League of Kansas Municipalities v. Board of County Com'rs of Shawnee County

• Citation: 24 Kan.App.2d 294,944 P.2d 172
• Decision Date: 29 August 1997
• Docket Number: No. 76553,76553
• Parties: LEAGUE OF KANSAS MUNICIPALITIES, Appellee, v. BOARD OF COUNTY COMMISSIONERS OF SHAWNEE COUNTY, Kansas, Appellant.
• Court: Court of Appeals of Kansas

Page 172

944 P.2d 172

24 Kan.App.2d 294

LEAGUE OF KANSAS MUNICIPALITIES, Appellee, v. BOARD OF COUNTY COMMISSIONERS OF SHAWNEE COUNTY, Kansas, Appellant.

No. 76553.

Court of Appeals of Kansas.

Aug. 29, 1997.

Syllabus by the Court

1. The scope of appellate review of an agency's action is to determine if the district court reviewed the action in accordance with the Act for Judicial Review and Civil Enforcement of Agency Actions, K.S.A. 77-601 et seq. The party asserting the invalidity of the action has the burden of proving the invalidity.

2. Deference should be given to an administrative agency's interpretation of a statute, especially if the agency is one of special competence and experience and if the statute is one which the agency is charged with enforcing.

3. An agency's interpretation of a statute is not conclusive, and the question of whether an agency has erroneously interpreted a statute is a matter of law over which appellate courts have unlimited review.

4. Constitutional and statutory provisions exempting property from taxation are to be strictly construed against the one claiming exemption, and all doubts are to be resolved against the exemption. Strict construction, however, does not mean unreasonable construction.

5. Generally, it is presumed that the legislature intends that a statute be given a reasonable construction, so as to avoid unreasonable or absurd results. When a statute is plain and unambiguous, the court must give effect to the intention of the legislature as expressed, rather than determine what the law should or should not be.

6. Under K.S.A.1996 Supp. 79-201a Second, the fact that property is, or may be, financed through the use of public funds, indicates that the property is being "used exclusively" for governmental purposes. However, the wording of the statute does not support a conclusion that the applicant requesting an exemption must actually be authorized to provide such financing by issuing bonds or levying taxes.

7. Kansas Constitution, article 11, § 1 provides generally that all property used exclusively for governmental purposes is exempt from taxation. The exemption depends solely upon the exclusive use made of the property and not on the ownership or the character of the owner.

8. K.S.A.1996 Supp. 79-201a Second is construed consistent with the language of article 11, § 1(b) of the Kansas Constitution to include property which is owned by an instrumentality of a government entity or entities as long as such property is actually being used exclusively for governmental purposes.

Sandra L. Jacquot, County Counselor, and Susana L. Valdovinos, Assistant County Counselor, for appellant.

John M. Knox, of Riling, Burkhead & Nitcher, Chartered, Lawrence, for appellee.

Before PIERRON, P.J., PADDOCK, Special Judge, and DAVID PRAGER, Chief Justice Retired, Assigned.

PADDOCK, Special Judge:

This appeal is to determine if the district court erred in ordering that the League of Kansas Municipalities (League) was exempt from ad valorem taxation. The Board of Tax Appeals (BOTA) had denied the League's application for exemption. The League then applied for judicial review, and the district court reversed BOTA's decision and remanded with directions that BOTA grant the exemption. BOTA refused to comply with the court's remand order, and, upon the League's motion, the district court granted the exemption. The Board of County Commissioners of Shawnee County (Board) appeals the court's order reversing BOTA and its order granting the exemption.

The BOTA decision

BOTA effectively found that the actual use of the League's property was exclusively for municipal purposes.

BOTA acknowledged in its final order that the League, which was created in 1910 and consists of 543 of the 627 cities in Kansas, performs numerous functions on behalf of the cities of Kansas, including: providing educational and training seminars; performing legal research; providing technical and advisory assistance; monitoring legislation; lobbying governmental functions; and issuing various publications, newsletters, and monthly magazines. BOTA further noted that the League produced various witnesses who testified "that the League was an integral part of their respective cities' operation" and that "the League provides surveys and studies to many cities which could not afford to have such studies compiled themselves." BOTA also noted that the League was exempt from federal income tax as a political subdivision and that pursuant to K.S.A. 12-1610e, it was an "instrumentality" of its member cities. Notwithstanding its findings, BOTA denied the exemption on the basis of its interpretation of K.S.A.1996 Supp. 79-201a Second. It opined that the League did not meet the requirements for the statutory exemption because the League is an instrumentality of its member cities, not a political subdivision, and that even if it is a political subdivision, it does not have the power to levy taxes or issue bonds; thus, the League's property is not being "used exclusively" by a government entity.

