BEFORE THE STATE BOARD OF EQUALIZATION
FOR THE STATE OF WYOMING
IN THE MATTER OF THE APPEAL OF )
BP PIPELINES NORTH AMERICA INC., )
FROM A DECISION OF THE NATRONA ) Docket No. 2005-117
COUNTY BOARD OF EQUALIZATION )
2005 PROPERTY VALUATION )
DECISION AND ORDER
APPEARANCES
David A. Drell, Vlastos, Henley & Drell, P.C., on behalf of BP Pipelines North America, Inc., and Amoco Reuse Agreement Joint Powers Board, (Petitioner or Taxpayer).
Lawrence E. Middaugh, Attorney at Law, on behalf of Susan DeWitt, the Natrona County Assessor (Respondent or Assessor).
DIGEST
This is an appeal from a decision of the Natrona County Board of Equalization (County Board). The State Board of Equalization (State Board), comprised of Alan B. Minier, Chairman, Thomas R. Satterfield, Vice-Chairman, and Thomas D. Roberts, Board Member, considered the oral argument of the parties and their respective briefs, as well as the hearing record and decision of the County Board.
Petitioner’s Notice of Appeal was filed with the State Board effective December 1, 2005. Petitioner and the Assessor filed briefs as allowed by the State Board’s Briefing Order. The Board heard oral argument on July 10, 2006.
Petitioner challenges the County Board decision affirming the Assessor’s 2005 fair market valuation of the property at issue. Petitioner’s Notice of Appeal asserts the golf course located on the property known as the “Commons,” property no. 10790330070061, is exempt from taxation, asserting its use “constitutes a governmental function.”
We evaluate Petitioner’s claims against our standard of review, which is whether the ruling of the County Board was arbitrary, capricious, unsupported by substantial evidence, and/or contrary to law. Rules, Wyoming State Board of Equalization, Chapter 3, § 9. We vacate the decision of the County Board.
PROCEEDINGS BEFORE THE COUNTY BOARD
The County Board conducted a hearing on October 13, 2005. The County Board’s Findings of Fact, Conclusions of Law and Order, while dated October 13, 2005, were not served on the respective parties, according to the certificate of service, until November 2, 2005. The County Board decision affirmed the Assessor’s 2005 fair market value for the property at issue.
JURISDICTION
The State Board is required to “hear appeals from county boards of equalization.” Wyo. Stat. Ann. § 39-11-102.1(c). A timely appeal from the County Board decision was filed with the State Board. Rules, Wyoming State Board of Equalization, Chapter 3, § 2.
STANDARD OF REVIEW
When the State Board hears appeals from a County Board, it acts as an intermediate level of appellate review. Laramie County Board of Equalization v. Wyoming State Board of Equalization, 915 P.2d 1184, 1188 (Wyo. 1996); Union Pacific Railroad Company v. Wyoming State Board of Equalization, 802 P.2d 856, 859 (Wyo. 1990). In its appellate capacity, the State Board treats the County Board as the finder of fact. Id. In contrast, the State Board acts as the finder of fact when it hears contested cases on appeal from final decisions of the Department of Revenue (Department). Wyo. Stat. Ann. § 39-11-102.1(c). This sharp distinction in roles is reflected in the State Board Rules governing the two different types of proceedings. Compare Rules, Wyoming State Board of Equalization, Chapter 2 and Rules, Wyoming State Board of Equalization, Chapter 3. Statutory language first adopted in 1995, when the State Board and the Department were reorganized into separate entities, does not express the distinction between the State Board’s appellate and de novo capacities with the same clarity as our long-standing Rules. 1995 Wyo. Sess. Laws, Chapter 209, § 1; § 39-1-304(a), (currently Wyo. Stat. Ann. § 39-11-102.1(c)).
