February 01, 2013 – Cavu Co., a Nebraska Corp. v. Domingo Martinez, Santa Fe County Assessor, No. 32,021

IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: _____________
Filing Date: 	February 1, 2013
NO. 32,021
CAVU CO., a Nebraska Corporation,
Respondent-Appellant,
v.
DOMINGO MARTINEZ, Santa Fe County Assessor,
Petitioner-Appellee.
APPEAL FROM THE DISTRICT COURT OF SANTA FE COUNTY
Raymond Z. Ortiz, District Judge
Francis P. Matthews
Elkhorn, NE
Sommer, Udall, Sutin, Hardwick & Hyatt P.A.
Kurt A. Sommer
Santa Fe, NM
for Appellant
Bridget Jacober
Santa Fe, NM
for Appellee

OPINION
Bustamante, Judge.
{1} 	This case presents two issues. 	The first is whether a statute and regulation
stating that an exemption from taxation is determined “as of January 1” requires the
reviewing body to focus exclusively on use of the property on that day or permits
examination of use prior to that date. 	The district court determined that because
CAVU Co.’s (Taxpayer) property was not in use on January 1, 2010, it was not
eligible for exempt status for that year. Although the district court erred in its narrow
interpretation of the applicable statutes and regulations, we nevertheless affirm its
ruling that Taxpayer’s property was not exempt for 2010.
{2} 	The second concerns the proper remedy under New Mexico’s Constitutional
provision requiring uniform taxation when similarly situated properties are disparately
granted exemptions from taxation. The district court reversed the Santa Fe County
Protest Board’s (Protest Board) decision that Taxpayer was entitled to an exemption
because another similarly used property was not taxed. We affirm the district court’s
conclusion that Taxpayer was not entitled to tax exempt status for 2010 based on non-
uniform treatment.

1The record is unclear as to the tax status of the property in 2009.
2
BACKGROUND
{3} 	Taxpayer, a Nebraska corporation, owns the property at 7300 Old Santa Fe
Trail in Santa Fe, New Mexico. 	The property was used as a school and determined
to be exempt from property taxes through 2008.1 Between May 2008 and August
2010, Taxpayer sought an educational tenant for the property, but the property was not
in active use, except for a few months during which it was used by an organization
that taught people to train dogs. In the fall of 2010, the property was again used as an
educational institution. It is undisputed that on January 1, 2010, the property was not
in active use for educational purposes. 	In 2010, the Santa Fe County Assessor
(Assessor) determined that the property was no longer exempt from ad valorem taxes
and valued the property at $6,689,750. Taxpayer protested this determination to the
Protest Board.
{4} 	The Protest Board restored the exemption based on its conclusion that denial
of an exemption to Taxpayer constituted “non-uniform” treatment in the assessment
of taxes, contrary to Article XIII, Section 1 of the New Mexico Constitution. The
Protest Board found that another property, the St. Francis School property, was not
operating as a school on January 1, 2010, but was granted an exemption from taxation

3
for that year. Finding that Taxpayer’s property was “in a very similar situation, with
no actual educational use on January 1[], but with active educational use starting in
the fall semester[,]” the Protest Board determined that exemption of the two properties
was non-uniform. It concluded that the proper remedy was to designate Taxpayer’s
property exempt as well.
{5} 	Although the Protest Board concluded that “it would appear that this case might
present one of the rare instances in which temporary non[-]use actually constitutes an
exempt use of property in the unique circumstances[,]” it did not decide the matter on
that basis, stating, “[g]iven our dispositive ruling on [Taxpayer’s] uniformity
argument, we do not make a formal decision on this basis.” Assessor filed a petition
for writ of certiorari with the district court. See Rule 1-075 NMRA (“Constitutional
review by district court of administrative decisions and orders.”).
{6} 	The district court reversed the Protest Board. 	It concluded that the Protest
Board’s decision was “not in accordance with law” because Taxpayer did not
“demonstrate that the Assessor’s failure to tax a similarly used property . . . was the
result of fraud or intentional discrimination by the Assessor” and, therefore, “there is
no constitutional basis to warrant the remedy of exempting [Taxpayer’s] property
from taxation.” It found further that “[NMSA 1978,] Section 7-38-7 [(1997)] clearly
provide[s] that January 1[] of each tax year is the point at which the status of property,

