City of Kennewick v. Benton County

Sanders, J.

(dissenting) — The Tri-Cities Coliseum is neither wholly nor partially exempt from property tax under RCW 84.36.010.1 dissent from a contrary result.

Washington Constitution article VII, section 1 (amend. 81)states:

Property of the United States and of the state, counties, school districts and other municipal corporations . . . shall be exempt from taxation.

RCW 84.36.010 implements article VII, section 1 (amend. 81) by providing:

*776All property belonging exclusively to the United States, the state, any county or municipal corporation . . . shall be exempt from taxation.

(Emphasis added).

The Tri-Cities Coliseum was owned by a joint venture comprised of the City of Kennewick (City) and the TriCities Coliseum Corporation, a Washington corporation (TCCC). The joint venture agreement expressly provided:

Title to the Coliseum shall be taken in the name of the City of Kennewick, in trust for the benefit of Joint Venturers, TCCC and the City, as their interests may appear herein.

Clerk’s Papers at 29 ("Coliseum Joint Venture Agreement” at 3).

Unless we were to find the statute unconstitutional (which the majority does not), the issue before us is whether a piece of property jointly owned by both the City of Kennewick and a private party fits within the statutory tax exemption which is limited to property "belonging exclusively” to a municipal corporation. The unavailability of this tax exemption is so clear it permits no denial.

RCW 84.36.010 predates the Washington Constitution as it was first enacted in 1854. RCWA § 84.36.010 Historical and Statutory Notes (West 1991). The "belonging exclusively” language was added in 1890, shortly after ratification of the state constitution.3 Consequently, for 107 years, the Legislature has implemented article VII, section l’s exemption for "property of” certain public entities as "property belonging exclusively” to the designated public entities. Early legislative constructions of constitutional provisions which prevail over time are entitled to great weight. State v. Reece, 110 Wn.2d 766, 779, 757 P.2d 947 (1988), cert. denied, 493 U.S. 812, 110 S. Ct. 59, 107 L. Ed. 2d 26 (1989).

*777This result is also consistent with the long-standing practice of this court to narrowly construe tax exemptions as well. Unfortunate as it may seem to the taxpayer, "[t]axation is the rule, and exemption is the exception.” Spokane County v. City of Spokane, 169 Wash. 355, 358, 13 P.2d 1084 (1932). Likewise, it is our rule that any legislative intention to create a tax exemption must be expressed in clear and unambiguous terms. Columbia Irrigation Dist. v. Benton County, 149 Wash. 234, 240, 270 P. 813 (1928) ("[W]here there is an exception, the intention to make one should be expressed in unambiguous terms.”); see also Spokane County, 169 Wash. at 358 (" 'All presumptions are against an intention of the State to bind itself by the exemption of property from taxation. Exemptions will be construed strictly and cannot be made by judicial construction to embrace other subjects than those plainly expressed.’ ”) (citation omitted) (quoting Board of Dirs. of Stinson Mem’l Library v. Board of Review, 248 Ill. 590, 595, 94 N.E. 153 (1911)). This rule of strict construction applies equally against municipal corporations. Spokane County, 169 Wash. at 358. Accordingly in Spokane County we applied the rule of strict construction and held that even though the City of Spokane held the legal title to a piece of property, it held it as a trustee for the benefit of a private party, and therefore concluded the property was not tax exempt. Id. at 360. Spokane controls the result here and cannot be distinguished.

Had the framers intended to exempt property owned in part by a municipal corporation and in part by a private entity they certainly did not manifest, that purpose. We are therefore bound to construe article VII, section 1 (amend. 81) and RCW 84.36.010 as written to not exempt jointly owned property. We cannot construe the ordinary meaning of this statute, much less using the rules of strict construction, to create an exemption where one does not exist. The only "property of” a public entity owned exclusively by the entity is that which is owned solely by the entity. Such an exclusivity requirement is also required by the strong language in Spokane County which *778strongly disfavors exemptions. Spokane County, 169 Wash. at 358.

While the majority finds this statute constitutional, it essentially defines the language of the statute out of existence. The majority cites Chief Seattle Properties, Inc. v. Kitsap County, 86 Wn.2d 7, 22, 541 P.2d 699 (1975) for the proposition that "exclusively” in RCW 84.36.010 "was apparently intended to eliminate an exemption to one not entitled to an exemption notwithstanding he owns the land with the United States which is entitled to the exemption.” However, this language is dicta. Chief Seattle Properties concerned the correct construction of the term "property” in RCW 84.04.080. The court in Chief Seattle Properties referenced RCW 84.36.010 to show the use of the term "property” in the former statute did not mean "exclusively owned property.” Chief Seattle Properties, Inc., 86 Wn.2d at 22. To read this statute as does the majority renders the term "belonging exclusively” superfluous. By the majority’s holding, the tax exemption would still apply even if the government entity did not exclusively own the property, contrary to the clear statutory text. This would defeat the ordinary meaning of the text and thereby require the court to improperly interpret the statute by rendering a portion of it superfluous. Clark v. Pacificorp, 118 Wn.2d 167, 183, 822 P.2d 162 (1991), superseded in statute as stated in Gilbert H. Moen Co. v. Island Steel Erectors, Inc., 128 Wn.2d 745, 912 P.2d 472 (1996).

The majority’s remaining argument is easily dismissed. As noted, Spokane County controls any argument that the property is tax exempt simply because the City alone holds paper title to the Coliseum. While this municipality holds paper title, it admittedly does so in part for the benefit of the Tri-Cities Coliseum Corporation, a private entity. Under the rule of Spokane County when the municipality does not own the property for its own exclusive benefit, the property fails the exemption test.

Exclusive municipal ownership of property as a prereq*779uisite to tax exemption is required by precedent, constitutional text, and long-standing legislative implementation. This property is not exempt from taxation. I dissent.

Madsen and Alexander, JJ., concur with Sanders, J.

The Legislature began exempting all property belonging exclusively to any county or municipal corporation in 1895. Laws of 1895, ch. 176, § 2, at 510. The 1890 statute exempted only property belonging exclusively to the State or the United States. Laws of 1890, ch. 18, § 5, at 532.