Trudy L. Eisele, Laramie County Treasurer and Kenneth Guille, Laramie County Assessor v. The Town of Pine Bluffs ( 2020 )

IN THE SUPREME COURT, STATE OF WYOMING
2020 WY 22OCTOBER TERM, A.D. 2019
February 19, 2020
TRUDY L. EISELE, Laramie County
Treasurer and KENNETH GUILLE,
Laramie County Assessor,
Appellants
(Respondents),
S-19-0037
v.
THE TOWN OF PINE BLUFFS,
Appellee
(Petitioner).
Appeal from the District Court of Laramie County
The Honorable Timothy C. Day, Judge
Representing Appellants:
Mark T. Voss, Laramie County Attorney, Cheyenne, Wyoming.
Representing Appellee:
Alexander Davison and Caleb C. Wilkins of Patton and Davison, LLC, Cheyenne,
Wyoming. Argument by Mr. Wilkins.
Before DAVIS, C.J., and FOX, KAUTZ, BOOMGAARDEN, and GRAY, JJ.
NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne,
Wyoming 82002, of any typographical or other formal errors so that correction may be made before
final publication in the permanent volume.
DAVIS, Chief Justice.
[¶1] The Town of Pine Bluffs owns and operates a daycare facility. Laramie County
assessed property taxes on the facility based upon its conclusion that it was not used
primarily for a governmental purpose. Pine Bluffs appealed, following the administrative
process to its end. The County Board of Equalization ruled against the Town, and the State
Board of Equalization affirmed that decision. The district court ruled in favor of the Town.
We reverse the district court’s decision and reinstate the order of the County Board.
ISSUES
[¶2] The County Treasurer and County Assessor, Appellants, present this issue:
Was the Laramie County Board of Equalization’s affirmance
of the Laramie County Assessor’s denial of a request for
exemption from taxation, for a daycare facility operated by the
Town of Pine Bluffs, in accordance with law, not arbitrary,
capricious, [or] an abuse of discretion, and supported by
substantial evidence in the record?
FACTS
[¶3] The facts in this case are largely undisputed. Pine Bluffs began offering daycare
services in the 1970s to address a public need for childcare. At the time, there were no
daycare services in Pine Bluffs. The facility was operated initially in part of the community
center, but in 2009 it was moved to a separate building. As approved in a special election,
Pine Bluffs used optional sales tax revenue to purchase and renovate the new facility.
[¶4] Over the years, private daycare providers in Pine Bluffs have come and gone. When
a private daycare facility opened in 2015, the Town considered closing its operation.
However, the governing body determined that there was still a need to provide daycare
options. As the Mayor of Pine Bluffs testified at the hearing before the County Board;
[T]hese private [daycare facilities] in our small town have just
come and gone too often to take the chance on doing away with
what we felt was a sure opportunity [to provide] service to the
community.
[¶5] For a variety of reasons, Pine Bluffs has a particular need for daycare options that
has not been met by the private sector in terms of quality, types, and stability of services.
Daycare services became even more important when local schools changed to a four-day
school week. In addition, the Pine Bluffs facility offers a preschool program that teaches
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social skills, ABCs, numbers, and colors. Children in the daycare center are also given
lessons in Spanish and sign language.
[¶6] Pine Bluffs has never intended to earn a profit from its daycare services. The center
has always operated at a fiscal loss. The Town is willing to incur these losses to offer safe
and stable daycare to the public.
[¶7] In 2015, the Town filed a complaint against the County Treasurer and County
Assessor, seeking to enjoin them from assessing and collecting property taxes on the
daycare facility. Town of Pine Bluffs v. Eisele, 2017 WY 117, ¶ 1, 403 P.3d 126, 127 (Wyo.
2017). We ruled that the district court had correctly dismissed the complaint because,
under the circumstances presented, the Town’s remedy was available only through the
administrative process. Id. ¶ 27, 403 P.3d at 132. In other words, the Town must appeal
the assessment of its daycare facility to the County Board of Equalization, and “appeal
from an unfavorable decision there to the state board of equalization . . . and from there to
petition the district court for review, and ultimately to appeal to this Court.” Id. ¶ 5, 403
P.3d at 128.
