Opinion
No. 110946.
2015-01-23
In the Matter of the Equalization Appeal of MISSION HILLS COUNTRY CLUB for the Year 2012 in Johnson County, Kansas.
Appeal from Court of Tax Appeals.Benjamin J. Neill, of Property Tax Law Group, LLC, of Leawood, for appellant.Kathryn D. Myers, assistant county counselor, for appellee Board of County Commissioners of Johnson County, Kansas.
Appeal from Court of Tax Appeals.
Benjamin J. Neill, of Property Tax Law Group, LLC, of Leawood, for appellant. Kathryn D. Myers, assistant county counselor, for appellee Board of County Commissioners of Johnson County, Kansas.
Before BUSER, P.J., HILL and BRUNS, JJ.
MEMORANDUM OPINION
PER CURIAM.
The Mission Hills Country Club (Club) sits on 10 parcels of land in Mission Hills, Kansas. The Club offers a championship golf course, a clubhouse with dining and shopping amenities, and a swimming pool.
This is an equalization appeal by the Club regarding the Kansas Court of Tax Appeals' (COTA) decision to uphold the manner in which Johnson County (County) classified one of the Club's 10 parcels (subject parcel) for property tax purposes. This subject parcel contains a portion of the golf course, a course restroom, the clubhouse, swimming pool, and ancillary improvements.
On appeal, the Club contends COTA erred in upholding the County's ad valorem tax assessment because K.S.A. 79–1439a, the statute upon which the County based its classification of the subject parcel, violates Article 11, § 1(a) of the Kansas Constitution (2012 Supp.). Having carefully considered the record, the constitutional and statutory provisions in question, the parties' briefs, and oral arguments, we conclude K.S.A. 79–1439a is not unconstitutional and, therefore, COTA did not err in applying the statute's provisions when making its tax assessment for the 2012 tax year. We affirm.
Introduction and Background
All property within Kansas is subject to taxation unless the legislature has expressly provided otherwise. K.S.A. 79–101. Article 11, § 1 of the Kansas Constitution (2012 Supp.) and K.S.A.2012 Supp. 79–1439 govern the appraisal and assessment of property subject to general ad valorem taxation. For assessment purposes, the taxing authority must classify the subject property into one of two principal classes—real property and tangible personal property. Kan. Const. art. 11, § 1(a) (2012 Supp.); K.S.A.2012 Supp. 79–1439(b). The authority must then determine the property's subclass because both of the principal classes contain several subclasses, each with a respective assessment rate. Kan. Const. art. 11, § 1(a) (2012 Supp.); K.S.A.2012 Supp. 79–1439(b). Under K.S.A.2012 Supp. 79–1439(b)(1)—which essentially mirrors the language of Article 11, § 1(a) (2012 Supp.)—real property shall be assessed as to subclass at the following rates:
“(A) Real property used for residential purposes including multi-family residential real property, real property necessary to accommodate a residential community of mobile or manufactured homes including the real property upon which such homes are located, residential real property used partially for day care home purposes if such home has been registered or licensed pursuant to K.S.A. 65–501 et seq., and amendments thereto, and residential real property used partially for bed and breakfast home purposes at 11.5% ....;
“(B) land devoted to agricultural use valued pursuant to K.S.A. 79–1476, and amendments thereto, at 30%;
“(C) vacant lots at 12%;
“(D) real property which is owned and operated by a not-for-profit organization not subject to federal income taxation pursuant to section 501 of the federal internal revenue code and included herein pursuant to K.S.A. 79–1439a, and amendments thereto, at 12%;
“(E) public utility real property, except railroad property which shall be assessed at the average rate all other commercial and industrial property is assessed, at 33% ....;
“(F) real property used for commercial and industrial purposes and buildings and other improvements located upon land devoted to agricultural use at 25%; and
“(G) all other urban and rural real property not otherwise specifically subclassed at 30%.” (Emphasis added.)