By Rule, the State Board’s standards for review of a County Board’s decision are nearly identical to the Wyoming Administrative Procedure Act standards which a district court must apply to hold unlawful and set aside agency action, findings of fact, and conclusions of law. Wyo. Stat. Ann. § 16-3-114(c)(ii). However, unlike a district court, the State Board will not rule on claims that a County Board has acted “[c]ontrary to constitutional right, power, privilege or immunity.” Wyo. Stat. Ann. § 16-3-114(c)(ii)(B). The State Board’s review is limited to a determination of whether the County Board action is:
(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;
(c) Without observance of procedure required by law; or
(d) Unsupported by substantial evidence.
Rules, Wyoming State Board of Equalization, Chapter 3, § 9.
Since the State Board Rules are patterned on the judicial review provision of the Wyoming Administrative Procedure Act, we look to precedent under Wyo. Stat. Ann. § 16-3-114(c) for guidance. For example, we must apply this substantial evidence standard:
Our task is to examine the entire record to determine if substantial evidence exists to support the [County Board’s] findings. We will not substitute our judgment for that of the [County Board] if [its] decision is supported by substantial evidence. Substantial evidence is relevant evidence which a reasonable mind might accept in support of the agency’s conclusions.
Romero v. Davy McKee Corp., 854 P.2d 59, 61 (Wyo. 1993). See also, Clark v. State ex rel. Wyoming Workers’ Safety and Compensation Division, 934 P.2d 1269, 1272 (Wyo. 1997) and Thunder Basin Coal Company v. Campbell County, Wyoming Assessor, 2006 WY 44, ¶ 12, 132 P.3d 801, 806 (Wyo. 2006).
We review the findings of ultimate fact of a county board of equalization 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 v. Fremont County Assessor, 2006 WY 10, ¶ 17, 126 P.3d 117, 123 (Wyo. 2006).
We must also apply this “arbitrary and capricious” standard:
Even if sufficient evidence is found to support the agency’s decision under the substantial evidence test, this [Board] is also required to apply the arbitrary-and-capricious standard as a “safety net” to catch other agency action which might have violated the Wyoming Administrative Procedures Act. Decker v. Wyoming Medical Comm’n, 2005 WY 160, ¶ 24, 124 P.3d 686, 694 (Wyo. 2005). “Under the umbrella of arbitrary and capricious actions would fall potential mistakes such as inconsistent or incomplete findings of fact or any violation of due process.” Id. (quoting Padilla v. State ex rel. Wyoming Workers’ Safety and Comp. Div., 2004 WY 10, ¶ 6, 84 P.3d 960, 962 (Wyo. 2004)).
State ex rel. Wyoming Workers’ Safety and Comp. Div. v. Madeley, 2006 WY 63, ¶ 8, 134 P.3d 281, 284 (Wyo. 2006). Where there is insufficient information to review the decision of the County Board on its merits or the findings of fact or conclusions of law are inadequate to permit effective review, the matter must be remanded. Id. at ¶ 14.
ISSUES
Petitioner’s opening brief recites this single issue:
The decision of the County Board of Equalization for the County of Natrona upholding the decision of the Natrona County Assessor in assessing a value of $5,516,800 on said property was arbitrary, capricious, and an abuse of discretion, and otherwise not in accordance with law and, furthermore, not supported by substantial evidence.
[Brief of Appellants/Petitioners, p. 1].
We conclude the decision of the County Board was not in accordance with law, and not supported by substantial evidence.
FACTS PRESENTED TO THE COUNTY BOARD
1. Alice Kraft, Executive Director of the Amoco Reuse Agreement Joint Powers Board (Joint Powers Board), testified the Petitioner, BP Pipelines North America, Inc., appeared in the county records to hold legal title to the property in question on January 1, 2005. Joe Deschamp, Environmental Business Manager for BP, also testified to the same effect. [County Board Record, pp. 142, 153, 157-158, 183-184; County Board Findings, ¶ 3].
2. The County Board entered the following factual finding which does not appear to be supported by any testimony or documentary evidence in the County Board record:
Amoco Oil Company was a wholly owned subsidiary of BP Pipelines North America, Inc., thus any reference in the County Board record to “Amoco” was a reference to BP Pipelines. [County Board Findings, ¶ 4].
