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Boise-Kuna Irrigation District v. Idaho State Tax Commission
Citations: 119 Idaho 269; 805 P.2d 475; 1991 Ida. LEXIS 13Docket: No. 18387
Court: Idaho Supreme Court; February 7, 1991; Idaho; State Supreme Court
The district judge, D. Duff McKee, issued a well-reasoned opinion regarding the tax status of a hydroelectric facility constructed and operated by a consortium of irrigation districts at the Lucky Peak Dam. This facility generates electricity primarily sold to the City of Seattle, with annual revenues estimated at $4.5 million. The facility, completed in October 1988 at a cost of approximately $78 million, was initially assessed at $63 million for tax purposes by the Tax Commission. This valuation was later adjusted to $36,465,000 based on the distinction between exempt and non-exempt components of the facility. The key legal issue presented by the petitioners is whether the hydroelectric facility is subject to ad valorem taxation under Idaho law, specifically Idaho Code Section 63-1051. The Tax Commission determined that the facility does not qualify for the tax exemption provided to irrigation districts because it is primarily used for power generation rather than irrigation. The petitioners argue that the facility should be considered part of an "irrigation project" or "irrigation system" and thus exempt from taxation under the broader definitions in the third subsection of the statute. However, the court concludes that the terms "irrigation project" and "irrigation system" are limited to facilities constructed for irrigation purposes, excluding those primarily for hydroelectric generation. Therefore, the court affirms the Tax Commission's assessment and determination regarding the taxability of the facility. The hydroelectric facility operated by the petitioners is determined to be subject to I.C. 63-1051(2), as it is used for purposes other than irrigation or related water activities. It does not qualify under I.C. 63-1051(3) as "operating property" used primarily for irrigation project maintenance. The argument that tax-exempt bond authorization implies the facility should be exempt from ad valorem taxation is rejected, as the Tax Commission's position maintains the unrelated nature of the issues. The court declines to reconsider the Lewiston Orchards Irrigation District v. Gilmore precedent regarding the tax status of irrigation districts, noting that any potential reversal must come from a higher court. This case is seen as one of first impression without direct supporting authority. The court emphasizes that statutes must be interpreted according to their plain meaning and that tax exemption statutes are strictly construed against the taxpayer, with extensions not permitted unless explicitly authorized by the legislature. Policy arguments for exemption should be directed to the legislature rather than the courts. The district court’s judgment is affirmed, with costs awarded to the respondent. Additionally, the court notes similarities between I.C. 63-1051(3) and I.C. 63-105C, which addresses the taxation of property used for commercial purposes by charitable organizations.