Court Opinion

ID: 6666162
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:06:20.309244+00
Date Added: 2024-06-11T16:00:20.095883
License: Public Domain

Carlson, Judge,
dissenting.
I respectfully dissent from the majority’s determination that we do not have jurisdiction in this matter and the conclusion that this appeal should be dismissed.

Jurisdiction.

The rationale of the majority’s opinion that this court does not have jurisdiction is based on the incorrect premise that the key date in any analysis is the first Board “hearing” of May 23, 2000. The gravamen of the jurisdictional question in this case is the stipulated and agreed-upon fact that Rushmore was not given notice that a hearing would be held on May 23. This notice requirement is clearly spelled out and mandated in § 77-202.02 (“county board of equalization ... after a hearing on ten days’ notice to the applicant ... shall certify its decision to the applicant”). The failure to comply with this notice requirement to the taxpayer-applicant, Rushmore, violates Rushmore’s due process rights.
The effect of the majority decision is to deny Rushmore a hearing. As stated, this lack of notice and a hearing to challenge Rushmore’s tax assessment constitutes a denial of due process. “Procedural due process” limits the ability of the government to deprive people of interests which constitute liberty or property interests within the meaning of the Due Process Clause and requires that parties deprived of such interests be provided adequate notice and an opportunity to be heard. Marshall v. Wimes, 261 Neb. 846, 626 N.W.2d 229 (2001). The central meaning of *383“procedural due process” is that parties whose rights are to be affected are entitled to be heard, and, in order that they may enjoy that right, they must first be notified. In re Interest of Natasha H. & Sierra H., 258 Neb. 131, 602 N.W.2d 439 (1999). The majority’s result is untenable when the facts and the intent of the parties clearly dictate June 27, 2000, as the operative hearing date.
Case law provides that an administrative agency has the power to reconsider its decisions until the “‘aggrieved party files an appeal or the statutory appeal period has expired.’ ” City of Omaha v. Wade, 1 Neb. App. 1168, 1172, 510 N.W.2d 564, 567 (1993). This provision applies to the Board because it is an administrative agency. See Ev. Luth. Soc. v. Buffalo Cty. Bd. of Equal., 243 Neb. 351, 500 N.W.2d 520 (1993) (stating that county board of equalization is administrative agency). It is clear that when the Board agreed to reconsider Rushmore’s application, it implicitly vacated its May 23, 2000, order. As such, there was no order in effect and the Board retained jurisdiction to reconsider the matter on June 27 and subsequently enter its order.
To perfect an appeal to the TERC, one must file his or her notice of appeal within 30 days of the Board’s final order. See § 77-1510. Rushmore filed its notice of appeal to the TERC on July 25, 2000. Rushmore’s appeal to the TERC was timely, and the TERC had jurisdiction to hear Rushmore’s appeal. Therefore, this court had jurisdiction to hear the Board’s appeal and the case should be decided on its merits.

Merits.

