Under The Rainbow Early Educ. Ctr. v. Cnty. of Goodhue, 25-CV-19-824

CourtTax Court of Minnesota
Writing for the CourtWendy S. Tien, Chief Judge
PartiesUnder the Rainbow Early Education Center, Petitioner, v. County of Goodhue, Respondent.
Decision Date15 September 2021
Docket Number25-CV-19-824

Under the Rainbow Early Education Center, Petitioner,

County of Goodhue, Respondent.

No. 25-CV-19-824

Tax Court of Minnesota, Regular Division, Goodhue County

September 15, 2021

This matter came before the Honorable Wendy S. Tien, Chief Judge of the Minnesota Tax Court, on the parties' cross motions for summary judgment.

Ryan R. Simatic, Biersdorf & Associates, P.A., represents petitioner Under the Rainbow Early Education Center ("Under the Rainbow").

Stephen F. O'Keefe and Carol K. Lee, Assistant County Attorneys, represent respondent Goodhue County.


The court, upon all the files, records, and proceedings herein, now makes the following:


1. Petitioner's motion for summary judgment is denied.

2. Respondent's motion for summary judgment is granted.



Wendy S. Tien, Chief Judge

I. Background

In February 2019, Under the Rainbow applied to the Goodhue County Assessor's office for an exemption from property taxes with respect to real property located at 555 Technology Drive in Red Wing (the "subject property") on the grounds that it is an educational institution—specifically, that it provides early education services to children aged six weeks to twelve years.[1] The County denied the application.[2] Under the Rainbow filed the instant property tax petition seeking a determination that the subject property qualifies for an exemption to property tax under Minn. Stat. § 272.02, subd. 5 (2020) and Minn. Const. art. X, § 1.[3] The parties filed cross motions for summary judgment.[4]

Under the Rainbow contends the subject property is exempt from the property tax as an educational institution based on earlier trial orders of this court granting exempt status to early education centers.[5] In support of this contention, Under the Rainbow submitted an affidavit of Michelle Finholdt, its chair and founder.[6] Ms. Finholdt averred that Under the Rainbow is licensed by the Minnesota Department of Human Services (DHS) as a Child Care Center, [7] and is authorized to supervise children up to twelve years old, although children typically stop attending before age ten.[8] The 2021 license describes the services provided as "Child Care Center - Day Time" and allows for a capacity of 123 students, including 24 infants and 99 toddler/preschool/school-age children (of which at most five may be school-age children).[9]

In addition to being licensed by DHS, Ms. Finholdt averred that Under the Rainbow was inspected by DHS, which found its license to be in compliance with the licensing regulations and requirements applicable to child care centers ("Rule 3")[10] as of January 21, 2021, [11] including Rule 3 requirements pertaining to teacher-to-child ratios[12] and equipment requirements.[13] Ms. Finholdt also described services Under the Rainbow provides to children in its care. Specifically, Under the Rainbow uses lesson plans for different age groups[14] and performs written evaluations of each student three times a year.[15] Twice yearly, its staff meets with parents of all children "to discuss the evaluations and conference with the parents on their child's intellectual, physical, social, and emotional development." [16]

Ms. Finholdt described the physical characteristics of the subject property to include eight classrooms: three for infants; two for toddlers; two for preschool; and school-age children; and a "large room designed to simulate a kindergarten environment" (the "Pre-K Room") for children between the ages of three and five, [17] which includes desks and an interactive whiteboard.[18] The subject property also includes four playgrounds.[19]

Under the Rainbow further contends that DHS-licensed childcare facilities that have attained a four-star rating under the state's Parent Aware program are per se qualified as educational institutions and therefore exempt from property tax.[20] In support of this contention, Under the Rainbow submitted an affidavit of Connie Welch, a coach at Families First of Minnesota ("FFM"), [21] which administers the Parent Aware program in Southern Minnesota, including Goodhue County.[22] Ms. Welch averred that Parent Aware is a voluntary program that receives funding from the federal government, but is administered by the Minnesota DHS[23] to "help[] early childhood educators improve and maintain best practices" and to help families "find quality early care and education." [24] She further averred that Parent Aware employs a star rating system to rate early childhood educators ("ECEs"), with a four-star rating as the highest rating.[25]

