Opinion ID: 1465764
Heading Depth: 1
Heading Rank: 7

Heading: exclusive use for charitable purposes

Text: We next undertake the second step of our analysis under § 12-81(7), namely, whether the real property at issue is used exclusively for carrying out [the corporate entity's] charitable purposes.... Isaiah 61:1, Inc. v. Bridgeport, supra, 270 Conn. at 77, 851 A.2d 277; see also General Statutes (Rev. to 2003) § 12-81(7) (to be exempt, property must be used exclusively for carrying out one or more of such purposes). The parties disagree over the application of the term exclusive to the facts of this case, and our prior cases have been less than clear in explaining exactly what that term means. The trial court found that the Center's property is not used exclusively for a charitable purpose. The town agrees and, in its argument to this court, focuses on the fact that the Center provides shortterm rehabilitative services to some of its patients, which, according to the town, defeats the exclusivity requirement. The Center responds by downplaying the significance of its rehabilitative operations [44] and by taking a broad view of its charitable purpose, urging this court to conclude that providing short-term rehabilitative care is within the Center's charitable purpose of provid[ing] [health] care.... We agree with the town that the Center is not using its property exclusively in furtherance of its charitable purpose because the provision of short-term rehabilitative care to the general public is outside the scope of that charitable purpose. Our discussion will proceed in two parts. First, we will examine the meaning of the term used exclusively. Next, we will examine the Center's short-term rehabilitative care services in the context of our understanding of this requirement, as well as the significance of such noncharitable use on the Center's tax status in light of the apportionment provision of § 12-88. We first endeavor to define the statutory term used exclusively and apply it to the facts of this case. This is an intensely fact-bound inquiry. Whether the property for which exemption is claimed is actually and exclusively used for [charitable] purposes must be determined from the facts of the case. Camp Isabella Freedman of Connecticut, Inc. v. Canaan, supra, 147 Conn. at 514, 162 A.2d 700; see also Lutheran Home, Inc. v. Board of County Commissioners, 211 Kan. 270, 276-77, 505 P.2d 1118 (1973) (a case involving a determination of that which is charitable must be decided upon its own particular facts or circumstances). Although the legislature has not defined the exact meaning of the term used exclusively, and the term seems to have heretofore defied precise definition, our analysis is guided by the strict construction that we must apply to statutory provisions bestowing on a taxpayer the privilege of a tax exemption. E.g., Fanny J. Crosby Memorial, Inc. v. Bridgeport, supra, 262 Conn. at 220, 811 A.2d 1277. In order to satisfy this exclusivity requirement, [a]n institution must be exclusively charitable, not only in the purposes for which it is formed and to which its property is dedicated, but also in the manner and means it adopts for the accomplishment of those purposes. (Emphasis added; internal quotation marks omitted.) H.O.R.S.E. of Connecticut, Inc. v. Washington, 258 Conn. 553, 563, 783 A.2d 993 (2001). A closer examination of cases that turn on this issue will be helpful in expanding on this manner and means approach. In Hartford Hospital v. Hartford, supra, 160 Conn. at 371-72, 279 A.2d 561, we reviewed a nonprofit hospital's claim that an apartment house it owned, which was located on property adjacent to the buildings actually used to care for patients, was tax-exempt under General Statutes (Rev. to 1964) §§ 12-81(16) [45] and 12-88. The city of Hartford (city) claimed that the apartment house was taxable because it was occupied by members of the hospital's staff, who paid rent to the hospital, and, thus, it was not used exclusively for hospital purposes. Id., at 371, 279 A.2d 561. We recognized, however, that the fundamental issue in the case was whether the use [of the apartment house] was exclusively for hospital purposes or for some other purpose. [46] Id., at 377, 279 A.2d 561. Our conclusion that the apartment house was entitled to a tax exemption as property used exclusively for hospital purposes was premised on the fact that it is necessary for the [hospital] to provide housing for a large number of its house staff in close proximity to [the hospital]... in order properly to perform its services as a hospital. (Emphasis added.) Id. Hartford Hospital thus stands for the proposition that the exclusively used test encompasses those activities that are necessary for the primary, tax-exempt purpose. Id. We interpret this to mean that § 12-81(7) anticipates such peripheral activities as are, in a practical sense, indispensable to the accomplishment of the permissible tax-exempt purpose but that nevertheless are outside the strict scope of that purpose. This proposition is borne out, albeit indirectly, in H.O.R.S.E. of Connecticut, Inc. v. Washington, supra, 258 Conn. at 553, 783 A.2d 993. The plaintiff in H.O.R.S.E. of Connecticut, Inc., was a nonprofit organization dedicated to the care of all abused, neglected, unwanted and lost domestic hoofed animals; to provide education and training pertinent to the care of hoofed animals for employees, members and officers, and the community as a whole; and to