Opinion ID: 2572683
Heading Depth: 5
Heading Rank: 2

Heading: Source of funding and government contractor status

Text: Neither the constitution, the statute, nor the borough's ordinance mentions source of funding as a factor controlling or bearing on the exemption right. Nor have our decisions addressed what effect receipt of government funds may have on exemption eligibility. Our property tax exemption cases have primarily turned on whether the property was actually used exclusively for an exempt purpose. [46] The superior court understood the borough to be arguing below that none of the TCC properties was exempt because the government was the source of most of the funding for TCC's programs. The superior court treated this source of funding argument as a threshold issue and held that receipt of government funding did not preclude exemption. The borough does not squarely advance a government source of funding argument here. It asserts, especially in its reply brief, that it is not arguing that substantial government funding is a complete disqualifier. It is therefore not necessary for us to consider whether the superior court erred as a matter of law in holding that it is not. The borough nonetheless argues that TCC was acting as a government contractor, and was therefore acting not to fulfill charitable purposes, but to satisfy its contractual undertakings to the government. And it argues that substantial government funding remains relevant to the charitable-purposes analysis it proposes. Courts elsewhere are split on whether substantial government funding affects eligibility for charitable-purpose exemptions. Some hold that substantial government funding precludes an exemption, and some do not. These results may turn on considerations that do not apply in Alaska. For example, in many of the jurisdictions that have held that receipt of government funding precludes a charitable-purpose exemption, the courts were bound by a statutory or constitutional framework that required the organization to be a public charity, [47] or they applied multi-factor tests valuing support provided by donations. [48] It may also be significant that some cases in which receipt of government funding rendered property ineligible, federal grant money was used to construct low-income housing and subsidize rent. [49] In contrast, many of the cases upholding exemptions despite government funding involved corporations that provided services to their beneficiaries. [50] In some jurisdictions that have adopted multi-factor tests that consider source of funding, courts have not distinguished between government funding and donations. [51] We find this latter group of cases to be more persuasive. Rather than argue that government funding is a complete disqualifier, the borough argues that TCC was a government contractor, and therefore did not act for charitable purposes. Assuming that TCC was a government contractor, we decline to hold that its government contractor status necessarily renders its property altogether ineligible for any exemption. Such a status would not necessarily be inconsistent with finding that the property was used exclusively for non-profit... charitable ... purposes. [52] In any event, the government's financial support for TCC is largely provided through the Indian Self-Determination and Education Assistance Act (the Self-Determination Act). [53] The unique relationship between the federal government and Indian tribes has long led the government to provide support to tribes for health, education, employment, irrigation, administration, and real estate services. [54] These services encompass a wide variety of activities, some of which are traditionally governmental and some of which resemble those conducted by private business. The federal government's purpose of satisfying its trusteeship responsibility is essentially charitable, i.e., is motivated by good will and a desire to add to the improvement of the moral, mental, and physical welfare of the public generally. [55] The Self-Determination Act confirms the federal government's trust responsibility. [56] The act has the purposes of improving the provision of federal services by making them more responsive to tribal needs, and improving the functioning of the tribes through increased self-government. [57] Thus, Self-Determination Act contracts are not merely conduits for federal funding that would be provided in any event. By reorganizing the services and their provision, the contracts permit tribes to improve[ ] ... the moral, mental, and physical welfare of individuals and the group. [58] We also note that TCC contends that it acts on behalf of several native villages that may be too small to administer Self-Determination Act contracts themselves. We conclude that TCC's activities in satisfying its Self-Determination Act contracts with the government are motivated by purposes that are properly characterized as charitable. This satisfies the charitable-purposes criterion for exemption in Alaska.