This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.
1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 SAYLOR FAMILY TRUST, LLC, 3 ALBUQUERQUE TALENT DEVELOPMENT 4 ACADEMY, CHRISTINE DUNCAN’S HERITAGE 5 ACADEMY, and SOUTHWEST PRIMARY, 6 INTERMEDIATE AND SECONDARY 7 CHARTER SCHOOLS,
8 Appellants-Respondents,
9 v. No. A-1-CA-36115
10 BERNALILLO COUNTY ASSESSOR,
11 Appellee-Petitioner,
12 and
13 BERNALILLO COUNTY VALUATION 14 PROTESTS BOARD,
15 Appellee.
16 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY 17 Alan M. Malott, District Judge
18 Peifer, Hanson & Mullins, P.A. 19 Mark T. Baker 20 Matthew E. Jackson 21 Albuquerque, NM
22 Matthews Fox, P.C. 23 Susan Barger Fox 1 Santa Fe, NM
2 for Appellants
3 Robles, Rael & Anaya, P.C. 4 Charles Rennick 5 Marcus J. Rael, Jr. 6 Albuquerque, NM
7 for Appellees 8 9 MEMORANDUM OPINION
10 VIGIL, Judge.
11 {1} The Bernalillo County Valuation Protests Board (the Board) and the
12 Bernalillo County Assessor (the Assessor) (collectively, Petitioners) appeal the
13 district court’s order granting Saylor Family Trust, LLC, (Owner) Albuquerque
14 Talent Development Academy, Christine Duncan’s Heritage Academy, and the
15 Southwest Primary, Intermediate and Secondary Charter Schools (Tenants)
16 (collectively, Respondents) an educational property tax exemption pursuant to
17 Article VIII, Section 3 of the New Mexico Constitution. We affirm.
18 BACKGROUND
19 {2} Owner owns three properties (the Properties) located at 1900 Atrisco Drive
20 NW, 10301 Candelaria Road NE, and 1800 Atrisco Drive NW in Albuquerque,
21 New Mexico. Owner built facilities for schools at the Properties and leased them to
22 Tenants. Tenants are all public charter schools and, as required in their lease
2 1 agreements, use the Properties exclusively for providing public education to
2 students.
3 {3} Respondents filed applications for educational use exemptions that the
4 Assessor denied, and Respondents protested the Assessor’s denials. Following a
5 hearing on the matter, the Board determined it was bound by Chapman’s, Inc. v.
6 Huffman, 1975-NMSC-062, 90 N.M. 21, 559 P.2d 398, and Rutherford v. Cty.
7 Assessor for Bernalillo Cty., 1976-NMCA-053, 89 N.M. 348, 552 P.2d 479, and
8 found the Properties were “not entitled to exemption under Article VIII, [Section]
9 3 of the New Mexico Constitution.” Respondents appealed the Board’s decision to
10 the district court. See Rule 1-074(C) NMRA (“When provided or permitted by law,
11 an aggrieved party may appeal a final decision or order of an agency.”); see also
12 NMSA 1978, § 7-38-28(A) (2015) (“A property owner may appeal an order made
13 by . . . a county valuation protests board by filing an appeal pursuant to the
14 provisions of [NMSA 1978,] Section 39-3-1.1 [(1999)].”); § 39-3-1.1(C) (“[A]
15 person aggrieved by a final decision may appeal the decision to district court.”).
16 {4} On appeal, the district court reversed the Board’s decision pursuant to CAVU
17 Co. v. Martinez, 2014-NMSC-029, 332 P.3d 287, because “[t]he direct, and only,
18 use of the [P]roperties were as schools, and . . . the [district c]ourt finds no
19 question that the use of the [P]roperties as schools embraces systematic instruction
20 and creates a substantial public benefit.” Furthermore, the district court concluded
3 1 that the cases cited by Petitioners, see Sisters of Charity of Cincinnati, Ohio v. Cty.