To receive a star rating, ECEs must meet specific qualifications to "document educational achievements and professional development activities," [26] which the ECE submits to FFM in the form of a Quality Documentation Portfolio ("QDP") that lists five categories of evaluation metrics.[27] A child care center also must use a pre-approved curriculum or submit its own curriculum to be rated by Parent Aware.[28] Ms. Welch averred that Under the Rainbow uses a pre-approved curriculum called Creative Curriculum.[29] The Minnesota DHS assigns the star ratings to Parent Aware applicants.[30] A three- or four-star rating also requires an observer from the University of Minnesota Center for Early Education Development ("CEED") to observe classes at the ECE.[31] ECEs must apply for re-rating on a biennial basis.[32] Ms. Welch avers that Under the Rainbow has achieved a four-star rating in the Parent Aware program since at least 2017.[33]

The County did not stipulate to any of the facts Under the Rainbow submitted.[34] Rather, in support of its motion for summary judgment, the County contends Under the Rainbow is not exempt from property tax because even if it is an educational institution, it is not a "seminary of learning." [35] The County asserts that Under the Rainbow did not submit evidence of its curriculum or any testimony from the Red Wing Public School District that suggests that the educational program at Under the Rainbow reduces the public burden.[36] In support of its contention, the County submitted an affidavit of its current Assessor, Lavon Vieths-Augustine, who averred that, although Under the Rainbow responded to discovery requests, some of its responses were not for the 2019 year.[37] Ms. Vieths-Augustine offered the opinion that "[t]he information provided to Goodhue County through discovery is not sufficient to grant an exception." [38]

Ms. Vieths-Augustine also averred that, based on a search of the assessor's files, the County had informed Under the Rainbow of "the kind of evidence which would be necessary in an exemption application." [39] She stated that such information was not provided to the County in connection with Under the Rainbow's application in 2019.[40] The April 2003 letter set forth three requirements the County considered necessary:

1) That the mission of the organization be fundamentally educational in nature
2) The facility is providing educational training that would otherwise have to be provided by a publicly supported institution, and
3) The public school would give credit for educational programs at the facility.[41]

The April 2003 letter expresses the position that "the local public school district would have to attest to parts #2 and parts #3" for the County to grant the exemption and represents that "[t]he school district has stated that it believes that parts #2 and #3 do not apply." [42] The December 2004 letter describes a conversation between the author and an employee of the Red Wing School District concerning the instructor qualifications for a preschool/early childhood development program and states that "[i]f Under the Rainbow does have a qualified teacher teaching preschool/early childhood development [the County] would need copies of their credentials and license along with copies of the curriculum. If this is the case, [it] would need to examine your documentation and compare it to that of the Red Wing School District and possibly confer with the Department of Revenue." [43]

A hearing was held on the cross-motions for summary judgment on June 3, 2021.[44]

II. Governing Law

A. Summary Judgment

Summary judgment is to be granted "if the movant shows that there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law." Minn. R. Civ. P. 56.01; Henson v. Uptown Drink, LLC, 922 N.W.2d 185, 189-90 (Minn. 2019). Summary judgment "permits the court to make a prompt disposition of an action on the merits if there is no genuine dispute regarding the material facts, and a party is entitled to judgment under the law applicable to such established facts." In re Estate of Bush, 302 Minn. 188, 211, 224 N.W.2d 489, 503 (1974). Accordingly, the court's function in ruling on a motion for summary judgment is first to determine whether there is an issue of fact to be tried. Anderson v. Twin City Rapid Transit Co., 250 Minn. 167, 186, 84 N.W.2d 593, 605 (1957).

A party asserting that there is no genuine issue as to any material fact must support the assertion by:

(1) citing to particular parts of materials in the record including depositions, documents, electronically stored information, affidavits, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials; or
(2) showing that the materials cited do not establish the absence or presence of a genuine issue for trial, or that an adverse party cannot produce admissible evidence to support the fact

Minn. R. Civ. P. 56.03(a).

In considering a motion for summary judgment, "all inferences from circumstantial evidence and all doubts must be resolved against the movant, without...

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