Vt. Coll. of Fine Arts v. City of Montpelier
| Decision Date | 10 February 2017 |
| Docket Number | No. 2016-194,2016-194 |
| Citation | 2017 VT 12 |
| Court | Vermont Supreme Court |
| Parties | Vermont College of Fine Arts v. City of Montpelier |
Superior Court, Washington Unit, Civil Division
DOCKET NO. 538-9-13 Wncv
In the above-entitled cause, the Clerk will enter:
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Harold E. Eaton, Jr., Associate Justice NOTICE: This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports. Readers are requested to notify the Reporter of Decisions by email at: JUD.Reporter@vermont.gov or by mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801, of any errors in order that corrections may be made before this opinion goes to press.
On Appeal from Superior Court, Washington Unit, Civil Division
Barney L. Brannen of Brannen & Loftus, PLLC, Hanover, New Hampshire, for Plaintiff-Appellant.
Robert E. Fletcher and Eric G. Derry of Stitzel, Page & Fletcher, P.C., Burlington, for Defendant-Appellee.
PRESENT: Reiber, C.J., Dooley, Skoglund, Robinson and Eaton, JJ.
¶ 1. This case concerns the taxable status of Schulmaier Hall, a building owned by the Vermont College of Fine Arts (VCFA), two-thirds of which VCFA rented to agencies of the State of Vermont (State) during the 2013 and 2014 tax years. The City Assessor of the City of Montpelier (City) found the property nonexempt for those tax years. In response, VCFA brought a motion for declaratory judgment in the trial court, and both parties moved for summary judgment. Granting summary judgment for the City, the court found not only (1) that VCFA had failed to exhaust its administrative remedies before moving for declaratory judgment but also (2) that the property was not exempt on the merits. We affirm.
¶ 2. The facts are undisputed. VCFA is a nonprofit corporation that was formed in February 2007. In June 2008, VCFA purchased the programs and property of Vermont College from Union Institute and University, consisting of several buildings and roughly thirty-one acres located within the City. One of these buildings—Schulmaier Hall—is the subject of the present dispute. Located at the southeast corner of the VCFA campus, Schulmaier Hall is a two-story building with classrooms and faculty lounges. It also has a basement and an unused attic.
¶ 3. VCFA provides low-residency graduate degree programs in fine arts and describes itself as having a "mission as a national center for education in the arts." These low-residency programs require VCFA's students to reside on campus twice each year for between seven and ten days. As a result of this model, VCFA did not use the majority of the campus for its own operations in the 2013-2014 tax years, leaving up to sixty-two percent of the built space open for lease. VCFA's operations include a "Leasing Strategy," and VCFA's finance plan includes rental income as a component of revenue from operations, with a revenue stream as high as $2.8 million in 2012-2013. This strategy for campus management predates VCFA; VCFA's purchase of Vermont College property also included eleven existing leases to third-party tenants.
¶ 4. As part of its leasing plan, VCFA negotiated terms with the State's Department of Buildings and General Services and, in August 2012, leased the first and second floors of Schulmaier Hall to the State. Combined, these floors are roughly 22,300 square feet, which is two-thirds of the usable space in the building. The lease had an initial term of two years and provided the State with an option to renew the lease for an additional two years. The space was leased at the rate of $17.80/square foot for the first year and $18.16/square foot for the second year—an annual rent of approximately $400,000. The State was using the leased portion of property during the 2013 and 2014 tax years; VCFA used a portion of the basement to house electronic communications and switching equipment for the campus and for storage during that time.
¶ 5. On June 12, 2013, the City's Assessor sent a Notice of Change in Appraisal of Real Estate to VCFA, stating that Schulmaier Hall is "now taxable." Five days before, the City Manager had sent an email to VCFA's president, advising him of the forthcoming change and giving the dates for the process for grieving the decision to the City's Board of Civil Authority (BCA). In the email, he stated that "[t]echnically, tax exempt status cannot be grieved but practically we would have until, say, July 1 to reach an accommodation if possible." VCFA did not grieve the City Assessor's decision to the BCA, but instead initiated an action in superior court by filing a Complaint for Declaratory Judgment on September 13, 2013. Since then, VCFA has made tax payments to the City under protest. In 2014, the State terminated its lease with VCFA.
