Fort Calhoun Bapt. Ch. v. Washington Cty. Bd. of Eq.

[8] In our consideration of the appropriate discipline, we
are also concerned by Wickenkamp’s failure to respond to
the formal charges filed by relator. We consider an attorney’s
failure to respond to inquiries and requests for information
from relator as an important matter and as a threat to the credi
bility of attorney disciplinary proceedings. See State ex rel.
NSBA v. Rothery, 260 Neb. 762, 619 N.W.2d 590 (2000). The
failure to respond to formal charges in this court is of even
greater moment.
Upon due consideration of the facts of this case, based on
Wickenkamp’s cumulative acts of misconduct and her dis
respect for this court’s disciplinary jurisdiction, the court finds
that the proper sanction is disbarment.
CONCLUSION
The motion for judgment on the pleadings is granted. It is
the judgment of this court that Wickenkamp should be and is
hereby disbarred from the practice of law, effective immedi
ately. Wickenkamp is directed to pay costs and expenses in
accordance with Neb. Rev. Stat. §§ 7 114 and 7 115 (Reissue
2007) and § 3 310(P) and Neb. Ct. R. § 3 323(B) within 60
days after an order imposing costs and expenses, if any, is
entered by the court.
Judgment of disbarment.
Wright, J., participating on briefs.
fort Calhoun baptist C hurCh , appellant,
v. Washington C ounty board of
equalization, appellee .
759 N.W.2d 475
Filed January 23, 2009. 	No. S 08 108.
1. Taxation: Judgments: Appeal and Error. Appellate courts review decisions
rendered by the Tax Equalization and Review Commission for errors appearing
on the record.
2. Judgments: Appeal and Error. When reviewing a judgment for errors appearing
on the record, an appellate court’s inquiry is whether the decision conforms to
the law, is supported by competent evidence, and is neither arbitrary, capricious,
nor unreasonable.
FORT CALhOUN BAPT. Ch. v. WAShINgTON CTy. Bd. OF Eq. 	25
Cite as 277 Neb. 25
Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
11/01/2026 04:51 AM CST

3. Taxation: Appeal and Error. questions of law arising during appellate review
of Tax Equalization and Review Commission decisions are reviewed de novo on
the record.
4. Taxation: Property: Statutes: Proof. Statutes exempting property from taxation
are to be strictly construed, and the burden of proving the right to exemption is
upon the claimant.
5. Taxation: Property: Words and Phrases. The term “exclusively” means that the
primary or dominant use of a property, and not an incidental use, is controlling in
determining whether the property is exempt from taxation.
6. Property: Nonprofit Organizations. Property is not used for financial gain
or profit to either the owner or user if no part of the income from the property
is distributed to the owners, users, members, directors, or officers, or to pri
vate individuals.
Appeal from the Tax Equalization and Review Commission.
Reversed and remanded with directions.
Milo Alexander 	and 	Kevin 	O’Connell, 	Senior 	Certified
Law Student, of Abrahams Legal Clinic, Creighton University
School of Law, and, on brief, Steven M. Virgil for appellant.
Edmond E. Talbot III, of Talbot & Truhlsen Law Offices,
L.L.P., for appellee.
heaviCan, 	C.J., 	Wright, 	C onnolly, 	gerrard, 	stephan,
mCC ormaCk , and miller-lerman, JJ.
Wright, J.
NATURE OF CASE
The Fort Calhoun Baptist Church (Church) leased part of
its facilities to the Fort Calhoun Community School district
(School). As a result of the lease, the Washington County
Board of Equalization (Board) reduced the tax exemption on
the Church’s property from 100 percent to 80 percent. The Tax
Equalization and Review Commission (TERC) affirmed the
Board’s action, and the Church appeals.
SCOPE OF REVIEW
[1 3] Appellate courts review decisions rendered by TERC
for errors appearing on the record. Neb. Rev. Stat. § 77 5019(5)
(Cum. Supp. 2006). See City of York v. York Cty. Bd. of Equal.,
266 Neb. 297, 664 N.W.2d 445 (2003). When reviewing a judg
ment for errors appearing on the record, an appellate court’s
26 	277 NEBRASKA REPORTS