3. Deschamp testified the two properties at issue at the County Board hearing were the Salt Creek Heights Business Center containing 438.692 acres, and the “Commons” containing 352.933 acres. [County Board Record, pp.116-117, 122-123; Exhibit C; County Board Findings, ¶ 5].
4. The County Board record contains a document, upon which the County Board relied, which indicates a federal court “Consent Decree” settled a lawsuit by the Wyoming Department of Environmental Quality and the United States Environmental Protection Agency against Amoco for remediation and reclamation of the properties at issue. [ County Board Record, p. 50, Exhibit K ¶ I; County Board Findings, ¶ 6].
5. Thomas O. Forslund, Casper City Manager, testified the federal court Consent Decree provided for a “Reuse Agreement” between Amoco and the City of Casper and Natrona County which was executed on September 15, 1998. [County Board Record, pp. 127–128; Exhibit H; County Board Findings, ¶ 7].
6. Alice Kraft testified the Joint Powers Board was established by the City of Casper and Natrona County on October 20, 1998, to carry out the terms of the Reuse Agreement. [County Board Record, p. 154; Exhibit G, I, J; County Board Findings, ¶ 8].
7. Alice Kraft and Joe Deschamp both testified the Joint Powers Board and Amoco entered into a lease agreement on August 1, 2000, whereby the property at issue was leased to the Joint Powers Board for a term of 99-years with an annual rental of $1.00. Amoco retained only the risk and control of existing environmental problems along with access to remediate those problems. The Joint Powers Board otherwise controlled the property at issue. [County Board Record, pp. 117, 119, 144, 150, 156; Exhibit K; County Board Findings, ¶ 9].
8. Alice Kraft and Joe Deschamp also testified the Joint Powers Board subleased a building site to the Wyoming Oil and Gas Conservation Commission for a term of 99 years; and that Amoco had entered into a recognition agreement which allows an additional 99-year lease if the Joint Powers Board should so request on behalf of the Conservation Commission. [County Board Record, pp. 119-120; 144-145].
9. Alice Kraft testified the Joint Powers Board created Three Crowns, LLC to operate the golf course on the Commons. Three Crowns in turn hired OB Sports to operate the golf course. [County Board Record, p. 147; Exhibit L, M; County Board Findings, ¶ 12].
10. Joe Deschamp testified that active groundwater remediation of the Commons by Amoco would take at least 80 years, with another 300 years required for natural processes to remove the final oil from the groundwater. Some of the active remediation areas can not be used by the Joint Powers Board. [County Board Record, pp. 117-119].
11. Deschamp testified the golf course was an integral part of the ongoing remediation activities. He noted the course contains approximately 60 oil recovery wells. All water features on the west end of the course are used for treatment of groundwater. The trees and grass perform phytoremediation in the top two feet of soil. The excess irrigation and storm water are captured in drains and allowed to percolate into the groundwater to enhance biodegradation of the oil in the groundwater. [County Board Record, pp. 120-122].
12. Alice Kraft and Tom Forslund testified the golf course ran at a deficit for its first year of operation, and was expected to run at a deficit for the next three to five years. The expectation was the course will ultimately be only a self-sustaining facility, able to pay its day-to-day expenses. It was not envisioned to make a profit for either the Joint Powers Board or the City and County. [County Board Record, pp. 129-132, 148].
13. Alice Kraft testified the shortfall (deficit) in the operation of the golf course was being underwritten by the Joint Powers Board with funds contributed by Amoco. Amoco agreed to provide to the Joint Powers Board, over a ten-year period, $20 million for a building facility fund; $3 million for an economic fund; and $3 million for an operation and maintenance fund. [County Board Record, pp. 132, 143].
14. Kraft further testified the Joint Powers Board constructed and owns the golf course clubhouse and maintenance building. The Joint Powers Board also advanced approximately $4 million for the operation and maintenance of the golf course. The Joint Powers Board expected the funds advanced to be repaid by the golf course, thus it would be a long time before the course showed any profit. [County Board Record, pp. 147-148, 160].
