STATE OF MINNESOTA

COUNTY OF HENNEPIN

TAX COURT FOURTH JUDICIAL DISTRICT

REGULAR DIVISION

Minnesota Twins, Inc.

Petitioner,

vs.

County of Hennepin,

Respondent.

Metropolitan Sports Facilities Commission Petitioner, FILE NOS. TC-6309 vs. and TC-7607 County of Hennepin, Respondent ORDER FOR SUMMARY JUDGMENT Dated: February 20, 1991

FILE NOS. TC-6548 and TC-7124

The above-entitled petitions relate to that portion of the Hubert

H. Humphrey Metrodome leased and used by the Minnesota Twins, Inc. and

the Minnesota Vikings Football Club, Inc. for their primary and/or

exclusive use, placed on the tax rolls in the January 2, 1986 and

January 2, 1987 assessments. (Property I.D. Nos. 26-029-24 21 0075

and 26-029-24 21 0076.)

The petitioners move for summary judgment decreeing that the

subject property was exempt from ad valorem tax in the 1986 and 1987

assessments. The respondent also moves for summary judgment

requesting affirmance of the assessments of the City Assessor. The

motions were consolidated and came on for hearing before the Honorable

Arthur C. Roemer, Judge of the Minnesota Tax Court, on August 23,

1988, at the Hennepin County Juvenile Justice Center in Minneapolis,

Minnesota.

Two issues were initially raised: (1) whether the respondent had

standing to raise the constitutional issue, and (2) whether the law

exempting the subject property was constitutional.

Pursuant to Minn. Stafc. § 271.01, and the opinions in the cases of

Nagaraja v. Commissioner of Revenue, 352 N.W.2d 373 (Minn. 1984), Erie

Mining Company v. Commissioner of Revenue, 343 N.W.2d 261 (Minn.

1984), In re McCannel, 301 N.W.2d 910 (Minn. 1980), and Guilliams v.

Commissioner of Revenue, 299 N.W.2d 138 (Minn. 1980), jurisdiction to

determine the constitutional issue was conveyed to the Tax Court by

the District Court for the Fourth Judicial District by Orders dated

March 29, 1988, June 22, 1988 and February 17, 1989.

In an Order dated December 14, 1988 [amended May 19, 1989], this

Court granted petitioners' motions for summary judgment and denied the

summary judgment motion of respondent, finding no authority for

respondent to challenge the constitutionality of a statute in these

chapter 278 proceedings. Respondent appealed this determination to

the Minnesota Supreme Court. In a decision dated February 16, 1990,

the Minnesota Supreme Court held that Hennepin County had standing to

raise the constitutional issue. Metropolitan Sports Facilities

Commission, Minnesota Twins, Inc. v. County of Hennepin, 451 N.W.2d

319 (Minn. 1990).

Subsequent to the Supreme Court's decision, a supplemental hearing

was held on July 13, 1990 at the Hennepin County Juvenile Justice

Center in Minneapolis, Minnesota. Supplemental briefs were filed and,

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on November 8, 1990, the respondent furnished a copy of the Hennepin

County Board Resolution dated November 6, 1990 authorizing the prosecution of the real property tax proceedings by the Hennepin County Attorney's Office and pursuing the constitutional challenge on behalf of the Minneapolis City Assessor (Resolution 90-11-934). Unsolicited supplemental correspondence was submitted, the last

communication being received on January 24, 1991.

At the original hearing, David R. Knodell, of Olson, Gunn and Seran, Ltd., appeared for petitioner Metropolitan Sports Facilities Commission. Petitioner Metropolitan Sports Facilities Commission is

currently represented by Richard L. Evans of McGrann Shea Franzen

Carnival Straughn & Lamb, Chartered, Attorneys at Law.

John W. Windhorst, Jr. and William R. Goetz, of Dorsey and

Whitney, represent petitioner Minnesota Twins, Inc. Mark Kapter Maher, Assistant Hennepin County Attorney, represents

the respondent. The Court, having heard and considered the arguments of counsel

and upon all of the files, records and proceedings herein, now makes

the following:

ORDER

1. Petitioners' motions for summary judgment are hereby denied.

2. Respondent's motion for summary judgment is hereby granted. 3. The assessments on the subject property for the January 2,

1986 and January 2, 1987 assessments are hereby affirmed.

IT IS SO ORDERED.

