Washington Cty. Bd. of Ts

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SUPREME COURT OF ARKANSAS

No. CV-15-357

WASHINGTON COUNTY; JEFF Opinion Delivered February 04, 2016

WILLIAMS, WASHINGTON COUNTY

TAX ASSESSOR; DAVID RUFF, APPEAL FROM THE WASHINGTON

WASHINGTON COUNTY TAX COUNTY CIRCUIT COURT

COLLECTOR; AND FAYETTEVILLE [NOS. CV12-3060-1, CV13-2227-1]

SCHOOL DISTRICT NO. 1

APPELLANTS HONORABLE DOUG MARTIN,

JUDGE

V.

BOARD OF TRUSTEES OF THE AFFIRMED.

UNIVERSITY OF ARKANSAS

APPELLEE

KAREN R. BAKER, Associate Justice

This appeal stems from the ad valorem taxation of certain parcels of property owned

by the appellee, Board of Trustees of the University of Arkansas (“the University”). In 2011,

2012, and 2013, the University submitted applications to the appellant, Washington County

Tax Assessor,1 seeking immunity from taxation, or alternatively, exemption from taxation for

tax years 2010, 2011, and 2012.2 Thereafter, litigation ensued, and the cases were

1

The appellants are Washington County, a governmental entity located in northwest

Arkansas; Jeff Williams, the publicly elected Assessor of Washington County; David Ruff,

the publicly elected Collector of Washington County; and the Fayetteville School District

No.1, a governmental entity operating in Washington County, Arkansas.

2

The University originally sought immunity from ad valorem taxation as to 46 parcels

of real property and 20 parcels of personal property. However, on May 23, 2014, the circuit

court granted the University’s motion to non-suit. Accordingly, there are a total of eleven

parcels at issue in this case; ten parcels of real property and one parcel of personal property.

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consolidated on the joint motion of the parties. The procedural history of this matter is as

follows. The Washington County Tax Assessor denied the University’s applications. The

University appealed the denial to the Washington County Board of Equalization, which

affirmed the assessor’s decision. Under protest, the University paid the assessed taxes and

appealed the Board of Equalization’s decision to Washington County Court. The

Washington County Court affirmed the Board of Equalization’s decision. On December 19,

2012, the University appealed to the circuit court. On January 18, 2013, the University filed

its complaint in the circuit court and filed its amended complaint on May 13, 2014. The

Fayetteville School District intervened in the case, asserting that the greatest portion of the

taxes assessed and collected by Washington County are distributed to the school district,

giving the school district an interest related to the property and taxes at issue. Washington

County and the University did not object to the school district’s intervention. The appellants

will hereinafter be collectively referred to as “Fayetteville.”

Once litigation proceeded in the circuit court, competing summary judgment motions

were filed by both parties. On October 28, 2014, the circuit court held a hearing. On

December 31, 2014, the circuit court announced its ruling from the bench, granting the

University’s motion for summary judgment and denying Fayetteville’s and entered an order

to that effect that same day. On January 12, 2015, Fayetteville filed a motion pursuant to

Arkansas Rule of Civil Procedure 52(b) for amended findings of facts and for additional

findings, including a Rule 54(b) certificate. On January 29, 2015, Fayetteville filed its notice

of appeal. On February 2, 2015, the circuit court entered a final order. On February 3, 2015,

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Fayetteville filed its second notice of appeal.

The parties timely filed their respective briefs, and with permission of the court, the

Attorney General of the State of Arkansas filed an amicus curiae brief in support of the

University. From the circuit court’s order granting the University summary judgment,

Fayetteville timely appeals and presents one issue: whether the circuit court erred in holding

that the University is entitled to sovereign immunity from ad valorem taxation.

I. Standard of Review

Moving to our standard of review, “summary judgment may be granted only when

there are no genuine issues of material fact to be litigated, and the moving party is entitled to

judgment as a matter of law.” Cannady v. St. Vincent Infirmary Med. Ctr., 2012 Ark. 369, 423

S.W.3d 548. “Ordinarily, upon reviewing a circuit court’s decision on a summary-judgment

motion, we would examine the record to determine if genuine issues of material fact exist.”