inquiry is whether the decision conforms to the law, is sup
ported by competent evidence, and is neither arbitrary, capri
cious, nor unreasonable. St. Monica’s v. Lancaster Cty. Bd.
of Equal., 275 Neb. 999, 751 N.W.2d 604 (2008). questions
of law arising during appellate review of TERC decisions are
reviewed de novo on the record. City of York, supra.
FACTS
The Church is a religious organization that meets the require
ments to hold property exempt from property taxes. The Church
owns real property in Fort Calhoun, Nebraska.
In February 2006, the School, also a tax exempt organiza
tion, began looking for a space to use for a new special edu
cation program. At that time, the School’s special education
students were receiving services in Omaha, Nebraska, and the
School sought to provide these services in Fort Calhoun. The
School’s goals were to meet the educational needs of the stu
dents and to save costs associated with contract services and
transporting the children to Omaha.
The School researched market rental rates in Fort Calhoun
and 	Blair, 	Nebraska. 	The 	investigation 	of 	potential 	sites
revealed there were few suitable facilities in Fort Calhoun.
The School identified two potential sites: the Church and St.
John’s Catholic Church. The School contacted both churches
about leasing classroom space. One reason the School was
interested in the Church was its proximity to the Fort Calhoun
high school. St. John’s Catholic Church ultimately determined
its facility would not be available for school use.
The Church was reluctant to enter into a lease, and it pro
posed that the School make a charitable donation to the Church
to offset the increase in costs associated with the School’s
presence. Because the School required a contract, the Church
asked the School to make an offer. The Church provided the
School with financial statements from the past 3 years to assist
the School in setting an amount. In negotiating a contract
and monthly rent, the Church’s objectives were to ensure the
Church did not incur a financial loss as a result of the lease
and to demonstrate to the community that it was not “overly
benefiting” from the contract with the School.
FORT CALhOUN BAPT. Ch. v. WAShINgTON CTy. Bd. OF Eq. 	27
Cite as 277 Neb. 25

The Church and the School entered into a facilities use
agreement on July 31, 2006, for $1,325 per month including
utilities, for 10 months each year for the 2006 07 and 2007 08
school years. After 2 years, the contract was to automatically
renew for another school year unless otherwise agreed.
Included in the $1,325 rent were prorated physical upgrade
costs. Approximately $5,000 to $7,000 in modifications for
handicapped access and fire safety was necessary for the space
to meet the fire marshal’s requirements. The Church agreed to
complete the upgrades, bear the upfront cost of the materials,
and donate the pastor’s carpentry skills and labor, charging the
School a total of $6,000 to be paid in 20 monthly installments
of $300. The parties anticipated that the physical modifications
to the Church would remain in place after the termination of
the lease and that these physical modifications would also bene
fit the Church.
The Church applied for a 100 percent tax exemption on its
real property on November 20, 2006. The Washington County
assessor subsequently recommended an 80 percent exemption.
The Board concurred with the assessor’s recommendation and
notified the Church of the valuation change designating 20
percent of the property as taxable. The Church timely protested
the valuation, and TERC scheduled a hearing.
At the hearing, the Church presented evidence of rental
values for property in Fort Calhoun. It excluded properties
that did not include utilities and a warehouse property as not
comparable. The properties varied in size, and most were less
than 1,000 square feet. The Church identified four comparable
properties, added the monthly rents together, divided that num
ber by the total square footage, and multiplied by 71 percent
to account for the fact that the School used the property only 5
out of 7 days each week. It calculated a market value of 54.9
cents per square foot.
A representative for the Church stated that in Fort Calhoun,
there was a premium on rent for properties over “a certain
size.” The Church determined that the School rented 2,243
square feet. Using $1,025 as the figure for rent, the Church
calculated the rental rate at 45.7 cents per square foot, which it
claimed was 9.2 cents below market value.
28 	277 NEBRASKA REPORTS