safeguard, advance and promote the safety and well-being of domestic hoofed animals by political, educational and other community activity. (Internal quotation marks omitted.) Id., at 556, 783 A.2d 993. In carrying out this purpose, the plaintiff used the subject property, at least in part, to board and to rehabilitate abused, neglected or abandoned horses. See id. The plaintiff appealed from the decision of the defendant town of Washington denying it a property tax exemption, and the trial court granted the plaintiff's motion for summary judgment, which the Appellate Court affirmed. Id., at 557, 783 A.2d 993. We granted the defendant's petition for certification to appeal, with the primary issue being whether there were any material facts in dispute as to whether the plaintiff's property was used exclusively for charitable purposes.... (Internal quotation marks omitted.) Id., at 555, 783 A.2d 993. The defendant argued that the plaintiff's property was not being used exclusively for a charitable purpose because there was evidence that the plaintiff may have boarded some horses commercially in order to make money to support the charitable portion of its operation. See id., at 564, 783 A.2d 993. The plaintiff insisted that such boarders formerly were abused or neglected animals that had been adopted but still required rehabilitative care. Id., at 565, 783 A.2d 993. We concluded that there was a material fact in dispute with respect to whether the plaintiff use[d] its property exclusively for charitable purposes within the meaning of § 12-81(7).... Id. Our conclusion was based on the evidence presented by the defendant, which, construed in the light most favorable to it as the nonmoving party, indicated that at least some of the plaintiff's boarders were healthy and were not, and never ha[d] been, in need of special care, treatment or rehabilitation that the plaintiff afford[ed] abused, neglected or abandoned horses in accordance with its charitable purpose. Id., at 564, 783 A.2d 993. Thus, the case was remanded to the trial court to resolve the factual dispute and to determine whether the plaintiff's use of its property was, in fact, dedicated exclusively to its charitable purpose. See id., at 564-66, 783 A.2d 993. We conclude from these cases that the term exclusive must be given its ordinary meaning in light of our strict construction of § 12-81(7). [47] We conclude that the exclusive use requirement of § 12-81(7) must be strictly construed so as to require a charitable organization seeking the benefit of a property tax exemption to use its property in such a manner that its activities are entirely dedicated to serving its stated charitable purpose. [48] Of course, this does not mean that any noncharitable use necessarily will defeat the tax exemption, but the proponent of the exemption must show that such uses are  necessary for  the accomplishment of the charitable purpose; (emphasis added) Hartford Hospital v. Hartford, supra, 160 Conn. at 377, 279 A.2d 561; cf. Loomis Institute v. Windsor, 234 Conn. 169, 178, 661 A.2d 1001 (1995) (faculty housing exempt under § 12-81[7] because it was used purely to effectuate [the school's] educational purposes); or, on the other hand, are merely incidental to such a purpose. See, e.g., Topeka Presbyterian Manor, Inc. v. Board of County Commissioners, 195 Kan. 90, 95 402 P.2d 802 (1965) (the expression `used exclusively' ... has reference to the primary and inherent use of the property as against a mere secondary or incidental use), overruled in part on other grounds by Lutheran Home, Inc. v. Board of County Commissioners, supra, 211 Kan. at 270, 505 P.2d 1118; Evangelical Lutheran Good Samaritan Society v. Gage, supra, 181 Neb. at 835, 151 N.W.2d 446 ([t]he primary or dominant use, and not an incidental use, is controlling in determining whether property is exempt from taxation [internal quotation marks omitted]); Hilltop Village, Inc. v. Kerrville Independent School District, supra, 426 S.W.2d at 947 ([n]or will the incidental uses of the properties for the operation of guest facilities, a canteen, a beauty shop and vending machines defeat the exemption). In this respect, we are in accord with the Michigan Supreme Court, which, in determining whether an institution is charitable, declared that it is the overall nature of the institution, as opposed to its specific activities, that should be evaluated. Wexford Medical Group v. Cadillac, supra, 474 Mich. at 213, 713 N.W.2d 734. We continue to believe that any analysis of a property's exclusive use under § 12-81(7) must consider the manner and means employed in pursuit of the charitable goal within the specific facts and circumstances of each case. Returning to the present case, we agree with the trial court that the Center's provision of short-term rehabilitative services to patients of all ages, drawn from the community at large, is outside the scope of the Center's stated purpose of operat[ing] and maintain[ing] a chronic and convalescent care nursing home (i.e., skilled nursing facility).... As we noted in part I of this opinion, the provision of long-term health care and spiritual support to the elderly in a nonprofit, nondiscriminatory manner and without regard to individual financial circumstances is a charitable purpose. This is an apt summary of the purposes found in the Center's charter, bylaws and mission statement. Providing short-term rehabilitative care to the general public, although a necessary service and surely helpful to the Center's