4
in terms of qualifying for an exemption from taxation, is to be determined.” Since the
property was not being used as a school on January 1, 2010, the district court held that
the property was not exempt for the 2010 tax year. Taxpayer appealed.
DISCUSSION
{7} 	Taxpayer makes five points which we consolidate into two major arguments.
First, it argues that the district court’s interpretation of Section 7-38-7 was contrary
to Article VIII, Section 3 of the New Mexico Constitution, principles of statutory
construction, and case law. Next, it argues that the district court erred in finding that
there was no constitutional basis on which to determine that the property is exempt.
We address these arguments in turn.
A. 	The District Court Erred in Interpreting Section 7-38-7 Too Narrowly
{8} 	Section 7-38-7 reads, in relevant part, “All property subject to valuation for
property taxation purposes shall be valued as of January 1 of each tax year[.]” 	In
addition, 3.6.7.14 NMAC (4/30/2001) states:
A. 	TAXABLE STATUS OF PROPERTY FIXED AS OF JANUARY
1 OF EACH YEAR: January 1 of each year is the date which determines
the tax status of all property subject to valuation for property taxation
purposes . . . . This status includes determination of whether the property
is exempt from property taxation. Therefore, if property is not entitled
to exemption from property taxation under the Property Tax Code
[NMSA 1978, Sections 7-35-1 to -38-93 (1973, as amended through
2012)] on January 1 of the tax year, it is not exempted from taxation for
that tax year. The sale or transfer of the property to a tax exempt owner

5
at a later date during the tax year does not entitle the property to
exemption for that tax year.
{9} 	Taxpayer argues that the district court’s reliance on the use of the property on
a single day—January 1—was a “gross misinterpretation” of the statute and that
“January 1[] is the determination date of the property’s tax status; it is not the
classification date.” Taxpayer argues further that the question of whether the property
was used for educational purposes “is to be decided on the basis of what educational
use took place before the date of January 1.” Finally, Taxpayer maintains that the
district court’s focus on the use of the property on a single day was contrary to Article
VIII, Section 3 of the New Mexico Constitution, which provides that “all property
used for educational or charitable purposes . . . shall be exempt from taxation.” We
agree that the district court erred in focusing only on a single day in its determination
of classification of the property.
{10} 	As a preliminary matter, we note again that the Protest Board did not decide the
issue of whether the property qualified for an exemption on the basis of its use for
educational purposes. 	Thus, there was no final order on this basis from which
Assessor could seek redress. Rather, Assessor argued in its statement of issues that
the Protest Board “act[ed] arbitrarily, capriciously[,] and not in accordance with law[]
[when it] did not enter an order denying the protest and finding the property taxable”
in spite of its finding that the property was not actively used for educational purposes

6
on January 1, 2010. The district court apparently agreed that the Protest Board erred
by not denying the exemption based on this finding of fact.
{11} 	We “review a district court’s decision in an administrative appeal under an
administrative standard of review.” 	Gallup Westside Dev., LLC v. City of Gallup,
2004-NMCA-010, ¶ 10, 135 N.M. 30, 84 P.3d 78. In a case such as this one, where
the district court reversed the Protest Board on one basis and ruled in favor of
Assessor on a different, independent basis, “[w]e conduct the same review of an
administrative order as the district court sitting in its appellate capacity, while at the
same time determining whether the district court erred in the first appeal.” 	Id.
(internal quotation marks and citation omitted). The district court may reverse the
Protest Board if it acted “outside the scope of authority of the agency[,]” Rule 1-
075(R)(3), or if “[the district court] determines that the administrative entity . . . acted
fraudulently, arbitrarily, or capriciously; if the decision was not supported by
substantial evidence in the whole record; or if the [Protest Board] did not act in
accordance with the law.” Gallup Westside Dev., LLC, 2004-NMCA-010, ¶ 10; see
NMSA 1978, § 39-3-1.1(D) (1999). Interpretation of a statute is a question of law
which an appellate court reviews de novo. 	See Morgan Keegan Mortg. Co. v.
Candelaria, 1998-NMCA-008, ¶ 5, 124 N.M. 405, 951 P.2d 1066.

