IDAHO YOUTH RANCH, INC., IDAHO YOUTH RANCH NAGEL CENTER, LLC., Petitioner-Appellant,
ADA COUNTY BOARD OF EQUALIZATION, Respondent
2014 Opinion No. 97.
Appeal from the District Court of the Fourth Judicial District of the State of Idaho, Ada County. Hon. Melissa Moody, District Judge.
The judgment of the district court is affirmed.
Law Office of John B. Hinton, Boise, for appellant. John B. Hinton argued.
Ada County Prosecuting Attorney, Boise, for respondent. Gene A. Petty argued.
HORTON, Justice. Chief Justice BURDICK and Justices EISMANN, J. JONES and Justice Pro Tem WALTERS, CONCUR.
[157 Idaho 181] HORTON, Justice.
The Ada County Board of Equalization (the BOE) denied an application for a property tax exemption made by the Idaho Youth Ranch, Inc. (the Youth Ranch) and Idaho Youth Ranch Nagel Center, LLC (the LLC). The Idaho Board of Tax Appeals affirmed that decision. The Youth Ranch and the LLC then sought judicial review. Ruling on the parties' cross-motions for summary judgment, the district court held that the property was not exempt from taxation. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
In August of 2006, Nagel Beverage Company (Nagel) approached the Youth Ranch and the Idaho Youth Ranch Foundation, Inc., about the sale of the real property and improvements at 5465 Irving Street in Boise. Nagel was looking to sell the property as part of a 1031 exchange and offered it to the Youth Ranch for $1,136,000 below the appraised value as a noncash donation. The Youth Ranch wanted to purchase the property and began to explore financing options with Key Bank.
In order to expedite the loan approval and to secure a favorable interest rate, Key Bank encouraged the Youth Ranch to form a separate LLC to purchase and hold the property. The Youth Ranch did so, and the LLC
[157 Idaho 182] was formed on August 15, 2006, for the purpose of purchasing and holding the property. The sole member of the LLC was the Idaho Youth Ranch Foundation, Inc. After acquiring the property on August 24, 2006, the LLC and the Youth Ranch entered into a twenty-five year triple-net commercial lease. Under the terms of the lease, the LLC was the landlord, and the Youth Ranch was the tenant. The rent under the lease agreement was a monthly amount of " $25,000, or an amount equal to [the LLC's] mortgage payment on the premises, whichever is greater...."
The Youth Ranch and the LLC applied for a property tax exemption for the year 2009 pursuant to Idaho Code section 63-602C, claiming that the property belonged to a charitable entity. The BOE denied the application, and the Board of Tax appeals affirmed the denial. The Youth Ranch and the LLC petitioned the district court for judicial review of the Board of Tax Appeals' decision. The parties filed cross-motions for summary judgment, agreeing that there were no genuine issues of material fact and that the district court could decide the case as a matter of law. The district court issued its memorandum decision on June 19, 2013. To determine whether the LLC was a charitable organization, the district court applied the eight-factor test this Court articulated in Appeal of Sunny Ridge Manor, Inc., 106 Idaho 98, 675 P.2d 813 (1984). The district court concluded:
Applying the factors that the Idaho Supreme Court has set forth, and looking at the totality of this case, the Court concludes that the LLC was not a charitable limited liability company within the meaning of Idaho Code § 63-602C; therefore, the property owned by the LLC is not exempt from taxation.
The district court issued its judgment on June 19, 2013, affirming the Board of Tax Appeals' decision denying the application for a property tax exemption. ...