May v. Akers-Lang, 2012 Ark. 7, 386 S.W.3d 378. However, in a case where the parties agree

on the facts, we simply determine whether the appellee was entitled to judgment as a matter

of law. Hobbs v. Jones, 2012 Ark. 293, 412 S.W.3d 844. “When parties file cross-motions for

summary judgment, as was done in this case, they essentially agree that there are no material

facts remaining, and summary judgment is an appropriate means of resolving the case. As to

issues of law presented, our review is de novo.” State v. Cassell, 2013 Ark. 221, 4–5, 427

S.W.3d 663, 666 (citations omitted). “De novo review means that the entire case is open for

review.” Certain Underwriters at Lloyd’s, London v. Bass, 2015 Ark. 178, at 9, 461 S.W.3d 317,

323 (citations omitted).

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Also on review, “[t]his court reviews a circuit court’s interpretation of a constitutional

provision de novo. We are not bound by a circuit court’s decision, but in the absence of a

showing that the [circuit] court erred in its interpretation of the law, that interpretation will

be accepted on appeal. Language of a constitutional provision that is plain and unambiguous

must be given its obvious and common meaning. Neither rules of construction nor rules of

interpretation may be used to defeat the clear and certain meaning of a constitutional

provision. Furthermore, when engaging in constitutional construction and interpretation,

this court looks to the history of the constitutional provision. The Arkansas Constitution

must be considered as whole, and every provision must be read in light of other provisions

relating to the same subject matter.” Gatzke v. Weiss, 375 Ark. 207, 211, 289 S.W.3d 455,

458 (2008) (citations omitted).

With these standards in mind, we turn now to the issue on appeal.

II. Sovereign Immunity from Ad Valorem Taxation

At issue is the circuit court’s February 2, 2015, order which granted the University’s

motion for summary judgment and held that the University was immune from ad valorem

taxation based on sovereign immunity:

For the reasons stated by the Honorable William Storey in a proceeding held on

December 31, 2014, the Court finds, as a matter of law, that the University is an

instrumentality of the State of Arkansas and that it possesses sovereign immunity from

ad valorem taxation. A copy of the written Order and the transcript of the proceeding

held on December 31, 2014 are respectively attached hereto as Exhibits 1 and 2 and

incorporated herein by reference.[3] Judge Storey specifically held that the Board of

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Judge Storey’s order in its entirety stated as follows:

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Trustees of the University of Arkansas is an instrumentality of the State of Arkansas and

cited Arkansas v. Texas, 346 U.S. 368 (1953), in support of his determination. Judge

Storey then held that the University, as an instrumentality of the State of Arkansas,

possesses sovereign immunity from ad valorem taxation under the Arkansas

Constitution. Judge Storey cited Arkansas State Highway Commission v. Sub-District No.

3 Grassy Lake, 237 Ark. 614 (1964), and generally referenced other cases cited by the

University’s brief in reaching the Court’s ruling.

As determined and announced by Judge Storey in open court on December 31, 2014,

and as entered into the record in a written Order on the same day, this Court finds and

holds, as a matter of law, that the Motion for Partial Summary Judgment filed by the

Intervenor was denied. In open court and in the Order entered on December 31,

2014, this Court finds and holds, as a matter of law, that the Motion for Partial

Summary Judgment, as adopted by Washington County, the Washington County Tax

Assessor, and the Washington County Tax Collector in their Statement of

Concurrence and Adoption by Reference, was denied as well. This Court incorporates

by reference and adopts Judge Storey’s bench ruling and written Order entered for the

record on December 31, 2014, as its own in this Judgment. For the avoidance of all

doubt, the Court FINDS and ORDERS:

A. Intervenor’s Motion for Partial Summary Judgment is hereby DENIED;

B. Washington County’s Motion for Partial Summary Judgment is hereby

DENIED; and

C. The University’s Motion for Summary Judgment is hereby GRANTED. These

rulings on the parties’ respective motions are intended to be and are declared

to be consistent with Judge Storey’s original ruling and Order dated December

Now on this 31st day of December, 2014, comes on for consideration the

referenced matter and from all things and matters before the Court, the Court

finds:

1. That Defendants’ motions for summary judgment should be and

are hereby denied.

2. That Plaintiffs motion for summary judgement should be and is hereby

granted.

IT IS SO ORDERED.

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31, 2014.

Accordingly, the narrow issue in this case is whether the University is immune from

ad valorem taxation as to the specific parcels involved in this case.

A. Sovereignty

We turn to the genesis of the sovereign state. Sovereignty is the “the supreme,

absolute, and uncontrollable power by which an independent state is governed and from

which all specific political powers are derived; the intentional independence of a state,

combined with the right and power of regulating its internal affairs without foreign

interference. Sovereignty is the power of a state to do everything necessary to govern itself,

such as making, executing, and applying laws; [and] imposing and collecting taxes. . . . The

sovereignty of a state is determined with reference to the U.S. Constitution, which is the

supreme law of the land.” West Encyclopedia on American Law, 2d ed., 258–89, Vol. 9 (2005).

