The Idaho Supreme Court has ruled that the J.R. Simplot Foundation was not eligible for a tax exemption while constructing its "urban meeting place" in downtown Boise in the 2015 tax year.
In its Thursday decision, the state's highest court decided the structure did not qualify for a charitable tax exemption because it was under construction and not being used exclusively for charitable purposes.
"Here, the plain language of the statute unambiguously indicates that to receive the charitable tax exemption the property must be used exclusively for the charitable purposes for which the charitable company is organized," Chief Justice Roger Burdick wrote in the nine-page decision. "The foundation argues that construction of a charitable building falls within this language. We disagree."
The five-story complex called JUMP - or Jack's Urban Meeting Place - is a community gathering place and creative center funded by the family of the Idaho business icon J.R. Simplot.
The facility was roughly 70 percent complete in early 2015 and held its grand opening by the end of that year. According to court documents, the foundation argued the facility conducted charitable work during construction because approximately 500 people, including prominent community member, either toured or listened to presentations at JUMP in 2014.
Thursday's decision affirms a prior district court ruling, which agreed with Ada County that the foundation did not qualify for a tax exemption in 2015. Ada County originally billed the foundation $675,000 in property taxes for the 2015 tax year, but it's still unclear how much the foundation will have to pay because it is currently challenging the county's assessment.
A spokeswoman for the foundation did not immediately return a request for comment on Friday; neither did a spokeswoman for Ada County.
In Idaho, nonprofits are generally exempt from paying property taxes, as well as federal and state income taxes, because they relieve the government's burden of providing those services. In 1999, Idaho lawmakers carved out a special exemption for hospitals that allowed them to receive a property tax exemption during construction.
The foundation's attorneys argued the law should also apply to other nonprofits, but the court disagreed.
"The fact that the Legislature amended the exemption statute as it applies to hospitals demonstrates the Legislature was aware of the problem facing charitable entities during construction, and yet chose to amend the statute only as to hospitals, and not extend the exemption to other charitable entities," Burdick wrote.