[¶8] In 2016, the Town did just that. It filed requests for exemption, which the County
Assessor denied. Pine Bluffs appealed to the County Board, which held a hearing on the
matter, and issued a decision affirming the County Assessor’s denial. The Town appealed
to the State Board, which affirmed the County Board’s decision. Continuing on with the
required administrative process, the Town appealed to the district court, which ruled in
favor of Pine Bluffs and reversed the decision of the State Board. The County Assessor
and County Treasurer took the final step in the process, and appealed to this Court.
STANDARD OF REVIEW
[¶9] Our review of this agency action is governed by the Wyoming Administrative
Procedure Act. Section 16-3-114(c) (LexisNexis 2019) provides in relevant part:
(c) To the extent necessary to make a decision and when
presented, the reviewing court shall decide all relevant
questions of law, interpret constitutional and statutory
provisions, and determine the meaning or applicability of the
terms of an agency action. In making the following
determinations, the court shall review the whole record or
those parts of it cited by a party and due account shall be taken
of the rule of prejudicial error. The reviewing court shall:
....
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(ii) Hold unlawful and set aside agency action, findings
and conclusions found to be:
(A) Arbitrary, capricious, an abuse of discretion
or otherwise not in accordance with law [or]
....
(E) Unsupported by substantial evidence in a
case reviewed on the record of an agency hearing
provided by statute.
We have long recognized that substantial evidence “is more than a mere scintilla” of
evidence; it is “such relevant evidence as a reasonable mind might accept as adequate to
support [an agency’s] conclusion.” Howard v. Lindmier, 67 Wyo. 78, 87, 214 P.2d 737,
740 (1950). It is also well established that “[q]uestions of law are reviewed de novo, and
‘[c]onclusions of law made by an administrative agency are affirmed only if they are in
accord with the law.’” Maverick Motorsports Grp., LLC v. Dep’t of Revenue, 2011 WY
76, ¶ 12, 253 P.3d 125, 128 (Wyo. 2011) (quoting Bowen v. State, Dep’t of Transp., 2011
WY 1, ¶ 7, 245 P.3d 827, 829 (Wyo. 2011) (quoting State ex rel. Workers’ Safety & Comp.
Div. v. Garl, 2001 WY 59, ¶ 9, 26 P.3d 1029, 1032 (Wyo. 2001))).
[¶10] Significantly, in this case our review is focused on the decision of the County Board.
We do not defer to the decision of the State Board or to that of the district court. Britt v.
Fremont County Assessor, 2006 WY 10, ¶ 17, 126 P.3d 117, 123 (Wyo. 2006); Laramie
County Bd. of Equalization v. Wyoming State Bd. of Equalization, 915 P.2d 1184, 1188
(Wyo. 1996). As we have explained:
Since in this case the county board was the finder of the fact
and the state board heard no additional testimony, we will treat
the state board as an intermediate level of review and accord
deference only to the county board’s findings of fact. Thus,
the primary focus of our review will be whether the county
board’s decision was lawful and supported by substantial
evidence.
Union Pac. R.R. v. Wyo. State Bd. of Equalization, 802 P.2d 856, 859 (Wyo. 1990).
[¶11] Pine Bluffs contends that the decision on whether its property is “used primarily for
a governmental purpose” is a finding of ultimate fact, and therefore subject to de novo
review. The district court agreed, relying on Mountain Vista Retirement Residence v.
Fremont County Assessor, 2015 WY 117, ¶ 4, 356 P.3d 269, 272 (Wyo. 2015).
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[¶12] Pine Bluffs is correct that the key question in this case is whether the town’s daycare
facility is “used primarily for a governmental purpose.” However, Pine Bluffs and the
district court overemphasize the importance of how the County Board’s answer to that
question is characterized.1 Whether we treat the County Board’s answer to that question
as a finding of ultimate fact or as a conclusion of law, we review its decision de novo, while
we review the findings of fact underlying that decision to see if they are supported by
substantial evidence. We have applied this standard of review in a number of similar cases.