7
{12} 	“Property is presumed to be subject to taxation.” Georgia O’Keefe Museum v.
Cnty. of Santa Fe, 2003-NMCA-003, ¶ 32, 133 N.M. 297, 62 P.3d 754; 3.6.7.16(A)
NMAC (4/30/2001). 	Article VIII, Section 3 of the New Mexico Constitution,
however, provides that “all property used for educational or charitable purposes . . .
shall be exempt from taxation.” 	Unlike several other exemptions in Article VIII,
Section 3, which are based on the ownership of the property or whether the property
is used for commercial or profit-generating purposes, the exemption at issue in this
case hinges on whether the property is “used for” educational purposes. Albuquerque
Lodge, No. 461, B. P. O. E., v. Tierney, 39 N.M. 135, 142, 42 P.2d 206, 211 (1935)
(“It is the use of property, not the declared objects and purposes of its owner, which
determines the right to exemption.”). 	The taxpayer bears the burden of proof
regarding an exemption. Georgia O’Keefe Museum, 2003-NMCA-003, ¶ 32.
{13} 	The issue before us is whether the property was “used for” educational purposes
at the times relevant to determination of its tax status for 2010. Assessor does not
dispute the Protest Board’s findings of fact that the property was used by a school
until May 2008, that the property was used by an organization that taught people to
train dogs between February and May 2010, and that educational use resumed again
in August 2010. Nor does Assessor appear to challenge Taxpayer’s assertion that the
property has never been used for purposes other than educational. Rather, Assessor

8
urges us to affirm the district court’s decision based on the fact that the property was
not in active use for educational purposes on January 1, 2010. Taxpayer argues that
this approach is unreasonable because it fails to consider use of the property prior to
that date. We agree with Taxpayer.
{14} 	Before reaching the merits, we dispose of Assessor’s somewhat oblique
assertion that the district court did not rely on the use of the property on January 1
alone. The district court’s order states:
On January 1, 2010 [Taxpayer’s] property while previously used for a
school and developed for a school was not in use as a school on that
date;
. . . Therefore, [Taxpayer’s] property did not qualify on [sic] for an
exemption from taxation based on educational use even though the
property was later used as a school during the calendar year[.]
(Emphasis added.) In addition, at the hearing, Assessor argued that Section 7-38-7
requires that “a property must be in use as an educational facility on January 1 of the
year in order to qualify for an exemption from taxation.” In an oral ruling, the district
court agreed, stating:
In my view, Section 7-38-7 clearly speaks in terms of January [1] being
the status date for valuation purposes. And on January 1 of the year in
question, the old school had vacated the property and the school was not
then being currently and actively used as an educational facility.
We conclude from this record that the district court’s decision rested on the use of the
property on January 1 without consideration of its use prior to that date.

9
{15} 	Turning now to the merits, we conclude that the district court erred in focusing
on January 1 because such a narrow interpretation of Section 7-38-7 is contrary to
Article VIII, Section 3 of the New Mexico Constitution, is not required by the
language of the Property Tax Code, and is inconsistent with case law. 	The
educational use exemption is constitutional in origin. 	N.M. Const. art. VIII, § 3;
Temple Lodge No. 6, A. F. & A. M., v. Tierney, 37 N.M. 178, 185, 20 P.2d 280, 283
(1933) 	(“[The 	exemption] 	invests 	citizens 	with 	constitutional 	rights, 	which
administrative officers or Legislature may not impair, and which courts must
protect.”). 	When this is the case, “[t]he rule in New Mexico is that of reasonable
construction, without favor or prejudice to either the taxpayer or the State, to the end
that the probable intent of [Article VIII, Section 3] is effectuated and the public
interests to be subserved thereby are furthered.” Benevolent & Protective Order of
Elks, Lodge No. 461 v. N.M. Prop. Appraisal Dep’t (BPOE, Lodge No. 461), 83 N.M.
445, 447, 493 P.2d 411, 413 (1972). The purpose of the exemption “is to encourage
private citizens to engage in educational pursuits from which the public derives a
substantial benefit.” 	Georgia O’Keefe Museum, 2003-NMCA-003, ¶ 46. 	When
interpreting Article VIII, Section 3 of the New Mexico Constitution and relevant
statutes, our task is to avoid “fritter[ing] away [the exemption] by a construction so
strict as to be unreasonable or harsh . . . [while also] not . . . enlarg[ing the exemption

10
so] as to create rights which the Constitution makers did not contemplate.” Georgia
O’Keefe Museum, 2003-NMCA-003, ¶ 44 (internal quotation marks and citation
omitted).
{16} 	Applying the district court’s narrow construction of Section 7-38-7 and
Regulation 3.6.7.14 of the Administrative Code has the potential to “fritter away” the
educational use exemption granted in our Constitution because it could undermine
substantially a property owner’s ability to demonstrate educational use. Cf. George
O’Keefe Museum, 2003-NMCA-003, ¶ 47. The district court’s interpretation does not
take into consideration the real possibilities for temporary vacancies or breaks in use
that have little impact on beneficial services provided to the public. Cf. Grand Lodge
of Ancient & Accepted Masons of N.M. v. Taxation & Revenue Dep’t, 106 N.M. 179,
181, 740 P.2d 1163, 1166 (Ct. App. 1987) (stating that educational use need not be
the exclusive use of the property for the exemption to apply). For instance, many, if
not most, schools are not in “active use” on January 1, a national holiday. In addition,
a property could be actively used for educational purposes by one tenant with a
temporary break in that activity before another tenant takes occupancy. 	We can
envision other like scenarios in which a property not in active use on a given day still
provides services of “substantial public benefit” sufficient to satisfy the educational
use exemption. 	See NRA Special Contribution Fund v. Bd. of Cnty. Comm’rs, 92