15. Joe Deschamp stated that Amoco had no ownership interest in the golf course, clubhouse or the maintenance building. [County Board Record, pp. 121-122].
16. Alice Kraft testified the Joint Powers Board provided insurance for the properties in question. It provided environmental insurance for the Oil and Gas Conservation Commission building, and a $25 million liability insurance policy for entire Commons area. [County Board Record, p. 145].
17. Alice Kraft and Joe Deschamp both testified the Salt Creek Heights property was subject to a separate lease with the same terms as the Commons lease with the exception that all remediation work had been completed. Amoco retained no control over this property. [County Board Record, pp. 122-124, 150].
18. Alice Kraft and Tom Forslund stated the Salt Creek Heights Business Center was designated for commercial, non-government use and development. [County Board Record, p. 135, 150-151; County Board Findings, ¶ 5, 14].
19. Alice Kraft and Joe Deschamp both testified the Joint Powers Board controlled any and all construction on the properties in question. [County Board Record, pp. 117, 145-146, 156; Exhibit K, ¶ 13, p. 53].
20. The County Board also entered the following factual findings which do not appear to be supported by any testimony or documentary evidence in the County Board record:
[a] The Commons was designated for recreational purposes, and included a golf course (178.20+acres); a walking course and white water rafting area (31.7acres); opportunity development area (23.42 acres); the Wyoming Oil & Gas Conservation Commission building (2.7 acres); and an area of continued remediation by Amoco (116.913 acres). [County Board Findings, ¶ 5].
[b] The Joint Powers Board subleased the golf course to Three Crowns, LLC, which hired OB Sports to operate and manage the course. [County Board Findings, ¶ 12].
DISCUSSION OF ISSUES AND APPLICABLE LAW
21. Petitioner’s Notice of Appeal to the State Board was timely filed. The State Board has jurisdiction to hear and determine all issues properly raised pursuant to Wyo. Stat. Ann. § 39-13-109(b)(ii).
22. The Wyoming Constitution, article 15, § 12, sets forth the general standard for exemption of property from taxation:
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.
23. The Wyoming Legislature, as authorized by article 15, § 12, has further detailed what property is to be exempt:
Exemptions.
(a) The following property is exempt from property taxation:
* * *
(iii) Property owned and used by counties primarily for a governmental purpose;
* * *
(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;
Wyo. Stat. Ann. §39-11-105(a)(iii) & (a)(v)(A)-(D) (emphasis added).
24. The Wyoming Joint Powers Act authorizes a city and county to jointly exercise and enjoy any power, privilege or authority they each individually may exercise:
Joint powers, functions and facilities; city-county airport board; eligible senior citizen centers.
(a) Any power, privilege or authority exercised or capable of being exercised by an agency may be exercised and enjoyed jointly with any other agency having a similar power, privilege or authority.…
(b) A county may enter into and operate under a joint powers agreement with one (1) or more counties, cities, school districts or community college districts for the performance of any function that the county, city, school district or community college district is authorized to perform, except the planning, expansion, creation, financing or operation of municipally owned electrical facilities.
* * *
(c) Specifically, without limiting but subject to the provisions of subsection (a) of this section, two (2) or more agencies may jointly plan, own, lease, assign, sell, create, expand, finance and operate:
* * *
Wyo. Stat. Ann. § 16-1-104(a), (b), & (c)(ii). See also, Wyo. Stat. Ann. § 18-2-108(a) &(b).