2 of Bernalillo, 1979-NMSC-044, 93 N.M. 42, 596 P.2d 255; Chapman’s, Inc.,
3 1975-NMSC-062; Rutherford, 1976-NMCA-053, applied to charitable, not
4 educational, exemptions. Petitioners filed a petition for writ of certiorari with this
5 Court. See Rule 12-505(B) NMRA (“A party aggrieved by the final order of the
6 district court in [an administrative appeal under Rule 1-074] may seek review of
7 the order by filing a writ of certiorari with the Court of Appeals, which may
8 exercise its discretion whether to grant the review.”). We granted certiorari to
9 determine whether the Properties are exempt from taxation under the educational
10 use provision, and whether the exemptions for educational and charitable uses
11 found in Article VIII, Section 3 of the New Mexico Constitution are subject to
12 different standards.
13 DISCUSSION
14 Standard of Review
15 {5} “We review a district court’s decision in an administrative appeal under an
16 administrative standard of review.” CAVU Co., 2013-NMCA-050, ¶ 11 (internal
17 quotation marks and citation omitted). “[W]e conduct the same review of an
18 administrative order as the district court sitting in its appellate capacity, while at
19 the same time determining whether the district court erred in the first appeal.” Id.
20 (internal quotation marks and citation omitted). “The district court may reverse the
4 1 [p]rotest [b]oard if it acted outside the scope of authority of the agency, or if the
2 district court determines that the administrative entity acted fraudulently,
3 arbitrarily, or capriciously; if the decision was not supported by substantial
4 evidence in the whole record; or if the [p]rotest [p]oard did not act in accordance
5 with the law.” Id. (alterations, omission, internal quotation marks, and citations
6 omitted). “Interpretation of a statute is a question of law which an appellate court
7 reviews de novo.” Id.
8 {6} “Property is presumed to be subject to taxation.” Georgia O’Keefe Museum
9 v. Cty. of Santa Fe, 2003-NMCA-003, ¶ 32, 133 N.M. 297, 62 P.3d 754. However,
10 Article VIII, Section 3 of the New Mexico Constitution provides that “all property
11 used for educational or charitable purposes . . . shall be exempt from taxation.”
12 Because this exemption deals with the taxation of real property, “the use of the
13 property, not the ownership, . . . is the determinative factor in property taxation.”
14 Georgia O’Keefe Museum, 2003-NMCA-003, ¶ 40; see Albuquerque Lodge, No.
15 461, B.P.O.E. v. Tierney, 1935-NMSC-022, ¶ 29, 39 N.M. 135, 42 P.2d 206
16 (holding that “[i]t is the use of property, not the declared objects and purposes of
17 its owner which determines the right to exemption”). “The proper focus of any
18 inquiry into the propriety of an exemption is whether the use of the property
19 furthers exempt purposes.” CAVU Co., 2014-NMSC-029, ¶ 21 (alteration, internal
20 quotation marks, and citation omitted). “It is the taxpayer’s burden to claim, apply
5 1 for, and prove an exemption based on an educational or charitable use.” Georgia
2 O’Keefe Museum, 2003-NMCA-003, ¶ 32.
3 {7} We deal here with Respondents’ application for an educational use
4 exemption.
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This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.
1 IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
2 SAYLOR FAMILY TRUST, LLC, 3 ALBUQUERQUE TALENT DEVELOPMENT 4 ACADEMY, CHRISTINE DUNCAN’S HERITAGE 5 ACADEMY, and SOUTHWEST PRIMARY, 6 INTERMEDIATE AND SECONDARY 7 CHARTER SCHOOLS,