11
N.M. 541, 547-48, 591 P.2d 672, 678-79 (Ct. App. 1978) (“If a portion of plaintiff’s
land is primarily and substantially devoted to educational purposes, notwithstanding
that the period of its instruction is very short, . . . it is educational within the scope of
the term as employed in [Article VIII, Section 3 of the New Mexico Constitution].”
(internal quotation marks and citation omitted)).
{17} 	In addition, Section 7-38-7 itself, analyzed in the context of the rest of the
Property Tax Code and accompanying regulations, does not require this narrow focus.
Quantum Corp. v. Taxation & Revenue Dep’t, 1998-NMCA-050, ¶ 8, 125 N.M. 49,
956 P.2d 848 (“[T]he statutes in question must be read in connection with other
statutes concerning the same subject matter[.]”). 	Section 7-38-7 states that “[a]ll
property . . . shall be valued as of January 1 of each tax year[.]” In the context of
valuations, it is obvious that Assessor and/or Protest Board are not limited by this
language to focusing on a single day in valuing a property because other relevant
statutes and regulations require use of comparable sales data in a specific prior period
to determine market value. See § 7-36-15(B) (stating that “the value of property for
property taxation purposes shall be its market value as determined by application of
the sales of comparable property, income or cost methods of valuation or any
combination of these methods”); AMREP Sw. Inc. v. Sandoval Cnty. Assessor, 2012-
NMCA-082, ¶¶ 12, 18, 284 P.3d 1118 (holding that the Protest Board was not

12
required to include post-January 1 data in its valuation of a property and affirming the
Protest Board’s “consistent interpretation of Section 7-38-7 and the administrative
code provisions ‘to mean that properties must be valued using only data available on
January 1 of the tax year.’ ”) (emphasis added); 3.6.5.23(C) NMAC (6/13/2003)
(stating that “[t]he phrase ‘current and correct values of property’ . . . means . . .
market value” based on specified years). 	Read in this context, “as of January 1”
defines not a limitation on what evidence can be considered, but rather a “cut-off date”
for determination of the valuation of a property. AMREP Sw. Inc., 2012-NMCA-082,
¶ 14; see 3.6.7.14(A), (B) NMAC. This “cut-off date . . . eliminates the substantial
amount of further valuation work that would be required in order to meet ‘moving
targets’ presented by protests based on later-developed evidence of comparable tax-
year sales.” AMREP Sw. Inc., 2012-NMCA-082, ¶ 14.
{18} 	Similarly, the statutes and regulations applicable to exemptions do not limit
claimants’ evidence of educational use to the property’s use on January 1. See, e.g.,
§ 7-38-8.1 (requiring the tax division to “adopt regulations to insure that all real
property . . . claimed to be exempt from property taxation . . . shall be reported”); § 7-
38-17(E) (stating that claimants must file “proof of eligibility” but not specifying what
evidence is required); 3.6.7.16 NMAC. Subsection C of Regulation 3.6.7.16 of the
Administrative Code specifies the information that must be submitted in order to

13
claim an educational use exemption, including “a description of the owner’s activities
or tax status for federal purposes if relevant to the claim for exemption” and “evidence
to support the claim and . . . evidence that [educational] use is the primary and
substantial use of the property.” (internal quotation marks omitted). Nowhere in that
regulation is the claimant required to provide evidence of use on a certain date or
prohibited from providing evidence of use of the property in the past. 	Only
Regulation 3.6.7.14 of the Administrative Code specifies that “if property is not
entitled to exemption from property taxation . . . on January 1 of the tax year, it is not
exempted . . . for that tax year.” We conclude that it is consistent with the purposes
of Article VIII, Section 3 of the New Mexico Constitution and the remainder of the
Property Tax Code to construe this language as setting a cut-off date to avoid re-
classification of properties throughout the tax year as in AMREP Sw. Inc., rather than
specifying a date on which the property’s use defines its status for the remainder of
the year.
{19} 	Our conclusion is also consistent with cases addressing educational and
charitable use. Both parties cite to NRA and Georgia O’Keefe Museum in support of
their positions. 	In NRA and Georgia O’Keefe Museum, this Court examined the
boundaries of “educational use” and defined it as “the direct, immediate, primary and
substantial use of property that embraces systematic instruction in any and all