25. The operation of a golf course by the City of Casper, within the defined parameters, is statutorily defined as a use “primarily for a governmental purpose.” If a golf course is a use primarily for a governmental purpose for a city, consistent logic requires it is also a use primarily for a governmental purpose for a county as well. The City of Casper, and Natrona
26. There is, in this situation, arguably another governmental purpose, that of pollution remediation. The golf course at issue was designed and built as an integral part of the active ground water remediation on the site of the former Amoco refinery. Supra, ¶¶ 10, 11. And it is reasonably clear from the County Board record that the golf course design and construction was an integral part of an overall voluntary remediation, as defined by which was an element of the resolution of the litigation between BP (Amoco) and the Wyoming Department of Environmental Quality and the United States Environmental Protection Agency with regard to the former refinery site. Supra, ¶ 4.
27. Property of a city or a county, if used primarily for a governmental purpose, is, by constitutional mandate and statutory provision, exempt from taxation. Supra, ¶¶ 22, 23. We can perceive no reason why the exempt status of the property necessarily must change simply because it becomes property of a joint powers board formed by two agencies which individually are entitled to an exemption. The taxation exemption enjoyed by the City and County should thus be enjoyed as well by the entity which they have created, a joint powers board.
28. The question thus arises: Is the property at issue “property of” the City and the County, and thus of the Joint Powers Board even though fee title rests in the name of BP Pipelines North America, Inc.? Counsel for the Assessor at oral argument before the Board stated his understanding the Assessor did not hold strong feelings about the status of the property at issue. He indicated her belief that she was statutorily bound by the record title ownership. It is our conclusion the property at issue, for purposes of tax exemption, is property of the Joint Powers Board.
29. The Colorado Constitution, similar to the Wyoming Constitution, exempts from taxation the property of cities and counties, albeit without the need for a governmental purpose. “Colo. Const. art. X, § 4, provides: ‘[t]he property, real and personal, of the state, counties, cities, towns and other municipal corporations and public libraries, shall be exempt from taxation.’” Gunnison County v. Board of Assessment Appeals of the State of Colorado, 693 P.2d 400, 404 (Colo. 1984).
30. The Colorado courts, while recognizing exemption under the Colorado constitution depends on ownership, have reached the conclusion, with which we agree, that record title alone is not determinative of tax exempt status. The answer to the question of “ownership” for tax purposes must be derived on the basis of real ownership, not forms and labels.
Exemption under this section depends on ownership. Record title alone, however, is not determinative of tax exempt status under Colorado law. The question of ownership for tax purposes must be decided on the basis of "real ownership" rather than "forms and labels." Mesa Verde Co. v. Board of County Commissioners, 178 Colo. 49, 495 P.2d 229 (1972), appeal dismissed, 409 U.S. 810, 93 S.Ct. 69, 34 L. Ed.2d 65 (1972); Southern Cafeteria, Inc. v. Property Tax Administrator, 677 P.2d 362 (Colo. App.1983). The nature of a transaction is not controlled by its legal characterization; rather, it is the intention of the parties which determines the essence of the transaction, and the facts of each case demonstrate the parties' intention. See H.M.O. Systems, Inc. v. Choicecare Health Services, Inc., 665 P.2d 635 (Colo. App.1983).
Id., at 404; See also, City and County of Denver v. Board of Assessment Appeals of the State of Colorado, 782 P.2d 817, 821(Colo. 1989).
31. The Illinois courts have similarly found legal title alone is not the decisive factor in determining ownership of property for tax purposes.
This court has long held that, in determining ownership of property for tax purposes, legal title alone is not the decisive factor; rather, the concern is with the "realities of ownership." City of Chicago, 147 Ill.2d at 505, 168 Ill. Dec. 841, 590 N.E.2d 478; Chicago Title & Trust Co., 75 Ill.2d at 489-92, 27 Ill. Dec. 476, 389 N.E.2d 540. Under this test, the key elements of ownership are control and the right to enjoy the benefits of the property.
In People v. Chicago Title & Trust Co., 75 Ill.2d 479, 489-92, 27 Ill. Dec. 476, 389 N.E.2d 540 (1979), this court held that the beneficiaries of a land trust were the owners of property for purposes of real estate taxation because they had control of the property and the right to its benefits. Although the trustee held legal title to the land, the trustee lacked any other indicia of ownership. The court explained: "Indeed, there is not a single attribute of ownership, except title, which does not rest in the beneficiary. The rights of creation, modification, management, income and termination all belong to the beneficiary." Chicago Title & Trust Co., 75 Ill.2d at 492, 27 Ill. Dec. 476, 389 N.E.2d 540.