When classifying property for tax purposes, the property owner's status is not an appropriate consideration. In re Tax Appeal of Coffeyville Res. Nitro. Fertilizers, L.L.C., No. 107,705, 2013 WL 4046403, at *4 (Kan.App.2013) (unpublished opinion), rev. denied 299 Kan. –––– (2014); see Krueger v. Board of Woodson County Comm'rs, 31 Kan.App.2d 698, Syl. ¶ 8, 71 P.3d 1167 (2003), aff'd 277 Kan. 486, 85 P.3d 686 (2004) (“[T]he method of valuation should be tied to factors associated with each parcel of property, not the status of the owner of the property.”).
K.S.A. 79–1439a(a) limits the 12% assessment rate for real property owned and operated by a not-for-profit organization to 6 of the 27 subsections granted tax-exempt status under Section 501(c) of the Internal Revenue Code. Main Line, Inc. v. Board of Reno County Comm'rs, 33 Kan.App.2d 875, 878, 112 P.3d 951 (2004), rev. denied 279 Kan. 1006 (2005). While the record does not definitively establish that the Club qualifies as a not-for-profit organization under Section 501(c), during this litigation both COTA and the parties treated the Club as a qualifying Section 501(c)(7) organization. See 26 U.S.C. § 501(c)(7) (2012) (“[c]lubs organized for pleasure, recreation, and other nonprofitable purposes, substantially all of the activities of which are for such purposes and no part of the net earnings of which inures to the benefit of any private shareholder”).
Regarding Section 501(c)(7) organizations, K.S.A. 79–1439a(a) provides:
“With respect to real property owned and operated by a not-for-profit organization not subject to federal income taxation pursuant to paragraph (7) of subsection (c) of section 501 of such code, this section shall only apply to land which is actually and regularly used for recreational purposes, other than land accommodating buildings or other improvements associated with such recreational land.” (Emphasis added.)
For the 2012 tax year, the County originally appraised the subject parcel at $4,329,200. However, the County later recommended a lower value of $4,242,600, based upon changes it made to its income approach to account for personal property.
In accordance with Article 11, § 1(a) (2012 Supp.) and K.S.A.2012 Supp. 79–1439(b)(1), the County divided the subject parcel into three assessment subclassifications: commercial, property owned and operated by a not-for-profit organization, and the catchall category, ‘ “other.” ‘ The County determined that the predominate purpose of the land attributable to the clubhouse, swimming pool, and ancillary improvements was to generate income. As a result, the County classified the 2 acres upon which these improvements are situated as commercial property, with an assessment rate of 25%. See Kan. Const. art. 11, § 1(a)(6) (2012 Supp.); K.S.A.2012 Supp. 79–1439(b)(l)(F).
Similar to the Club's other nine parcels that contain the golf course fairways and greens with no improvements, the County classified the remainder of the subject parcel as not-for-profit property owned and operated by a Section 501(c)(7) organization, which is subject to a 12% assessment rate. See Kan. Const. art. 11, § 1(a)(4) (2012 Supp.); K.S.A.2012 Supp. 79–1439(b)(1)(D); see also 26 U.S.C. § 501(c)(7) (2012). The County determined, however, that a restroom located on the golf course qualified as' “other” ‘ property, which carries an assessment rate of 30%. See Kan. Const. art. 11, § 1(a)(7) (2012 Supp.); K.S.A.2012 Supp. 79–1439(b)(1)(G).
Of note, the County's classification determinations differed from the 2011 tax year. In 2012, the percentage of the subject parcel assessed as commercial property jumped from 21.5% to 73.7%, and the percentage classified as not-for-profit dropped from 78.5% to 24.5%.
The Club filed an equalization appeal with COTA, asserting that all of the subject parcel should be classified as not-for-profit property. Alternatively, the Club argued that only those portions of the subject parcel that were actually generating income should be classified as commercial, i.e., the clubhouse's closets, hallways, and locker rooms should be designated as not-for-profit property.
