Fire Baptized Holiness Church for Exemption from Ad Valorem Taxation v. Hendrix
Docket: No. 84,691
Court: Court of Appeals of Kansas; February 15, 2001; Kansas; State Appellate Court
Marquardt, J. Fire Baptized Holiness Church appeals the Kansas Board of Tax Appeals (BOTA) decision that denied its application for ad valorem tax exemption. The Church operates Independence Bible School, primarily funded by tuition and donations, and previously had a tax-exempt dormitory until 1997-1998. In 1998, the Church applied for a tax exemption for several properties, including the dormitory, which BOTA initially recommended approving. However, BOTA later denied the exemption, asserting that the dormitory was not used exclusively for religious purposes, citing its use as a residence for students and dorm parents, as well as its role as a cafeteria and gymnasium for school events. The Church's petition for reconsideration was granted, but BOTA again denied the exemption, classifying the dormitory's primary use as non-educational. The Church contends that the dormitory serves religious and educational functions and thus qualifies for tax exemption under K.S.A. 79-201 Second, which allows for exemptions for property used exclusively for specified purposes. Under Kansas law, the burden of proof lies with the entity claiming the exemption. Tax exemption statutes are to be strictly interpreted against granting exemptions. The appellate court's review of BOTA's legal interpretations is unlimited, and while BOTA's decisions are typically given deference, the court will correct any erroneous interpretations of law.
The Church argues that BOTA's interpretation of the statute and the term "exclusively" is overly strict. According to constitutional and statutory requirements, property must be "used exclusively" for exempt purposes, meaning it should be solely dedicated to these purposes without any other use. Kansas courts have adopted a broad definition of "education," encompassing not just classroom attendance but also various activities contributing to intellectual and moral development. This definition has been applied in cases such as National Collegiate Realty Corp., where the NCAA headquarters was deemed to be used exclusively for educational purposes, qualifying for tax exemption.
The Church contends that dormitories should automatically qualify for tax exemption as they are critical to education. The precedent set in Seventh Day Adventist v. Board of County Commissioners supported tax exemption for dormitories used exclusively for educational purposes, while residential properties for staff were not exempt. The current dormitory only accommodates students and dorm parents, with daily use for meals and occasional classes, differentiating it from the teacher residences in the Seventh Day Adventist case. The use of a residence alone does not equate to educational or religious use without considering the purpose of occupancy.
The court has previously ruled against exemptions when properties serve multiple non-educational functions, as in Sigma Alpha Epsilon Fraternal Ass’n, where a fraternity was not deemed exclusively educational due to social activities. Conversely, in Kansas Wesleyan Univ. v. Saline County Comm’rs, a university president’s residence was exempt due to its use for official institutional functions. Given the usage pattern of the dormitory, it is determined to be used exclusively for educational purposes, aligning with the broad definition acknowledged by Kansas courts. The ruling is reversed and remanded to grant the tax exemption.