14
branches of learning from which a substantial public benefit is derived.” 	NRA, 92
N.M. at 548, 591 P.2d at 679 (internal quotation marks omitted). The parties accept
this definition. 	Other New Mexico cases cited by the parties included Sisters of
Charity of Cincinnati, Ohio v. Bernalillo County, 93 N.M. 42, 45, 596 P.2d 255, 258
(1979), BPOE, Lodge No. 461, 83 N.M. at 446-47, 493 P.2d at 412-13, and Grace,
Inc. v. Board of County Commissioners, Bernalillo County, 97 N.M. 260, 261, 639
P.2d 69, 70 (Ct. App. 1981). These cases addressed the requirements for “charitable
use” under Article VIII, Section 3 of the New Mexico Constitution. Cf. Pecos River
v. Cnty. of San Miguel, 2013-NMCA- 	, 	P.3d 	(No. 30,854, Jan. 11, 2013)
(discussing the requirement of “charitable use” under Article VIII, Section 3 of the
New Mexico Constitution, and concluding that protection of natural habitat through
seasonal maintenance qualifies the property for exemption from taxation). None of
these cases addressed the specific issue here: whether property must be in active use
for exempt purposes on January 1 in order for an exemption to apply. But we can
infer the opposite based on the facts relied on in these cases. For example, in NRA,
the National Rifle Association sought a refund of taxes paid on the ground that it
qualified for an educational use exemption. 92 N.M. at 543, 591 P.2d at 674. The
Supreme Court set forth the district court’s findings with regard to the NRA’s
activities during both the contested tax year and the year before. Id. at 544-45, 591

15
P.2d at 675-76. In Georgia O’Keefe Museum, the protest board heard testimony about
the Museum’s activities during the two years before the contested tax year. 2003-
NMCA-003, ¶ 5; see Sisters of Charity, 93 N.M. at 44, 596 P.2d at 257 (discussing
history of use of the property without reference to a specific date or year); BPOE,
Lodge No. 461, 83 N.M. at 446, 493 P.2d at 412 (relying on the facts recited in this
Court’s opinion, Benevolent & Protective Order of Elks, Lodge No. 461 v. N.M. Prop.
Appraisal Dep’t, 83 N.M. 505, 507, 494 P.2d 167, 169 (Ct. App. 1971) aff’d, BPOE,
Lodge No. 461, 83 N.M. at 447, 493 P.2d at 413, which addressed the lodge’s
activities throughout the tax year).
{20} 	Assessor does not argue that the district court was following a “long-standing
administrative 	construction[] 	of 	[the] 	statute[] 	by 	the 	agency 	charged 	with
administering [it]” to which we should “give persuasive weight.” AMREP Sw. Inc.,
2012-NMCA-082, ¶ 9 (internal quotation marks and citation omitted). 	Nor does
Assessor direct us to New Mexico cases that support the district court’s approach.
Assessor does cite Dillard v. New Mexico State Tax Commission, 53 N.M. 12, 201
P.2d 345 (1948), for the proposition that “a property’s status on January 1 is
determinative of whether it is entitled to an exemption for that year.” In that case, the
Court considered whether a soldier discharged after January 1 of the tax year was
entitled to a veteran’s exemption for that year. Id. at 24, 201 P.2d at 353; see N.M.

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2Since taxes are assessed annually, Section 7-38-7, we presume that the basis
of tax status for the 2009 tax year was use of the property during 2008. The focus of
our analysis for tax status in 2010, therefore, is on use of the property during 2009.
16
Const. art. VIII, § 5. Dillard is distinguishable from this case in several ways. First,
the Court’s holding—that “[i]f the owner of property is not an honorably discharged
soldier on January [1] of any year, then he is not entitled to . . . exemption for that
year”—was based on NMSA 1941, Section 76-203 (1933), which contains language
not found in the current Property Tax Code. Dillard, 53 N.M. at 23-24, 201 P.2d at
353. 	Second, unlike a fact-dependent analysis of whether a property is used
“primar[ily] and substantial[ly]” for educational purposes to provide a “substantial”
public benefit, NRA, 92 N.M. at 547-48, 591 P.2d at 678-79, whether a soldier was
honorably discharged as of a certain date is a binary question. Thus, we find Dillard
to be distinguishable from the circumstance herein.
{21} 	Neither are we convinced by the out-of-state cases cited by Assessor because
both the facts and the statutes at issue there are unlike those here.
B. 	Taxpayer’s Property Did Not Qualify for the Educational Use Exemption
{22} 	In spite of the district court’s overly narrow interpretation of Section 7-38-7,
we affirm the district court’s decision because Taxpayer’s educational use of the
property was not “primary and substantial” for at least twelve months before January
1, 2010.2 See NRA, 92 N.M. at 548, 591 P.2d at 679; see also Moffat v. Branch, 2002-

