B-145371, MAY 2, 1961, 40 COMP. GEN. 605

B-145371: May 2, 1961

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DISTRICT OF COLUMBIA REDEVELOPMENT LAND AGENCY - REAL PROPERTY TRANSFERS - TAXATION REAL PROPERTY WHICH WAS TAX EXEMPT WHEN ACQUIRED BY THE DISTRICT OF COLUMBIA REDEVELOPMENT LAND AGENCY UNDER SECTION 13 OF THE DISTRICT OF COLUMBIA REDEVELOPMENT ACT OF 1945. WHICH PROVIDES THAT REAL PROPERTY ACQUIRED BY THE AGENCY SHALL BE TAX EXEMPT AND SPECIFIES THE CONDITIONS UNDER WHICH THE TAX EXEMPTION WILL COMMENCE WHEN TITLE TO THE PROPERTY IS TRANSFERRED FROM THE AGENCY TO TAX EXEMPT ENTITIES. WHEN PROPERTY IS DESIGNATED FOR TAX EXEMPT USE. THE RULE THAT REAL PROPERTY IN THE DISTRICT OF COLUMBIA WHICH IS TAXABLE ON JULY 1. - IS TAXABLE FOR THE ENTIRE YEAR IS APPLICABLE TO PROPERTY OF THE D.C. WHEN LAND WHICH IS TAXABLE ON JULY 1 IS TRANSFERRED BY THE AGENCY TO A TAX EXEMPT ENTITY.

B-145371, MAY 2, 1961, 40 COMP. GEN. 605

DISTRICT OF COLUMBIA REDEVELOPMENT LAND AGENCY - REAL PROPERTY TRANSFERS - TAXATION REAL PROPERTY WHICH WAS TAX EXEMPT WHEN ACQUIRED BY THE DISTRICT OF COLUMBIA REDEVELOPMENT LAND AGENCY UNDER SECTION 13 OF THE DISTRICT OF COLUMBIA REDEVELOPMENT ACT OF 1945, 5 D.C. CODE 712, WHICH PROVIDES THAT REAL PROPERTY ACQUIRED BY THE AGENCY SHALL BE TAX EXEMPT AND SPECIFIES THE CONDITIONS UNDER WHICH THE TAX EXEMPTION WILL COMMENCE WHEN TITLE TO THE PROPERTY IS TRANSFERRED FROM THE AGENCY TO TAX EXEMPT ENTITIES, BECOMES SUBJECT TO TAXATION WHEN ACQUIRED BY THE AGENCY, REGARDLESS OF THE STATUS OF THE REAL PROPERTY PRIOR TO ITS ACQUISITION OR THE TAX EXEMPT USES OF THE PROPERTY WHILE OWNED AND OPERATED BY THE AGENCY. UNDER SECTION 13 OF THE DISTRICT OF COLUMBIA REDEVELOPMENT ACT OF 1945, 5 D.C. CODE 712, WHICH PROVIDES THAT, WHEN PROPERTY IS DESIGNATED FOR TAX EXEMPT USE, THE TAX EXEMPTION SHALL NOT COMMENCE UNTIL TITLE HAS BEEN TRANSFERRED FROM THE D.C. REDEVELOPMENT LAND AGENCY, THE TAX EXEMPTION INURES TO THE BENEFIT OF THE TRANSFEREE AND TAXABLE PROPERTY HELD BY THE AGENCY DOES NOT BECOME TAX EXEMPT TO THE AGENCY BY REASON OF ITS INTENDED USE. THE RULE THAT REAL PROPERTY IN THE DISTRICT OF COLUMBIA WHICH IS TAXABLE ON JULY 1--- THE DATE FOR ANNUAL TAX ASSESSMENTS--- IS TAXABLE FOR THE ENTIRE YEAR IS APPLICABLE TO PROPERTY OF THE D.C. REDEVELOPMENT LAND AGENCY; THEREFORE, WHEN LAND WHICH IS TAXABLE ON JULY 1 IS TRANSFERRED BY THE AGENCY TO A TAX EXEMPT ENTITY, THE TAX EXEMPT BENEFIT INURES TO THE TRANSFEREE AND THE AGENCY IS NOT ENTITLED TO A PARTIAL REBATE OF TAXES.

