenne v. Bd. of County Comm'rs of 
Laramie County, 484 P.2d 706 
(Wyo. 1971), we dealt with whether certain buildings located on the grounds of 
the municipal airport were subject to taxation.  The buildings were leased to for-profit 
private persons or entities.  Three 
of the buildings were used as fixed-based operations for the repair, equipping, 
fueling, and storage of aircraft for the general public.  We concluded that such fixed-based 
operations were a necessary adjunct to the airport, and, therefore, the 
buildings were tax exempt.  One of 
the other buildings was leased to a Cheyenne ambulance service and still another 
to a company that principally did airplane repairs and other services for the 
United States Government.  This 
Court affirmed the district court's finding that these last two buildings were 
not primarily for a government purpose and were subject to taxation.  We ultimately found that "[t]he 
test . . . is whether or not those buildings were primarily used . . . as 
reasonably necessary or essential facilities to the efficient operation and 
maintenance of the airport."  Id. at 709 (emphasis supplied).   It is important to note, however, that 
the mere renting of the governmental property to a private entity engaged in a 
profit-making venture does not necessarily render that property taxable.  A governmental entity can accomplish a 
governmental purpose through a private lessee.  Id.  We have also held that once a property is 
being used primarily for a governmental purpose, the fact that the property is 
being used for other purposes does not destroy its tax-exempt status.  State Bd. of Equalization v. City of 
Lander, 
882 P.2d 844, 850 (Wyo. 
1994).

 
 

[¶16]   We turn then to the case now before 
us.  The property at issue is part 
of a business park.  The tenants 
that have leased property are all private, for-profit businesses.  These businesses are lessees only and 
are not managed by, controlled by, or affiliated with CWC.  We have nothing before us to indicate 
that CWC students or staff have any significant involvement in these business 
enterprises.  Certainly, the lessees 
do not appear to be reasonably necessary or essential to the operation of 
CWC.  Even if there is some 
tangential use of the property by CWC faculty, staff, or students of which we 
are unaware, it has not been demonstrated that such use is primarily 
governmental.

 
 

[¶17]   CWC's stated intentions for the 
property, coupled with rental payments, are not sufficient to comply with the 
Wyoming Constitution's mandate that the property be used primarily for a 
governmental purpose.  Here the use 
of the property is primarily, if not exclusively, for private  non-governmental purposes.  As such, the business park property at 
issue is taxable.

 
 
[¶18]   The district court correctly 
pointed out that we want to avoid a tax spiral where the government is taxing 
itself to pay itself.  That 
certainly would be true if the property were being used primarily for a 
governmental purpose.  In this case, 
however, the for-profit tenants will likely have the tax assessment passed on to 
them.  This will avoid the tax 
spiral and result in the tenants being placed on equal footing with the 
competitor businesses who don't lease from government entities. 

 
 
CONCLUSION

 
 
[¶19]   The for-profit tenants' use of 
CWC's business park property is clearly non-governmental and not necessary or 
essential to facilitate the efficient operation and maintenance of the 
college.  Therefore the property is 
not tax exempt pursuant to Article 15, § 12 of the Wyoming Constitution.  The decisions of the Fremont County 
Assessor and Board of Equalization are affirmed and the district court is 
reversed.