E.g., Oakley v. Fremont County Cmty. Coll. Dist., 2010 WY 106, ¶¶ 8-9, 236 P.3d 1004,
1006-07 (Wyo. 2010); Deromedi v. Town of Thermopolis (In re Deromedi), 2002 WY 69,
¶¶ 8-9, 45 P.3d 1150, 1153 (Wyo. 2002); Town of Thermopolis v. Deromedi (In re Town
of Thermopolis), 2002 WY 70, ¶¶ 11-12, 45 P.3d 1155, 1159-60 (Wyo. 2002).
DISCUSSION
[¶13] Article 15, Section 12 of the Wyoming Constitution provides:
The property of the United States, the state, counties,
cities, towns, school districts and municipal corporations,
when used primarily for a governmental purpose, and public
libraries, lots with the buildings thereon used exclusively for
religious worship, church parsonages, church schools and
public cemeteries, shall be exempt from taxation, and such
other property as the legislature may by general law provide.
Wyo. Const. art. 15, § 12. Implementing this constitutional provision is Wyo. Stat. Ann.
§ 39-11-105 (LexisNexis 2019), which states in pertinent part:
(a) The following property is exempt from property
taxation:
....
(v) Property of Wyoming cities and towns owned
and used primarily for a governmental purpose
including:
(A) Streets and alleys and property used for
the construction, reconstruction, maintenance
and repair of streets and alleys;
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It would have been helpful on review had the County Board made a better effort to set forth its findings
of basic fact, and then differentiate those findings from its ultimate findings and conclusions of law.
Moreover, conclusions of law should carefully reflect applicable regulatory, statutory, and constitutional
language, and pertinent language derived from cases that have interpreted the same.
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(B) Property used to furnish sewer and water
services;
(C) City or town halls, police stations and
equipment, traffic control equipment, garbage
collection and disposal equipment and lands and
buildings used to service and repair the halls,
stations or equipment;
(D) Parks, airports, auditoriums, cemeteries,
golf courses, playgrounds and recreational
facilities. Any charges for the use of the facilities
shall not exceed the cost of operation and
maintenance to qualify for the exemption;
(E) Personal property used exclusively for the
care, preservation and administration of city or
town property;
(F) Parking lots operated on a nonprofit basis.
[¶14] Child care facilities are not listed in this statutory provision. However, this list is
meant to be illustrative, not exclusive. Deromedi, ¶ 13, 45 P.3d at 1154 (“By the statutory
use of the term ‘including’ the legislature intends to include other purposes even though
not specifically enumerated.”). Any municipal property that is “used primarily for a
governmental purpose” is exempt from property taxation. Indeed, the initial presumption
is that municipal property is exempt.
Although under Title 39, taxation of property is
generally the rule, the exemptions provided for by § 39-11-
105(a)(v) require that we apply the rule that where the
established policy of the state is to exempt publicly owned
property, the burden is placed on the taxing authority to
establish taxability. City of Cheyenne v. Bd. of County
Comm’rs of the County of Laramie, 484 P.2d 706, 708-09
(Wyo. 1971). The mere ownership of property by a town does
not exempt the property; it must also be used primarily for
governmental purposes. Id. at 709. When a town uses the
property in a proprietary manner, the property is not exempt
from taxation. Town of Pine Bluffs v. State Board of
Equalization, 79 Wyo. 262, 288, 333 P.2d 700, 710 (Wyo.
1958). The taxable status of property owned by a governmental
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entity must be determined as a question of fact by the use made
of the property. City of Cheyenne v. Sims, 521 P.2d 1347, 1349
(Wyo. 1974).
Deromedi, ¶ 10, 45 P.3d at 1153-54.
[¶15] We have recognized that “[t]he term ‘governmental purpose’ is not readily
amenable to precise definition and such determination is largely dependent upon the
circumstances presented in each case.” City of Cheyenne v. Board of County Comm’rs,
484 P.2d 706, 708 (Wyo. 1971). For guidance in its decision, the County Board relied on
a rule promulgated by the Wyoming Department of Revenue, which states in relevant part:
(a) Publicly owned property is not, per se, exempt from
taxation. The property is exempt only “when used primarily
for a governmental purpose.”