TO THE DISTRICT OF COLUMBIA REDEVELOPMENT LAND AGENCY, MAY 2, 1961:

BY LETTER OF MARCH 17, 1961, YOU REQUESTED OUR OPINION WITH RESPECT TO TWO MATTERS INVOLVING INTERPRETATION OF SECTION 13 OF THE DISTRICT OF COLUMBIA REDEVELOPMENT ACT OF 1945, 60 STAT. 799, 5 D.C. CODE, 1951 USED., 712. SECTION 13 PROVIDES AS FOLLOWS:

SEC. 13. NOTHING CONTAINED IN THIS ACT SHALL BE CONSTRUED TO AUTHORIZE OR REQUIRE THE EXEMPTION OF ANY REAL PROPERTY FROM TAXATION. NO REAL PROPERTY ACQUIRED BY THE AGENCY UNDER THIS ACT SHALL BE EXEMPT FROM TAXATION BY REASON OF SUCH ACQUISITION OR BY REASON OF THE HOLDING THEREOF BY THE AGENCY; AND, IN THE CASE OF ANY PIECE OF REAL PROPERTY, WHICH UNDER THE PROJECT AREA REDEVELOPMENT PLAN, IS DESIGNATED TO BE USED FOR FEDERAL OR DISTRICT OR OTHER TAX-EXEMPT USES, THE EXEMPTION OF SUCH REAL PROPERTY FROM TAXATION GRANTED BY OR IN THE ACT ENTITLED "1AN ACT TO DEFINE THE REAL PROPERTY EXEMPT FROM TAXATION IN THE DISTRICT OF COLUMBIA (1PUBLIC LAW 846, SEVENTY-SEVENTH CONGRESS)," OR OTHER STATUTE, SHALL NOT COMMENCE UNTIL TITLE THERETO SHALL HAVE BEEN TRANSFERRED FROM THE AGENCY TO THE UNITED STATES OR THE DISTRICT OF COLUMBIA OR TO A FEDERAL OR DISTRICT PUBLIC AGENCY AS PROVIDED IN SECTION 7 OF THIS ACT OR SOLD OR LEASED TO A PUBLIC REDEVELOPMENT COMPANY OR OTHER PUBLIC CORPORATION OR TAX-EXEMPT AGENCY AND MAY THEREBY BECOME EXEMPT FROM TAXATION BY REASON OF THE PROVISIONS OF STATUTES OTHER THAN THIS PRESENT ACT; THE INTENTION BEING THAT OWNERSHIP OR OPERATION BY THE AGENCY IN THE EXERCISE OF ITS POWER UNDER THIS PRESENT ACT SHALL NOT, IN AND OF ITSELF, PRODUCE TAX EXEMPTION.

THE FOLLOWING SPECIFIC QUESTIONS ARE PRESENTED FOR OUR CONSIDERATION:

1. DOES PROPERTY ACQUIRED BY THE REDEVELOPMENT LAND AGENCY BECOME SUBJECT TO TAXATION SOLELY BY REASON OF ITS ACQUISITION BY THE AGENCY, NOTWITHSTANDING THE FACT THAT PRIOR TO SUCH ACQUISITION IT WAS TAX EXEMPT?

2. DOES THE EXEMPTION FROM TAXATION WITH RESPECT TO LAND TRANSFERRED BY THE AGENCY TO TAX-EXEMPT ENTITIES COMMENCE UPON THE TRANSFER ITSELF OR AT THE BEGINNING OF THE SUCCEEDING TAX YEAR?

YOU POINT OUT THAT THE FIRST QUESTION PERTAINS PRINCIPALLY TO LAND ACQUIRED BY THE AGENCY FROM THE FEDERAL OR DISTRICT GOVERNMENTS AND THE SECOND QUESTION TO LAND TRANSFERRED BY THE AGENCY TO THE FEDERAL OR DISTRICT GOVERNMENTS OR OTHER TAX-EXEMPT ORGANIZATIONS. YOU STATE FURTHER THAT THESE QUESTIONS HAVE BEEN A SOURCE OF DISAGREEMENT BETWEEN YOUR AGENCY AND THE DISTRICT OF COLUMBIA FOR SEVERAL YEARS.