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DATED: February 20, 1991

MEMORANDUM

The issue of the tax exempt status of the subject property, a portion of the Hubert H. Humphrey Metrodome ("Metrodome") leased by the Metropolitan Sports Facilities Commission (the "Commission") to the Minnesota Twins, Inc. ("Twins") and Minnesota Vikings Football Club, Inc. ("Vikings") for their primary or exclusive use, has been in litigation for many years. The Minneapolis City Assessor placed these properties on the tax rolls in the January 2, 1983 assessment, for taxes payable in 1984. Petitions were filed in 1984 contesting that

assessment. While that petition was pending in the Tax Court, the legislature

addressed this issue and amended Minn. Stat. § 473.556, subd. 4, relating to exemption of property owned by the Metropolitan Sports Facilities Commission. The original statute passed in 1977 exempting

the Commission's property provides as follows:

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Exemption of property. Any real or personal property acquired, owned, leased, controlled, used or occupied by the commission for any of the purposes of sections 473.551 to 473.595 is declared to be acquired, owned, leased, controlled, used and occupied for public, governmental, and municipal purposes, and shall be exempt from taxation by the state or any political subdivision of the state, provided that such properties shall be subject to special assessments levied by a political subdivision for a local improvement in amounts proportionate to and not exceeding the special benefit received by the properties from the improvement. No possible use of any such properties in any manner different from their use under sections 473.551 to 473.595 at the time shall be considered in determining the special benefit received by the properties. All assessments shall be subject to final confirmation by the council, whose determination of the benefits shall be conclusive upon the political subdivision levying the assessment.

The amendment in 1985 added the following:

Notwithstanding the provisions of section 272.01, subdivision 2, or 273.19, real or personal property leased by the commission to another person for uses related to the purposes of sections 473.551 to 473.595, including the operation of the metro- politan sports area, but not including property sold or leased for development pursuant to subdivision 6, shall be exempt from taxation regardless of the length of the lease.

First Ex. Sess., Laws 1985, ch. 14, art. 20, § 17 (the "1985

amendment").

The record and the legislative history do not indicate whether the

1985 amendment was passed by the legislature to clarify the legal

issues or to prospectively reverse a possible decision of the Tax

Court subjecting the subject property to taxation. The 1985 amendment

did not include an effective date. The act was approved on June 28,

1985. Thus, we conclude it was applicable to the January 2, 1986 and

subsequent assessments.

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Subsequent to the adoption of the 1985 amendment, this Court

issued its decision in the case of Minnesota Vikings Football Club,

Inc. and Metropolitan Sports Facilities Commission v. County of

Hennepin, File No. TC-3889 (Minn. Tax Ct. October 13, 1986), holding

that the property exclusively used by the Minnesota Vikings was

subject to tax under the provisions of Minn. Stat. § 272.02, subd. 2

or Minn. Stat. § 273.19, relating to public property leased to private

entities. This decision was not appealed.

The Minneapolis City Assessor continued to place the subject

property on the tax rolls. The Twins were assessed taxes of

$37,702.74 for 1986 and $38,536.12 for 1987. The Vikings were

assessed taxes of $207,541.86 for 1986 and $216,281.36 for 1987. The

record indicates that the Commission was obligated by contract to pay

any taxes assessed against the property leased by the Vikings. This

action was commenced by the petitioners challenging the January 2,

1986 and January 2, 1987 assessments. Petitions for subsequent years

are also pending.

The petitioners asserted: (1) that a public official or

governmental unit in performing a ministerial duty under statute has

no standing to question the constitutionality of that statute; and

(2) that the statute clearly exempts the subject property and is

constitutional. The respondent countered with three arguments: (1)

that the respondent has standing to challenge the constitutionality;

(2) that the statute is unconstitutional, or, in the alternative, (3)

that this Court should interpret the statute to reach a constitutional

result, viz., that the subject property is subject to tax and that the

1985 amendment applies only to the playing field, the seats and the

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common areas.

All of these issues except the issue of constitutionality were

clarified by the Minnesota Supreme Court in 1990. Metropolitan Sports Facilities Commission, Minnesota Twins, Inc. v. County of Hennepin,

451 N.W.2d 319 (Minn. 1990). In that decision the Supreme Court held

that Hennepin County has standing to challenge the constitutionality

of the statute at issue. The interpretation of the statute was also

clarified when the Supreme Court stated:

On cross-motions for summary judgment, the Tax Court ruled that the 1985 exemption statute exempts the leased property from real estate taxation. Hennepin County accepts this ruling.

451 N.W.2d at 320.

The sole issue, therefore, is the constitutionality of the

exemption statute. The respondent claims it is unconstitutional

because it is special legislation, violates the equal protection

clause of the Minnesota Constitution, was not for a public purpose, is

not within any exemption allowed by our state Constitution, and was

passed in a bill that embraces more than one subject.

In exploring constitutionality it is helpful to review the leases

of the subject property. Pursuant to Minn. Stat. § 473.556, subd. 12,

the Commission entered into a baseball use agreement with the Twins on

August 10, 1979, which provided for long-term use of the Metrodome for

Twins home baseball games. In exchange for that use the Twins agreed

to pay the Commission a percentage of the gross receipts from ticket

sales to the Twins games. Adjustments are made for lost revenues

resulting from the attendance reduction due to certain televised

games. The Twins also agreed to reimburse the Commission for certain

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expenses. The Commission reserved the right to operate concessions in the Metrodome but agreed to pay the Twins a percentage of the gross receipts from the sale of concessions. A supplemental agreement was executed on November 2, 1979.