B. Authority to Tax

With regard to the power to tax, article 2, section 23 of the Arkansas Constitution,

entitled, “Taxation and eminent domain; delegation,” provides that

[t]he State’s ancient right of . . . taxation, is herein fully and expressly conceded; and

the General Assembly may delegate the taxing power, with the necessary restriction,

to the State’s subordinate political and municipal corporations, to the extent of

providing for their existence, maintenance and well being, but no further.

Ark. Const. art. 2, § 23.

With regard to taxation of property, article 16, section 5, provides in pertinent part:

(a) All real and tangible personal property subject to taxation shall be taxed according

to its value, that value to be ascertained in such manner as the General Assembly shall

direct, making the same equal and uniform throughout the State.

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....

(b) The following property shall be exempt from taxation: public property used

exclusively for public purposes; churches used as such; cemeteries used exclusively as

such; school buildings and apparatus; libraries and grounds used exclusively for school

purposes; and buildings and grounds and materials used exclusively for public charity.

C. Analysis – Arkansas Constitution article 16, section 5

Having reviewed the principles of sovereignty and taxation, we move to our review

of the Arkansas Constitution to address the issue before us. Fayetteville contends that the

circuit court erred in its interpretation of article 16, section 5 and asserts that the University

is “subject to” ad valorem taxation. Fayetteville further asserts that there is not a reported

decision by this court involving ad valorem taxation which holds that property owned by the

state of Arkansas is immune from ad valorem taxation. Fayetteville also contends that the

Arkansas Constitution does not grant immunity to the state from ad valorem taxation or its

instrumentalities. Rather, Fayetteville contends that our constitution employs a use analysis,

stating in section 5(a) that all property subject to taxation shall be taxed and that public

property shall be taxed and exempted only under subsection (b) if it is used exclusively for

public purposes. Relying on Arkansas Teacher Retirement System v. Short, 2011 Ark. 263, at 10,

381 S.W.3d 834, 840, Fayetteville contends that:

[t]he decision in the Short case leaves no doubt that property owned by agencies and

instrumentalities of the state - including the University of Arkansas - is not immune

from taxation simply because those agencies and instrumentalities hold title to the

property in their names and serve the beneficent public purposes. Short makes it

abundantly clear that such entities must show that the particular property at issue is

actually and exclusively used for public purpose. . . . [T]he University of Arkansas must

. . . prove that the parcels of property at issue here are actually and exclusively used for

a public purpose. The University will have the opportunity to offer such proof in

connection with its exemption claim. It cannot short-circuit that process by claiming

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sovereign immunity.

The University responds that it is not “subject to” taxation, and therefore, the analysis

ends because it is simply immune from taxation, and an analysis regarding exemption and

subsection (b) is not necessary. The University further responds that if all property were

subject to taxation, the constitution would state “all property is subject to,” not “subject to”

which contemplates exclusions either by immunity or by exemption. The University also

responds that, as an instrumentality of the sovereign state, its property enjoys immunity from

taxation as a sovereign entity and that the exemption analysis is not necessary and it urges us

to affirm the circuit court.

Fayetteville replies that, even if the University is an instrumentality of the State, an

analysis of taxation and exemption is required based on our constitution. In sum, both parties

rely on the absence of language in article 16, section 5 as support for their respective

arguments.

We turn now to the constitutional provisions at issue. In City of Fayetteville v.

Washington County, 369 Ark. 455, 468, 255 S.W.3d 844, 853– 54 (2007), we interpreted our

constitution and explained our standard of review regarding constitutional challenges:

This court has been absolutely clear about our role in interpreting the Arkansas

Constitution:

“The people of the State, in the rightful exercise of their sovereign powers,

ordained and established the constitution; and the only duty devolved upon this

court is to expound and interpret it.” Lake View, 351 Ark. at 54, 91 S.W.3d at

484 (quoting State v. Floyd, 9 Ark. 302, 315 (1849)). We have specifically

defined the standards we use when interpreting the Arkansas Constitution to

be as follows: When interpreting the constitution on appeal, our task is to read

the laws as they are written, and interpret them in accordance with established

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principles of constitutional construction. It is this court’s responsibility to decide

what a constitutional provision means, and we will review a lower court’s

construction de novo. We are not bound by the decision of the trial court;

however, in the absence of a showing that the trial court erred in its

interpretation of the law, that interpretation will be accepted as correct on

appeal. Language of a constitutional provision that is plain and unambiguous

must be given its obvious and common meaning. Neither rules of construction

nor rules of interpretation may be used to defeat the clear and certain meaning

of a constitutional provision. Smith v. Sidney Moncrief Pontiac, Buick, GMC Co.,

353 Ark. 701, 720, 120 S.W.3d 525, 537 (2003) (internal citations omitted).

Applying this standard to the constitutional provisions at issue, the plain language of

article 23, section 2 provides that the state has the right to tax and the General Assembly may

delegate the taxing power. Further, the plain language of article 16, section 5, subsection (a)

provides that real and tangible personal property are subject to taxation. However, as noted

by the parties, in our constitution there is an absence of language articulating that property

owned by the state is “subject to” taxation.4

Based on the plain language of the constitution, the constitution does not state that

sovereign property is subject to ad valorem taxation. Further, in reviewing our long-standing

4

We note that the “subject to” language was first adopted in our 1836 constitution

and was a single subsection and did not include subsection (b). Art. 7, REVENUE section 1-2

(emphasis in original) stated in pertinent part:

SEC. 1. All revenue shall be raised by taxation to be fixed by law.

SEC. 2. All property subject to taxation, shall be taxed according to its value – that value

to ascertained in such manner as the General Assembly shall direct[.] . . . Provided, the

General Assembly shall have power to tax merchants, hawkers, peddlers, and

privileges, in such a manner as may from time to time be prescribed by law: And

provided further, that no other or greater amount of revenue shall at any time be levied

than required for the necessary expenses of the government, unless by a concurrence

of two-thirds of both houses of the General Assembly.

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precedent, in School District of Ft. Smith v. Howe, 62 Ark. 481, 37 S.W. 717 (1896), we

interpreted article 16, section 5 and addressed the issue of when public property is exempt

from taxation. In our analysis we also addressed immunity from taxation and explained

The constitution of the state declares that laws exempting property from taxation,

except as therein provided, shall be void. Const. art. 16, § 6; Railway Co. v. Worthen,

46 Ark. 312. It further provides that the following property shall be exempt from

taxation: “Public property used exclusively for public purposes; churches used as such;

cemeteries used exclusively as such; school buildings and apparatus; libraries and

grounds used exclusively for school purposes; and buildings and grounds and materials

used exclusively for public charity.” Const. 1874, art. 16, § 5. This provision defining

what public property is exempt from taxation does not refer to property owned by the state, for

the presumption is that the state does not intend to tax its own property, but it refers to property

owned by the public corporations, or organizations of the state, such as counties, cities, towns, and

school districts. It will be noticed that all public property is not exempt from taxation,

but only that public property which is used exclusively for public purposes. It is

conceded that this land is public property, but the question of its exemption from

taxation is not determined alone by its character as public property, but also by the

nature of its use. This land is not used for school grounds, nor is there any intention

to erect upon it buildings of any kind for the use of schools; but it was purchased, and

is now held, only for the purpose of sale or for rent.

Id. at 484, 37 S.W. at 717–18(emphasis added).

Additionally, in Blackwood v. Sibeck, 180 Ark. 815, 23 S.W.2d 259, 260 (1930), we also

recognized sovereign immunity from ad valorem taxation. The issue on appeal in Blackwood

addressed the liability of the counties of the state for the payment of the license fee for the

issuance of the tag or plate that is placed upon motor vehicles owned by the counties and used

exclusively for public purposes. In Blackwood, in addressing tax statutes regarding the county,

we explained that

The case of Board of Improvement v. School District, . . . [56 Ark. 354, 19 S.W. 969

(1892)], did not hold that public property might not be taxed, but held only that there

was a presumption against any such intention on the part of the Legislature, and that

such a tax could be levied and collected only when the authority so to do was

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expressly conferred or arose by necessary implication from the legislation imposing the

tax. As the reason for this rule, the court quoted from Cooley on Taxation (2d Ed.)

p. 172, as follows: “Some things are always presumptively exempted from the

operation of general tax laws, because it is reasonable to suppose they were not within

the intent of the legislature in adopting them. Such is the case with property belonging

to the state and its municipalities, and which is held by them for governmental

purposes. All such property is taxable if the state shall see fit to tax it; but to levy a tax

upon it would render necessary new taxes to meet the demand of this tax, and thus the

public would be taxing itself in order to raise money to pay over to itself, and no one

would be benefitted but the officers employed, whose compensation would go to

increase the useless levy. It cannot be supposed that the legislature would ever

purposely lay such a burden upon public property and it is therefore a reasonable

conclusion that, however general may be the enumeration of property for taxation, the

property held by the state and by all its municipalities for governmental purposes was

intended to be excluded, and the law will be administered as excluding it in fact.”•

Blackwood, 180 Ark. at 816–17, 23 S.W.2d at 260 (1930).