8 Appellants-Respondents,
9 v. No. A-1-CA-36115
10 BERNALILLO COUNTY ASSESSOR,
11 Appellee-Petitioner,
12 and
13 BERNALILLO COUNTY VALUATION 14 PROTESTS BOARD,
15 Appellee.
16 APPEAL FROM THE DISTRICT COURT OF BERNALILLO COUNTY 17 Alan M. Malott, District Judge
18 Peifer, Hanson & Mullins, P.A. 19 Mark T. Baker 20 Matthew E. Jackson 21 Albuquerque, NM
22 Matthews Fox, P.C. 23 Susan Barger Fox 1 Santa Fe, NM
2 for Appellants
3 Robles, Rael & Anaya, P.C. 4 Charles Rennick 5 Marcus J. Rael, Jr. 6 Albuquerque, NM
7 for Appellees 8 9 MEMORANDUM OPINION
10 VIGIL, Judge.
11 {1} The Bernalillo County Valuation Protests Board (the Board) and the
12 Bernalillo County Assessor (the Assessor) (collectively, Petitioners) appeal the
13 district court’s order granting Saylor Family Trust, LLC, (Owner) Albuquerque
14 Talent Development Academy, Christine Duncan’s Heritage Academy, and the
15 Southwest Primary, Intermediate and Secondary Charter Schools (Tenants)
16 (collectively, Respondents) an educational property tax exemption pursuant to
17 Article VIII, Section 3 of the New Mexico Constitution. We affirm.
18 BACKGROUND
19 {2} Owner owns three properties (the Properties) located at 1900 Atrisco Drive
20 NW, 10301 Candelaria Road NE, and 1800 Atrisco Drive NW in Albuquerque,
21 New Mexico. Owner built facilities for schools at the Properties and leased them to
22 Tenants. Tenants are all public charter schools and, as required in their lease
2 1 agreements, use the Properties exclusively for providing public education to
2 students.
3 {3} Respondents filed applications for educational use exemptions that the
4 Assessor denied, and Respondents protested the Assessor’s denials. Following a
5 hearing on the matter, the Board determined it was bound by Chapman’s, Inc. v.
6 Huffman, 1975-NMSC-062, 90 N.M. 21, 559 P.2d 398, and Rutherford v. Cty.
7 Assessor for Bernalillo Cty., 1976-NMCA-053, 89 N.M. 348, 552 P.2d 479, and
8 found the Properties were “not entitled to exemption under Article VIII, [Section]
9 3 of the New Mexico Constitution.” Respondents appealed the Board’s decision to
10 the district court. See Rule 1-074(C) NMRA (“When provided or permitted by law,
11 an aggrieved party may appeal a final decision or order of an agency.”); see also
12 NMSA 1978, § 7-38-28(A) (2015) (“A property owner may appeal an order made
13 by . . . a county valuation protests board by filing an appeal pursuant to the
14 provisions of [NMSA 1978,] Section 39-3-1.1 [(1999)].”); § 39-3-1.1(C) (“[A]
15 person aggrieved by a final decision may appeal the decision to district court.”).
16 {4} On appeal, the district court reversed the Board’s decision pursuant to CAVU
17 Co. v. Martinez, 2014-NMSC-029, 332 P.3d 287, because “[t]he direct, and only,
18 use of the [P]roperties were as schools, and . . . the [district c]ourt finds no
19 question that the use of the [P]roperties as schools embraces systematic instruction
20 and creates a substantial public benefit.” Furthermore, the district court concluded
3 1 that the cases cited by Petitioners, see Sisters of Charity of Cincinnati, Ohio v. Cty.
2 of Bernalillo, 1979-NMSC-044, 93 N.M. 42, 596 P.2d 255; Chapman’s, Inc.,
3 1975-NMSC-062; Rutherford, 1976-NMCA-053, applied to charitable, not
4 educational, exemptions. Petitioners filed a petition for writ of certiorari with this
5 Court. See Rule 12-505(B) NMRA (“A party aggrieved by the final order of the
6 district court in [an administrative appeal under Rule 1-074] may seek review of
7 the order by filing a writ of certiorari with the Court of Appeals, which may
8 exercise its discretion whether to grant the review.”). We granted certiorari to
9 determine whether the Properties are exempt from taxation under the educational
10 use provision, and whether the exemptions for educational and charitable uses
11 found in Article VIII, Section 3 of the New Mexico Constitution are subject to
12 different standards.
13 DISCUSSION
14 Standard of Review
15 {5} “We review a district court’s decision in an administrative appeal under an
16 administrative standard of review.” CAVU Co., 2013-NMCA-050, ¶ 11 (internal
17 quotation marks and citation omitted). “[W]e conduct the same review of an
18 administrative order as the district court sitting in its appellate capacity, while at
19 the same time determining whether the district court erred in the first appeal.” Id.