The baseball use agreement gave the Twins exclusive year-around use of certain facilities within the Metrodome. These facilities include locker rooms, dressing rooms, shower space, office space, printing areas, storage, and dining space. The construction expenses of these areas were shared between the Commission and the Twins, the Commission's share being raised by contribution from Twin City businesses. The exclusive area is located on three separate levels within the Metrodome. The leased area on the first or highest level involves 4,838 square feet used for a ticket office (both on-site sales and mail order sales), office of the president, and an adjoining conference room. The space on the second or middle level comprises 4,600 square feet. About one-half of this space is occupied by sales and marketing offices, the rest being equally divided between the accounting offices and the baseball department which comprises the general manager, office of player personnel, the scouting department and the minor leagues department. The exclusively leased space on the third or lowest level is as follows: (1) the Twins' clubhouse (5.636 square feet), containing a locker, shower and dressing rooms, and (2) a kitchen and two dining rooms (4,659 square feet). One of the dining rooms is an executive dining room and the second dining room is used by employees and, on game days, by press representatives attending the games. These dining rooms are not open to the public. The remainder of this area is taken up by the media relations office and by mail and

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storage rooms. There are two principal lease agreements with the Vikings, both

dated August 8, 1979. One is a private spectator box option agreement to 112 boxes 1/ for a term of 240 months, with the Vikings having the option to extend the term for an additional 10 years. Another, a football use agreement for a term of 30 years, with the Vikings having to renew this agreement on the same terms for an additional 10 years, appears to govern the Vikings' use of other exclusive areas involved in this case, such as the lounge (which faces the outside of the stadium) and the locker room. There are four other agreements between the Commission and the Vikings.

The private boxes seat 1,110 people. The box rental in 1983 was

as follows:

Number of Boxes___ Type of Box Rental Fees

46 8 seat suites $ 25,000 each 56 10 seat suites $ 27,500 each 13 12 seat suites $ 30,000 each

The potential gross income thus exceeds $3,000,000 annually. The respondent, in alleging that the 1985 amendment exempting the

subject property from real estate taxes is unconstitutional, asserts three arguments: (1) the legislature does not have the authority to enact legislation exempting particular institutions from property taxation unless there is a constitutional grant of authority; (2) that exemption of the leasehold interests from taxation would violate

I/There are a total of 115 boxes, but 3 are retained by the Commission and were not taxed.

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Minnesota Constitution Article XII, sec. 1, Article X, sec. 1, and Article I, sec. 2; and (3) the 1985 amendment, the interpretation of which was at issue in this proceeding, was part of a "garbage" bill,

violating Minnesota Constitution Article IV, sec. 17 and should be stricken. We will discuss these arguments in the order raised.

I. That the legislature does not have the authority to enact legislation exempting particular

institutions from property taxation unless there is a constitutional grant of authority.

Article X of the Minnesota Constitution provides as follows:

Section 1. Power of taxation? exemption? legislative powers. The power of taxation shall never be surrendered, suspended or contracted away. Taxes shall be uniform upon the same class of subjects and shall be levied and collected for public purposes, but public burying grounds, public school houses, public hospitals, academies, colleges, universities, all seminaries of learning, all churches, church property, houses of worship, institutions of purely public charity, and public property used exclusively for any public purpose, shall be exempt from taxation except as provided in this section .... The legislature by law may define or limit the property exempt under this section other than churches, houses of worship, and property solely used for educational purposes by academies, colleges, universities and seminaries of learning.

The language of the 19th Century Minnesota Constitution was different from our present Constitution. The early court decisions took the position advocated by the respondent, that any exemption is invalid if it does not have as its roots an exemption provided by the

Minnesota Constitution. This was first announced in LeDuc v. City of

Hastings, 39 Minn. 110, 38 N.W. 803 (1888), where the court held unconstitutional an after-the-fact exemption to civil war veterans.

Again, in State v. Pioneer Savings and Loan Co., 63 Minn. 80, 65 N.W.

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138 (1895), the court held: "whatever the method adopted, the legislature cannot, directly or indirectly, exempt any property from taxation which the constitution does not so exempt." See also

Trustees of Pillsbury Academy v. State, 204 Minn. 365, 283 N.W. 727 (1939) [where an attempted grant of immunity to a new academy was held unconstitutional under predecessor constitutional provision of Article

IX, sec. 3]. However, Article IX, Section 3, of the Constitution as it then

read stated "Laws shall be passed taxing all monies, credits, investments in bonds, stocks, joint stock companies or otherwise, and

also all real and personal property according to its true value in money." This was changed by the 1906 Constitutional Amendments to substantially what we have today. The 1906 amendments, often called the wide-open tax amendments, enlarged the legislature's power to tax. In commenting on the present language, the Supreme Court in Reed v. Bjornson, 191 Minn. 254, 253 N.W. 102 (1934) [relating to income

tax rates, deductions and exemptions], stated: We hold that the enumeration of exemptions in our constitution does not forbid making others which do not offend the uniformity clause or the federal constitution. The power to fairly exempt is inherent in the power to tax.

191 Minn. at 269-70, 253 N.W. at 109. Respondent suggests that the Reed court confused exemptions with

classifications. We disagree. Both were discussed in the Reed case.