More recently, in Arkansas State Highway Comm’n v. Sub-Dist. No. 3 of Grassy Lake,

in a condemnation action, a drainage district asserted that the exercise of eminent domain on

its lands by the State Highway Commission would reduce its property tax base and create a

deficiency that would necessarily have to be made up by other landowners in the district.

This drainage district earnestly argues that, as a matter of equity, if the potential tax

liability of the condemned land should be extinguished without compensation to the

district the result will be to increase the payments that will eventually have to be made

by the other landowners in the district. No doubt this is true, but the situation is simply an

unavoidable consequence of the State’s sovereign immunity from taxation. In fact, this situation

is commonplace. Almost every tract of land taken by eminent domain is subject to

future taxation for public improvements already made, such as a levee, a drainage

system, a courthouse, a municipal auditorium, a schoolhouse, and so on. There can, as

a practical matter, obviously be no requirement that the sovereign satisfy all these nebulous

obligations as a condition to the acquisition of the land. (See Public Water Supply Dist. No.

3 of Jackson County, Mo. v. United States, 135 F.Supp. 887, 133 Ct.Cl. 348.) That some

shift in the burden of taxation may take place is merely one of the risks that every

taxpayer incurs.

Id., 237 Ark. 614, 617–18, 376 S.W.2d 259, 261 (1964) (emphasis added).

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Finally, although Fayetteville asserts that our decision in Short, 2011 Ark. 263, at 10,

381 S.W.3d at 840, supports its position, we disagree. In that case, we addressed the issue of

whether certain property was used exclusively for public use with regard to exemption, not

immunity. Specifically, the Arkansas Teacher Retirement System contended that the circuit

court erred in concluding that the property was not exempt from the payment of ad valorem

taxes pursuant to article 16, section 5(b) of the Arkansas Constitution. Id. at 1, 381 S.W.3d

at 835. Accordingly, the issue on appeal was not immunity from taxation and therefore, this

case is not relevant to our discussion.

Here, our constitution delegates the power to enact laws regarding taxation. The

record demonstrates that our General Assembly has not enacted a law subjecting property

owned by the state to ad valorem taxation, nor has the General Assembly delegated that

power to subordinate political and municipal corporations. Therefore, in reviewing the

specific facts and circumstances in this particular case, based on our constitution and long-

standing precedent, we hold that the property owned by the state is immune from ad valorem

taxation.

As the United States Supreme Court explained in Van Brocklin v. Anderson, 117 U.S.

151, 174–75 (1886):

In short, under a republican form of government, the whole property of the state is

owned and held by the state for public uses, and is not taxable, unless the state which

owns and holds it for those uses clearly enacts that it shall share the burden of taxation

with other property within its jurisdiction. Whether the property of one of the states

of the Union is taxable under the laws of that state depends upon the intention of the

state as manifested by those laws.

Further, “All [state owned] property is taxable, if the State shall see fit to tax it; but to

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levy a tax upon it would render necessary new taxes to meet the demand of this tax, and thus

the public would be taxing itself in order to raise money to pay over to itself, and no one

would be benefitted. . . . It cannot be supposed that the legislature would ever purposely lay

such a burden upon public property, and it is therefore a reasonable conclusion that, however

general may be the enumeration of property for taxation, the property held by the state . . .

will be administered as excluding it in fact, unless it is unmistakably included in the taxable

property by the constitution or statute.” Thomas M. Cooley, The Law of Taxation, 1313 (4th

ed.) Accordingly, to tax property to simply take from one pocket and return it to the same

pocket is non-sensical.

III. The University of Arkansas as an Instrumentality of the State of Arkansas

Having established that property owned by the state in this case is immune from ad

valorem taxation under these facts, we must also resolve the specific issue before us, whether

the University is the state in this situation and entitled to immunity from taxation. We

answer that question in the affirmative. In Texas v. Arkansas, 346 U.S. 368, 370 (1953), in

addressing a contract issue, the United States Supreme Court held as follows:

[A]s we read Arkansas law the University of Arkansas is an official state instrumentality;

and we conclude that for purposes of our original jurisdiction any injury under the

contract to the University is an injury to Arkansas.

