City of Nome v. Catholic Bishop of Northern Alaska, s. S-37
| Decision Date | 04 October 1985 |
| Docket Number | Nos. S-37,S-38 and S-36,s. S-37 |
| Parties | CITY OF NOME, Appellant, v. CATHOLIC BISHOP OF NORTHERN ALASKA, Appellee. The AMERICAN LUTHERN CHURCH, Community United Methodist Church, the National Division of the Board of Global Ministries of the United Methodist Church, and the Women's Division of the Board of Global Ministries of the United Methodist Church, Appellants/Cross-Appellees, v. CITY OF NOME, Appellee/Cross-Appellant. |
| Court | Alaska Supreme Court |
Thomas H. Dahl, Anchorage, for appellants/cross-appellees, Lutheran and Methodist Church Groups.
R. Eldridge Hicks, Brian Carter Boyd, Lane, Powell, Barker & Hicks, Anchorage, for appellant/appellee/cross-appellant, City of Nome.
Charles D. Silvey, Schaible, Staley, DeLisio & Cook, Fairbanks, for appellee, Catholic Bishop of Northern Alaska.
Before BURKE, C.J., and RABINOWITZ, MATTHEWS, COMPTON and MOORE, JJ.
TABLE OF CONTENTS
-----------------
I. INTRODUCTION ..................................................... 874
II. STANDARD OF REVIEW ............................................... 875
III. PROCEDURAL ISSUES ................................................ 876
A. Remand ........................................................ 876
B. Standing ...................................................... 877
C. Stay of Taxes ................................................. 877
IV. PRELIMINARY ISSUES ............................................... 878
A. "Exclusive Use" is Required ................................... 879
B. Spatial Apportionment is Required ............................. 881
V. RELIGIOUS RESIDENCES ............................................. 881
A. May a Single Parish Contain More Than One Exempt
Residence? .................................................... 882
B. May the Residence of an Assistant Pastor be Exempt? ........... 882
C. Must a Pastor be Available and Committed Exclusivley as a
Clergyman for a Local Congregation in Order to Have an
Exempt Residence? ............................................. 883
D. Is the Residence of a Religious Worker Not Listed in AS
29.53.020(b)(1) Exempt? ....................................... 884
E. Is the Residence of a Religious Worker Not Listed in AS
29.53.020(b)(1) Directly Incidental to and Vitally Necessary
for the Use of Other Exempt Property? ......................... 884
F. Is the Residence of Members of a Religious Order, Which is
Not the Order's Monastery, Exempt? ............................ 886
VI. CHURCH SANCTUARIES, RELIGIOUS ADMINISTRATIVE
OFFICES AND RELIGIOUS EDUCATION ................................. 887
VII. PROGRAMS OPERATED BY THE CHURCH OWNER ............................ 887
A. What is a "Charitable Purpose"? ............................... 887
B. When Does Payment for a Service Taint What was
Otherwise An Exempt Activity? ................................. 888
C. KNOM Radio Station ............................................ 889
1. Is KNOM used exclusively for "public worship"? ............. 890
2. Is KNOM used for "religious education"? .................... 890
3. Is KNOM used for "charitable purposes"? .................... 890
D. Youth Hostel .................................................. 891
E. Thrift Shop ................................................... 891
VIII. CHURCH PROPERTY LEASED TO OTHER NON-PROFIT
ORGANIZATIONS ................................................... 891
IX. SUPPORT PROPERTIES ............................................... 892
A. KNOM-Related Properties ....................................... 893
B. Garage and Heating Plant ...................................... 893
C. Quonset Hut ................................................... 893
D. Lutheran Garage ............................................... 894
E. KD Building ................................................... 894
F. Lutheran Apartment ............................................ 894
G. Young Center Storage and Parking and Methodist Office
Building and Gargage .......................................... 895
H. Seaview House Storage ......................................... 895
X. CONCLUSION ....................................................... 895
*874 I. INTRODUCTION
These are consolidated appeals from two superior court decisions. That court reviewed the City of Nome's refusal to allow tax exemptions under AS 29.53.020(a)(3) for properties claimed to have been used exclusively for nonprofit religious, charitable and educational purposes. Three separate entities claim exemptions: the Catholic Bishop of Northern Alaska ("Catholics"), the American Lutheran Church ("Lutherans"), and one local plus two national units of the United Methodist Church ("Methodists"). Each appealed denials of exemptions for four tax years, 1979 through 1982.