191 Minn. 268, 253 N.W. at 108.

In State v. Cooley, 62 Minn. 183, 64 N.W. 379 (1895), a private owner who was claiming exemption as public property under a city

ordinance granting exemption was held to be taxable on property used

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as a public market house or place. Respondent contends that the facts

in the subject case are not unlike those in the Cooley case, and that

the Twins and Vikings are private profit-making organizations. We

fail to see the similarity since in the Cooley case the property at

issue was privately owned property used for a public purpose and met

only one of the two requirements for exemption (public ownership and use for a public purpose), the use requirement. In addition, this

case was decided prior to the 1906 Constitutional changes. Respondent indicates the only conceivable constitutional grant of

authority that petitioners could point to would be Article X, sec. 1,

"public property used exclusively for any public purpose." However, respondent indicates that the subject property does not qualify under this category since the exemption is not designed to benefit private

corporations or allow the private use of public property. Little

Earth of United Tribes, Inc. v. County of Hennepin, 384 N.W.2d 435

(Minn. 1986) [private non-profit corporation property held taxable];

City of Springfield v. Commissioner of Revenue, 380 N.W.2d 802 (Minn.

1986) [city owned clinic taxable since used by private physicians for

private practice].

We do not subscribe to the respondent's interpretation of the

present constitution as requiring a specific grant of authority to exempt property. Were this the case, all household goods over $200 in

value should be on the tax rolls as well as all personal property

(except owned by exempt entities). Were this interpretation followed

by the courts, the Minnesota Supreme Court would not have exempted

tools and machinery of private manufacturing companies. Abex v.

Commissioner of Taxation, 295 Minn. 445, 207 N.W.2d 37 (1973). We

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prefer the interpretation as prohibiting the legislature from surrendering, suspending or contracting away the power of taxation, as requiring that taxes be uniform upon the same class of subjects, along with a protection from taxation for certain types of property enumerated in the Constitution (except where the legislature is

permitted definitional authority).

II. That exemption of the leasehold interests from taxation would

violate Minnesota Constitution Article XII, sec. 1, Article X, sec. 1, and Article I, sec. 2.

The special legislation clause of Minnesota Constitution Article XII, sec. 1, provides in relevant part as follows:

Section 1. Prohibition of special legislation; particular subjects. In all cases when a general law can be made applicable, a special law shall not be enacted except as provided in section 2. ... The legislature shall pass no local or special law . . . exempting property from taxation ....

Both parties agree that the special legislation clause carries the same prohibition as that contained in the Uniformity Clause, Article X, sec. 1, and the Equal Protection Clause, Article I, sec. 2, of the Minnesota Constitution, and that all three clauses prohibit the same

acts as those prohibited by the Equal Protection Clause of the Fourteenth Amendment of the United States Constitution:

We therefore reiterate that the prohibition against arbitrary legislative action embodied in the state equal protection clause, Minn. Const. art. I, § 2, the state uniformity clause, Minn. Const. art. X, § 1, and the state special legislation clause, Minn. Const. art. XII, § 1, are coextensive with those afforded by the federal equal protection clause, U.S. Const. amend XIV, § 1.

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AFSCME Councils v. Sundquist, 338 N.W.2d 560, 570 n.l2 (Minn. 1983);

see also In re Estate of Turner, 391 N.W.2d 767, 770 n.2 (Minn. 1986)

["the rational basis standard used in Minnesota equal protection

analysis is the same as the standard used in federal equal protection

analysis"]. A fundamental principle of law is that legislation is presumed to

be constitutional. The party asserting unconstitutionality bears the

burden of proof. The Minnesota Supreme Court has stated that "where a party challenges a statute as unconstitutional, the court will not strike down the statute unless the party challenging it demonstrates

beyond a reasonable doubt that the statute violates some consti- tutional provision." Lund v. County of Hennepin, 403 N.W.2d 617, 619

(Minn. 1987), appeal dismissed, 108 S. Ct. 50 (1987) [quoting Miller

Brewing Co. v. State, 284 N.W.2d 353, 356 (Minn. 1979)]. In property classification cases the courts have given the legislature extreme

latitude in classifying property, requiring only a rational basis. In

the case of Guilliams v. Commissioner of Revenue, 299 N.W.2d 138

(Minn. 1980), the Supreme Court, in sustaining an act of the legislature requiring an adjustment to farm losses in the amount of non-farm income, stated: "in the field of taxation, the legislature's

power is inherently broader and is exercised more flexible than in

other areas. 299 N.W.2d at 142.