20 (internal quotation marks and citation omitted). “The district court may reverse the
4 1 [p]rotest [b]oard if it acted outside the scope of authority of the agency, or if the
2 district court determines that the administrative entity acted fraudulently,
3 arbitrarily, or capriciously; if the decision was not supported by substantial
4 evidence in the whole record; or if the [p]rotest [p]oard did not act in accordance
5 with the law.” Id. (alterations, omission, internal quotation marks, and citations
6 omitted). “Interpretation of a statute is a question of law which an appellate court
7 reviews de novo.” Id.
8 {6} “Property is presumed to be subject to taxation.” Georgia O’Keefe Museum
9 v. Cty. of Santa Fe, 2003-NMCA-003, ¶ 32, 133 N.M. 297, 62 P.3d 754. However,
10 Article VIII, Section 3 of the New Mexico Constitution provides that “all property
11 used for educational or charitable purposes . . . shall be exempt from taxation.”
12 Because this exemption deals with the taxation of real property, “the use of the
13 property, not the ownership, . . . is the determinative factor in property taxation.”
14 Georgia O’Keefe Museum, 2003-NMCA-003, ¶ 40; see Albuquerque Lodge, No.
15 461, B.P.O.E. v. Tierney, 1935-NMSC-022, ¶ 29, 39 N.M. 135, 42 P.2d 206
16 (holding that “[i]t is the use of property, not the declared objects and purposes of
17 its owner which determines the right to exemption”). “The proper focus of any
18 inquiry into the propriety of an exemption is whether the use of the property
19 furthers exempt purposes.” CAVU Co., 2014-NMSC-029, ¶ 21 (alteration, internal
20 quotation marks, and citation omitted). “It is the taxpayer’s burden to claim, apply
5 1 for, and prove an exemption based on an educational or charitable use.” Georgia
2 O’Keefe Museum, 2003-NMCA-003, ¶ 32.
3 {7} We deal here with Respondents’ application for an educational use
4 exemption. “[T]he phrase ‘used for educational purposes’ [means] ‘the direct,
5 immediate, primary and substantial use of property that embraces systematic
6 instruction in any and all branches of learning from which a substantial public
7 benefit is derived.’ ” NRA Special Contribution Fund v. Bd. of Cty. Comm’rs,
8 1978-NMCA-096, ¶ 35, 92 N.M. 541, 591 P.2d 672. While the parties do not
9 dispute that Tenants used the Properties for educational purposes, Petitioners argue
10 that the Properties should nonetheless be subject to taxation because Owner’s use
11 was not for educational purposes. We disagree.
12 {8} In 2014 our Supreme Court addressed a similar question in CAVU Co.
13 There, CAVU Co. applied for an educational use exemption for the twenty-six-acre
14 school campus it owned. 2014-NMSC-029, ¶¶ 2, 5. Seven years before CAVU Co.
15 purchased the property, it had been developed and improved “solely for operation
16 as a school.” Id. ¶ 2. Before and during CAVU Co.’s ownership, the property was
17 “used for educational purposes by several schools and ha[d] never been used for
18 any other purpose.” Id. ¶ 2, 3. However, four years after CAVU Co. purchased the
19 property, the tenant-school closed, and the property remained vacant for almost
20 two years. Id. ¶¶ 2-4. CAVU Co. listed the property for sale, but turned down a
6 1 film company’s offer to lease the property, “insisting on maintaining the property
2 for educational uses only[.]” Id. ¶ 4 (alteration and internal quotation marks
3 omitted).
4 {9} After temporarily leasing the property to a dog training school, CAVU Co.
5 applied for an educational use exemption which the Santa Fe County Assessor
6 denied. Id. ¶ 5. Citing the period during which the property was vacant, the
7 Assessor stated “the property was not used directly and immediately for
8 educational purposes.” Id. (internal quotation marks omitted). Later that same year,
9 CAVU Co. leased the property to an elementary school. Id. ¶ 6. The following
10 year, the Santa Fe County Valuation Protests Board reinstated CAVU Co.’s
11 exemption without making a formal decision on the property’s education use
12 because a similar vacant school remained exempt. Id. ¶¶ 7-8.
13 {10} On appeal, our Supreme Court held that, in seeking out and engaging with
14 interested educational tenants, negotiating lease terms with a college preparatory
15 school, and rejecting the film company’s offer, CAVU Co. “used the temporarily
16 vacant property in a direct and immediate effort to further its educational use.” Id.