On October 14, 2013, COTA issued an order upholding the County's assessment classifications. In particular, COTA held the subject parcel was not entitled, in its entirety, to the not-for-profit tax classification because this classification only applies to the ‘ “land” ‘ that is actually and regularly used for recreational purposes by a not-for-profit entity organized pursuant to Section 501(c)(7).
COTA also explained that in addressing the not-for-profit classification, K.S.A.2012 Supp. 79–1439(b)(1)(D) references K.S.A. 79–1439a(a), which exempts “any ‘land accommodating buildings or other improvements associated with such recreational land’ “ from receiving this classification. COTA noted that although K.S.A. 79–102 provides ‘ “the terms ‘real property,’ ‘real estate,’ and ‘land’ “ include not only land itself, but all buildings, fixtures, and improvements, K.S.A. 79–102 also includes the phrase, ‘ “except as otherwise specifically provided.’ “ According to COTA, this exception applies to K.S.A. 79–1439a(a) because this latter subsection addresses land, buildings, and improvements with specificity rather than in general terms.
The Club petitioned for reconsideration, now arguing that K.S.A. 79–1439a(a) could not be utilized to justify the County's assessment classifications because the legislature's attempt to restrict the not-for-profit tax classification to specific types of property owned and operated by a Section 501(c)(7) organization violated Article 11, § 1(a)(4) (2012 Supp.). According to the Club, Article 11, § 1(a)(4) (2012 Supp.) was a self-executing provision and, thus, because its plain language provided that a taxpayer need only operate as a Section 501(c) organization for its property to qualify for the not-for-profit classification, “[t]he legislature [could not] constitutionally restrict the application of [this] self-executing classification provision.”
On November 15, 2013, COTA issued an order denying the Club's petition for reconsideration, finding that the Club had failed to offer any evidence or arguments that persuaded COTA it should modify its original order.
The Club filed a timely petition for judicial review.
Constitutionality of K.S.A. 79–1439a
On appeal, the Club contends the County's ad valorem tax assessment for the subject parcel violates Article 11, § 1(a) (2012 Supp.) because it depends upon K.S.A. 79–1439a(a), which, according to the Club, unduly restricts the not-for-profit classification for property owned and operated by an organization exempt from federal taxation under Section 501(c)(7).
This court reviews orders from COTA under the standards set forth in the Kansas Judicial Review Act (KJRA). K.S.A.2012 Supp. 77–601 et seq. Under the KJRA, a reviewing court will only grant relief from an agency action under specified circumstances, including those wherein the agency action, or the statute or rule and regulation upon which the agency action is based, is unconstitutional on its face or as applied. K.S.A.2012 Supp. 77–621(c). Because COTA lacks jurisdiction to address constitutional questions and, thus, correctly refrained from addressing the Club's claim regarding the constitutionality of K.S.A. 79–1439a, we will review this issue in the first instance. See In re Property Valuation Appeals of Various Applicants, 298 Kan. 439, 446–47, 313 P.3d 789 (2013), cert. denied ––– U.S. ––––, 135 S.Ct. 51, 190 L.Ed.2d 29 (2014); In re Tax Appeal of Weisgerber, 285 Kan. 98, 102, 169 P.3d 321 (2007).
At the outset, it is important to summarize our standards of review, especially as they relate to the analysis of constitutional questions. The interpretation of an amendment to the Kansas Constitution and the determination of a statute's constitutionality are questions of law subject to unlimited review. Kansas One–Call System v. State, 294 Kan. 220, 225, 274 P.3d 625 (2012); Most Worshipful Grand Lodge v. Board of Shawnee County Comm'rs, 259 Kan. 510, 514–15, 912 P.2d 708 (1996).