Both parties agree that the test to be applied in this case is a familiar "rational basis" test. Miller Brewing Co. v. State, 284

N.W.2d 353 (Minn. 1979). The standard of analysis is the same whether

legislation is attacked under Minn. Const. art. XII, § 1 (special

legislation), or in violation of Minn. Const. art. X, § 1 (state

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uniformity clause), or in violation of Minn. Const. art. I, § 2 (state equal protection clause). The same rational basis test must be applied. AFSCME Councils v. Sundquist, 338 N.W.2d 560, 570 n.l2 (Minn. 1983) . See also J. L. Shiely Co. v. County of Steams, 395

N.W.2d 357, 360 (Minn. 1986). The Supreme Court has provided criteria for determining whether

legislation meets the rational basis test. The court established

three criteria:

(1) The distinctions which separate those included within the classification from those excluded must not be manifestly arbitrary or fanciful but must be genuine and substantial, thereby providing a natural and reasonable basis to justify legislation adapted to peculiar conditions and needs? (2) the classification must be genuine or relevant to the purpose of the law; that is, there must be an evident connection between the distinctive needs peculiar to the class and the prescribed remedy; [and] (3) the purpose of the statute must be one that the state can legitimately attempt to achieve.

Miller Brewing, 284 N.W.2d at 356. See also Schwartz v. Talrno, 295 Minn. 356, 362, 205 N.W.2d 318, 323 (19_), appeal dismissed, 414 U.S. 803, 94 S. Ct. 130, 38 L.Ed.2d 39 (1973); Montgomery Ward & Co., Inc. v. Commissioner of Taxation, 216 Minn. 307, 12 N.W.2d 625 (1943).

More recently the Minnesota Supreme Court stated: In determining whether a challenged classification is rationally related to achievement of a legitimate governmental purpose, we must answer two questions: "(I) [d]oes the challenged legislation have a legitimate purpose? and (2) [w]as it reasonable for the lawmakers to believe that use of the challenged classification would promote that purpose?

In re Estate of Turner, supra, 391 N.W.2d at 769-70 (quoting Western &

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Southern Life Insurance Co. v. State Board of Equalization, 451 U.S.

648, 668 (1981)]. If any reasonable basis exists for the exemption the court may not

disturb that legislative judgment. Erie Mining Company v. Commissioner of Revenue, 343 N.W.2d 261, 267 (Minn. 1984) [citing In_

re McCannel, 301 N.W.2d 910, 917 (Minn. 1980)]. Respondent argues that the Minnesota Supreme Court has noted that

"the purpose of real estate exemptions is to foster the accomplishment of public purposes and not to favor private parties at the expense of taxpayers generally." Petition of Board of Foreign Missions, Augustana Synod, 221 Minn. 536, 21 N.W.2d 645 (1946). Respondent further argues that each exemption granted is an expenditure of taxpayers' funds which unless justified by the constitution is unfair to all taxpayers who contribute their share of wealth. Unlawful exemptions therefore constitute a taking without due process of law. Green v. Frazier, 253 U.S. 33 (1920).

The Minnesota legislature in 1977, in creating and empowering the Commission, acknowledged that a public purpose exists in establishing a procedure for the acquisition and betterment of sports facilities. This legislation provides as follows:

The legislature finds that the population in the metropolitan area has a need for sports facilities and that this need cannot be met adequately by the activities of individual municipalities, by agreements among municipalities, or by the private efforts of the people in the metropolitan area. It is therefore necessary for the public health, safety and general welfare to establish a procedure for the acquisition and betterment of sports facilities and to create a metropolitan sports facilities commission.

Minn. Stat. § 473.552 (1988).

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However, it was not until eight years later that the 1985

amendment was passed providing an exception to M.S.§ 272.01, subd. 2,

and M.S.§ 273.19, the statutes providing that all government owned

property leased to private individuals shall be taxable. There is no indication in the documents whether the Commission was unaware of the

two statutes relating to leased property, whether the fiscal viability of the stadium commission had changed, or whether other motivations

may have existed for the passage of the 1985 amendment.

Petitioners cite the case of Lifteau v. Metropolitan Sports

Facilities Commission, 270 N.W.2d 749, 754-55 (Minn. 1978), which

upheld the legislative determination that the construction of a sports facility constituted a public purpose which justified the expenditures of public funds. However, we do not find that case persuasive.

Merely because the legislature determined that construction and ownership of a public sports facility constitutes a public use does not necessarily mean that the granting of tax exemption to the profit

making corporate lessees who are given exclusive use of the property

constitutes a public purpose.

We do not agree that the legislative decision to exempt property leased to private parties is consonant with the policy considerations

that led to the creation of the Commission. They are completely

separate issues. If the Commission felt that in order to be competitive with other cities and states seeking major league teams it

was necessary to provide further financial incentives, it had the

authority to do so through reducing the percentage of gate receipts,

reducing the amount paid by the Vikings to the Commission for the

exclusive use of the boxes, or other contractual arrangements.

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There is one major difference, however, between providing

financial incentive through reduced lease payments and providing a tax

exemption. That difference is the source of the funds. If the

incentives are provided by the Commission through reduced payments,

the Commission's revenues are reduced accordingly. If it is done

through tax exemption, the Commission's revenues are unaffected

(unless the Commission has contracted to pay the tax) but the taxing

districts in which the property is located must shoulder the burden.

The City of Minneapolis provides the usual services of government,

fire protection, police protection, streets, sidewalks, and other

obligations of government. If the statute is sustained, the costs of

these services will have to be paid by other taxpayers in the city.