17
NMCA-067, ¶ 13, 132 N.M. 412, 49 P.3d 673 (“[W]e will affirm the district court if
it is right for any reason and if affirmance is not unfair to the appellant.”).
{23} 	“An exemption dependent on the use of property is solely a question of fact.”
Grand Lodge, 106 N.M. at 181, 740 P.2d at 1166. An exempt “property need not be
used exclusively for charitable or educational purposes, but those must be the primary
or substantial uses. . . . In addition, it is the actual use of the property, not the owner’s
declared objects and purposes, that determines the right to an exemption.” Id. The
Protest Board found that the property’s design made it “most suited” for a school and
that there was “no dispute that . . . use [of the property through May 2008] was a bona
fide educational use entitling the owner to a full exemption.” 	It concluded that
beginning in August 2010, the property was again used for a “bona fide educational
use.” It also made the following9999 findings:
[Finding] 21. 	There is also no significant dispute that the property
ceased being used actively as a school in May, 2008
and was not used actively as a full-time elementary
school again until August, 2010.
. . . .
[Finding] 23. 	More to the point, [Taxpayer] actively sought an
educational tenant for the subject property during the
interim, including protracted negotiation with Desert
Academy, which proved fruitless.
. . . .

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[Finding] 27. 	There is evidence that during this time [Taxpayer]
was actively seeking a school tenant and, in fact, was
negotiating with one or more potential tenants.
Moreover, 	there 	is 	evidence 	of 	the 	owner’s
commitment to an educational use of the subject
property in the form of nominal or significantly
reduced rents for such use.
. . . .
[Finding] 30. 	The 	subject 	property 	was 	not 	put 	to active
educational use as of January 1. . . .
{24} 	Our case law makes clear that the only relevant facts are those pertaining to the
use of the property—not whether the property is built for a certain purpose, the
owner’s intent for the property, or the owner’s support of educational or charitable
causes through reduced rent. Grand Lodge, 106 N.M. at 181, 740 P.2d at 1166. Thus,
findings 23 and 27, as well as the Protest Board’s observations about the suitability
of the property for a school, are of limited or no relevance to the question before us.
See Grace, Inc., 97 N.M. at 260-61, 639 P.2d at 69-70 (holding that property
purchased by a church for a new building was taxable in spite of the church’s intent
to build a new facility on it); Georgia O’Keefe Museum, 2003-NMCA-003, ¶ 40
(stating that the educational use exemption does not distinguish between organizations
that make a profit and those that do not). The focus on actual use derives from the
basic principle on which the educational use exemption is based: “The rationale for
this [exemption] provision is that all property should bear its share of the cost of

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government. Property which is exempt from taxation does not share in the burden.
Therefore, in exchange for its exempt status, such property must confer a substitute
substantial benefit on the public.” NRA, 92 N.M. at 548, 591 P.2d at 679; see 71 Am.
Jur. 2d State and Local Taxation § 269 (2012). 	Only property in actual use can
provide a “substitute substantial benefit.” NRA, 92 N.M. at 548, 551, 591 P.2d at 578,
682 (“Article VIII, [Section] 3 must be construed to free from taxation only property
that is presently and actually in substantial use for educational purposes.”) Here, the
property was not in actual use to benefit the public for all of 2009. We recognize that
Taxpayer 	sought 	to 	negotiate 	with 	educational 	tenants 	during 	this 	period.
Nevertheless, because such negotiations reflect intent for future use of the property
rather than “present and actual” use, we conclude that the property did not qualify for
an educational use exemption in 2010.
C. 	There Is no Constitutional Basis on Which Taxpayer Is Entitled to an
Exemption
{25} 	Taxpayer next argues that “[t]he district court erred in rejecting the Protest
Board’s determination that the [p]roperty should be rendered exempt under [the] New
Mexico Constitution[,] [A]rticle VIII, [S]ection 1, which requires that similarly
situated property be uniformly treated.” 	Taxpayer disputes the district court’s
determination that, absent a showing of “fraud or intentional discrimination by . . .
Assessor[,]” there was “no constitutional basis to warrant the remedy of exempting