IN THE ABSENCE OF CLARIFICATION IN THE LEGISLATIVE HISTORY OF THE ACT, THE DISTRICT, FOLLOWING THE WELL-REORGANIZED PRINCIPLE IN TAX EXEMPTION MATTERS--- THAT EXEMPTIONS FROM TAXATION ARE STRICTLY CONSTRUED--- IS OF THE OPINION THAT QUESTION NUMBERED 1 MUST BE ANSWERED IN THE AFFIRMATIVE AND, WITH RESPECT TO QUESTION NUMBERED 2, THAT EXEMPTION COMMENCES AT THE BEGINNING OF THE SUCCEEDING TAX YEAR. THE REASONS FOR THESE CONCLUSIONS ARE SET FORTH IN VARIOUS DOCUMENTS WHICH YOU ENCLOSED WITH YOUR LETTER.

THE GENERAL RULE THAT EXEMPTIONS FROM TAXATION ARE STRICTLY CONSTRUED DOES NOT APPEAR TO BE FOR APPLICATION HERE. BUT FOR THE PROVISIONS OF SECTION 13, THE DISTRICT OF COLUMBIA REDEVELOPMENT LAND AGENCY, WHETHER IT BE CONSIDERED A FEDERAL OR DISTRICT OF COLUMBIA AGENCY, WOULD BE ENTITLED TO TAX EXEMPTION FOR PROPERTY HELD BY IT. SEE 47 D.C. CODE, 1951 USED., 801 (A) A AND B. THUS, IT WOULD APPEAR MORE APPROPRIATE TO ARGUE THAT RATHER THAN TO CONSTRUE AN EXEMPTION STRICTLY THERE IS INVOLVED THE NECESSITY FOR CONSTRUING STRICTLY THE WAIVER FROM THAT EXEMPTION CONTAINED IN SECTION 13 OF THE ACT. SEE KING AND BOOZER V. STATE, 3 SO.2D 572, 581 (1941), AND CASES CITED THEREIN.

HOWEVER, IRRESPECTIVE OF WHETHER IT IS THE EXEMPTION OR THE WAIVER THEREOF WHICH IS TO BE ACCORDED A STRICT CONSTRUCTION, WE BELIEVE THE STATUTE IN QUESTION IS SUFFICIENTLY CLEAR TO PERMIT OF ONLY ONE REASONABLE CONCLUSION WITH RESPECT TO THE QUESTIONS PRESENTED.

NOTHING CONTAINED IN THIS ACT SHALL BE CONSTRUED TO AUTHORIZE OR REQUIRE THE EXEMPTION OF ANY REAL PROPERTY FROM TAXATION.

THIS INITIAL SENTENCE OF SECTION 13 SIMPLY MEANS THAT REGARDLESS OF THE LANGUAGE OF THE ACT OR ANY IMPLICATIONS THAT MAY BE DRAWN THEREFROM, NO PART OF THE ACT SHALL BE CONSTRUED AS GIVING THE AGENCY A TAX EXEMPT STATUS. THE FIRST PART OF THE SECOND SENTENCE--- "1NO REAL PROPERTY ACQUIRED BY THE AGENCY UNDER THIS ACT SHALL BE EXEMPT FROM TAXATION BY REASON OF SUCH ACQUISITION OR BY REASON OF THE HOLDING THEREOF BY THE AGENCY"--- WOULD SEEM TO MEAN THAT REGARDLESS OF THE STATUS OF THE AGENCY, THAT IS WHETHER IT BE CONSIDERED A FEDERAL OR DISTRICT OF COLUMBIA AGENCY AND THEREFORE ORDINARILY EXEMPT FROM TAXATION, SUCH ACQUISITION OR HOLDING IN SUCH CAPACITY WOULD NOT RENDER THE REAL PROPERTY TAX EXEMPT. FINALLY, THERE IS FOR CONSIDERATION THE LAST EXPRESSION CONTAINED IN SECTION 13--- "THE INTENTION BEING THAT OWNERSHIP OR OPERATION BY THE AGENCY IN THE EXERCISE OF ITS POWER UNDER THIS PRESENT ACT SHALL NOT, IN AND OF ITSELF, PRODUCE TAX EXEMPTION.'