In addressing a statute's constitutionality, appellate courts presume the statute is constitutional and resolve all doubts in favor of the statute's validity. We must interpret a statute in a manner that renders it constitutional if there is any reasonable construction that would maintain the legislature's apparent intent. Kansas One–Call System, 294 Kan. at 225, 274 P.3d 625. “ ‘ “In ascertaining the meaning of a constitutional provision, the primary duty of the courts is to look to the intention of the makers and adopters of that provision.” [Citation omitted.]’ “ In re Tax Appeal of Wedge Log–Tech, 48 Kan.App.2d 804, 812, 300 P.3d 1105, rev. denied 298 Kan. –––– (2013). Moreover, when interpreting and construing a constitutional amendment, “ “ “the court must examine the language used and consider it in connection with the general surrounding facts and circumstances that cause the amendment to be submitted.' [Citations omitted.]' “ “ 48 Kan.App.2d at 812, 300 P.3d 1105.
The most fundamental rule of statutory construction is the legislature's intent governs if that intent can be ascertained. Bergstrom v. Spears Manufacturing Co., 289 Kan. 605, 607, 214 P.3d 676 (2009). We must first attempt to ascertain legislative intent through the statutory language enacted, giving common words their ordinary meanings. Northern Natural Gas Co. v. ONEOK Field Services Co., 296 Kan. 906, 918, 296 P.3d 1106, cert. denied ––– U.S. ––––, 134 S.Ct. 162, 187 L.Ed.2d 40 (2013). Where there is no ambiguity in the statutory language, we do not speculate as to the legislative intent; only if the language is unclear or ambiguous do we use canons of construction, legislative history, or other background considerations to construe legislative intent. In re Tax Appeal of Burch, 296 Kan. 713, 722, 294 P.3d 1155 (2013); Northern Natural Gas Co., 296 Kan. at 918, 296 P.3d 1106. We review an administrative agency's interpretation of a statute de novo. Kansas Dept. of Revenue v. Powell, 290 Kan. 564, 567, 232 P.3d 856 (2010).
Before addressing the merits of the Club's argument, a brief history of the enactment of K.S.A. 79–1439a is in order. In 1992, Kansas voters approved an amendment to Article 11, § 1 of the Kansas Constitution which revised the state's system for assessing property taxes. Kan. Const. art. 11, § 1 (2012 Supp.); L.1992, ch. 342, sec. 1. As adopted, the Amendment provided in part:
“The provisions of this subsection shall govern the assessment and taxation of property on and after January 1, 1993, and each year thereafter.... Property shall be classified into the following classes for the purpose of assessment and assessed at the percentage of value prescribed therefor:
“Class 1 shall consist of real property. Real property shall be further classified into seven subclasses. Such property shall be defined by law for the purpose of subclassification and assessed uniformly as to subclass at the following percentages of value:
“(4) Real property which is owned and operated by a not-for-profit organization not subject to federal income taxation pursuant to section 501 of the federal internal revenue code, and which is included in this subclass by law .......... 12%
“(6) Real property used for commercial and industrial purposes and buildings and other improvements located upon land devoted to agricultural use .......... 25%
“(7) All other urban and rural real property not otherwise specifically subclassified .......... 30%” (Emphasis added.) Kan. Const. art. 11, § 1(a) (2012 Supp.).
In 1993, the legislature passed House Bill 2035, which reduced the ad valorem assessment rate for nonprofit organizations not subject to federal taxation under Section 501(c)(3), (4), (8), and (10) of the Internal Revenue Code, to effectuate Article 11, § 1(a)(4) (2012 Supp.). House Bill 2035 provided:
“ ‘(1) (a) In accordance with and for the purposes of Section 1 of Article [11] of the Kansas constitution, real property, to the extent herein specified, which is owned and operated by a not-for-profit organization not subject to federal income taxation pursuant to paragraph (2), (3), (4), (8), or (10) of subsection (c) of Section 501 of the federal internal revenue code, as in effect on January 1, 1993, is hereby included in subclass (4) of class 1 for property tax classification purposes, and shall be assessed at the rate of 12% of its fair market value. With respect to real property owned and operated by a not-for-profit corporation not subject to federal income taxation pursuant to paragraph (2) of subsection (c) of Section 501 of such Code, this section shall only apply to real property leased to a not-for-profit organization not subject to federal income taxation pursuant to paragraph (8) of subsection (c) of Section 501 of such Code. Nothing in this subsection shall be deemed to affect exemption of property by law or Kansas constitution .’ “ Most Worshipful Grand Lodge, 259 Kan. at 514–15, 912 P.2d 708.