CORRECTION PAGES 16, 19-20: Cavu Co. v. Domingo Martinez, No. 32,021, Filed 2-1-13, BuHnVz: Move last sentence from Page 19,
lines 12-13 to end of paragraph on Page 16, line 9.
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[Taxpayer’s] property from taxation.” “We interpret the Constitution and determine
whether the law was properly applied to the facts through de novo review.” Georgia
O’Keefe Museum, 2003-NMCA-003, ¶ 27.
{26} 	Our analysis encompasses three distinct questions. First, was there a disparity
in taxation of two similarly situated properties? 	Second, was the disparity
constitutional in nature? Finally, what is the proper remedy?
{27} 	The Protest Board made the following findings:
[Finding] 34. 	. . . .
a. 	The St. Francis School, owned by the Archdiocese of
Santa Fe, was not operating as a school on January 1,
2010.
b. 	School operations at the site, as the New Mexico
School for the Arts, began for the fall semester of
2010.
c. 	The school was in fact leased to a real estate
developer for potential redevelopment during at least
part of 2010.
d. 	The tax rolls for the property containing the school
reflected no valuation for improvements for 2010 (a
portion of the lot was leased to the City of Santa Fe
for parking during this time, and it may be only that
portion which carried a land valuation).
e. 	The school building was thus exempt from taxation
for the 2010 tax year, as it was not placed on the tax
rolls.

21
[Finding] 35. 	[Taxpayer’s] property is in a very similar situation,
with no actual educational use on January [1], but
with active educational use starting in the fall
semester.
. . . .
[Finding] 41. 	Thus, if [Taxpayer’s] property and the [St. Francis]
School property were treated differently, but were
otherwise 	in 	factually 	similar 	positions, 	that
disparate 	treatment 	would 	constitute 	lack 	of
uniformity.
[Finding] 42. 	The Board does find such non-uniform treatment.
The parties dispute whether and to what extent the St. Francis School property was
exempted from taxation. Assessor also argues that the Protest Board’s findings were
not supported by substantial evidence. 	We need not resolve this issue, however,
because even if we assume there was a disparity, we determine that Taxpayer was not
entitled to exempt status on that basis.
{28} 	The second question is whether a disparity in taxation is a violation of the New
Mexico Constitution’s requirement of uniform taxation. N.M. Const. art VIII, § 1.
Disparity in taxation by itself is not unconstitutional. 	In Ernest W. Hahn, Inc. v.
County Assessor for Bernalillo County, the Court held that “[t]emporary inequalities
which result from the practicalities of carrying out a county-wide systematic and
definite property appraisal program are inevitable and constitutional.” 92 N.M. 609,
612, 592 P.2d 965, 968 (1978). It is “[o]nly when fraud or systematic discrimination

22
are present, . . . [that] the inequitable taxation give[s] rise to a constitutional claim.”
Appelman v. Beach, 94 N.M. 237, 240, 608 P.2d 1119, 1122 (1980). Taxpayer seeks
to distinguish Hahn and Appelman by arguing that it is unnecessary to demonstrate
fraud or systematic discrimination in an exemption situation because exemption,
unlike valuation, “is determined by external facts easily discernible and not by a
subjective judgment call.” For reasons we discuss more fully below, we disagree that
Hahn and Appelman are not applicable here. 	Taxpayer has not demonstrated that
Assessor’s disparate treatment of the two properties was the result of fraud or
systematic discrimination; in fact, Taxpayer does not even assert that this is the case.
Any disparity, therefore, does not rise to a constitutional violation. 	We affirm the
district court’s conclusion to this effect.
{29} 	Finally, we affirm the district court’s rejection of Taxpayer’s requested remedy.
When there is a violation of the constitutional uniformity requirement, “[t]axpayers
are entitled to a reduction in their assessment for the [relevant] tax year to a level
which will achieve the practical uniformity required by Article VIII, Section 1 . . . of
the New Mexico Constitution.” Hahn, 92 N.M. at 614, 592 P.2d at 970. In contrast,
“[i]f there is no constitutional claim, a taxpayer’s remedy is limited to having the
assessing authority raise the valuation of other properties to the level of his own.”
Appelman, 94 N.M. at 240, 608 P.2d at 1122. Appelman and Hahn are the progeny