In its opinion, TERC assigned $1,325 as the rental amount
for 3,200 square feet. It calculated the amount of time the
School used the property and concluded the actual rental rate
was 57.8 cents per square foot. TERC determined market rental
values by identifying two properties and calculating the rental
price per square foot. One property rented for 45 cents per
square foot ($360 ÷ 800 square feet), and the other rented for
66.7 cents per square foot ($1,600 ÷ 2,400 square feet). The
800 square foot property with a rental value of 45 cents per
square foot per month did not include utilities.
TERC found that the evidence did not support a finding
that the Church had leased the property to the School at a
below market rate. As such, it determined that the Church had
not met its burden of proving its eligibility for an exemption,
because it “failed to demonstrate that the lease of the subject
property to the School was for less than market value or that
its lease of the subject property to the School represents a
contribution of any manner in aid of a charitable, religious or
educational use by the School.” It concluded the Church had
not proved by clear and convincing evidence that the Board’s
decision was unreasonable or arbitrary, and it affirmed the
Board’s recommendation of an 80 percent exemption. The
Church appeals.
ASSIgNMENTS OF ERROR
The Church claims that TERC erred by not considering
the School’s educational use of the property in determining
whether the property was used for an exempt purpose and
that TERC incorrectly determined the lease was for a busi
ness purpose.
ANALySIS
The issue is whether the property leased by the Church to
the School was used exclusively for educational, religious, or
charitable purposes and, therefore, was exempt from taxation
pursuant to Neb. Rev. Stat. § 77 202 (Cum. Supp. 2006).
[4] Neb. Const. art. VIII, § 2, states in pertinent part: “[T]he
Legislature by general law may classify and exempt from taxa
tion property owned by and used exclusively for . . . educa
tional, religious, charitable, or cemetery purposes, when such
FORT CALhOUN BAPT. Ch. v. WAShINgTON CTy. Bd. OF Eq. 	29
Cite as 277 Neb. 25

property is not owned or used for financial gain or profit to
either the owner or user.” Section 77 202 provides:
(1) The following property shall be exempt from prop
erty taxes:
. . . .
(d) Property owned by educational, religious, chari
table, or cemetery organizations, or any organization for
the exclusive benefit of any such educational, religious,
charitable, or cemetery organization, and used exclusively
for educational, religious, charitable, or cemetery pur
poses, when such property is not (i) owned or used for
financial gain or profit to either the owner or user, (ii)
used for the sale of alcoholic liquors for more than twenty
hours per week, or (iii) owned or used by an organiza
tion which discriminates in membership or employment
based on race, color, or national origin. For purposes of
this subdivision, educational organization means (A) an
institution operated exclusively for the purpose of offering
regular courses with systematic instruction in academic,
vocational, or technical subjects or assisting students
through services relating to the origination, processing,
or guarantying of federally reinsured student loans for
higher education.
Statutes exempting property from taxation are to be strictly
construed, and the burden of proving the right to exemption is
upon the claimant. United Way v. Douglas Co. Bd. of Equal.,
215 Neb. 1, 337 N.W.2d 103 (1983).
TERC relied upon United Way in affirming the Board’s deci
sion. TERC examined whether the lease to the School was a
qualified charitable use by the Church. It found that the leased
property was used by the Church for religious purposes on
weekends, Wednesday evenings, and other times when neces
sary. TERC found there was no evidence that the School used
the property for religious purposes or that the Church made any
educational use of the leased premises except in conjunction
with its religious use. Because this property was used a signifi
cant amount of time by the School for educational purposes,
TERC concluded that the Church did not use the property
exclusively for a religious use.
30 	277 NEBRASKA REPORTS