¶ 6. After VCFA filed its motion for declaratory judgment, both parties moved for summary judgment. VCFA argued that Schulmaier Hall qualified for a tax exemption under the "public schools" clause of 32 V.S.A. § 3802(4) or, in the alternative, under the "public use" clause of the same statute. The City argued that VCFA had not exhausted its administrative remedies before moving for declaratory judgment and that neither exemption was appropriate. The court concluded that the precedent on exhaustion was mixed and continued to the merits, granting the City's motion, denying VCFA's, and finding that Schulmaier Hall was leased for "general commercial purposes" and was not exempt under either clause of § 3802(4).
¶ 7. We review a trial court's decision on cross-motions for summary judgment de novo, applying the same standard of review as applied below. Inkel v. Pride Chevrolet-Pontiac, Inc., 2008 VT 6, ¶ 8, 183 Vt. 144, 945 A.2d 855. "Summary judgment is appropriate only when the moving party establishes that there is no genuine issue of material fact and that the party is entitled to judgment as a matter of law." Dulude v. Fletcher Allen Health Care, Inc., 174 Vt. 74, 79, 807 A.2d 390, 395 (2002). As with any motion for summary judgment, "the nonmoving party receives the benefit of all reasonable doubts and inferences." Robertson v. Mylan Labs., Inc., 2004 VT 15, ¶ 15, 176 Vt. 356, 848 A.2d 310 (citing Samplid Enters., Inc. v. First Vt. Bank, 165 Vt. 22, 25,676 A.2d 774, 776 (1996)). When, as here, "there are cross-motions for summary judgment, both parties are entitled to the benefit of all reasonable doubts and inferences" when being considered as the non-moving party. Montgomery v. Devoid, 2006 VT 127, ¶ 9, 181 Vt. 154, 915 A.2d 270 (quotation omitted).
¶ 8. On appeal, VCFA argues that Schulmaier Hall qualifies for a tax exemption under the "public schools" clause of § 3802(4) or, in the alternative, under the "public use" clause of the same statute. 32 V.S.A. § 3802(4) (). The City first responds that we should not reach the merits of the case because VCFA had not exhausted its administrative remedies before moving for declaratory judgment. It next responds that if we do reach the merits, neither exemption is appropriate and VCFA may not apply for multiple exemptions under § 3802(4). We conclude that VCFA should have exhausted its administrative remedies, but we reach the merits here in recognition of our own inconsistent precedent regarding exhaustion in the specific case of § 3802(4). On the merits, we conclude that VCFA may apply for multiple exemptions under § 3802(4), but that neither the "public schools" exemption nor the "public use" exemption is appropriate here. We therefore affirm.
¶ 9. We first consider whether VCFA had to exhaust its administrative remedies before bringing its motion for declaratory judgment. Specifically, the City argues that the court lacked subject matter jurisdiction to reach the merits of this case because VCFA was required to exhaust its administrative remedies by first grieving the City Assessor's decision to the BCA, and VCFA failed to satisfy this requirement. VCFA responds that the BCA does not have the authority to rule on questions of tax-exempt status, and that consequently grieving a decision of tax-exempt status to the BCA would be futile. We hold that the BCA does have authority to rule on questions oftax-exempt status and that VCFA should have exhausted its administrative remedies before bringing its motion for declaratory judgment.
¶ 10. The process of determining the taxable status of property starts with assembling the "grand list" of a town:
32 V.S.A. § 4152(a). This indicates that the listers of a town or city—here, the City Assessor—have the responsibility to determine whether a property is taxable or exempt, because they must list the exempt parcels in the grand list. However, a property owner may challenge the decision of the listers on any matter, including the tax-exempt status of the property: "[T]he listers shall meet . . . and on that day and from day to day thereafter shall hear persons aggrieved by their appraisals or by any of their acts until all questions and objections are heard and decided." Id. § 4221.
¶ 11. Likewise,...
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