17 ¶ 26. Furthermore, its lease negotiations with the college preparatory school, its
18 refusal to lease to the film company, and its stated intent of leasing solely to an
19 educational facility indicated that CAVU Co. embraced systematic instruction. Id.
20 ¶ 28. The Court concluded that these actions resulted in a substantial public benefit
7 1 by “drawing potential school tenants into negotiations, all in furtherance of its
2 educational purpose.” Id. ¶ 31. However, because the board had not formally
3 decided whether the property was eligible for an educational use exemption, the
4 Court remanded “with directions to determine whether [CAVU Co.’s] use of the
5 [p]roperty was in furtherance of its exempt purpose.” Id. ¶ 32.
6 {11} Similarly, in the case before us, Owner put the Properties to use for
7 educational purposes. Most notably, whereas CAVU Co. dealt with the owner’s use
8 of the property when the property was vacant, we are faced with a situation in
9 which the Properties are leased by educational tenants. Prior to Tenants’ lease
10 agreements, Owner developed facilities on the Properties and, in its lease
11 agreements, Owner explicitly restricted the use of the Properties to educational
12 purposes. Accordingly, we conclude that CAVU Co. mandates our affirmance of
13 the district court.
14 {12} Moreover, unlike the district court, we conclude that CAVU Co. is consistent
15 with the cases cited by Petitioners. See Sisters of Charity, 1979-NMSC-044;
16 Chapman’s, Inc., 1975-NMSC-062; Rutherford, 1976-NMCA-053. Chapman’s,
17 Inc. and its progeny stand for the proposition that the qualifying use for exemption
18 purposes is the “use by the owner of the property rather than the use to which the
19 property is put by the tenant[.]” 1975-NMSC-062, ¶ 2; see Rutherford, 1976-
20 NMCA-053, ¶ 9 (extending Chapman’s, Inc.’s rule that “the charitable use
8 1 specified in Article VIII, Section 3 of the Constitution of New Mexico should be
2 construed to mean use by the owner of the property rather than the use to which the
3 property is put by the tenant” (internal quotation marks and citation omitted)); see
4 also Sisters of Charity, 1979-NMSC-044, ¶ 8 (same). Consistent with this line of
5 cases, CAVU Co. examined the owner’s use of the property. We have done the
6 same here.
7 {13} We note Petitioner’s argument that Owner’s revenue-generating use should
8 disqualify the Properties from exemption. Sisters of Charity, on which Petitioners
9 rely, involved the religious order’s request for a refund of taxes attributable to
10 property it owned and leased to St. Joseph Hospital, a non-profit corporation also
11 owned by Sisters of Charity. 1979-NMSC-044, ¶¶ 1-3. Our Supreme Court
12 concluded the lease to St. Joseph did not disqualify Sisters of Charity from a
13 charitable use exemption because the two organizations were charitable in nature,
14 St. Joseph was a “wholly owned subsidiary of [Sisters of Charity], and [St.
15 Joseph’s] lease is not primarily a profitmaking or revenue-producing
16 arrangement.” Id. ¶ 15 (internal quotation marks omitted). While our Supreme
17 Court held “property under lease serv[ing] the profitmaking purposes of some
18 private (non-exempt) person or organization” provides a reason why exemption is
19 denied, id. ¶ 14, the Court subsequently held in CAVU Co. “the exemption
20 provision makes no distinction between private nonprofit and for-profit
9 1 organizations.” 2014-NMSC-029, ¶ 15 (citing Georgia O’Keefe Museum, 2003-
2 NMCA-003, ¶ 40). To the extent that these two rules are inconsistent with one
3 another, our Supreme Court’s holding in CAVU Co. calls into question its previous
4 holding in Sisters of Charity.
5 {14} We affirm the district court order.
6 {15} IT IS SO ORDERED.
7 ___________________________ 8 MICHAEL E. VIGIL, Judge
WE CONCUR:
9 ___________________________ 10 LINDA M. VANZI, Chief Judge
11 ___________________________ 12 DANIEL J. GALLEGOS, Judge