(b) The phrase “governmental purpose” cannot be precisely
defined. The following considerations should be evaluated:
(i) If a service or function is obligatory (one the
governmental entity must perform as a legal duty
imposed by statute), the function is governmental and
the associated property is exempt.
(ii) If a service is rendered gratuitously, supported
by taxes, and for the public welfare or enjoyment
generally, the property associated with providing such
service is exempt.
(iii) Property owned by a governmental entity acting
in its proprietary capacity is not exempt, (e.g. where a
city enters the field of private competitive business for
profit or into activities which may be and frequently are
carried on through private enterprises).
(iv) Governmental property subject to the payment of
service (user) fees is not exempt unless the specific use
is provided by statute (e.g. public sewer and water
services).
Wyo. Dep’t of Revenue Rules, Ch. 14, § 5 (2015).
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[¶16] The County Board, in its Findings of Fact, Conclusions of Law and Order, made
findings of fact that correlate with this regulation, this one in particular:
The Assessor appropriately assessed the factors [listed in this
regulation] and found a daycare is not an obligatory function –
one that Pine Bluffs or any municipality has a legal duty to
perform. Second, the Pine Bluffs’ daycare center is not a
service that is provided gratuitously – Pine Bluffs charges a fee
for daycare services; (iii) the daycare center is a proprietary
function – or a service that is frequently carried on through
private enterprises; and (iv) the daycare service is provided for
a service fee and is not one that is specifically exempt by Wyo.
Stat. § 39-11-105(v).
We examine the record to determine whether these findings of fact are supported by
substantial evidence.
[¶17] During the County Board’s hearing, the County Assessor testified that there was a
statutory list of governmental facilities in Wyo. Stat. Ann. § 39-11-105 that are tax exempt.
He noted that the list includes “parks, airports, auditoriums, cemetery, golf courses,
playgrounds and recreational facilities,” but contains no mention of daycare centers. He
testified that he was not aware of any other governmental entity in Laramie County that
operated a daycare center. He testified that, to his knowledge, there is no statutory mandate
for municipalities to provide daycare services. The Treasurer of the Town of Pine Bluffs
agreed that she was unaware of any state statute requiring municipalities to operate daycare
centers. Whether this testimony is considered factual or whether these are legal assertions,
it serves as substantial evidence that daycare is not an obligatory municipal function.
[¶18] The County Assessor testified that the Pine Bluffs daycare facility charged fees. He
referred to an exhibit that included “clippings from the [Pine Bluffs] newspaper . . . when
it started as a daycare, opened as a daycare, and that they were charging fees.” The Pine
Bluffs Treasurer provided more updated information, indicating that the daycare facility
had recently increased the fees it charged. The record contains substantial evidence to
support a finding that the daycare facility charges for its services, or in other words, that
the service is not rendered gratuitously.
[¶19] The County Assessor testified that daycare was a service typically offered by private
entities. We have said that when a municipality “enters a zone of private business, or into
activities which may be and frequently are carried on through private enterprises, that its
activities become proprietary.” Town of Pine Bluffs v. State Board of Equalization, 79
Wyo. 262, 292, 333 P.2d 700, 711 (1958) (citation omitted). The Town Treasurer testified
that there was a privately-operated daycare facility in Pine Bluffs, and that private daycare
centers had operated in Pine Bluffs “on and off throughout the years.” The Mayor of Pine
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Bluffs acknowledged that offering the same service as a private entity was a form of
competition with that private entity. Together, these witnesses provided substantial
evidence to support a finding that the daycare center operates in a proprietary capacity.
[¶20] The County Assessor testified, as discussed previously, that the Pine Bluffs daycare
facility charged a fee. This was confirmed by the Pine Bluffs Treasurer. The Assessor and
the Treasurer also testified that they knew of no statute providing for a municipal daycare
facility. This provides substantial evidence to support a finding that the daycare facility
was governmental property subject to the payment of fees and not specifically exempted
by statute.
[¶21] Based on these factual findings, the County Board concluded that the Pine Bluffs
daycare facility did not qualify as tax exempt. Specifically, it concluded:
10. Applying the facts of this instant matter, Pine Bluffs’
daycare center is not an obligatory function – one that Pine
Bluffs or any municipality has a legal duty to perform. Pine
Bluffs’ daycare center is not a service that is provided
gratuitously – Pine Bluffs charges a fee for daycare services.