Petitioners cite that the exemption created by the 1985 amendment

is not the first exception to sections 272.01, subd. 2, or 273.19.

The petitioners quote from section 272.01, subd. 2(b), which provides

that the tax imposed by that subdivision does not apply to property

leased or used by way of a concession in a public park, market, fair

grounds, port authority, economic development, municipal stadium, or

public property in airports and cities under $50,000. However, in all

of these exceptions to the general rule, the exception applied to all

lessees of governmental entities owning the type of property covered

by the exception when leased to private entities. They did not, as in

this case, single out the lessees of one governmental unit, the

Commission.

Petitioner Twins also cites the case of DePonti Aviation v. State,

280 Minn. 30, 157 N.W.2d 742 (1948), which discusses Minn. Stat.

§§ 272.01, subd. 2 and 273.19. However, this case does not appear to

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be relevant (permits taxation under 273.19 of leased airport

property). Petitioners also cited several cases from other jurisdictions. In

Assessors of West Springfield v. Eastern States Exposition, 326 Mass.

167, 93 N.E.2d 462 (1950), the court upheld a statute exempting from

taxation property belonging to incorporated agricultural societies. In the West Springfield case the taxpayer society leased its facility

for as much as 7 months of the year to unrelated nonexempt entities

that used the facilities for sporting events unrelated to the purposes

of the society. The court held that, while Massachusetts statutes

established as a criteria for taxation the use of the property, the

statute which provided exemption solely on the basis of ownership

would be sustained. However, the Massachusetts statute related to all

agricultural societies, not just one agricultural society. Again, in

Illinois State Toll Highway Commission v. Korzen, 32 I11.2d 338, 205

N.E.2d 433 (1965), the court affirmed legislation in exempting state

owned property owned by the Highway Commission located at "oases"

along the toll way leased to private nonexempt parties for the

operation of service stations and restaurants. The statute creating

the Highway Commission provided that all property belonged to the

Commission was exempt from taxation. However, another statute provided that real property owned by an exempt entity but leased to a

nonexempt entity was taxable to the lessee. The court noted that the service stations and restaurants on the leased property fulfilled the

purpose of the Highway Commission and there should be no different tax

treatment than if it were owned and operated by the Commission

itself. Although the Illinois Constitution contained a special

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legislation provision (111. Const. art. IV, § 13) similar to

Minnesota's, this issue was not considered by the court. See also

Howard A. Johnson Co. v. King, 351 Atl.2d 524 (Maine 1976); Walter

Reade, Inc. v. Township of Dennis, 36 N.J. 435, 177 Atl.2d 752 (1962);

Public Parking Authority of Pittsburgh v. Board of Property

Assessment, 377 Pa. 274, 105 Atl.2d 165 (1954). Again, in the Korzen

case the legislation applied to all leased property at oases, not just

the property at issue in the case. In both the West Springfield case

and the Korzen case the court held that ownership (by a governmental

entity) alone is sufficient for exemption. The Minnesota legislature did not do this in the 1985 amendment. Rather, it exempted the lessee

from liability for property taxes.

With that background let us examine the three tests cited in

Miller Brewing, supra.

(1) The distinctions which separate those within the classifi-

cation from those without must not be arbitrary or fanciful. In this

case the exemption granted to the lessees to use property without

being subject to the tax is limited to only one entity, the

Commission. Property leased for a period of 3 years or more located

at any other stadium or sports facility in the state other than those

owned by the Commission is subject to tax. In addition, the real estate privately owned by sports organizations such as the Vikings'

offices and training facilities, the Target Center, and any other

privately owned major league, minor league or nonprofit sports

organization owning property (except that owned by exempt entities) is

taxable. We do not find the exemption at issue satisfies this

requirement.

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(2) The classification must be genuine or relevant to the purpose of the law; that is, there must be an evident connection between the needs peculiar to the class and the prescribed remedy. Here again, while we agree with the preamble of the law creating the Commission authorizing the construction of a facility and providing tax exemption to the public areas, it does not follow that the exemption of the property leased for the sole and exclusive use of the Twins and Vikings is genuine or relevant to the purpose of the law. No essential connection has been established linking the construction and

operation of the facility with the granting of exemption to the portions of the subject property exclusively used or controlled by the

Twins and the Vikings. The Twins asserted that location of their offices in the stadium

was necessary to the operation of the franchise. Little factual justification was presented to support that argument. The respondent contests this assertion alleging that no proof was presented. No reason was presented why the Twins offices and administrative support facilities could not be located somewhere else in the city or adjacent

to the stadium connected with a tunnel or skyway, such is the case of

many clinics constructed adjacent to hospitals. See Chisago Health Services v. Commissioner of Revenue, 462 N.W.2d 386 (Minn. 1990). The

Vikings, whose offices, administrative support facilities and practice field are located in the suburbs, apparently feel no need to have

their office in the stadium or even adjacent thereto.