Next, TERC examined the amount of rent charged by the
Church to determine whether the lease evidenced a charitable
use. It considered whether the lease was below the market rate,
because the court in United Way had concluded that the lease
by United Way of the Midlands (United Way) at less than fair
market value was a charitable use. TERC examined comparable
leases submitted by the School and concluded that the lease to
the School was not at a below market rate. Because the lease
was not below the market rate, TERC found that the lease did
not represent a contribution in aid of a charitable, religious,
or educational use by the School. Therefore, it concluded
that the leased portion of the property was not exempt. TERC
affirmed the Board’s reduction of the Church’s exemption to
80 percent.
For the reasons set forth below, we reverse the judgment and
remand the cause with directions to grant the Church a 100
percent exemption. Because TERC relied upon our decision in
United Way, we examine that opinion in more detail.
United Way was a charitable nonprofit organization that
owned real property that was approximately 27,704 square feet.
It occupied over half the property and was required to lease
the remaining square footage to charitable or nonprofit agen
cies. The issue was whether the remaining square footage was
tax exempt.
United Way leased 5,256 square feet to two other chari
table nonprofit organizations, Omaha Council of Campfire
girls (Campfire girls) and greater Omaha Community Action
(Community Action), for about one half the fair market rental
value of similarly contracted and situated properties. The
board of equalization determined that the leased property
and the vacant space were subject to taxation. In contrast,
the district court held that all the property was exempt
from taxation.
In affirming the district court’s decision, this court focused
upon the market value of the lease in determining whether
the leased premises were exempt. This reasoning has created
some confusion as to the relevance of the market value or
the amount charged for the lease. The court in United Way
reasoned that because the lease from United Way to Campfire
FORT CALhOUN BAPT. Ch. v. WAShINgTON CTy. Bd. OF Eq. 	31
Cite as 277 Neb. 25

girls and Community Action was less than the fair market
value, United Way’s use of the leased property remained
charitable as opposed to a business purpose and was therefore
still exempt.
It was not disputed that Campfire girls’ and Community
Action’s use of the leased space was charitable. This fact
should have ended the court’s inquiry. Instead, the court exam
ined whether the lease by United Way at less than fair mar
ket value was a continued charitable use of the property by
United Way.
When the court implicitly rejected the position that owner
ship and operation of the subject property must coincide in
a single legal entity in order for the property to qualify for
a charitable exemption, the court should have focused on the
use of the property by the lessees. The issue in United Way
v. Douglas Co. Bd. of Equal., 215 Neb. 1, 337 N.W.2d 103
(1983), was not whether the lease for less than fair market
value was a charitable use by United Way. It was the chari
table use of the property by Campfire girls and Community
Action that established the use of the property as being
tax exempt.
[5] Although ownership and use of the property may be
by different entities, exclusive use of the property for exempt
purposes is required. See United Way, supra. It is the exclusive
use of the property that must be determined. The term “exclu
sively” means that the primary or dominant use of the property,
and not an incidental use, is controlling in determining whether
the property is exempt from taxation. Pittman v. Sarpy Cty. Bd.
of Equal., 258 Neb. 390, 603 N.W.2d 447 (1999).
[6] In the case at bar, it is the exclusive use of the property
that governs the exemption, and not the market value of the
lease. It was not disputed that the Church and the School were
organizations qualified to own property exempt from taxation.
The issue of financial gain or profit to the owner or user of the
subject property was not an issue to be considered by TERC.
Property is not used for financial gain or profit to either the
owner or user if no part of the income from the property is
distributed to the owners, users, members, directors, or officers,
or to private individuals. See United Way, supra.
32 	277 NEBRASKA REPORTS