Governor Joan Finney vetoed House Bill 2035, however, and her “Veto of the Trifecta Bill resulted in no change in the status quo concerning the level of real estate tax assessments for nonprofit organizations for the calendar year 1993.' “ 259 Kan. at 515, 912 P.2d 708.
Almost 1 year later, the legislature passed House Substitute for Senate Bill 157, the legislature's second attempt to effectuate Article 11, § 1(a)(4) (2012 Supp.). On May 11, 1994, Governor Finney signed this bill into law, and the Act was codified at K.S.A. 79–1439a and K.S.A. 79–1439b.
K.S.A. 79–1439a(a) governs the classification, for assessment purposes, of real property owned and operated by certain not-for-profit organizations exempt from federal taxation under Section 501(c) and provides:
“ In accordance with and for the purposes of section 1 of article 11 of the Kansas constitution, real property, to the extent herein specified, which is owned and operated by a not-for-profit organization not subject to federal income taxation pursuant to paragraphs (2), (3), (4), (7), (8) or (10) of subsection (c) of section 501 of the federal internal revenue code, as in effect on January 1, 1994, is hereby included in subclass (4) of class 1 for property tax classification purposes, and shall be assessed at the rate of 12% of its fair market value. With respect to real property owned and operated by a not-for-profit organization not subject to federal income taxation pursuant to paragraph (2) of subsection (c) of section 501 of such code, this section shall only apply to real property leased to a not-for-profit organization not subject to federal income taxation pursuant to paragraph (8) of subsection (c) of section 501 of such code. With respect to real property owned and operated by a not-for-profit organization not subject to federal income taxation pursuant to paragraph (7) of subsection (c) of section 501 of such code, this section shall only apply to land which is actually and regularly used for recreational purposes, other than land accommodating buildings or other improvements associated with such recreational land. Nothing in this subsection shall be deemed to affect the exemption of property by law or the Kansas constitution.” (Emphasis added.)
Another subsection, K.S.A. 79–1439b, provides for tax recoupment whenever land owned and operated by a Section 501(c)(7) organization that has been assessed at the 12% classification rate is devoted to a use other than recreational.
Shortly after the enactment of K.S.A. 79–1439a and K.S.A. 79–1439b, our Supreme Court determined that Article 11, § 1(a)(4) (2012 Supp.) was not a self-executing provision. In other words, the constitutional provision required supplementary legislation to render it effective. In this regard, House Substitute for Senate Bill 157 qualified as constitutional enabling legislation. Most Worshipful Grand Lodge, 259 Kan. at 515–21, 912 P.2d 708.
As briefly noted earlier, in the case on appeal, COTA first interpreted and applied K.S.A. 79–1439a(a) by finding the plain language of the statute limits the not-for-profit classification and assessment rate to land which “is actually and regularly used for recreational purposes.” COTA then observed that, according to K.S.A. 79–102, ‘ “the terms “real property,” “real estate,” and “land,” ... except as otherwise specifically provided, shall include not only the land itself, but all buildings, fixtures, improvements, mines, minerals, quarries, mineral springs and wells, rights and privileges appertaining thereto.” ’ (Emphasis added.) COTA found the statutory language, “except as otherwise specifically provided,” applied to K.S.A. 79–1439a(a) because this statute expressly exempts “land accommodating buildings or other improvements associated with such recreational land” from receiving the beneficial not-for-profit classification status. See K.S.A. 79–102; K.S.A. 79–1439a(a). This exemption renders the general definition in K.S.A. 79–102 inapplicable, as it evinces the legislature's intent to only grant the preferred classification status to any land a Section 501(c)(7) organization uses for recreational purposes, which does not contain buildings or other improvements. As COTA found, the portion of the subject parcel which did not receive the not-for-profit classification—the land associated with the clubhouse and course restroom—did not qualify for this beneficial classification because of the buildings and improvements built upon it.