No one disputes the need to have ticket sales facilities in the stadium. If the 1985 amendment were limited to ticket sales

facilities we would have an entirely different issue. It would be

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comparable to the exemption granted the airlines in Minn. Stat. § 272.01, subd. 2(b)(2), for property used at publicly owned airports

for ticket sales.

(3) The purpose of the statute must be one that the state can legitimately attempt to achieve. The respondent argues that the sole benefit is a financial windfall to the Twins and the Vikings. It is

apparent from the record that the benefits do accrue to the Twins and the Vikings, the Twins enjoying exemption on their office space,

employee facilities including restaurants, training rooms & locker rooms. The Vikings realize a considerable profit by having exclusive

authority over the box rentals. We have grave doubts over the validity of a statute which provides these benefits at the expense of other property taxpayers in the city, county and school district.

As noted earlier, the Supreme Court raised two criteria in the

Turner case, supra, for determining whether a law met the rational

basis test. The first is, does the challenged legislation have a

legitimate purpose. We must answer this in the negative since it has

not been established that granting tax exemption to property solely

and exclusively utilized by the Twins and Vikings constitutes a valid

public purpose. Having reached that conclusion it is not necessary to

consider the second criteria, whether it was reasonable for the

lawmakers to believe that the use of the challenged classification

would promote that purpose.

While not argued extensively by the parties, the location of the

exemption at issue appears to support the conclusion that it is

special purpose legislation. Instead of amending Minn. Stat.

§ 272.01, subd. 2 by inserting another exclusion, the statutes

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relating to the Metropolitan Sports Facilities Commission (Minn. Stat. §§ 473.551 - 473.596) were amended by adding a new subdivision, Minn.

Stat. § 473.556, subd. 4. The Minnesota Constitution, Article X, section 1, commences with

the sentence, "The power of taxation shall never be surrendered,

suspended or contracted away." The exemption granted to the lessees of the Metropolitan Sports Facilities Commission, together with the

authorization to impose rents, fees and charges for the use of the

facilities, constitutes an indirect surrender of the taxing power to

the Commission, which may permit the Commission to impose higher

rental charges.

Respondent places considerable weight on the case of Burns v. Essling, 156 Minn. 171, 194 N.W. 404 (1923), which held that the City

of Eveleth, operating under a home rule charter, could not

constitutionally expend public funds to assist the Eveleth Athletic

Association through purchase of their bonds, to construct a facility to be used as a hockey rink, with other incidental public benefits,

which would later be transferred to the City. We agree with

petitioners that this case has no application to the issue in this case for two reasons: (1) the philosophy of the legislature and

courts have changed since 1923; and (2) the Burns case relates to public expenditures, not tax exemptions. The public purpose in

expending funds to construct the stadium was well settled in the Lifteau case, supra. It is also accepted practice that public funds

may be expended through grants, nominal value sale of property, or

issuance of industrial revenue bonds by state agencies such as the

Department of Economic Development, IRRB, or city agencies such as the

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Minneapolis Community Development Agency or the St. Paul Port

Authority. Nor do we find Blume v. County of Ramsey, File No. C9-88-2861

(Minn. Tax Ct. March 31, 1989), persuasive. This case upheld the constitutionality of the fiscal disparity aid provision of Minnesota Laws 1988, ch. 719, and relates more to inequality between taxing districts (Roseville versus St. Paul) than to exemption.

Petitioner Twins, in a supplemental post-trial brief, called our attention to a recent case decided by this Court, County of Hennepin v. Commissioner of Revenue and Atlas Partnership, Dkt. No. 5389 (Minn. Tax Ct. November 20, 1990), in which this Court held that the Atlas Partnership was entitled to exemption under Minn. Stat. § 272.02, subd. 1(9), which conferred exemption for real property used for the abatement and control of air, water and land pollution, even though Atlas Partnership was a profit-making entity. We do not consider this case as persuasive since the issue here is not whether the petitioners are profit making entities, or how much profit they make. Rather, the issue is whether the legislation violates the constitutional

provisions cited above. We find that the 1985 amendment constitutes special purpose

legislation and fails under the equal protection clause of the Minnesota and U. S. Constitutions.

III. The 1985 Amendment was part of a "garbage" bill violating Minn.

Const. art. IV, § 17.

Respondent argues that the 1985 amendment, which was part of the Omnibus appropriation bill passed at the end of the 1985 session,

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violates Article IV, § 17, which provides as follows: "no law shall embrace more than one subject which shall be expressed in its title." This constitutional requirement is designed to alert legislators and

the public to the content of a proposed bill. Lifteau, supra. The 1985 amendment at issue was included in an Omnibus fiscal

bill. Minnesota Laws 1985, First Spec. Sess., ch. 14 (hereinafter

"chapter 14"). The bill contained 21 articles. The title alone, which began on the top of page 2302 of the 1985 session laws, ends on the bottom of page 2304. The text of the bill requires almost 400 pages of printing in the session laws (pp. 2304 through 2695). The amendment to Minn. Stat. § 473.556, subd. 4, at issue in this case,

was contained in the 20th article of the 21 article bill.