K.S.A.1996 Supp. 79-201a Second provides for ad valorem tax exemption, in pertinent part, for

"[a]ll property used exclusively by the state or any municipality or political subdivision of the state. All property owned, being acquired pursuant to a lease-purchase agreement or operated by the state or any municipality or political subdivision of the state, including property which is vacant or lying dormant, which is used or is to be used for any governmental or proprietary function and for which bonds may be issued or taxes levied to finance the same, shall be considered to be 'used exclusively' by the state, municipality or political subdivision for the purposes of this section."

The district court largely adopted BOTA's findings of fact with respect to the League's activities and stated that "[t]he undisputed evidence presented at the administrative hearing demonstrated that all property owned by the League is being used for municipal purposes." The court reversed BOTA's decision holding that BOTA had misinterpreted the provisions of 79-201a Second, and stated in part: "The statute does not provide that the ability to issue bonds or levy taxes is a requirement for exclusive governmental use."

In addition, the court found that BOTA's interpretation of 79-201a Second was contrary to the provisions of article 11, § 1(b) of the Kansas Constitution, which provides:

"All property used exclusively for state, county, municipal, literary, educational, scientific, religious, benevolent and charitable purposes, farm machinery and equipment, merchants' and manufacturers' inventories, other than public utility inventories included in subclass (3) of class 2, livestock, and all household goods and personal effects not used for the production of income, shall be exempted from property taxation."

The scope of review

" 'The scope of appellate review of an agency's action is to determine if the district court reviewed the action in accordance with the Act for Judicial Review and Civil Enforcement of Agency Actions K.S.A. 77-601 et seq. The party asserting the invalidity of the action has the burden of proving the invalidity. [Citation omitted.]' " Board of Douglas County Comm'rs v. Cashatt, 23 Kan.App.2d 532, 538, 933 P.2d 167 (1997) (quoting Kaufman v. Kansas Dept. of SRS, 248 Kan. 951, 959, 811 P.2d 876 [1991] ).

The district court's scope of review is set out in K.S.A. 77-621(c), in relevant part: "The district court shall grant relief only if it determines any one or more of the following: ... (4) the agency has erroneously interpreted or applied the law." Additionally, special rules applicable to the review of agency actions must be considered where the issue is one of statutory interpretation.

Ordinarily, deference should be given to an administrative agency's interpretation of a statute, especially if the agency is one of special competence and experience and if the statute is one which the agency is charged with enforcing. Board of Douglas County Comm'rs, 23 Kan.App.2d at 538, 933 P.2d 167. However, an agency's determination is not conclusive, and the question of whether an agency has erroneously interpreted a statute as a matter of law is a question over which this court has unlimited review. 23 Kan.App.2d at 538-39, 933 P.2d 167.

"The legal principles applicable to questions of taxation and exemption are well settled. Whether particular property is exempt from ad valorem taxation is a question of law if the facts are agreed upon. [Citation omitted.] Taxation is the rule, and exemption from taxation is the exception under the Kansas Constitution and statutes. [Citation omitted.] Constitutional and statutory provisions exempting property from taxation are to be strictly construed against the one claiming exception, and all doubts are to be resolved against the exemption. [Citation omitted.] Strict construction, however, does not mean unreasonable construction." Lario Enterprises, Inc. v. State Bd. of Tax Appeals, 22 Kan.App.2d 857, 859, 925 P.2d 440, rev. denied 261 Kan. ---- (1996).

Generally, it is presumed that the legislature intends that a statute be given a reasonable construction, so as to avoid unreasonable or absurd results. Todd v. Kelly, 251 Kan. 512, 520, 837 P.2d 381 (1992). Further, "[w]hen a statute is plain and unambiguous, the court must give effect to the intention of the legislature as expressed, rather than determine what the law should or should not be." Martindale v. Tenny, 250 Kan. 621, Syl. p 2, 829 P.2d 561 (1992).

K.S.A.1996 Supp. 79-201a Second issues

1. The ability to issue bonds or levy taxes issue

The Board does not actually brief or argue that the district court erred in ruling that BOTA incorrectly interpreted the phrase "used exclusively" to require that the entity seeking an exemption also be able to levy taxes or issue bonds.

We ordinarily consider issues on appeal that are not...