It was undisputed that the property was not used for the sale
of alcohol and that neither the Church nor the School discrimi
nated on the basis of race, color, or national origin. Thus, the
only issue remaining was whether the Church property was
used exclusively for an exempt purpose.
It is the exclusive use of the property that determines
the exempt status. See Nebraska Conf. Assn. Seventh Day
Adventists v. Bd. of Equalization, 179 Neb. 326, 138 N.W.2d
455 (1965). The Constitution and the statutes do not require
that the ownership and use must be by the same entity.
Ownership and use may be by separate entities. United
Way, supra.
For property to be exempt from taxation, a claimant must
prove
“(1) that the subject property is owned by a charitable,
educational, religious, or cemetery organization; (2) that
the subject property is not being used for financial gain or
profit to the owner or user; and (3) that the subject prop
erty is being used exclusively for charitable, educational,
religious, or cemetery purposes[.]”
[Additionally,] the property cannot be used for the sale
of alcoholic liquors for more than 20 hours per week and
the property cannot be owned or used by an organization
which discriminates in membership or employment based
on race, color, or national origin.
Bethesda Found. v. Buffalo Cty. Bd. of Equal., 263 Neb. 454,
458, 640 N.W.2d 398, 402 (2002), quoting Ev. Luth. Soc. v.
Buffalo Cty. Bd. of Equal., 230 Neb. 135, 430 N.W.2d 502
(1988).
In Bethesda Found., supra, we referred to a department of
Property Assessment and Taxation regulation dealing with the
uses of property. We noted that an exemption was available
only if property was
“used exclusively for religious, educational, charitable, or
cemetery purposes. The property need not be used solely
for one of the four categories of exempt use, but may be
used for a combination of the exempt uses. For purposes
of this exemption, the term exclusive use shall mean the
predominant or primary use of the property as opposed to
FORT CALhOUN BAPT. Ch. v. WAShINgTON CTy. Bd. OF Eq. 	33
Cite as 277 Neb. 25

incidental use. . . .” See 350 Neb. Admin. Code, ch. 40,
§ 005.03 (1999).
Bethesda Found., 263 Neb. at 459, 640 N.W.2d at 403. The use
of the property establishes whether it is exempt. Id.
In this case, the property was being used exclusively for reli
gious or educational purposes. We conclude that the property
owned by the Church was used exclusively for religious and/or
educational purposes. The School used the fellowship hall,
restrooms, and areas for ingress and egress Monday through
Friday during school hours, unless the use would interfere with
a wedding, funeral, or election. This use was educational and
was an exempt use. The remainder of the time, the Church
used the property for religious purposes, which was also an
exempt use.
The lease of the property by the Church to the School did
not create a taxable use. Both of the uses were exempt. The
property was used for a combination of exempt uses. TERC
was misled by our reasoning in United Way v. Douglas Co.
Bd. of Equal., 215 Neb. 1, 337 N.W.2d 103 (1983), when the
court considered the market value of the lease to Campfire
girls and Community Action. To the extent that United Way
focused on the market value of the lease and not the subse
quent use of the property by the lessees, such reasoning is
disapproved.
The Legislature, by general law, may classify and exempt
from taxation property owned by and used exclusively for edu
cational, religious, or charitable purposes when such property
is not owned or used for financial gain or profit to either the
owner or user. See Neb. Const. art. VIII, § 2. The Legislature
has provided that property owned by educational, religious, or
charitable organizations for the exclusive benefit of educational,
religious, or charitable organizations and used exclusively for
educational, religious, or charitable purposes shall be exempt
from property taxes. See § 77 202(1)(d).
The lease by the Church to the School did not create a non
exempt use of the property. The property continued to be used
exclusively for religious and educational purposes.
34 	277 NEBRASKA REPORTS