The Supreme Court further held:

The University, which was created by the Arkansas legislature, is governed by

a Board of Trustees appointed by the Governor with consent of the Senate. The

Board, to be sure, is ‘a body politic and corporate with power to issue bonds which

do not pledge the credit of the State. But the Board must report all of its expenditures

to the legislature, and the State owns all the property used by the University. The

Board of Trustees is denominated ‘a public agency’ of the State, the University is

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referred to as ‘an instrument of the state in the performance of a governmental work’,

and a suit against the University is a suit against the State.

Id. at 371.

Additionally, our holdings have been consistent with those of the United States

Supreme Court’s that the University is an instrumentality of the State and acting as the State.

In State v. University of Arkansas Board of Trustees, 241 Ark. 399, 401, 407 S.W.2d 916, 916–17

(1966), we explained:

In the light of the holding of the United States Supreme Court in State of Arkansas v.

State of Texas, we hold that this suit against the University of Arkansas Board of

Trustees is a suit against the State.

Accordingly, consistent with our precedent, we hold that the University is an

instrumentality of the State of Arkansas and for the reasons discussed above, the property at

issue here is immune from ad valorem taxation. Therefore, we affirm the circuit court.

Affirmed.

Special Justice REX M. TERRY joins in this opinion.

Special Justice BRIAN A. VANDIVER concurs.

BRILL, C.J., and GOODSON, J., not participating.

BRIAN A. VANDIVER, Special Justice, concurring. I agree with the court’s

decision to affirm the trial court. I agree that the University is an instrumentality of the State

and that is, in my opinion, fairly well settled. But I write separately because I answer the

sovereign-immunity question differently, for the following reasons.

The University concedes that it is entitled to sovereign immunity from ad valorem

taxes under Ark. Const. art. 16, § 5 only if the property is “held for a public purpose.”

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Therefore, I believe the narrow and specific issue presented in this unique case of limited

implied sovereign immunity under art. 16, § 5 turns on this question: Are the University’s

parcels in question held for a public purpose?

First, I believe it is important to clarify the type of sovereign immunity at issue. To

the extent there is a limited implied sovereign immunity from ad valorem taxes under art. 16,

§ 5, it is, in my opinion, different and not as strong as the express sovereign immunity from

suit found at Ark. Const. art 5, § 20. This court has so recognized a distinction between the

two, insofar as it relates to appellate jurisdiction, in another recent case brought by the

University. See Bd. of Trustees v. Pulaski Cty., 2013 Ark. 230. In Pulaski County, the

University made the same argument it makes in this case with regard to ad valorem taxes

imposed by Pulaski County on certain parcels of property at UAMS. In that case, the trial

court denied the University’s motion for summary judgment and the University attempted

an interlocutory appeal. This court dismissed the appeal for lack of jurisdiction because this

court held immunity from suit is different from the immunity from ad valorem taxes as

asserted by the University in Pulaski County (and now again in this case). I agree with that

distinction, not only for purposes of appellate jurisdiction, but substantively as well.

Therefore, in my opinion, this Court’s vast body of case law applying a “rigid” analysis to the

express sovereign immunity from suit that originates from art. 20, § 5 (see, e.g., Short v.

Westark Cmty. College, 347 Ark. 497, 504, 65 s.w. 3d 550, 445 (2002)), is not applicable in

this case where the University asserts a limited implied sovereign immunity from paying an

ad valorem tax which originates, according to the University, from art. 16, § 5.

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Second, if we are dealing with a different type of sovereign immunity, then how is it

different? The majority begins its analysis with a discussion of the State’s sovereignty and the

State’s power to delegate the power to tax. I do not necessarily disagree with those general

fundamental principles of government. There is no question that the State generally has the

power to tax, it may delegate that power to the counties and other local governments, and

that it has so delegated to the counties the power to impose ad valorem taxes. But there is

also equally no question that, in 1958, the voters of this State prohibited the State from

imposing any ad valorem tax at the state level. See Ark. Const. amend 47. This raises in my

mind a curious question: If the State has no power to impose an ad valorem tax on its own,

and the counties clearly do, then what sovereign immunity, if any, can the State assert as a

defense to paying the ad valorem tax imposed by the counties on property held by the State?