On appeal, the Club focuses its argument on the constitutionality of K.S.A. 79–1439a. In particular, the Club contends “the legislature over-reached when it enacted K.S.A. 79–1439a and the language restricting Article 11, § 1(a)(4) [is] unconstitutional.”
At the outset, the Club's constitutional argument has undergone a metamorphosis since the filing of this litigation. In its petition for reconsideration to COTA, the Club premised its constitutional challenge upon its claim that the legislature had unduly “restrict[ed] the application of a self-executing classification provision.” (Emphasis added.) On appeal, the Club has abandoned this argument. It now acknowledges that the phrase, “and which is included in this subclass by law,” found in Article 11, § 1(a)(4) (2012 Supp.) shows “the constitutional provision was not self-executing and further legislative action would be necessary to carry out the voter's intent.”
On appeal, the Club now argues that while Article 11, § 1(a)(4) (2012 Supp.) is not self-executing, the legislature exceeded its authority because the portion of K.S.A. 79–1439a(a) which restricts the not-for-profit classification to certain types of property owned and operated by a Section 501(c)(7) organization does not conform to the common understanding of voters when they adopted the constitutional provision.
In particular, the Club asserts that while the legislature had the power to determine which Section 501(c) organizations were eligible to benefit from Article 11, § 1(a)(4) (2012 Supp.), “[n]othing in the amendment or its history suggests the legislature was empowered to ... grant[ ] the preferred assessment status ... and then restrict its application.” In other words, the voters intended the not-for-profit classification to represent an all or nothing proposition—once the legislature statutorily authorizes a Section 501(c) organization to become a beneficiary of Article 11, § 1(a)(4) (2012 Supp.), that organization's property must qualify, in its entirety, for this preferred classification. According to the Club, “the legislature ‘may broaden’ what is given by the constitution but it ‘may not limit or curtail the constitutional provisions.’ [Citation omitted.]” See In re Tax Exemption Application of Mental Health Ass'n of the Heartland, 289 Kan. 1209, 1211–12, 221 P.3d 580 (2009).
In response, the County argues the Club's assertion that K.S.A. 79–1439a is unconstitutional is “absurd” because Article 11, § 1(a)(4) (2012 Supp.) is not self-executing, and the legislature has full authority to “include, exclude or limit the application of the [p]rovision by legislative enactment.” Alternatively, the County argues that even if the legislature exceeded its authority, the Club would not be entitled to take advantage of the not-for-profit classification because the remedy would be to sever the entirety of the language pertaining to Section 501(c)(7) organizations.
Both parties cite to our Supreme Court's decision in Most Worshipful Grand Lodge. After carefully considering this Supreme Court precedent, we are persuaded that Most Worshipful Grand Lodge 's analysis which led to the determination that House Substitute for Senate Bill 157 qualified as appropriate constitutional enabling legislation provides helpful guidance for resolving this appeal. As a result, a review of the facts and legal argument presented in Most Worshipful Grand Lodge is in order.
On November 4, 1993, The Most Worshipful Grand Lodge of Ancient Free and Accepted Masons of Kansas and various other lodges sued Shawnee County, alleging that the 1992 amendment to Article 11, § 1(a) was self-executing, the legislature had failed to act responsibly by neglecting to implement the amendment, and Shawnee County was illegally assessing taxes against the lodges at the higher assessed rate. Subsequently, the Topeka Country Club and Shawnee Country Club (Intervenors)—not-for-profit organizations operating under Section 501(c)(7)—entered the litigation and asserted their own prayer for relief.