23
of Skinner v. New Mexico State Tax Commission, which addressed as a matter of first
impression the question of “whether a tax equalization program in a county,
commenced 	but 	not 	completed 	in 	a 	single 	year, 	violates 	the 	New 	Mexico
constitutional provision requiring equal and uniform taxes.” 66 N.M. 221, 222, 345
P.2d 750, 751 (1959). 	The Protest Board concluded that Skinner, Hahn, and
Appelman are distinguishable on their facts. We conclude to the contrary that they are
controlling here.
{30} 	Both Taxpayer and the Protest Board seek to distinguish Skinner, Hahn, and
Appelman on the ground that they pertain to valuations only. The Protest Board found
that Skinner was not “helpful” because, unlike valuations which are “susceptible to
shades of estimation or inexactitude[,]” classification of property as exempt is “a
binary inquiry.” Taxpayer makes a similar argument on appeal. We do not agree that
classification of a property as tax exempt based on educational use is materially
different from valuation of property. An educational use exemption is granted when
the use of the property is “primar[ily] and substantial[ly]” used for educational
purposes that provide a “substantial public benefit.” NRA, 92 N.M. at 548, 591 P.2d
at 679 (internal quotation marks omitted). The test for educational use thus requires
a subjective assessment of the property’s use and its benefit to the public.

24
{31} 	In addition, the Skinner, Hahn, and Appelman holdings did not hinge on
reasonable variation in values based on assessments of market value. Instead, they
revolved around the timing of appraisals. 	In each case, the county conducted
reappraisals of the protestants’ properties but not on other properties in the county,
which resulted in higher valuations of, and higher taxes on, the protestants’ properties
than on those of their neighbors. Appelman, 94 N.M. at 238-39, 608 P.2d at 1120-21;
Hahn, 92 N.M. at 610-11, 592 P.2d at 966-67; Skinner, 66 N.M. at 222-23, 345 P.2d
at 751. The focus of the Court’s inquiry in those cases was the county’s reappraisal
program and whether it was based on a “systematic and definite plan for the
reappraisal of all lands in [the c]ounty.” 	Hahn, 92 N.M. at 613, 592 P.2d at 969.
Thus, the question was whether the county was administering the reappraisal program
in a discriminatory, non-uniform manner, not whether the reappraisal values or
valuation methods were infirm. Appelman, 94 N.M. at 238, 608 N.M. at 1120 (stating
that the taxpayer sought “to have her property tax valuation reduced to the level of
other county non-reassessed property”); Hahn, 92 N.M. at 612, 592 P.2d at 968
(stating that “singling out one or a few taxpayers for reappraisals for several years in
succession while virtually all other owners of comparable properties do not undergo
a single reappraisal in the same period is an inequality that is neither temporary nor
constitutional”); Skinner, 66 N.M. at 223, 345 P.2d at 751 (stating that the protestants

25
“do not seriously protest their valuations nor claim that they are higher than the law
allows, but . . . say that their assessments cannot be raised unless and until all other
property in the county is similarly treated”). Only in Hahn, where certain properties
were reappraised repeatedly while others were not reappraised at all, did the Court
determine that the conduct of the reappraisal program and resulting inequity in
taxation was unconstitutional. 92 N.M. at 612, 592 P.2d at 968. We conclude that
Skinner and its progeny are not distinguishable on these grounds.
{32} 	Since here we have determined that there was no fraud or systematic
discrimination by Assessor, the only remedy for any disparity is to remove the
exemption from properties to which it was erroneously granted, rather than to exempt
Taxpayer’s property from taxes. 	Taxpayer did not request this remedy, arguing
instead that the St. Francis School property was correctly granted an exemption and
that Taxpayer’s property should be similarly treated. See Appelman, 94 N.M. at 240,
608 P.2d at 1122 (stating that the taxpayer “sought the improper remedy; she should
have requested that the [c]ounty be ordered to raise the valuation level of other
property in the county to full market value”). 	The district court did not err in its
conclusion that Taxpayer was not entitled to an exemption on the basis of non-
uniform exemptions.

26
CONCLUSION
{33} 	Taxpayer is not entitled to an exemption from taxation in 2010 based on
educational use of the property because the property was not in use for any eligible
purposes for the entire previous tax year. Although the district court erred in focusing
too narrowly on the use of the property on January 1, we nevertheless affirm its ruling
to this effect. In addition, we agree with the district court’s reasoning and conclusion
that Taxpayer is not entitled to exemption from taxation based on non-uniform
treatment of a similarly used property.
{34} 	IT IS SO ORDERED.
MICHAEL D. BUSTAMANTE, Judge
WE CONCUR:
_________________________________
LINDA M. VANZI, Judge
_________________________________
J. MILES HANISEE, Judge