In my opinion, it is a very limited implied sovereign immunity because, at the end of the day,

the State still has the power to delegate to (or take away from) the counties the power to

impose the ad valorem tax. And, I do agree with the majority that the Arkansas legislature

has not yet expressly waived or abrogated the State’s limited implied sovereign immunity from

paying ad valorem taxes imposed by the counties (although I acknowledge that the legislature

certainly could do so if it so desired).

Third, I believe the University’s argument is too broad, but I also believe the

Fayetteville appellants’ argument is too narrow. I do not read art. 16, § 5 (a) and (b) as

separate and distinct provisions like the University does. Nor am I convinced that this

Court’s dicta in School District of Ft. Smith v. Howe, 62 Ark. 481, 37 S.W. 717 (1896)

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conclusively determines that the more onerous public-property exemption under art. 16, §

5(b), requiring “exclusive use” for a public purpose, never applies to property owned by the

State. If that were the case, then why would the University assert both art. 16, § 5(a)

sovereign immunity and art. 16, § 5(b) exclusive-use-exemption defenses to all of its parcels

in this case (and I note in the Pulaski County case too). It seems to me that the University,

rightly so, first argued limited implied sovereign immunity, but was prepared to argue the

exclusive-use exemption in the alternative if necessary. Further, in Arkansas Teacher Retirement

System v. Short, 2011 Ark. 263, 381 S.W.3d 834, this court specifically decided whether the

art. 16, § 5(b) exemption would apply to an instrumentality of the State. Likewise, the

Arkansas legislature has specifically utilized the art. 16, § 5(b) exemption language by stating

that all property owned by the Arkansas State Highway Commission or the Arkansas State

Highway and Transportation Department is “public property used exclusively for public

purposes” and, therefore, “ neither the commission nor the department pursuant to Arkansas

Constitution, Article 16, § 5, is required to pay real or personal property taxes on real estate

and tangible personal property owned by that commission or department . . . . ” See Ark.

Code Ann. § 26-3-308(a)(Repl.. 2012). Moreover, the Arkansas Assessment Coordination

Department itself has stated that “all property” is “subject to” the ad valorem tax unless it is

exempt under 5(b) or another applicable exemption. See Frequently Asked Questions, Arkansas

Assessment Coordination Department (Second Revision June 14, 2012) (“1. What property in

this state is subject to taxation? All property that is not exempt under the constitution, ACA

26-3-201. Property that is exempt under the Arkansas Constitution is: (1) public property

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used exclusively for public purposes . . . .”). Taken to its logical extreme, the University’s

argument might mean that the University is immune from paying any local tax, whether it

be a tax on real property, a tax on personal property, a sales tax, and the like. Surely that is

not the law.

But I also do not read art. 16, § 5 as strictly as the Fayetteville appellants do, that there

simply is no limited implied sovereign immunity from ad valorem taxes and the “exclusive

use” test under §5(b) is the University’s only possible defense. Even if the “exclusive use” test

from §5(b) is not the issue before the court (and I agree with the majority that it is not), there

still must be some requirement and some evidence that the property is held by the University

for a public purpose for the limited sovereign immunity to apply, as the University has

conceded. If that were not required, then the University (and any other instrumentality of

the State) would be allowed to hold property for any purpose and remain completely immune

from ad valorem taxes. Surely that is not the law either.

The University argues, and the majority concludes, that Short is irrelevant to this case

because Short was limited to the exclusive-use exemption under §5(b). To the contrary, I

believe Short is very instructive in this case. First, the University and the majority say that

sovereign immunity was not raised in the Short case. That may be true, but the question is

why was it not raised? I do not presume that the learned counsel in Short missed the issue or

that sovereign immunity would have applied even if it had been raised. Second, if sovereign

immunity had been raised in Short, the University argued to the trial court below, and I agree

that Short is factually distinct from the present case because the parcels in Short were clearly

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held (or, in that case, leased) for a private purpose. Thus, as the University conceded to the

trial court below, the limited implied sovereign immunity in art. 16, § 5(a) would not have

applied in Short, which could very likely be a reason why it was not raised.

This brings me to my primary concern with the scope the of majority’s opinion. The

majority assumes that any property held by the State or its instrumentalities (like the

University) is held for a public purpose without requiring any inquiry into the property’s

purpose and, thus, the State and its instrumentalities would always be entitled to sovereign

immunity from ad valorem taxes on any parcels held regardless of the purpose. I do not read

the limited implied-sovereign-immunity in art. 16, § 5 that broadly. In my opinion, the

limited implied sovereign immunity analysis in this unique case hinges upon whether the

University’s parcels are held for a public purpose. Therefore, the converse is also true – if the

parcels are not held for a public purpose, then the University is not entitled to the limited

implied sovereign immunity.

