Vermont College of Fine Arts v. City of Montpelier
165 A.3d 1065
| Vt. | 2017Background
- Vermont College of Fine Arts (VCFA), a nonprofit educational institution, owned Schulmaier Hall and leased roughly two-thirds (first and second floors) to Vermont State agencies for 2013–2014, receiving about $400,000/year in rent. VCFA used part of the basement for campus communications and storage.
- The Montpelier City Assessor determined Schulmaier Hall taxable for 2013 and 2014 and sent notice; VCFA did not appeal to the Board of Civil Authority (BCA) but filed a declaratory-judgment action in superior court and paid taxes under protest. The State later terminated the lease in 2014.
- VCFA claimed exemption under 32 V.S.A. § 3802(4) as (1) lands owned or leased by colleges/public schools and (2) property used for public, pious, or charitable uses (the “public use” exemption).
- The City argued VCFA failed to exhaust administrative remedies (appeal to BCA) and that the leased use was for general commercial purposes, defeating the school exemption and lacking the required concurrence of mission for the public-use exemption.
- The superior court granted summary judgment to the City, finding VCFA should have exhausted administrative remedies and that Schulmaier Hall was taxable on the merits. The Vermont Supreme Court affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether VCFA was required to exhaust administrative remedies (appeal to BCA) before suing in superior court | VCFA: Appealing to BCA would be futile; BCA lacks authority over tax-exempt status | City: Statutory scheme gives BCA authority to hear grievances about lister/assessor decisions; exhaustion required | Court: BCA has authority; VCFA should have exhausted remedies, but court reached merits due to inconsistent precedent |
| Whether VCFA may pursue multiple exemptions under § 3802(4) | VCFA: May assert both public-schools and public-use clauses | City: An educational institution must be limited to the public-schools clause | Court: Clauses are disjunctive; VCFA may apply under multiple clauses |
| Whether Schulmaier Hall qualifies for the "public schools" exemption (lands owned/leased by colleges) given substantial commercial leasing | VCFA: Historic educational use and potential future educational use support exemption | City: Primary use during tax years was commercial leasing to State; statute excludes property "rented for general commercial purposes" | Court: Primary use was rental for commercial purposes; the 1911 amendment excludes such use; no exemption for the tax years at issue |
| Whether Schulmaier Hall qualifies for the "public use" exemption (public, pious, charitable uses) when owned by a nonprofit and leased to State agencies | VCFA: Ownership by nonprofit and public-use by State confers public benefit | City: No concurrence of mission between owner and lessee; benefits flow to lessee/individuals, not indefinite public | Court: Concurrence of nonprofit ownership and use (single mission) required; VCFA fails this prong; no public-use exemption |
Key Cases Cited
- Burr & Burton Seminary v. Town of Manchester, 782 A.2d 1149 (Vt.) (rental for cash flow constitutes "general commercial purpose" and defeats schools exemption)
- American Museum of Fly Fishing v. Town of Manchester, 557 A.2d 900 (Vt.) (three-part test for public-use exemption: unconditional dedication, benefit to an indefinite class and society, nonprofit ownership/operation)
- Twin Valley Community Servs., Inc. v. Town of Randolph, 756 A.2d 1233 (Vt.) (concurrence of nonprofit ownership and use; shared single mission required for exemption when owner and operator differ)
- Lincoln St., Inc. v. Town of Springfield, 615 A.2d 1028 (Vt.) (benefit must flow to an indefinite class; private or selective benefits defeat public-use exemption)
- Mountain View Community School, Inc. v. City of Rutland, 27 A.3d 312 (Vt.) (public-schools exemption is separate from the public, pious, or charitable uses exemption)
- Willard v. Pike, 9 A. 907 (Vt.) (historical definition of "public school" use; educational use central, but later statutory amendment changed scope)
FOR THE COURT: Chief Justice