The TERC held a hearing on June 6, 2001, to decide the merits of this case. At the hearing, Hofer testified and offered exhibits containing information about Rushmore and its ministries. Hofer testified that he has worked for Rushmore for 23 years. Hofer stated that he has traveled for 17 years, ministering in 20 states and several countries. Hofer testified that the residence at issue was built because Rushmore needed more space to entertain guests for fundraising and ministry. Hofer stated that the garage was being built to provide a place for the ministry’s van, recreational vehicle, and other equipment. The garage would also contain office space where Hofer would prepare his ministry. Hofer *384testified that Rushmore requires him to live in the residence and provide security for the equipment mentioned above.
Hofer provided detailed information about how the residence is used to promote Rushmore’s ministry. Specifically, Hofer said that in 2000, he had about 75 people at the residence for Bible study, 15 people for counseling, and about 84 people for “evangelism and fellowship.” Hofer stated that he had 140 overnight guests during 2000. These people were supporters, potential supporters, and people he was ministering to.
Hofer testified that there was no sale of alcohol on the premises. Hofer also testified that Rushmore did not discriminate on the basis of race, color, or national origin. Hofer stated that there is a mortgage on the residence, which Rushmore pays. The warranty deed entered into evidence named Rushmore as the grantee of the property that is the subject of this lawsuit. Hofer also stated that no rent is received from this property. Hofer further testified that all money received from “love offerings” or other contributions goes through the secretary-treasurer of Rushmore.
Sidney Penke, a Washington County assessor, testified regarding why she denied Rushmore’s application. Penke stated, “[I]t was the fact that we had nothing to show us there was an actual affiliation with a church like we had [with] the other parsonages where we could see this.” Penke testified that there was no evidence to show that the residence was used for church purposes. Penke reiterated several times that Rushmore could not be granted tax-exempt status because there was no affiliation with a particular church.
Two members of the Board testified on the Board’s behalf. Both members testified that if there were a church with a congregation close to the residence, it would have made a difference as to their decisions. They also testified that the residence was used predominantly for a religious purpose.
After hearing the evidence, the TERC took the matter under advisement. In a written order, the TERC reversed the Board’s determination and vacated its order. The TERC found that Rushmore “presented sufficient clear and convincing evidence to support its contention that the subject property satisfies the five-part test for exemption.” The TERC concluded as a matter *385of law that based on the record before it, the decision of the Board to deny Rushmore’s application for tax-exempt status for the tax year 2000 was unreasonable and arbitrary. Thereafter, the Board appealed.
The Board’s assignments of error are as follows: (1) The TERC failed to apply the proper standard of review, (2) the TERC improperly placed the burden of proof on the Board, and (3) the TERC erred in finding that the decision of the Board was unreasonable or arbitrary.
The first error addresses whether the TERC employed the proper standard of review. The Board argues that the TERC “expressly rejected the mandatory presumption” afforded to the Board. Brief for appellant at 8. The Board argues that Rushmore did not present sufficient evidence to allow the TERC to reverse the decision of the Board.
Regarding the proper standard of review, Neb. Rev. Stat. § 77-1511 (Reissue 1996) provides that the TERC
shall hear appeals and cross appeals ... as in equity and without a jury and determine anew all questions raised before the [Board] which relate to the liability of the property to assessment, or the amount thereof. The [TERC] shall affirm the action taken by the [B]oard unless evidence is adduced establishing that the action of the [B]oard was unreasonable or arbitrary ....
The Nebraska Supreme Court has dealt with whether a rebut-table presumption exists regarding the decision of a board of equalization. The court held, under a predecessor to the present § 77-1511, that there is a presumption that a board of equalization has properly performed its official duties and that in making an assessment it has acted upon sufficient competent evidence to justify its action. However, the court further held that “‘[t]he presumption disappears when there is competent evidence to the contrary ....’” Boss Hotels Co. v. County of Hall, 183 Neb. 19, 21, 157 N.W.2d 868, 869 (1968).
In this case, the TERC determined that Rushmore presented evidence proving that the Board’s denial of Rushmore’s application was incorrect. Therefore, the presumption of correctness was rebutted, and the reasonableness of the Board’s denial of Rushmore’s application became a question of fact. The Board’s *386allegation that the TERC ignored a rebuttable presumption of correctness is without merit. It is apparent from its written order that the TERC employed the proper standard of review. In its order, the TERC specifically concluded, as a matter of law based on the record before it, that the decision of the Board to deny Rushmore’s application for tax-exempt status for the tax year 2000 was unreasonable and arbitrary.
The Board also assigns that the TERC improperly placed the burden of proof on the Board rather than Rushmore. The Board argues that from the TERC’s findings of fact, it can be inferred that the TERC shifted the burden to the Board. According to the Board, the TERC improperly required the Board to “prove a disqualifying use of the property.” Brief for appellant at 8.
