135 So. 3d 821
La. Ct. App.2014Background
- The Board of Commissioners for the Port of New Orleans (Port) owns three parcels with warehouses/ improvements along the Inner Harbor Industrial Canal and leased them to for-profit tenants (The Kearney Companies; Southern Intermodal Xpress).
- Port filed suit after the Orleans Parish Tax Assessor (Williams) assessed ad valorem taxes for 2011 and attempted tax sales for unpaid assessments.
- Port moved for summary judgment asserting Art. VII, § 21(A) of the Louisiana Constitution exempts “public property used for public purposes,” and argued the lessees’ port-related operations further Port statutory duties.
- Williams cross-moved, arguing lessees perform private, for-profit commercial activities that do not constitute a governmental or public-purpose use and thus should be taxable.
- Trial court granted Port’s summary judgment, declaring the improvements exempt and enjoining tax sales. The appellate majority reversed and remanded for further discovery on whether the lessees’ activities constitute a public purpose; two judges dissented.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether improvements owned by a public entity but leased to private, for-profit tenants are exempt from ad valorem taxation under La. Const. Art. VII, § 21(A) | Port: Improvements are public property used for a public purpose because lessees’ warehousing/forwarding/intermodal services further the Port’s statutory mission to maintain, develop, and promote commerce and traffic. | Williams: Lessees perform private commercial functions that do not constitute governmental or public-purpose uses; similar private competitors are taxable. | Reversed trial court; remanded for additional discovery and a hearing to determine if the lessees’ actual activities satisfy the “public purpose” requirement. |
Key Cases Cited
- Slay v. Louisiana Energy and Power Authority, 473 So.2d 51 (La. 1985) (adopted two-part test: public ownership and use for a public purpose required for exemption under Art. VII, § 21(A))
- Abundance Square v. Erroll Williams, 62 So.3d 261 (La. App. 4 Cir. 2011) (interpreted Article VII exemptions in context of housing authority properties; limited to dedicated public housing uses)
- Schulingkamp v. Heaton, 455 So.2d 1181 (La. App. 4 Cir. 1984) (discussed taxing private lessees of public lands and equitable considerations)