Heard, considered, and decided by the court en banc.
To have been eligible for property tax exemption under Minn. Stat. § 272.02, subd. 26(D) (repealed 2003), a structure must have been in physical existence and not have had real property taxes assessed against it before the 1991 tax levy.
Minnesota Statutes § 272.02, subd. 26(D), satisfied the rational basis test and thus did not violate the Uniformity Clause of the Minnesota Constitution or the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution.
The opinion of the court was delivered by: Anderson, Paul H., Justice.
Took no part: Anderson, G. Barry, J.
Intergenerational Living and Health Care (ILHC) operates "The Commons on Marice" (The Commons), a senior assisted living community facility in Eagan, Minnesota. In 2001 and 2002, ILHC applied for a partial property tax exemption for The Commons under Minn. Stat. § 272.02, subd. 26 (2002) (repealed 2003). Dakota County denied ILHC's applications on the ground that The Commons was not eligible for the exemption. ILHC sought review of these denials. The Minnesota Tax Court concluded The Commons was eligible for the exemption and granted summary judgment in favor of ILHC. The county petitioned for a writ of certiorari. We reverse.
ILHC completed construction of The Commons in 1999. The county classified the property as "Apartment with Nursing Facilities." In April 2001, and again in March 2002, ILHC applied for a partial property tax exemption under Minn. Stat. § 272.02, subd. 26 (2002) (repealed 2003).*fn1 The county denied ILHC's applications. ILHC paid the disputed taxes and filed petitions for review of the real estate taxes due and payable in 2001 and 2002.
In June and December 2002, ILHC and the county filed cross-motions with the tax court for partial summary judgment on the interpretation of two provisions of subdivision 26--romanette (ii) and subpart (D). The parties stipulated that The Commons met all of subdivision 26's requirements except for the two that specifically focused on a disputed interpretation of the statute: whether subpart (D) limited the exemption to housing that existed and was unassessed before the 1991 tax levy and whether romanette (ii) limited the exemption to housing for low-income residents. ILHC's position is that, to be eligible for the partial exemption, housing did not have to exist in 1991 and did not have to be for low-income elderly. The county takes a contrary position, asserting that the exemption was only for low-income housing that was in existence and unassessed before the 1991 tax levy. The county contends that the statute was intended for the narrow remedial purpose of assisting developments for low-income tenants who were faced with a sudden increase in taxes because the facilities had not been assessed prior to 1991 through no fault of the property owners.
To support its position that The Commons was ineligible for the exemption, the county submitted a newspaper article from January 1993 describing the background and tax circumstances of Central Towers, an apartment building for low-income elderly and disabled tenants in downtown Saint Paul.*fn2 It was and remains the county's contention that subdivision 26 was not applicable to The Commons because the subdivision was enacted as a specific remedy for Central Towers and other facilities faced with similar circumstances. According to the article, Central Presbyterian Church opened Central Towers in 1965 to house as many as 280 low-income elderly or mentally or physically handicapped tenants. Monthly rents included meal services and many of the residents received some type of government housing subsidy. Central Towers did not qualify for a property tax exemption as a charitable organization because its owners received the rental income.
At some point, a nonprofit corporation was formed to take over Central Towers. The newspaper article noted that the Central Towers building was not assessed real property taxes until 1991 when Ramsey County decided that it should not be exempt. This change and the resultant property taxes on the building led to the nonprofit corporation nearly depleting its cash reserve and increasing rents. In the article, the president of the corporation's board is attributed as indicating that the board would "ask the state Legislature to change the tax laws during the upcoming session to make the apartment building and others like it exempt from local property taxes."
The county also submitted a partial transcript and tape recording of an April 19, 1993 meeting of the Minnesota Senate Property Tax Subcommittee where the property tax provisions of an omnibus tax bill were presented--including what became subdivision 26. After describing the criteria for exemption, a committee staff person stated, "These properties will be exempt from the property tax henceforth[;] due to an assessor's misinterpretation, they had been treated * * * as tax exempt in the past, and they will continue to be tax exempt under this language in the future." (Brackets added.)
The tax court's own research identified two additional instances where legislators made statements concerning the provision that eventually became subdivision 26. The first statement was during an April 29, 1993 meeting of the Conference Committee on Taxes held to consider enactment of the subdivision that is now codified as Minn. Stat. § 272.02, subd. 26. The relevant excerpt is as follows:
Sen. Johnson*fn3: Do you want to know where [the provision] comes from?
Sen. [Flynn]: As I recall, it was [Senator Pappas] who found out that there was some senior housing that had not been assessed in the past, and it was determined suddenly that it should be [taxed] * * * and, whereas this kind of housing had not been subject to property tax, nor has it been assessed in other parts of the metropolitan area * * * that we are able to identify * * *.
Q: Senator, how many properties will this apply to?
Sen. [Flynn]: Just one or two * * *.
[Voice in background]: "One * * * [in] Senator [Pappas's] district * * * St. Paul * * * Central Towers."
The second statement identified by the tax court was from a May 17, 1993, proceeding of the ...