After the litigation was commenced, however, the legislature passed and enacted House Substitute for Senate Bill 157, the enabling legislation also at issue in the present case on appeal. Consequently, the original plaintiffs, whose property was included in the 12% assessment category under the new law, abandoned their active role in the litigation. While the Intervenors' land actually and regularly used for recreational purposes was also included in House Substitute for Senate Bill 157, the Intervenors continued the litigation in order to seek relief for their “other real estate.” Most Worshipful Grand Lodge, 259 Kan. at 512, 912 P.2d 708.
When the district court determined that the 1992 amendment to Article 11, § 1(a) was not self-executing, the Intervenors appealed to our Supreme Court. They contended that when the rules of construction were applied to the ambiguous phrase ‘ “and which is included in this subclass by law,” ’ the voters' intent became obvious-the provision would be self-executing and apply to all Section 501(c) organizations. 259 Kan. at 516–17, 912 P.2d 708.
Our Supreme Court held that while a “degree of ambiguity [existed] in the interplay of the Amendment and the explanatory statement,” it “encounter[ed] no difficulty in holding the Amendment [was] not self-executing[, e]nabling legislation [was] required[, and t]he House Substitute for Senate Bill 157 (K.S.A.1995 Supp. 79–1439a and K.S.A.1995 Supp. 79–1439b) was that enabling legislation and [was] constitutional.” 259 Kan. at 520–21, 912 P.2d 708. The Supreme Court provided three reasons for its decision.
First, the Supreme Court noted the Intervenors had sidestepped the Amendment's explanatory statement provided to Kansas voters, which stated that a vote for the proposition would “decrease the assessment rate from 30% to 12% for ‘real property owned and operated by certain not-for-profit organizations.’ “ 259 Kan. at 517, 912 P.2d 708. According to the Court, the “Intervenors disregard [ed] the word ‘certain,’ reasoning that ‘certain’ refer[red] only to ‘not-for-profit organizations not subject to federal income taxation pursuant to § 501 of the federal internal revenue code,’ conveniently avoiding the Amendment's phrase ‘which is included in this subclass by law.’ “ 259 Kan. at 517–18, 912 P.2d 708.
Second, our Supreme Court reasoned that the legislative history of Article 11, § 1(a)(4) (1995 Supp.) did not support the Intervenors' contention that all Section 501(c) organizations were automatically entitled to the reduced assessment rate upon the Amendment's passage. 259 Kan. at 518–19, 912 P.2d 708. The court explained:
“The legislative history is significant. Beginning in 1990, certain fraternal organizations requested property tax relief from the legislature. These organizations were generally classified as 501(c)(8) or 501(c)(10) organizations under the Internal Revenue Code. The Kansas House Committee on Taxation introduced a proposed constitutional amendment, 1991 House Concurrent Resolution 5007, which reduced the tax assessment rate for 501(c)(8) and 501(c)(10) organizations. [Citation omitted.] A representative of the Topeka Woman's Club, a 501(c)(4) organization, testified before the committee, requesting tax relief. The committee then revised the proposed amendment to the present form. An explanation of this revision stated:
“ ‘House Taxation Committee amendments included ... changing the eligibility for the proposed assessment level for certain not-for-profits from only those organized under 501(c)(8) and 501(c)(10) to only those defined by statute which are organized under any provision of 501(c) and reducing the proposed assessment level from 15 to 12 percent....’ [Citation omitted.] “We find nothing in the legislative history to support the contention that all 501(c) organizations were to be granted the reduced assessment rate.
“After the Amendment was adopted, the legislature twice attempted to pass enabling legislation. [Citation omitted.] The Governor vetoed the first attempt in 1993 but signed the second attempt in May 1994. Neither bill granted the reduced assessment rate to all 501(c) organizations. The enabling legislation in 1993 and 1994 indicates legislative intent that the Amendment was not self-executing.
“The movement to propose the Amendment began through the efforts of fraternal organizations. The legislature's objective was to propose an amendment that granted the requested relief but left the legislature, through enabling legislation, a way to limit the relief to certain—not all-not—for-profit organizations.” 259 Kan. at 518–20, 912 P.2d 708.
