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LEAGUE8/29/1997
This appeal is to determine if the district court erred in ordering that the League of Kansas Municipalities (League) was exempt from ad valorem taxation. The Board of Tax Appeals (BOTA) had denied the League's application for exemption. The League then applied for judicial review, and the district court reversed BOTA's decision and remanded with directions that BOTA grant the exemption. BOTA refused to comply with the court's remand order, and, upon the League's motion, the district court granted the exemption. The Board of County Commissioners of Shawnee County (Board) appeals the court's order reversing BOTA and its order granting the exemption.
The BOTA decision
BOTA effectively found that the actual use of the League's property was exclusively for municipal purposes.
BOTA acknowledged in its final order that the League, which was created in 1910 and consists of 543 of the 627 cities in Kansas, performs numerous functions on behalf of the cities of Kansas,
including: providing educational and training seminars; performing legal research; providing technical and advisory assistance; monitoring legislation; lobbying governmental functions; and issuing various publications, newsletters, and monthly magazines. BOTA further noted that the League produced various witnesses who testified "that the League was an integral part of their respective cities' operation" and that "the League provides surveys and studies to many cities which could not afford to have such studies compiled themselves." BOTA also noted that the League was exempt from federal income tax as a political subdivision and that pursuant to K.S.A. 12-1610e, it was an "instrumentality" of its member cities. Notwithstanding its findings, BOTA denied the exemption on the basis of its interpretation of K.S.A. 1996 Supp. 79-201a Second. It opined that the League did not meet the requirements for the statutory exemption because the League is an instrumentality of its member cities, not a political subdivision, and that even if it is a political subdivision, it does not have the power to levy taxes or issue bonds; thus, the League's property is not being "used exclusively" by a government entity.
K.S.A. 1996 Supp. 79-201a Second provides for ad valorem tax exemption, in pertinent part, for
" ll property used exclusively by the state or any municipality or political subdivision of the state. All property owned, being acquired pursuant to a lease-purchase agreement or operated by the state or any municipality or political subdivision of the state, including property which is vacant or lying dormant, which is used or is to be used for any governmental or proprietary function and for which bonds may be issued or taxes levied to finance the same, shall be considered to be `used exclusively' by the state, municipality or political subdivision for the purposes of this section."
The district court largely adopted BOTA's findings of fact with respect to the League's activities and stated that " he undisputed evidence presented at the administrative hearing demonstrated that all property owned by the League is being used for municipal purposes." The court reversed BOTA's decision holding that BOTA had misinterpreted the provisions of 79-201a Second, and stated in part: "The statute does not provide that the ability to issue
bonds or levy taxes is a requirement for exclusive governmental use."
In addition, the court found that BOTA's interpretation of 79-201a Second was contrary to the provisions of article 11, ยง 1(b) of the Kansas Constitution, which provides:
"All property used exclusively for state, county, municipal, literar
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