Chicago Patrolmen’s Association v. Department of Revenue, 171 Ill.2d 263, 273-274, 664 N.E.2d 52, 57 (Ill. 1996). See also, Coles-Cumberland Professional Development Corporation v. Department of Revenue, State of Illinois, 284 Ill. App.3d 351, 354, 672 N.E.2d 391, 394 (Ill. 1996); Board of Education of Glenn Ellyn Community Consolidated School District No. 89 v. Department of Revenue, 356 Ill. App.3d 165, 173, 825 N.E.2d 746, 754 (Ill. 2005).
32. Record title to the property at issue is held by BP Pipelines North America, Inc. Supra, ¶ 1. The property is, however, subject to a 99-year lease, the terms of which clearly indicate the “real ownership,” the “realities of ownership,” the right to control and enjoy the benefits of the property, are held by the Joint Powers Board. The Joint Powers Board controls any and all construction on the property in question. The Joint Powers Board has subleased portions of the property. BP (Amoco), under the lease, retained only the risk and control of existing environmental problems along with access to remediate those problems. Supra, ¶¶ 7, 8, 16, 19. In realistic terms, the only attribute or indicia of ownership held by BP (Amoco), is naked legal title.
33. The property at issue, for purposes of taxation, and for exemption from taxation, is “property of” the City of Casper and Natrona County through the entity they have jointly created, the Joint Powers Board.
34. Although taxation is generally the rule, and exemption the exception, Commissioners of Cambria Park v. Board of County Com'rs of Weston County, 62 Wyo. 446, 174 P.2d 402, 405, (1946), the opposite is true where, as here, the established policy of the state is to exempt the property of cities and counties. “The burden is on the taxing authority to establish taxability.” City of Cheyenne v. Bd. of County Comm'rs of the County of Laramie, 484 P.2d 706, 708-09 (Wyo.1971). See also, State Board of Equalization v. City of Lander, 882 P.2d 844, 848 (Wyo. 1994), and Deromedi v. Town of Thermopolis, 2002 WY 69 ¶10, 45 P.3d 1150, 1153-1154 (Wyo. 2002).
35. The taxation exemption for golf courses which are the property of a city is limited to the circumstances in which “[a]ny charge for the use of the facilities shall not exceed the costs of operation and maintenance….” Supra, ¶ 23. This limiting language appears only in the statutory provision which expressly addresses city golf courses. There is no equivalent language with regard to county property. A strict reading of the city statute making the same limitation applicable to the property of the Joint Powers Board seems appropriate as the City of Casper is one of the agencies which created the Joint Powers Board. A decision not to apply the limitation to the property at issue would arguably improperly ignore a statutory requirement.
36. The Assessor, in order to support a finding of taxability of the golf course, must thus prove by competent, admissible evidence the charges levied by the golf course exceed the cost of operation and maintenance. Such a showing was not made.
37. The Assessor presented no evidence at the County Board hearing addressing the charges by the golf course nor the costs of operation and maintenance. The only evidence presented on this subject came from the witnesses presented by Petitioner. The evidence presented to the County Board indicated the golf course ran a deficit in its first year of operation, and is expected to run a deficit for three to five more years. The expectation is the golf course will ultimately be only self sustaining, being able to pay its day-to-day course expenses, but not be a profit center for either the Joint Powers Board or the City and County. Such conclusion is particularly relevant in light of the fact the Joint Powers Board expects to be repaid the $4 million it advanced for operation and maintenance of the course. Supra, ¶¶ 12, 13, 14.
38. The Assessor failed to carry the required burden to overcome the constitutional and statutory policy exempting the golf course property from taxation.