It is well established that the burden of proving exemption from taxation is on the party claiming such exemption. Indian Hills Comm. Ch. v. County Bd. of Equal., 226 Neb. 510, 412 N.W.3d 459 (1987); United Way v. Douglas Co. Bd. of Equal., 215 Neb. 1, 337 N.W.2d 103 (1983).
A review of the TERC’s order and the record shows that the TERC did not place the burden of proof on the Board. Instead, after Rushmore presented evidence rebutting the presumption that the Board’s denial of Rushmore’s application was correct, the TERC determined the reasonableness of the Board’s evaluation based on the evidence before it. This assigned error is without merit.
The Board’s remaining assigned errors may be summarized as asserting that the TERC erred in determining that the Board’s decision was unreasonable or arbitrary. In its argument, the Board contends that the TERC erred in finding that the residence was a parsonage. The Board also contends that the TERC ignored evidence adduced at the hearing that the use of the residence was for financial gain.
This court reviews the decision of the TERC for error appearing on the record. See § 77-5019(5). When reviewing an order for errors appearing on the record, an appellate court’s inquiry is whether the decision conforms to the law, is supported by competent evidence, and is neither arbitrary, capricious, nor unreasonable. Harrison Square v. Sarpy Cty. Bd. of Equal., 6 Neb. App. *387454, 574 N.W.2d 180 (1998); In re Conservatorship of Estate of Marsh, 5 Neb. App. 899, 566 N.W.2d 783 (1997).
Section 77-202(l)(c) exempts property from taxation if the property is
owned by educational, religious, charitable, or cemetery organizations and used exclusively for educational, 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 discriminates in membership or employment based on race, color, or national origin.
In this case, the Board does not dispute that the property was not used for the sale of alcoholic liquor. Nor does the Board contend that Rushmore discriminated on the basis of race, color, or national origin. The only issues in this appeal are whether Rushmore used the property exclusively for religious purposes and whether Rushmore used the property for financial gain or profit.
The Nebraska Supreme Court has held that “exclusive use” means the primary or dominant use of property, as opposed to incidental use. Neb. Unit. Meth. Ch. v. Scotts Bluff Cty. Bd. of Equal., 243 Neb. 412, 499 N.W.2d 543 (1993). An exemption will not be lost if the property claimed to be exempt is used in an incidental manner that is not religious as long as the predominant or primary use of the property is one or more of the exempt uses. Id.
The Nebraska Supreme Court has defined religious purpose as follows:
“ ‘Prayer is always worship. Reading the Bible and singing may be worship. * * * If these exercises of reading the Bible, joining in prayer and in the singing of hymns were performed in a church there would be no doubt of their religious character, and that character is not changed by the place of their performance.’...”
Id. at 418, 499 N.W.2d at 547-48. Additionally, the Nebraska Supreme Court has found that the tax exemption for religious purposes is not restricted to property used exclusively for public *388worship; rather, the exemption embraces all property primarily used for religious purposes. Id.
As set forth above, Hofer testified that the primary purpose of the residence is to entertain guests for fundraising and ministry. Hofer specifically testified regarding the amount of ministry performed at the residence. Hofer stated that the garage was being built to provide a place for the ministry’s van, recreational vehicle, and other equipment. The garage would also contain office space where Hofer would prepare his ministry. Rushmore requires Hofer to live in the residence and provide security for the equipment mentioned above.
With regard to the Board’s contention that Rushmore used the property for financial gain, this argument is without merit. Hofer testified about the financial layout of Rushmore. He stated that all money went to Rushmore’s secretary-treasurer and that Rushmore did not receive any rent for the use of the property. There was no evidence presented to suggest that Rushmore was profiting financially from the construction of the residence and garage.
Given the expertise of the members of the TERC, the TERC is authorized by Neb. Rev. Stat. § 77-5016(5) (Supp. 1999) to “utilize its experience, technical competence, and specialized knowledge in the evaluation of the evidence presented to it.” It is apparent that Rushmore’s evidence provided a basis for the TERC’s conclusion that Rushmore rebutted any presumption that the Board’s decision was correct. As a result, the reasonableness of the Board’s decision became a question of fact. Based upon the evidence presented, the TERC did not act arbitrarily or capriciously in determining that the decision of the Board was unreasonable and arbitrary. The TERC also did not act arbitrarily or capriciously in granting Rushmore’s application for tax exemption. The TERC’s decision is supported by competent evidence and conforms to the law. These assigned errors are without merit.
As indicated earlier, I find that the Board had jurisdiction to enter its June 27, 2000, order and that the TERC had jurisdiction to hear Rushmore’s appeal. On the merits, I find that the TERC applied the correct standard of review and did not place the burden of proof on the Board. Finally, I find that the TERC did not *389err when it reversed the Board’s decision denying Rushmore’s application for tax exemption. Accordingly, I would affirm.