DocketNumber: No. TC-MD 060538E (Control); 060539E.
Citation Numbers: 19 Or. Tax 250
Judges: <bold>COYREEN R. WEIDNER, Magistrate.</bold>
Filed Date: 4/26/2007
Status: Precedential
Modified Date: 7/6/2016
Plaintiff appeals the taxability of property identified in Defendant's records as Accounts 54376 and 54379. A trial was held in Astoria, Oregon, December 13, 2006. William R. Canessa (Canessa), Attorney, appeared on behalf of Plaintiff (the City). John A. Solheim (Solheim), Commercial Appraiser, appeared on behalf of Defendant (the County).
"The Manager shall manage the City's RV Park including, but not limited to paying for all expenses associated with the RV Park, hiring and terminating employees, maintaining the books and records, collecting and disbursing of funds, repairing and maintaining structures and the swimming pool, advertising and renting RV spaces, operating the store and fueling stations, maintaining the landscaping, maintaining adequate security, operating a reservation system, and applying for and obtaining all required *Page 252 governmental and quasi-governmental permits, licenses and approvals if the same have not already been obtained, for use of the RV park and related operations of the RV Park, and such other duties as described in this Agreement."
The Agreement provides that the City shall reimburse the Manager for all expenses out of an imprest fund established by the City. The Agreement further provides that the Manager must deposit each day the previous day's receipts into the City's account at a local bank, and the Manager must make its books available to the City for inspection. For any expenses exceeding $1,500, the Manager must seek approval from the City prior to incurring the expense. The Manager must also provide its proposed annual budget to the City Manager for the City Manager's approval, and the City Manager and park Manager are required to meet at least quarterly to discuss the park's operations. The Manager must operate the RV park continuously and may close only with the approval of the City Manager. The Agreement provides that the City reserves the right for the public to use portions of the park "so long as the public's use of the Facility does not infringe upon the operation of the Facility for the benefit of paying visitors." Either party may terminate the Agreement with 90 days written notice.
Solheim testified that, when the City purchased the property in 1996, he discussed the taxable status with the City Manager. The City Manager at that time informed Solheim that the City was holding the property for a future school site. Solheim testified that, based on their discussions, the County concluded the property should remain on the roll as taxable property because it was not being held for a corporate purpose of the City in accordance with ORS
In February 2006, Canessa sent a letter to the County stating the City believed the property should be exempt and requesting the matter be resolved. Solheim responded in a letter dated March 14, 2006, denying the claim for exemption and advising the City of its appeal rights. *Page 253 The City filed an appeal with this court June 1, 2006. In its Complaint, the City requests that the court grant the subject property exempt status for the 1999-2006 tax years. At trial, the court questioned Canessa about the City's basis for requesting relief back to the 1999-2000 tax year. He responded that the City was asking relief for "whatever years" the court deemed appropriate.
A. Tax Years
ORS
1. Plaintiff seeks exemption under the provisions of ORS
2, 3. ORS
4. The City, however, has timely appealed the 2006-07 tax year because the City appealed within 90 days of receiving the County's letter advising the City the County would not grant the City's request for exempt status on the property. The County's letter occurred prior to issuance of a tax statement for the 2006-07 tax year. The court will consider whether the property is entitled to exemption for the 2006-07 tax year.
B. Exempt Status
The County denied the City exempt status on the property claiming: (1) the property is not used for the City's corporate purposes, and (2) the Manager holds a sufficient interest in the property to disqualify it from exempt status.
1. ORS
ORS
"(1) Except as provided by law, all property of the state and all public or corporate property used or intended for corporate purposes of the several counties, cities * * * and all other public or municipal corporations in this state, is exempt from taxation."
(Emphasis added.) The County claims the property, although owned by the City, is taxable because it is not used for the City's corporate purposes.
The court begins by observing that when "public corporations are involved, exemption is the rule and taxation the exception." City of Eugene v. Keeney,
In City of Eugene v. Dept. of Rev., the Tax Court considered whether providing childcare was within the corporate purposes of the City of Eugene. The court began by noting a corporate purpose is "`any purpose for the accomplishment of which a valid power is granted by the charter or other legislative enactment.'"
In addition to the grant of authority provided by ORS
"SECTION 4. POWERS OF THE CITY. The City has all powers that the constitutions, statutes and common law of the United States and of this state expressly or impliedly grant or allow municipalities, as fully as though this charter specifically enumerated each of those powers.
"SECTION 5. CONSTRUCTION OF POWERS. In this charter, no mention of a specific power is exclusive or restricts the authority that the city would have if the specific power were not mentioned. The * * * city has all powers necessary or convenient for conducting its private affairs, including all powers that cities may now or hereafter assume under the home rule provision of the constitution and laws of Oregon."
The City argues there is a public need for an RV park because the City is a destination resort for tourists. By providing a source of lodging, the City is serving its visitors and supporting the local tourist industry. *Page 256
5. Both ORS
2. ORS
ORS
The Oregon Supreme Court has observed that "even publicly owned property should pay its share of the cost of government when in the hands of a private person and devoted to a private use."Holman Tfr. Co. et al. v. Portland et al.,
"It is, then, the character of the occupant's right to use until his interest is terminated which is regarded as the significant factor. If, prior to termination, the transferor can rightfully interfere with every use the occupant might make of the premises, the interest is clearly a mere license. If any interference by the transferor is prohibited, the transferee's interest is clearly a leasehold. When a case does not present either of these extremes we are required to determine whether the right to use bargained for by the transferee is substantial enough to warrant giving him the benefits (or imposing upon him the burdens) which legal tradition has attached to possessory interests. Generally the substantiality of the occupant's interest is tested by the inquiry: Does he have sufficient control over the premises to warrant the label of possession?"
Sproul,
The County claims the City has conveyed the Manager an interest in the property. The County points to the *Page 257
authority and control given to the Manager to run the business and further argues that the 90-day termination requirement shows the Manager has an interest in the property. The County refers the court to a variety of cases finding the lessee of property had sufficient control to result in taxation of the property. See, e.g., Avis Rent A Car System, Inc. v. Dept. ofRev.,
6, 7. The difference between the cases referred to by the County and the subject appeal is that, in this case, the City has not transferred to the Manager an interest in the property. Lessees and other holders of an interest in property pay the owner rent to use the property for the user's benefit. SeePort of Coos Bay v. Dept. of Rev.,
IT IS THE DECISION OF THIS COURT that the property identified by Accounts 54376 and 54379 is exempt for the 2006-07 tax year.
Avis Rent a Car System, Inc. v. Department of Revenue , 330 Or. 35 ( 2000 )
Port of Coos Bay v. Department of Revenue , 298 Or. 229 ( 1984 )
City of Eugene v. Department of Revenue , 15 Or. Tax 1 ( 1998 )
Sproul v. Gilbert , 226 Or. 392 ( 1961 )
Holman Transfer Co. v. City of Portland , 196 Or. 551 ( 1952 )