Fourth, there is another wrinkle to this case. The University argues, correctly in my

opinion, that, pursuant to Ark. Const. art. 14, § 2, property held by the University is

presumed to have a public purpose. While that may be true, that public-purpose presumption

can be rebutted, and sovereign immunity destroyed, with certain facts as in Short, which the

University admitted to the trial court below: “Of course, if the property itself is taken beyond what

was contemplated is used for a sovereign, I don’t know how that would be inconsistent with the position

that we read as we went through each one of these cases where we’re talking about state property held for

a public purpose.” (emphasis added).

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Fifth, are the University’s parcels in this case held for a public purpose? The University

says yes, while the Fayetteville appellants say no, which would suggest a disputed issue of fact.

But I agree with the majority that there are no disputed issues of material fact for these

reasons.

The simple fact that the property is titled in the Board’s name is, in my opinion,

insufficient evidence by itself that the parcels are held for a public purpose. However, the

additional evidence in this case, limited to the parcels in question, sufficiently demonstrates

in my opinion that the purposes of those parcels are the University’s book store and the

University’s green space (which might be used for future University development).

The tax assessor’s affidavit is insufficient evidence, in my opinion, to rebut the

constitutional presumption and destroy the University’s limited implied sovereign immunity

from ad valorem taxes under Art. 16, § 5. Further, the affidavit is, in my opinion, conclusory

and speculative. The tax assessor does not explain his conjecture that the book store

“appeared to be purely a profit-making venture” or his conclusion and “belief that none of

the parcels of real property which are the subject of this action [are] held for a public

purpose.” Thus, in my opinion, such evidence cannot preclude summary judgment to the

University on its limited implied-sovereign-immunity argument. It is well settled that

speculation and conjecture alone cannot prevent summary judgment. See Ark. R. Civ. P.

56(e); Browning v. Browning, 319 Ark. 205, 890 S.W.2d 273 (1995) (conjecture about rope’s

condition not sufficiently probative to avoid summary judgment). On this record, and for

these parcels, summary judgment to the University was appropriate because the admissible and

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undisputed material evidence sufficiently established that the parcels were held for a public

purpose.

However, had the trial court been presented with different facts (e.g., if there had been

factual admissible evidence that the purpose of the property truly was a private purpose as was

the case in Short), then perhaps the constitutional presumption of a public purpose could be

rebutted, the limited implied sovereign immunity under art. 16, §5 could be destroyed, and

the result perhaps could be different (as may or may not be the case for the University’s non-

suited parcels in this case or its other real and personal property in this State). But those facts

are not before this court.

Finally, the Fayetteville appellants argue that not being allowed to impose the ad

valorem tax on the University’s parcels in question is unfair and inequitable because, for

example, the University and its employees and students benefit from the services provided by

the county and the school district. I do not necessarily disagree with that argument, but I

make two observations. First, I agree with the majority and underscore that this decision is

limited to the parcels before the court. This decision does not apply to all of the University’s

real and personal property. Second, the Fayetteville appellants’ argument raises a policy matter

for the Arkansas legislature to address (if it so desires), not this court. Some states have

legislatively addressed the alleged inequity of a state’s sovereign immunity from ad valorem

taxes in a variety of ways for many years. See, e.g., Compensating Local Governments for Loss of

Tax Base Due to State Ownership of Land (New York State Department of Taxation & Finance

September 1996) (50-state survey of various methods used by states to compensate local

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governments for tax-base reduction due to state ownership of land). The Fayetteville

appellants’ argument might be directed to their state representatives, but it has no bearing on

this case.

For these reasons, I concur in the decision to affirm the trial court’s decision granting

summary judgment to the University.

Steven S. Zega, Washington County Attorney, for appellants Washington County;

Russell Hill, elected successor to Jeff Williams, Washington County Assessor; and David Ruff,

Washington County Tax Collector.

Davis, Clark, Butt, Carithers & Taylor, PLC, by: Constance G. Clark and William Jackson

Butt II, for appellant Fayetteville School District No. 1.

Fred Harrison, General Counsel, by: T. Scott Varady, William R. Kincaid, and Matthew

McCoy, Associate General Counsel, for appellee.

Leslie Rutledge, Att’y Gen., by: Bourgon B. Reynolds, Ass’t Att’y Gen., amicus curiae in

support of appellee.

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