Ski-Lan Gymnastics v. City of Rutland, SKI-LAN

• Decision Date: 06 September 1983
• Docket Number: No. 82-354,SKI-LAN,82-354
• Citation: 143 Vt. 294,465 A.2d 1363
• Parties: , 13 Ed. Law Rep. 1011 GYMNASTICS and Performing Arts Educational Foundation, Inc. v. CITY OF RUTLAND and the Rutland City Board of Assessors.
• Court: Vermont Supreme Court

Page 1363

465 A.2d 1363

143 Vt. 294, 13 Ed. Law Rep. 1011

SKI-LAN GYMNASTICS and Performing Arts Educational Foundation, Inc. v. CITY OF RUTLAND and the Rutland City Board of Assessors.

No. 82-354.

Supreme Court of Vermont.

Sept. 6, 1983.

Carroll, George & Pratt, Rutland, for plaintiff-appellant.

William J. Bloomer, City Atty., Rutland, for defendants-appellees.

Before BILLINGS, C.J., and HILL, UNDERWOOD, PECK and GIBSON, JJ.

BILLINGS, Chief Justice.

Plaintiff brought a petition for declaratory judgment against defendants, the City of Rutland and its Board of Assessors, to determine whether certain Rutland property owned by plaintiff, and operated as a school for gymnastics and performing arts, should be exempt from property taxation. Plaintiff maintained that it has undertaken to assume "part of the public burden for making available instruction and performance of performing arts" in that city. As such, its property should qualify for tax exemption as "[r]eal and personal estate ... sequestered or used for public, pious or charitable uses." 32 V.S.A. § 3802(4).

Defendants claimed that plaintiff's facility assumes no public burden otherwise borne by Rutland, that its use is not essentially public in nature, and that even if plaintiff's use is public, such use is primarily for "health or recreational purposes" and thus falls within the exception of 32 V.S.A. § 3832(7) requiring tax exemption only by special town vote. The Rutland Superior Court agreed, concluding that plaintiff does not assume a burden of the municipality to provide any service which either the municipality or the legislature has determined to be an essential governmental function, but rather that plaintiff's services provide a private benefit. Thus, the court held that plaintiff's property is not exempt from taxation under 32 V.S.A. § 3802(4). Plaintiff appeals.

Based on a stipulation and an evidentiary hearing the court found the following facts, which are not in dispute. Plaintiff is a nonprofit Vermont corporation, exempt from federal income taxation under § 501(c)(3) of the Internal Revenue Code of 1954 (as codified 26 U.S.C. § 501(c)(3)). According to its articles of incorporation, plaintiff was organized to operate a facility instructing "those enrolled from the general public in gymnastics, dance, music and theater arts," and is "[t]o be organized and always operated exclusively for educational purposes, no part of the net earnings of which will inure to the benefit of any private individual or shareholder ...." Upon dissolution of the corporation, all its remaining economic resources are to be distributed to the educational programs of the Vermont Council on the Arts. Plaintiff admittedly charges for such instruction, but tuition is free for those who cannot afford it; although plaintiff attempts to recruit gifted and talented students, it does not exclude others who apply. Finally, plaintiff concedes that the programs it offers are not required as part of the state-mandated curriculum in Vermont public schools; however the City does offer some of the same courses as plaintiff through a program run by its parks and recreation department.

In Brattleboro Child Development, Inc. v. Town of Brattleboro, 138 Vt. 402, 416 A.2d 152 (1980), we had opportunity to explore extensively the policy considerations justifying property tax exemptions, as well as the criteria for allowing such relief. There we observed:

The term "public" when used in the context of tax exemption has an elusive meaning, but excluded from its purview are those uses or activities which, although some of them might benefit a broad indefinite class of persons who are part of the general public, do not in fact do so. It excludes those uses or activities for which, because of the nature of the use or activity, the structure of the administering organization, or the manner of administering the use or activity, the benefit is in fact available only to a class of persons who form a closed circle of beneficiaries designated by a judgmental selection process.

Id. at 404, 416 A.2d at 154 (citing Vermont Wild Land Foundation v. Town of Pittsford, 137 Vt. 439, 443, 407 A.2d 174, 177 (1979)). Moreover,

[T]he governing consideration is the direct and immediate, rather than the remote or incidental, benefit derived from the use of the property. Shelburne Museum, Inc. v. Town of Shelburne, 129 Vt. [341,] 346, 278 A.2d [719,] 721 [ (1971) ]. "Whatever directly promotes individual interest, although it may also tend incidentally to the public benefit, is essentially a private, and not a public, activity."

Id. 138 Vt. at 407, 416 A.2d at 155-56 (quoting Vermont Wild Land Foundation v. Town of Pittsford, supra, 137 Vt. at 444, 407 A.2d at 177, and English Language Center, Inc. v. Town of Wallingford, 132 Vt. 327, 331, 318 A.2d 180, 183 (1974)).

In order to qualify for an exemption under the aforesaid statute, plaintiff...