Title: Crittenden Hosp. Ass'n v. Bd. of Equalization

State: arkansas

Issuer: Arkansas Supreme Court

Document:

CRITTENDEN HOSPITAL ASSOCIATION v. The BOARD
OF EQUALIZATION of Crittenden County

97-43                                              ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered December 18, 1997


1.   Taxation -- exemption -- taxpayer's burden of proof. -- A taxpayer must
     establish an entitlement to an exemption beyond a reasonable
     doubt; a strong presumption operates in favor of the taxing
     power; tax exemptions must always be strictly construed
     against the exemption.

2.   Taxation -- public-purpose exemption -- applicable test. -- For purposes
     of the public-purpose exemption from taxation under Ark.
     Const. art. 16,  5(b), the applicable test is not whether the
     rents collected from a building are used for a public purpose,
     but whether the building is used exclusively for a public
     purpose; there is a material difference between the use of
     property exclusively for public purposes and renting it out
     and applying the proceeds arising therefrom to the public use;
     under the constitution, the property must be actually occupied
     or made use of for a public purpose.

3.   Taxation -- public-purpose exemption -- actual use is determining factor. -
     - The determining factor for tax-exemption purposes is the
     actual use to which the property is put.

4.   Appeal & error -- findings of fact set aside only if clearly erroneous. -
     - The appellate court will set aside the circuit court's
     findings of fact only when they are clearly erroneous.

5.   Taxation -- public-purpose exemption inapplicable -- appellant failed to
     prove building and lot used exclusively for public purposes. -- Where the
     circuit court considered evidence that appellant rented a
     physicians' office building exclusively to for-profit private
     health-care providers; that a parking lot, though used by
     hospital physicians, patients, staff, and visitors, was also
     used by the physicians who rented the building and their
     patients; and that the building was in competition with other
     tax-paying medical facilities in the county; and where the
     supreme court could not say that appellant had proved beyond
     a reasonable doubt that the hospital would not survive without
     a tax-free physicians' office building, the supreme court held
     that the circuit court's finding that appellant had failed to
     prove beyond a reasonable doubt that the physicians' office
     building and parking lot were used exclusively for public
     purposes was not clearly erroneous.

6.   Officers & public employees -- assessor's duties -- assessor not bound by
     agreement signed by county judge. -- The assessor is charged with
     the duties of making the county tax books and preparing and
     submitting a final abstract of those books to the State
     Equalization Board; a lease agreement between appellant and
     the county that provided that the county would take no action
     to assess the leased premises was not signed by the assessor,
     but by the county judge; thus, the assessor was not bound by
     the contents of the lease agreement; even had the assessor
     been bound by the agreement's terms, the parties were
     conclusively presumed to have contracted with reference to the
     existing law, Ark. Const. art.,  5b.


     Appeal from Crittenden Circuit Court; David Burnett, Judge;
affirmed.
     Hanover, Walsh, Jalenak & Blair, by: James A. Johnson, for
appellant.
     Hale, Fogleman & Rogers, BY: Joe M. Rogers, for appellees.

     W.H. "Dub" Arnold, Chief Justice.
     The property that is the subject of this appeal is a
physiciansþ office building and parking lot located adjacent to the
Crittenden Memorial Hospital and leased from the county by
appellant Crittenden Hospital Association.  The primary issue
presented is whether this property is exempt from ad valorem
taxation as public property used exclusively for public purposes. 
Ark. Const. article. 16,  5(b).   The Association was assessed
taxes for this property for the tax year 1993 and applied for an
exemption.  The County Equalization Board denied the exemption. 
The Association appealed to the county court, which reversed the
boardþs ruling and ordered the property to be removed from the tax
rolls.  The tax assessor appealed to the circuit court, which ruled
that the Association had not met its burden of proving that the
property was used exclusively for public purposes.  The Association
appeals, raising several arguments for our review.  We have
permitted the Arkansas Hospital Association to file a brief as
amicus curiae in support of the Associationþs position.  Finding no
merit to the Associationþs claims, we affirm the circuit courtþs
judgment.
     
                         I. Burden of proof
     We examine first the Associationþs argument that the circuit
court erred in requiring it to establish an entitlement to the tax
exemption beyond a reasonable doubt.  In making its argument, the
Association asks us to reconsider our well-established case law on
ad valorem tax exemptions:
          It is settled that a taxpayer must establish an
     entitlement to an exemption beyond a reasonable doubt.  City
     of Little Rock v. McIntosh, 319 Ark. 423,