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AGO 1954 No. 229 - March 24, 1954
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Don Eastvold | 1953-1956 | Attorney General of Washington

TAXATION ‑- EXEMPTION ‑- (RCW 84.36.030) ‑- NON-PROFIT [[NONPROFIT]]CORPORATION.

The Spokane Junior Livestock Show is exempt from taxation except for that portion of the corporate property which is rented to outside interests.

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                                                                  March 24, 1954

Honorable Hugh H. Evans
Prosecuting Attorney
Spokane County
Spokane, Washington                                                                                           Cite as:  AGO 53-55 No. 229

Attention:  Robert J. McNichols, Civil Deputy

Dear Sir:

            In your letter of March 4, 1954, you requested a formal opinion from this office on whether or not the property of the Spokane Junior Livestock Show should be exempt from taxation under the provisions of RCW 84.36.030.

            You ask the following specific questions:

            1. Does the Spokane Junior Livestock Show come within the provisions of the exemption statute?

            2. If so, does the fact that portions of the property are rented to outside interests take that particular property out of the exemption provision even though the funds obtained thereby are used to promote the objectives of the Junior Livestock Show?

            In our opinion both questions may be answered in the affirmative.

            [[Orig. Op. Page 2]]

                                                                     ANALYSIS

            In your letter you state that the Spokane Junior Livestock Show is organized as a nonprofit corporation in the State of Washington.  Article III of said corporation's Articles is as follows:

            "The object for which the corporation is formed is and shall be to stimulate character building in boys and girls under twenty-one years of age in the breeding, rearing, and improvement of domestic and other animals; to disseminate information concerning the animal industry, the best methods of production, feeding, improving, and marketing all kinds of animals, and especially cattle, sheep, hogs, horses, and mules and poultry, among young people; * * *"

            It appears that the language as set out in this Article relating to the object of the corporation is almost identical to the language of the exemption statute, which is as follows:

            RCW 84.36.030:

            "The following property shall be exempt from taxation:

            "* * *

            "Property of nonprofit organizations or associations engaged in character building in boys and girls under twenty-one years of age, to the extent such property is necessarily employed and devoted solely to the said purposes, provided such purposes are for the general public good and such properties are devoted to the general public benefit;"

            Therefore it is our opinion that the Spokane Junior Livestock show as bound by the objects set forth in its Articles of Incorporation, is exempt from property taxation under the statute above quoted.

             [[Orig. Op. Page 3]]

            However, the fact that portions of the property are rented to outside interests takes that particular property out of the exemption provision.

            The Supreme Court has examined this exact question in the following two cases:  Norwegian Lutheran Church v. Wooster, 176 Wash. 581, and Wilson's Modern Business College v. King County, 4 Wn. (2d) 636.

            In theNorwegian Lutheran Church case the court held that property belonging to a church and leased to another organization engaged in religious work, with the rental received to carry on the work of the lessor, is not exempt from taxation.  The court went on to say that the language of the statute

            "* * * 'wholly used, or to the extent solely used,' [which was Rem. Rev. Stat. § 11111 which is now RCW 84.36.040] indicates the possibility of segregation in some cases.  Here, clearly all those parts of the building which are rented to others are subject to taxation, and if susceptible of segregation, may be taxed separately; while the remainder of the building used for a chapel and the benevolent work carried on in connection therewith, if it can be segregated, is clearly entitled to exemption under the terms of the statute."

            In the case ofWilson's Modern Business College, the court in interpreting the same statute (Rem. Rev. Stat. § 11111) held that the statute, read as a whole, left no doubt as to the intent of the legislature

            "* * * to exempt from taxation all parts of the property used for school purposes, while all parts rented to others are subject to taxation and, if susceptible of segregation, may be taxed separately."

            The court further held that the rented portion of the building, and the proportionate part of the land was subject to taxation, while the remainder was not.  The taxation of the rented portion is based on the ratio of value which it bears to the whole property.  It seems clear that these two case decisions are binding upon the question here at issue.

             [[Orig. Op. Page 4]]

            We conclude that the Spokane Junior Livestock Show is exempt from taxation insofar as such property is used for nonprofit corporate purposes.  However, that portion rented to outside interests is subject to taxation even though the money derived therefrom is used to further the purposes of the organization.  Therefore, if the portions of the premises devoted to rental use can be segregated, they may be separately taxed and the balance of the property exempted from taxation.

Very truly yours,

DON EASTVOLD
Attorney General

CAROLYN J. REABER
Assistant Attorney General

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