State v. Klein
2011 ND 42
| N.D. | 2011Background
- Nonprofit property owners in Grand Forks challenged Board of County Commissioners' denial of real estate tax abatements for 2006–2008.
- Council recommended denial after hearings; Board adopted those recommendations.
- Owners sought abatement claiming exemption for charitable or public purposes under ND law.
- Owners moved for remand/extension to allow consideration of transcripts from Council hearings; district court denied.
- District court affirmed Board's denial; cases consolidated on appeal.
- Court affirms, holding no abuse of discretion and no misapplication of charitable tax-exemption law.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remand for additional evidence | Property owners argue transcripts were material evidence. | Board acted with adequate record and evidence; remand unnecessary. | District court did not abuse discretion; no remand required. |
| Tax exemption interpretation | Properties qualify for charitable/public-use exemptions. | Exemption requirements not met; use and operations do not show charity. | Board's interpretation not arbitrary or unreasonable; exemptions denied. |
| Standard of review | Deferential scrutiny supports exemptions where charitable use shown. | Limited review confirms whether Board acted arbitrarily or with substantial evidence. | Review is deferential and substantial evidence supports Board's decision. |
| Character of use and subsidies | Subsidies and services support charitable use. | Subsidies alone do not establish charitable use; must demonstrate forbearance or services with nonrecoupment risk. | Property not shown to be devoted to charitable purposes; exemptions denied. |
| Evidence of charitable purpose for Terzetto Village | Terzetto Village provides low/moderate-income housing fulfilling public charity aims. | Activities are largely market-based with government subsidies; not enough to show charitable use. | Denial supported by substantial evidence; not exempt. |
Key Cases Cited
- Grand Forks Hous. Auth. v. Grand Forks Bd. of County Comm’rs, 2010 ND 245 (ND 2010) (review of local tax abatement decisions; deference but independent review)
- Hagerott v. Morton County Bd. of Comm’rs, 2010 ND 32 (ND 2010) (arbitrary, capricious, or unreasonable standard for local decisions)
- Gowan v. Ward County Comm’n, 2009 ND 72 (ND 2009) (arbitrary, capricious, or unreasonable conduct standard)
- In re Pederson Trust, 2008 ND 210 (ND 2008) (abuse of discretion standard in trust-related decisions)
- Y.M.C.A. of North Dakota State Univ. v. Board of County Comm’rs, 198 N.W.2d 241 (ND 1972) (charitable exemption requires direct charitable use, not mere ownership)
- Evangelical Lutheran Good Samaritan Soc’y v. Board of County Comm’rs, 219 N.W.2d 900 (ND 1974) (charity use can be recognized even with some profit if charitable purpose preserved)
- Riverview Place, Inc. v. Cass County, 448 N.W.2d 635 (ND 1989) (two-step charitable-use analysis; use of property determines exemption)
- North Dakota Soc’y for Crippled Children and Adults v. Murphy, 94 N.W.2d 343 (ND 1959) (charitable exemption requires direct charitable connection; not mere convenience)