Pine Bluffs’ daycare center is a proprietary function – or a
service that is frequently carried on through private enterprises.
Pine Bluffs’ daycare service is provided for a service fee and
is not one that is specifically exempt by Wyo. Stat. § 39-11-
105(v).
11. Thus, the property owned by Pine Bluffs and used in
connection with its daycare facility does not qualify for tax
exempt status.
(Emphasis in original.) We must determine whether the County Board committed any
errors of law in reaching these conclusions.
[¶22] Pine Bluffs’ only explicit challenge with regard to these legal conclusions is an
assertion that “there is a potential conflict” between subsection (b)(iv) of the Rules and the
“statute related to service fees for governmentally-owned property.” It is, however,
unnecessary for us to answer that question, because even if we agreed with Pine Bluffs’
assertion that the County Board made an error of law in applying subsection (b)(iv), Pine
Bluffs claimed no specific error of law related to the County Board’s conclusions that the
Pine Bluffs daycare facility was not tax exempt under subsections (b)(i), (b)(ii), and (b)(iii).
[¶23] As a more generalized objection to the County Board’s legal conclusions, Pine
Bluffs contends that the daycare facility is used primarily for a governmental purpose, and
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the County Board erred in deciding otherwise.2 In its brief, Pine Bluffs asserts that it is
“clear from the record that the exclusive purpose of the Daycare is to provide unique
daycare services that are necessary.” Pine Bluffs provided a more comprehensive version
of its argument before the County Board, which summarized the Town’s position as
follows:
Pine Bluffs asserts that the ultimate issue is whether or not the
Pine Bluffs daycare is serving primarily a governmental
purpose.
In support of its contention, Pine Bluffs argued that the day-
care facility:
1) is a function essential to the operation of
government, one that the public needs;
2) is intended to and does in fact operate at a loss;
3) has been around providing services to residents
for a long period of time, when private
alternatives have come and gone;
4) is a case where a local government is offering a
service for the safety, protection, [and] education
of its citizens that cannot and has not been
offered by the private sector;
5) is not intended to compete with the private
sector.
“Further,” Pine Bluffs asserted, “the daycare center provides a safe and educational venue
for children, and public safety is the first thing on the list of governmental purposes.”
2
Pine Bluffs points out that the County Board “did not make a finding on the primary purpose of the
Daycare – the one relevant question to the legal analysis.” We agree that no such ultimate conclusion was
explicitly stated, but none was necessary. The County Board did conclude that the County Assessor
appropriately assessed the regulatory factors that guide the determination of whether a facility serves
primarily a governmental function. The County Board also concluded, as noted in ¶ 21, that “Pine Bluffs’
daycare center is a proprietary function.” Because the Department of Revenue and this Court have already
distinguished between a governmental function and a proprietary one in which the government enters an
activity that may be and frequently is carried on through private enterprise, see ¶ 24, the County Board did
not need to further conclude that the primary purpose of the daycare was not a governmental one.
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[¶24] However laudable it may be for a town to provide daycare services, and however
important those services may be to the public, we cannot ignore that: (1) there is substantial
evidence in the record to support the County Board’s finding that daycare is typically and
frequently carried on by private enterprise; (2) that case law and regulation establish that a
municipality engaged in activities that may be and frequently are carried out by private
enterprises are acting in their proprietary capacity, Pine Bluffs, 79 Wyo. at 291-92, 333
P.2d at 711-12; Wyo. Dep’t of Revenue Rules, Ch. 14, § 5(b)(iii); see also Biscar v.
University of Wyoming Bd. of Trs., 605 P.2d 374, 376 (Wyo. 1980) (“Where the activity
has historically been carried on by a private corporation . . . it is proprietary.” (internal
citations omitted)); (3) that the County Board correctly applied the pertinent law to the
facts of this case; and (4) that after careful review, we simply cannot find that the County
Board’s decision constituted reversible error.
[¶25] We reverse the district court’s decision and reinstate the order of the County Board.
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