THE LANGUAGE IMMEDIATELY PRECEDING SUCH EXPRESSION DEALS WITH THE QUESTION OF WHAT AGENCY PROPERTY WILL BE TAX EXEMPT AND WHEN IT WILL BE SO EXEMPT. IT RECOGNIZES THAT CERTAIN REAL PROPERTY ACQUIRED OR HELD BY THE AGENCY MAY BE DESIGNATED UNDER THE PROJECT AREA REDEVELOPMENT PLAN TO BE USED FOR FEDERAL OR DISTRICT OR OTHER TAX EXEMPT USES AND PROVIDES THAT EXEMPTION OF SUCH PROPERTY FROM TAXATION WILL COMMENCE UPON TRANSFER OF TITLE TO TAX EXEMPT ENTITIES. THAT IS TO SAY, THE OWNERSHIP OR OPERATION BY THE AGENCY OF REAL PROPERTY DESIGNATED FOR TAX EXEMPT USES WOULD NOT IN AND OF ITSELF RENDER SUCH PROPERTY TAX EXEMPT BUT WOULD REQUIRE ACTUAL TRANSFER OF TITLE FROM THE AGENCY TO THE TAX EXEMPT ENTITY TO SO RENDER IT.

IT THUS APPEARS THAT THE STATUS OF THE REAL PROPERTY PRIOR TO ITS ACQUISITION BY THE AGENCY IS NOT DETERMINATIVE IN THE MATTER. THE FIRST QUESTION IS ANSWERED ACCORDINGLY.

WITH RESPECT TO THE SECOND QUESTION RAISED, SECTION 13, AS INDICATED ABOVE, PROVIDES THAT WHERE PROPERTY IS DESIGNATED, UNDER THE PROJECT AREA REDEVELOPMENT PLAN, FOR TAX EXEMPT USE, THE EXEMPTION FROM TAXATION FOR SUCH PROPERTY "SHALL NOT COMMENCE UNTIL TITLE THERETO SHALL HAVE BEEN TRANSFERRED FROM THE AGENCY * * *.' CLEARLY, ANY TAX EXEMPTION UNDER THIS PROVISION INURES TO THE BENEFIT OF THE TRANSFEREE OF THE PROPERTY AND DOES NOT IN ANY WAY AFFECT THE AGENCY REGARDING THE TAX STATUS OF THE PROPERTY TRANSFERRED. THE SOLE PURPOSE FOR PROVIDING AS TO WHEN TAX EXEMPTION SHALL COMMENCE WAS, APPARENTLY, TO MAKE CLEAR THAT TAXABLE PROPERTY HELD BY THE AGENCY WAS NOT TO BECOME TAX EXEMPT TO THE AGENCY BY REASON OF ITS INTENDED USE. THUS THE AGENCY IS IN THE SAME POSITION AS ANY OTHER TAXPAYER SO FAR AS CONCERNS THE TRANSFER OF TAXABLE PROPERTY TO A TAX EXEMPT ORGANIZATION.

THE IMPORT OF THE QUESTION AS TO THE DATE UPON WHICH TAX EXEMPTION COMMENCES LIES IN WHETHER THE AGENCY IS TO BE ENTITLED TO PARTIAL REFUNDS OF TAXES PAID FOR A FULL YEAR WHEN THE PROPERTY INVOLVED IS TRANSFERRED TO A TAX EXEMPT ORGANIZATION DURING THE COURSE OF THAT TAX YEAR. TAX ASSESSMENTS OF REAL PROPERTY IN THE DISTRICT OF COLUMBIA ARE MADE ANNUALLY ON JULY 1, 47 D.C. CODE, 1951, USED., 101 ID. 702. IF PROPERTY IS EXEMPT ON THAT DAY IT IS EXEMPT FOR THE ENTIRE YEAR; AND, CONVERSELY, IF PROPERTY IS TAXABLE ON THAT DATE, IT IS TAXABLE FOR THE ENTIRE YEAR. SEE CONGREGATIONAL HOME OF DISTRICT OF COLUMBIA V. DISTRICT OF COLUMBIA, 202 F.2D 808 (1953). CF. DISTRICT OF COLUMBIA V. GENERAL FEDERATION OF WOMEN'S CLUBS, INCORPORATED, 249 F.2D 503 (1957); AND UNITED STATES V. ALABAMA, 313 U.S. 274 (1941). FOR THE REASONS STATED ABOVE, THIS RULE APPLIES TO THE DISTRICT OF COLUMBIA REDEVELOPMENT LAND AGENCY.

THE SECOND QUESTION PRESENTED IS ANSWERED ACCORDINGLY, AND THE AGENCY IS NOT ENTITLED TO A PARTIAL REBATE OF TAXES PAID ON PROPERTY TRANSFERRED DURING THE COURSE OF A TAX YEAR TO A TAX EXEMPT ORGANIZATION.

A COPY OF THIS LETTER IS BEING SENT TO THE BOARD OF COMMISSIONERS OF THE DISTRICT OF COLUMBIA.