Opinion ID: 1751245
Heading Depth: 1
Heading Rank: 1

Heading: The Board of Review's Appeal.

Text: We first consider the appeal of the Board of Review relating to the child care facility. The district court found a sufficient nexus between the purposes of the University and a child care facility being operated primarily for University students and personnel to render the property exempt from taxation. In reviewing the correctness of that determination, we begin with Iowa Code section 427.1(9) (1991), which provides an exemption for: All grounds and buildings used or under construction by literary, scientific, charitable, benevolent, agricultural, and religious institutions and societies solely for their appropriate objects, not exceeding three hundred twenty acres in extent and not leased or otherwise used or under construction with a view to pecuniary profit. The requirements of section 427.1(9) were reviewed in Congregation B'Nai Jeshurun v. Board of Review, 301 N.W.2d 755 (Iowa 1981). We stated in that case: Our statute is quite tightly drawn. It contains three requirements. First, the property must be used ... by [literary, scientific, charitable, benevolent, agricultural, and] religious institutions and societies.... The second requirement ... narrows the kind of use which qualifies property for exemption: the use by religious [and other listed types of] institutions and societies must be  solely for their appropriate objects.  (Emphasis added.) Third, the property must not be used or leased with a view to pecuniary profit. Id. at 756 (quoting Iowa Code § 427.1(9) (1979)). The first and third requirements stated in Congregation B'Nai Jeshurun are not disputed by the Board of Review. As to the second requirement, however, the Board urges that the facility is not being used solely for the appropriate objects of the college because a few children are allowed to attend whose parents are not students or employees of the school. The application of this second or actual use requirement was initially considered more than 100 years ago. In Trustees of Griswold College v. State, 46 Iowa 275, 282 (1877), the statutory language, devoted solely to the appropriate objects of [the qualifying institutions,] was not the same as the actual necessities of the institution. This court interpreted this language to mean that [t]he true inquiry should be not what is actually necessary, but what is proper and appropriate to effectuate the objects of the institutions. If given a literal reading, the solely for their appropriate objects test espoused in Congregation B'Nai Jeshurun and the what is proper and appropriate to effectuate the objects of the institutions test espoused in Griswold College would appear to be in conflict. However hard it may be to completely reconcile these statements of principle, we believe that certain guideposts may be discerned. Among these is our belief that a more demanding actual use test is imposed in those situations in which the challenged use is the primary basis for the claim of exemption. In contrast, the phrase solely for their appropriate objects is a much less demanding requirement for those religious, educational, and charitable organizations who clearly qualify as such without regard to the use of the property at issue. This is because the very reason for the existence of those institutions is to carry on charitable, educational, and religious activities. Consequently, the use of their property for an activity within their mission will ordinarily be consistent with exempt status. The Congregation B'Nai Jeshurun case qualifies this conclusion with respect to uses that are only shown to generally benefit the institution and that do not foster a specific program within the mission of the institution. St. Ambrose University is clearly both an educational and a religious organization without regard to its use of the property at which the day-care facility is housed. The day-care activities are for the direct benefit of students and faculty and facilitate their respective educational goals. The district court found: [The child care facility's] primary operation is to benefit students who otherwise might not be able to attend the University and its primary use is actually for such purpose. Obviously providing an employment benefit to its employees also is for an educational purpose. The court found that any use of the facility by other persons was incidental to the purpose for which the University owned the facility. On our de novo review in this equity action, we conclude that the district court's findings on the evidentiary issues accurately reflect the importance of the child care facility to the purposes of the University. We conclude that these findings qualify the property as exempt under section 427.1(9). We affirm the order of the district court on the Board of Review's appeal.