Procedurally, the cases are similar. Each church applied for exemptions to the Nome City Assessor in each of these years, and each was denied exemption on a portion of its property. The churches appealed these denials to the City Council of the City of Nome, sitting as the Board of Equalization ("Board" or "City"). AS 29.53.135. The Board affirmed the denials, and the churches appealed to the superior court. The superior court issued comprehensive decisions, 1 affirming in part, reversing in part, and remanding in part.
The Lutherans and Methodists now appeal the relevant superior court decision to this court, and the City cross-appeals. The City appeals the court's rulings on the Catholics' properties. For convenience, the cases have been consolidated.
The appeal concerns tax exemptions under AS 29.53.020. The churches sought to exempt religious residences, administrative offices, sanctuaries, and property used for both religious educational and charitable purposes. They also sought to exempt properties used as support for exempt properties, and church property leased to other nonprofit organizations. For each exemption we interpret AS 29.53.020 to require both spatial apportionment and exclusive use for a religious, charitable or educational purpose. We recognize two narrow exceptions to the "exclusive use" requirement. First, a de minimus use will not defeat the exemption. Second, property may be exempt if its use is both directly incidental to and vitally necessary for the use of exempt property. We also acknowledge that some church property leased to other nonprofit organizations may be exempt. Finally, we recognize that support property may be exempt if it is necessary to the convenient use of exempt property. In this opinion, we apply these rules to the numerous properties at issue, and summarize our rulings in chart form for the City on remand. See section X.
II. STANDARD OF REVIEW
As a general rule, we approach issues independently of the superior court when that court acts as an intermediate court of appeal. Burgess Construction v. Smallwood, 698 P.2d 1206 (Alaska 1985); Jager v. State, 537 P.2d 1100, 1106 (Alaska 1975). That rule, however, does not apply here. In this case, the Board set forth no findings of fact when it denied exemptions to the churches. Since the hearing transcripts inadequately reflected the basis for the Board's decisions, the superior court entered its own findings of fact. It based these upon the parties' briefs and the record on appeal. The superior court thus exercised the discretion authorized by Appellate Rule 609 2 to "grant a trial de novo in whole or in part." 3 When the superior court conducts a trial de novo, we review only the superior court's decisions. Kott v. City of Fairbanks, 661 P.2d 177, 180 n. 1 (Alaska 1983).
We note that the Board erred by not entering findings of fact and conclusions of law in its determinations. Even absent a statutory duty to make findings, an agency 4 that makes an adjudicative decision must articulate its reasons. See Kenai Peninsula Borough v. Ryherd, 628 P.2d 557, 562 (Alaska 1981) (); Fields v. Kodiak City Council, 628 P.2d 927, 933 (Alaska 1981) (). Such findings
facilitate judicial review, insure careful administrative deliberation, assist the parties in preparing for review, and restrain agencies within the bounds of their jurisdiction.
Fields, 628 P.2d at 932 (quoting Mobil Oil Corp. v. Local Boundary Commission, 518 P.2d 92, 97 n. 11 (Alaska 1974)). This rule covers a board of equalization's exemption determinations because they are essentially informal adjudications. See Application of Lakeview Gardens, 605 P.2d 576, 582 (Kan.1980).
The parties dispute whether certain properties deserved exemption under AS 29.53.020(a)(3) as properties used exclusively for nonprofit religious, charitable and educational purposes. Since our decision requires interpretation of statutory and case law, we do not defer to the City's administrative expertise. Rather, we review the City's decisions under the "substitution of judgment test." Earth Resources v. State, Department of Revenue, 665 P.2d 960, 965 (Alaska 1983); Jager, 537 P.2d at 1107 n. 23; Kelly v. Zamarello, 486 P.2d 906, 916 (Alaska 1971).
This court will not overturn the superior court's factual findings unless clearly erroneous. 5 Alaska R.Civ.P. 52(a). "A finding of fact is clearly erroneous only when this court is left with the firm and definite conviction on the entire record that a mistake has been made." Stanton v. Fuchs, 660 P.2d 1197, 1198 (Alaska 1983). However, no Alaska court has determined the proper standard of review of factual findings made by a superior court exercising...
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