The Board of Park Commissioners of the applicant City of
Wichita (City) appeals from a decision of the district court
affirming the decision of the Board of Tax Appeals (BOTA), which
denied ad valorem tax exemptions to the City concerning certain
Essentially we have three issues to consider: (1) Whether BOTA
had jurisdiction to revoke the City's exemption as to certain
park property; (2) whether BOTA's corrected order on rehearing
was supported by substantial evidence and not arbitrary; and (3)
whether certain ex parte communications between the Sedgwick
County appraiser and BOTA prejudiced the City. We affirm in part,
reverse in part, and remand with directions.
PROCEDURAL AND FACTUAL HISTORY
This appeal concerns two parcels of land: horse stables and a
residence. The facts are not generally in dispute.
The first parcel of real property, referred to as "the
stables," is real property approximately a quarter-section in
size. The stables were built between 1977 and 1980 and have since
operated under various arrangements. The stables property had
previously been exempted from ad valorem taxation under BOTA
Order No. 787-1, April 7, 1971. The City leased the stables to
Bobbi Reichert on May 12, 1986. In the stables lease, the City
named this property the Pawnee Prairie Park Riding Stables,
referring to it as the "facility." Pawnee Prairie Park is a large
regional park (625 acres) consisting primarily of natural area
and is made available to the public through a system of
pedestrian and equestrian trails. The Park is immediately
adjacent to Wichita Mid-Continent Airport. The stables consist of
a barn, pens, arena, farm ground, and hay meadow, along with
equestrian trails, wilderness areas, and public picnic areas
which make up about one-sixth of the total park area. The real
property comprising the stables was described by metes and bounds
and was identified as the facility to be leased to Bobbi Reichert
in the May 12, 1986, lease.
There is a dispute between the parties concerning the legal
sufficiency of this description. The Board of Sedgwick County
Commissioners (County), respondent, argues the property was
"fully legally described by metes and bounds . . . such legal
description being an attachment and part of the lease agreement."
The City contends
"[t]he property subject to the Stables lease is not
entirely the same as D-423-UP, the property
identified by the BOTA Order. [D-423-UP is a County
tax key number identifying a 151-acre tract within
Pawnee Prairie Park.] Pawnee Prairie Park is 625
acres, the Stables are 109.5 acres. . . .
. . . .
"[T]he precise parcel of land [the stables] that is
the subject of this appeal has never been
The lease agreement between the City and Bobbi Reichert
provided the facility was to be used to provide the public with
riding stables that would include services such as the boarding
of horses; providing horses for riding lessons; conducting fun
shows, horse shows, junior rodeos, riding instruction, trail
rides, and cookouts; and rehabilitating individuals with mental
and physical disabilities. The facility was to be open to the
public from sunrise to sunset seven days a week. Under the terms
of the lease, Bobbi Reichert was to pay one dollar per year as
rent and pay the operation's expenses out of the revenues from
the facility. Reichert had the right to mow and bale any hay
growing on the property.
Reichert boarded her own horses and those of private
individuals on the property. There were no city-owned horses
involved in the operation. She used her own horses for teaching
and rehabilitative purposes, and leased them to customers for
trail rides. Reichert boarded privately owned horses, charging
between $78 and $140 per month. Reichert was not paid to operate
the stable, but was allowed to keep the fees for boarding the
horses, with the potential for profit, even though there was no
showing of profit from the stables.
Approximately six weeks after the City and Bobbi Reichert
entered into the lease on the stables, they entered into a lease
on the residence. The residence lease states that it is necessary
that "LESSEE reside near, on, or adjacent to" the stables. The
Wichita Airport Authority (WAA) owned the residence and had
leased it to the City on June 23, 1986. The City had previously
deeded the property to WAA on August 23, 1976.
On the same date WAA leased the property to the City, the City
leased it to Bobbi Reichert. This sublease agreement locates the
residence just south of and adjacent to the riding stables
facility owned by the City. Under the sublease, Reichert was
responsible for paying utilities, repairing any damage above
normal wear and tear, paying any taxes which may have become a
lien on the property, and carrying and maintaining appropriate
insurance as required by the lessor. Reichert waived any and all
rights of recovery against the City for or arising out of damages
to or destruction of any of her property.
The stables operation ultimately was unsuccessful for a number
of reasons. Both leases were terminated in early 1988, and the
residence was returned to WAA. The City resumed direct control of
the stables. On September 10, 1986, the City filed an application
with BOTA for ad valorem tax exemption on the residence. The
stables were not listed on the application for exemption. The
residence was described by metes and bounds, situated at 2655 S.
Tyler Road in Wichita, Kansas. A hand-written key number of
D-425-UP appeared on the face of the application where the form
requests specific description of the property to be exempted.
After the City submitted its application for exemption, the
County Appraiser recommended the exemption be granted. On October
28, 1987, BOTA, in docket No. 4551-86-TX, denied the application,
finding the subject matter of the application, the residence, to
be nonexempt. BOTA stated it found neither statutory nor case law
authority for exempting residences owned by municipalities. BOTA
further found that the City had presented no evidence supporting
the use of the residence as a recognized governmental or
The City filed a Motion for Rehearing. BOTA granted the motion
and a rehearing was held. Additional evidence was presented and
entered into the record. BOTA issued an Order on Rehearing which
reaffirmed its original determination and revoked the stables'
exemption. A corrected Order on Rehearing was issued to include
the County tax key number of the stables, D-423-UP. The City then
filed this appeal.
The City contends BOTA had no jurisdiction to expand its Order
on Rehearing beyond the property listed on the application for
exemption: the residence. The Order on Rehearing not only denied
exemption for the residence, but also revoked the existing
exemption for the stables. The City contends further that BOTA's
revocation of the stables exemption denied the City notice and an
opportunity for hearing as required by the Kansas Administrative
The County contends that although there is no specific
statutory authority for the review of an exemption from ad
valorem taxation except for the property for which the exemption
is sought, the City inextricably tied the proposed exemption of
the residence to the stables. The County contends BOTA had the
authority to revoke the stables' ...