bottom line, simply cannot be characterized as falling within the Center's charitable purpose. [49] If the Center limited its provision of rehabilitative care to its existing population of elderly, long-term residents, we would be inclined to conclude that such services are within the scope of its charitable purpose as expressed in its corporate charter. Alternatively, the Center could amend its charter to broaden the availability of rehabilitative services for those elderly persons who are not part of its long-term patient population but who are drawn from the community at large. In such a case, the use of the Center's facility in furtherance of that charitable purpose would not defeat a claim for property tax exemption under the exclusive use requirement of § 12-81(7). [50] The record, however, does not support such a characterization of the Center's operation with respect to the rehabilitative services that it advertises and promotes. These services are neither indispensable nor incidental to the Center's stated charitable purpose. We conclude, therefore, that the trial court properly determined that the Center's property is not used exclusively for its charitable purpose. Moreover, the record is devoid of any evidence to indicate that the Center has satisfied the requirements of § 12-88 so as to allow this court to conclude that a portion of the Center's property is used exclusively for its charitable purpose. The Center has not claimed, and the record does not indicate, that the facility is divided so that a part of the building is physically segregated and entirely devoted to the charitable, long-term care aspects of its business. Section 12-81(7) is [s]ubject to the provisions of § 12-88. General Statutes (Rev. to 2003) § 12-81(7). The last sentence of § 12-88 provides a mechanism for apportioning taxes between the part of the property used for charitable purposes and the part used for other, noncharitable purposes. Specifically, [i]f a portion only of any lot or building belonging to, or held in trust for, any such organization is used exclusively for carrying out one or more of such purposes, such lot or building shall be so exempt only to the extent of the portion so used and the remaining portion shall be subject to taxation. General Statutes § 12-88. This language is unhelpful to the Center. We interpret this portion of § 12-88 to allow property taxes to be apportioned based on the physical use of the subject property and conclude that the Center's use does not qualify for such apportionment. Our interpretation of this part of § 12-88 is bolstered by the approach that we have taken in the only case that we could find applying a statutory provision analogous to § 12-88 in a similar factual context. In St. Bridget Convent Corp. v. Milford, 87 Conn. 474, 475, 88 A. 881 (1913), we considered a claim brought by the plaintiff, a religious organization operating a boarding and day school, that its property was exempt from taxation. The school consisted of several buildings and a large tract of land, some of which was used as a campus and playground and a portion of which was operated as a vegetable garden. Id., at 482, 88 A. 881. There also were two cottages on the plaintiff's property used as faculty housing. Id. The relevant statutory exemption provided in relevant part: The following property shall be exempt from taxation: ... buildings or portions of buildings exclusively occupied as colleges, academies, churches, public schoolhouses, or infirmaries with the land appurtenant to such infirmaries ... [and] buildings belonging to and used exclusively for scientific, literary, benevolent, or ecclesiastical societies ... not including any real estate of any educational, benevolent, or ecclesiastical corporation or association... which is leased or used for other purposes than the specific purposes of such corporation or association.... Public Acts 1911, c. 184. Pursuant to this public act, which is conceptually very similar to §§ 12-81(7) and 12-88, we concluded that the campus, playground and school buildings themselves were entitled to an exemption, whereas that portion of the land used as a garden, together with the faculty cottages, was properly taxable. St. Bridget Convent Corp. v. Milford, supra, at 482, 88 A. 881. We reasoned that, despite the beneficial use to which the school put this land, it was not used for the specific purposes of the plaintiff, namely, as a school. Id. Because we could discern that an identifiable portion of the plaintiff's property was used exclusively by the school for educational purposes and another portion was used for other purposes, the tax burden on the property was apportioned accordingly. [51] We conclude that the approach taken in St. Bridget Convent Corp. is a sound one, and is the approach dictated by § 12-88. Applying this approach in the present case, we note that the record indicates that the charitable and noncharitable aspects of the Center's operations are fully integrated and intertwined. [52] In the absence of proof that the Center's long-term chronic care services are offered in a portion of the facility that is physically separate from, and exclusively dedicated to, its short-term rehabilitative care operation, we are unable to apply § 12-88 to direct the apportionment of property tax between charitable and noncharitable uses of the subject property. Therefore, the Center cannot avail itself of § 12-88 to achieve a tax exemption for its otherwise charitable activities.