39. There is a further reason the golf course property should be exempt. To conclude the course is not exempt ignores the realities of who would pay any tax assessed and collected, and further ignores the basic reason for exempting public property.
40. The lease between BP (Amoco) and the Joint Powers Board specifically requires the Board, as the “Leasing Party,” to pay any and all real estate taxes, personal property taxes, etc. [County Board Record, Exhibit K ¶ 21, p. 055]. The Joint Powers Board is nothing more than the City of Casper and Natrona County acting jointly. To require the Board to pay real estate taxes would in reality require the City and County to pay taxes to themselves from tax revenues. Such a scenario falls squarely within the scope of the justification for exempting property in Wyoming used primarily for a governmental purpose:
The purpose of such an exemption is to prevent an escalating spiral of unnecessary taxation and administrative costs with no benefit to the public. 16 Eugene McQuillin, The Law of Municipal Corporations, § 44.57 at 206 (3rd ed. 1994). If one governmental entity chooses to tax the property of another governmental entity, the governmental entity forced to pay taxes may have to levy and collect new taxes to meet the demands of the tax. 2 Cooley, supra, § 621 at 1313. The effect of such a tax spiral is that the public would be taxing itself to raise money to pay itself. Id. The only benefit of such a system is that it satisfies a bureaucratic desire for exactitude by taking money out of one pocket and putting it in another. Id. at 1317.
State Board of Equalization v. City of Lander, 882 P.2d 844, 850 (Wyo. 1994). See also, Van Buren County Hospital and Clinic v. Board of Review of Van Buren County, 650 N.W. 2d 580, 586-587 (Iowa 2002), and Public Utility District No. 1 of Snohomish County, Washington v. Department of Revenue, 17 Or. Tax 290, 306, 2004 WL 220389 (Oregon 2004).
41. Government entities taxing themselves makes no economic sense, and is bad tax policy.
The exemption is based on the policy that property owned by and used for the public benefit of one governmental entity or subdivision should not be taxed by another because that would defeat the purpose of the exemption. For one unit of government, for example, a city, to have to levy a tax so that it can pay taxes to another overlapping unit, for example, a county, makes little economic sense and is bad tax policy. In other words, county taxation of city-owned property would necessarily require additional taxation by the city of its taxpayers for the revenue to pay the county-imposed tax. Orange State Oil Co. v. Amos, 100 Fla. 884, 887, 130 So. 707, 709 (1930); Newton v. City of Atlanta, 189 Ga. 441, 444, 6 S.E.2d 61, 63 (1939); City of Idaho Falls v. Pfost, 53 Idaho 247, 23 P.2d 245 (1933); Pelouze v. City of Richmond, 183 Va. 805, 809, 33 S.E.2d 767, 769 (1945); 2 T. Cooley, The Law of Taxation § 621, at 1313 (4th ed. 1924); 71 Am. Jur. 2d State and Local Taxation § 336 (1973).
Interwest Aviation v. County Board of Equalization of Salt Lake County, 743 P.2d 1222, 1225 (Utah, 1987).
42. The golf course property is, for purposes of taxation, owned by the Joint Powers Board and thus the City of Casper and Natrona County. The citizens of both should not be taxing themselves in order to raise money to pay themselves through tax receipts.
ORDER
IT IS THEREFORE HEREBY ORDERED the decision of the Natrona County Board of Equalization denying the golf course exempt status is reversed. The golf course property, for the reasons stated herein, is exempt from taxation.
Pursuant to Wyo. Stat. Ann. §16-3-114 and Rule 12, Wyoming Rules of Appellate Procedure, any person aggrieved or adversely affected in fact by this decision may seek judicial review in the appropriate district court by filing a petition for review within 30 days of the date of this decision.
DATED this day of July, 2006.
STATE BOARD OF EQUALIZATION
_____________________________________
Alan B. Minier, Chairman
_____________________________________
Thomas R. Satterfield, Vice-Chairman
_____________________________________
Thomas D. Roberts, Board Member
ATTEST:
________________________________
Wendy J. Soto, Executive Secretary