Finally, the Supreme Court found the Intervenors failed to prove a conflict between the legislative intent behind Article 11, § 1(a)(4) (1995 Supp.) and the voters' understanding of the amendment. 259 Kan. at 520, 912 P.2d 708. The majority of the voter affidavits the Intervenors presented as “intent indicators on the meaning of the Amendment” were associated with Section 501(c) organizations and did not qualify as a representative sample. 259 Kan. at 518, 912 P.2d 708. Likewise, the newspaper articles published before the election, which the Interveners submitted as “evidence of the ‘attendant circumstances' “ surrounding the amendment's adoption, generally indicated that fraternal organizations, rather than all Section 501(c) organizations, would receive the reduced assessment rate. 259 Kan. at 519, 912 P.2d 708.
Although our Supreme Court in Most Worshipful Grand Lodge did not explicitly address the constitutional challenge raised by the Club, in essence, the Intervenors' argument paralleled the Club's contention that the legislature exceeded its authority when it limited the not-for-profit classification to certain types of property owned and operated by a Section 501(c)(7) organization. The Intervenors were Section 501(c)(7) organizations, and in explaining the procedural posture of the case, our Supreme Court noted that although the “Intervenors' land actually and regularly used for recreational purposes was also included in the 12% assessment category[,] ... the Intervenors continued to seek relief for other real estate.” (Emphasis added.) 259 Kan. at 512, 912 P.2d 708.
In other words, similar to the Club's argument on appeal, the Intervenors unsuccessfully contended that House Substitute for Senate Bill 157 was unconstitutional because it rendered some of their real estate ineligible for the preferred not-for-profit assessment status. We consider the Club's argument as contrary to the reasoning of our Supreme Court in Most Worshipful Grand Lodge. It is difficult to understand how legislation that makes a Section 501(c) organization a beneficiary of Article 11, § 1(a)(4) (2012 Supp.) on a limited basis would be unconstitutional when, according to Most Worshipful Grand Lodge, the legislature has the constitutional authority to completely exclude Section 501(c) organizations from receiving this benefit.
The Club's argument fails for an additional reason. In its brief, the Club states: “The question presented is whether the limiting language of K.S.A. 79–1439a conforms to the common understanding of the people when they adopted the [amendment].” Unlike the Intervenors in Most Worshipful Grand Lodge, however, the Club presented no evidence below to prove its claim that Kansas voters intended the not-for-profit classification status to represent an all or nothing proposition.
COTA's inability to review a constitutional issue does not relieve a party of the obligation to raise the issue and make a record establishing the necessary factual predicates for the reviewing court to properly apply constitutional principles. In re Tax Appeal of National Catastrophe Restoration, Inc., 48 Kan.App.2d 189, 205–06, 291 P.3d 89 (2012). In Most Worshipful Grand Lodge, the Intervenors presented evidence in the form of affidavits and newspaper articles which our Supreme Court deemed insufficient. In the present case on appeal, the Club reprises the Intervenors' argument but presents no evidence in support of its claim. The burden is on the party making a claim to designate facts in the record to support that claim; without such a record, the claim of error fails. Friedman v. Kansas State Bd. of Healing Arts, 296 Kan. 636, 644–45, 294 P.3d 287 (2013).
Given our Supreme Court's approach in Most Worshipful Grand Lodge, and the imperative to presume that K.S.A. 79–1439a is constitutional while resolving all doubts in favor of the statute's validity, we are persuaded that the language of Article 11, § 1(a)(4) (2012 Supp.), “and which is included in this subclass by law” empowered the legislature to limit the beneficial not-for-profit assessment status to land “actually and regularly used for recreational purposes, other than land accommodating buildings or other improvements associated with such recreational land.” K.S.A. 79–1439a(a). For all of the reasons stated, we hold that COTA did not err in upholding the County's ad valorem tax assessment.
Affirmed.