CONCLUSION
Appellate courts review decisions rendered by TERC for
errors appearing on the record. § 77 5019(5). See City of York
v. York Cty. Bd. of Equal., 266 Neb. 297, 664 N.W.2d 445
(2003). When reviewing a judgment for errors appearing on
the record, an appellate court’s inquiry is whether the decision
conforms to the law, is supported by competent evidence, and
is neither arbitrary, capricious, nor unreasonable. St. Monica’s
v. Lancaster Cty. Bd. of Equal., 275 Neb. 999, 751 N.W.2d 604
(2008). We conclude that TERC’s decision did not conform
to the law. The property was used exclusively for tax exempt
purposes within the meaning of § 77 202. The primary or
dominant use of the property was for religious and educational
purposes. There was no evidence to the contrary.
Therefore, TERC’s 	order 	is 	reversed 	and 	the 	cause 	is
remanded to TERC with directions to instruct the Board to
grant a 100 percent exemption on the Church’s property.
reversed and remanded With direCtions.
miller-lerman, J., concurring.
given the facts of the case, I concur in the result reached
by the majority. I would not, however, disregard the poten
tial relevance of the market value or profitability of a lease
in all cases, and I see no need to disapprove United Way v.
Douglas Co. Bd. of Equal., 215 Neb. 1, 337 N.W.2d 103
(1983), in this regard in this case. I agree that an analysis
of “use” by both the claimant owner and renter is a suitable
inquiry relative to the exempt analysis in property tax cases.
however, the burden of proving the right to exemption is
upon the claimant owner, id., and, as discussed below, the
claimant owner must show that its use continues to be the
use or purpose for which the exemption was granted. I write
separately only to express my view that an unnaturally high
rent may have implications for exempt purposes, because at
some point, the use of the property as a device for generating
exaggerated receipts will have bearing on whether the domi
nant use of the claimant owner remains for the charitable
purpose of the original exemption or will have devolved into
an unrelated use.
FORT CALhOUN BAPT. Ch. v. WAShINgTON CTy. Bd. OF Eq. 	35
Cite as 277 Neb. 25

It has been observed elsewhere that the generation of excess
revenues, even from exempt activities, can jeopardize an orga
nization’s property tax exemption, but will not result in loss
of exempt status so long as, upon analysis, those revenues are
reinvested into the expansion and maintenance of the organi
zation. See St. Margaret Seneca Place v. Board, 536 Pa. 478,
640 A.2d 380 (1994). See, also, West Allegheny Hosp. v. Bd.
of Prop. Assess., 500 Pa. 236, 455 A.2d 1170 (1982); david
A. Brennen, The Commerciality Doctrine as Applied to the
Charitable Tax Exemption for Homes for the Aged: State and
Local Perspectives, 76 Fordham L. Rev. 833 (2007); Andras
Kosaras, Federal Income and State Property Tax Exemption
of 	Commercialized 	Nonprofits: 	Should 	Profit-Seeking 	Art
Museums Be Tax Exempt?, 35 New Eng. L. Rev. 115 (Fall
2000). While not a perfect analogy, this analysis is similar to
the examination employed with respect to the unrelated busi
ness income tax, I.R.C. §§ 511 through 515 (2000), wherein
income tax may be imposed on an exempt organization’s
unrelated trade or business income, following a determination
as to whether the unrelated activity serves the organization’s
primary exempt purpose or, to the contrary, is the operation of
an unrelated business.
An inquiry regarding the leased portion in a case such
as the present one should permit examination into various
aspects of the lease and the relationship of the use of the por
tion in question to the claimant owner’s purpose. See Home
of Carlisle v. Bd. of Assessment, 591 Pa. 436, 919 A.2d 206
(2007). I would not conclude that the mere fact that both the
claimant owner and renter are exempt organizations ends
the inquiry. On the facts of this case, given the modest rent
charged, the portion in question is obviously not used as an
unrelated business vehicle serving as a revenue stream to
finance an endeavor different from that for which the property
tax exemption was granted. I, therefore, agree with the major
ity that the claimant owner was entitled to its property tax
exemption without a reduction.
36 	277 NEBRASKA REPORTS