The principal thrust of chapter 14 was state taxation. Thirteen articles related to taxes administered by the Department of Revenue (articles 1, 15, 21 income tax; article 2 sales tax; art. 10 mining taxes; art. 11 mortgage registration tax; art. 13 estate tax; art. 14

telephone gross earnings tax; art. 19 cigarette tax; art. 5 property tax refunds; and art. 16 enforcement). Articles 3 and 4 related to the property tax. However, other diverse subjects were contained in the bill, including local government aids (art. 6); Hennepin Co. Park Reserve (budgeting and selection of governing board) (art. 7); jobs and economic development (articles 8 & 9); lease rates on land leased

by the DNR (art. 17); and budget reserve (art. 18). Article 20, in which the 1985 amendment was included, was headed

by the non-descriptive title, "miscellaneous." Article 20 contained such diverse sections as powers of the tax court (sec. 1); special

assessments (sec. 2); levy limit base (sec. 3); tax forfeited land

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sale procedure (sec. 4-16); 1985 assessment adjustments required to be made by the Commissioner of Revenue (sec. 18); 1984 disaster credit refund (sec. 19); and City of Minneapolis rental registration (sec.

20) . Neither the title of the bill nor the title of the article

contained any clue that it related to property owned by the Commission. The title of the bill, while listing an amendment to section 473.556.4, in the text simply stated, "changing property tax exemptions, classes, classification ratios, and credits; . . .."

The mischief attempted to be prohibited by Minn. Const. art. IV, § 17, is well expressed by the Supreme Court in State v. Cassidy, 22 Minn. 312 (1875). In that case the Supreme Court stated:

The well-known object of this section of the constitution, which declares that "no law shall embrace more than one subject, which shall be expressed in its title," was to secure to every distinct measure of legislation a separate consideration and decision, dependent solely upon its individual merits, by prohibiting the fraudulent insertion therein of matters wholly foreign, and in no way related to or connected with its subject, and by preventing the combination of different measures, dissimilar in character, purposes and objects, but united together with the sole view, by this means, of compelling the requisite support to secure their passage.

Id. at 322. The respondent asserted that the exemption at issue was not

publicized and that legislators had little opportunity to know that it was inserted in the omnibus bill. According to an attachment to the petitioners' brief, the introduction of a bill to exempt the subject property was publicized (Minneapolis Star article. Page 1B, March 30, 1985). However, the record does not disclose what hearings, if any,

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were held on the bill, and what legislative action was taken, if any, other than its insertion into the omnibus bill (Laws of 1985, ch. 14,

art. 20, § 17). Respondent's arguments are not without merit. This same issue was

addressed in State of Minn. ex rel. Robert W. Mattson, Treasurer of_ the State of Minnesota v. Peter J. Kiedrowski, 391 N.W.2d 777 (1986). The issue in that case related to language in an omnibus bill transferring certain duties from the state Treasurer's office to the Commissioner of Finance. The Supreme Court held that the law violated art. V, § 1, and art. IX, § 1 of the Minnesota Constitution. The plaintiff in the Kiedrowski case also asserted that the law violated art. IV, § 17. The majority opinion did not discuss this issue. However, in a concurring opinion. Justices Yetka and Simonette addressed the issue of omnibus bills, referring to them as their popular names, "garbage" or "Christmas tree" bills, put together at the end of the session and containing disparate measures, many of which could not pass on their own merit. The special concurrence of

Justice Yetka stated: While we recognize that modern times require

modern methods of legislating, it was never intended by our founding fathers that the legislature be able to combine into one act a number of totally unrelated subjects. Thus, we should publicly warn the legislature that if it does hereafter enact legislation similar to Chapter 13, which clearly violates Minn. Const. art. IV, § 17, we will not hesitate to strike it down regardless of the consequences to the legislature, the public, or the courts generally. After all, the legislature has, within its given powers, the right to prepare proper constitutional amendments to submit to the people if it finds that existing constitutional restraints offer severe impediments to its ability to perform efficiently, but it

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should not and cannot be given the fiat to ignore the constitution, for then we will surely have despotism, a tyranny the founders sought to prevent -- a system not of laws, but of men.

State ex rel. Mattson v. Kiedrowski, 391 N.W.2d at 785.

The single subject provision has also been recently addressed by

the Supreme Court in Blanch v. Suburban Hennepin Regional Park

District, 449 N.W.2d 150 (Minn. 1989). The court in the Blanch case

stated that the test was whether all of the matters in the bill were

"germane" to one general subject. Id. at 154-55 [quoting Waso v.

Anderson, 312 Minn. 394, 402, 252 N.W.2d 131, 137 (1977)].

The 1985 amendment at issue in this proceeding was passed prior to

the Supreme Court's decision in Kiedrowski. Thus, it might be

considered to fall within the grandfather provisions suggested in the

concurring opinion. However, as in the case of Kiedrowski, since we

have already held the 1985 amendment to be unconstitutional on other

grounds, it is not necessary to decide whether Laws of Minnesota 1985,

1st Spec. Sess., ch. 14, violates Minn. Const. art. IV, § 17.

A • C • R •

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